4 thoughts on “The British economy is on the wrong side of the Laffer curve”

  1. Posted 16/03/2011 at 14:43 | Permalink

    If “wrong side” means “past the revenue maximising point” then you may be right, we must be pretty near the revenue maximising point – certainly as far as welfare claimants and tax credit claimants are concerned who face marginal tax rates of 70% – 100% (in other words, making means less testing less savage would REDUCE the cost of welfare to the taxpayer without making claimants worse off).

    If “wrong side” means “at a level where overall GDP is depressed below its tax-free level” then you are certainly right, because even a flat tax of 10% depresses GDP by 5% or 10%.

    The only tax which doesn’t have these deadweights costs is of course Land Value Tax.

  2. Posted 17/03/2011 at 09:00 | Permalink

    Very sad that we have reached this point, and under a Conservative goverrnment.

    Not just a Conservative government but one that promised to cut the deficit through downsizing government.

    Now they look for growth, but growth from where? They wish to spend money, to revitalise the private sector whilst at the same time sustaining a growing public sector, which will have to be found somewhere. Perhaps there is a cunning plan……..

  3. Posted 19/03/2011 at 07:38 | Permalink

    The Cameroids plan is actually quite simple and is simply a cynical ploy to appear tough to both sides; guardians of public sector spending amongst the highest paid civil servants and axe-wielding warriors to the turnip Taliban and Colonel Blimps of the Tory Party faithful.

    I even have a clever acronym for this plan: Declining Rate Of State Sanctioned Theft Re-Appropriation Programme, or DROSSTRAP for short; borrowing more (i.e. Deferring taxation) but at a slower rate relative to percentage GDP with a view to ultimately reducing spending as a proportion of GDP.

    It’s Thatcherism by the backdoor, only the hope is to cut spending rather than just hold it back or grant concessions in other areas that the Civil Dis-service can abuse; problem is if we are on the long side of the Laffer curve then growth is already depressed and the cuts are not bloody enough to stop growth being overtaken by inflation or wage hikes in the public sector.

    Should’ve abandoned this strategy before it started, annexed the Bank of England and re-appropriated it’s interest raising powers and brought back up slowly to what markets wanted. Simultaneously reforming major civil bodies into funding bodies (education vouchers, healthcare etc.) and letting the markets do the rest, killing leviathan in the process.

    We are reduced to a gamble on long odds that the public sector is fighting all the way to a New NuLabour victory for want of an actual conservative party.

    God help us all.

  4. Posted 01/08/2011 at 21:21 | Permalink

Comments are closed.