Tax and Fiscal Policy

Tax increases would be “self-defeating”

Philip Booth writes a letter to The Telegraph

Demos research on taxation showed that most people support tax rises, at least for the wealthy. But as IEA Senior Academic Fellow Professor Philip Booth points out in a letter to the editor of The Telegraph, “such tax increases, if implemented, would be self-defeating, as revenues would decrease due to the Laffer-curve effect”.

More interestingly, Philip added, people hugely underestimate the amount of tax they pay. When the amount they pay is revealed to them, they reverse their preferences in favour of lower government spending and taxation.

Read the full letter here.