Tax and Fiscal Policy

Truss’ self-funding tax cut pledges won’t make inflation worse


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Christopher Snowdon, IEA Head of Lifestyle Economics, has written for The Times commenting on the tax pledges made during the leadership contest.

Reflecting on Liz Truss’ plans for self-funding tax cuts, Christopher writes:

“When Truss says that her do-nothing plan for corporation tax would pay for itself, all she means is that Sunak’s plan to raise corporation tax would cost the economy more than it gains. She may have a point.”

“Taxing corporations is seen as something akin to taxing an inanimate object at worst and a bunch of cigar-chomping fat cats at best. Raising the top rate of income tax is seen in a similar light, but in both cases there is demonstrably a point at which further increases reduce tax revenues as businessmen decide they would rather live elsewhere.”

“The economy has so many moving parts that if Truss’s plan is ever implemented, we will probably never know for sure whether it made us richer or poorer, but history shows that when searching for a self-funding tax cut, corporation tax is a good place to start.”


Read the full article here.



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