There is a “gaping black hole in Britain’s finances,” said George Pascoe-Watson in the Sun. Under the budget that Chancellor of the Exchequer Alistair Darling announced last week, Britain will have to borrow more money in the next two years than all previous British governments put together, adding more than $1 trillion to our national debt. Darling said he had no choice but to raise a whole slew of taxes. His proposal would “hammer” those earning more than about $220,000 by raising their top tax rate to 50 percent. Those earning less would see many of their most cherished tax breaks abolished. All of us who drive cars would be “pummeled” with a sharp rise in the gas tax, while drinkers would see taxes on booze go up. All told, “in a bid to claw back cash,” the new budget would punish the average family with nearly $1,500 a year in additional taxes.
But it’s the wealthy who’d be hardest hit, said the composer Andrew Lloyd Webber in the Daily Mail, and that’s bad news for everyone. For successful artists and entrepreneurs who are self-employed or who employ others, the top tax rate could be even higher than 50 percent because of additional taxes that employers must pay. These people, “part of the wealth-creation engine that has helped power Britain’s economy,” will have little choice but to go live abroad somewhere where they can use more of their earnings to invest in their businesses and create more jobs, rather than bestowing it on a profligate government. We will see “the inevitable exodus” of the very talent “that can dig us out of the hole we find ourselves in.”
Cry me a river, said Suzanne Moore, also in the Daily Mail. A good 98 percent of us won’t be affected by the 50 percent tax rate, because we don’t make anything near $200,000 a year. “As for these super-rich people who may now flee the country because they have no social conscience whatsoever, I fail to see them as a great loss.” Those highfliers are the very people who got us into this financial mess with their complicated investment schemes. “What being relaxed about the super-wealthy has meant in reality is widening inequality.”
Railing against the rich like that may feel good, said Martin Ivens in The Times, but it is bad policy. “Of course most voters, when asked, will say the rich should pay more.” Nearly two-thirds of voters surveyed support the 50 percent tax rate, and even more support tax increases on tobacco and alcohol. But independent analyses show that raising taxes above 40 percent brings hardly any extra revenue. This tax hike, then, is intended to boost the government’s popularity, not to solve Britain’s budget problem. In fact, a tax hike could leave us worse off, said William Rees-Mogg, also in The Times. Tax revenues might actually go down, not up, when the new rates take effect, as the rich flee or hide their assets. Then where will the government get the money to pay for Britain’s enormous welfare state? If you have to borrow billions, “you cannot afford to spit in the faces of those who have millions to lend.”