The race to raise taxes
The FT recently carried an interesting article by Gideon Rachman on the growing global trend towards higher taxes on the wealthy.
The position in France was featured where the increase of the top rate of tax to 75% has been presented by some in power as an ‘opportunity’ for the rich in France to show their patriotism. Interesting. Not unlike seeing a problem as a ‘challenge’ and other such examples of ‘wordsmithing’.
Anyway, the proposed increase in the US top rate from 35% to 39.5% looks positively benign by comparison. And of course in the UK, which was first out of the blocks in the race to increase tax rates, it seems that the lactic’ has kicked in and we are now going backwards with a reduction of the additional rate from 50% to 45% from 6 April 2013. This is in no small part due to severe doubt cast over the effectiveness of high tax rates in increasing overall tax yield. It seems (and many of the rich and famous would appear to concur with this) the higher the tax the greater is the willingness to take action to avoid it – acceptable or otherwise. And that’s another issue.
But globally, even in the UK and even with the proposed reduction in our top rate, there is, it seems, a growing backlash against the ‘extremely wealthy’. Statements reinforcing the importance of this group paying (or overpaying) towards the recovery through higher taxes are being made more frequently by politicians who are attuned to the popularity of such a view in many sectors of the population – apart from with those who have to pay the increased taxes that is. And those that do (have to pay the increased taxes) are likely to be more open to securing the benefit of experienced, professional advice.