The Strauss-Kahn case

[Jason]

Dandelion, I agree that the Laffer Curve is an imprecise model. There are real difficulties in determining just where the RMP is. There are arguments anywhere between 20% and 80%! But it does suggest that for a particular economy the RMP can be identified. There is some level of agreement that for the UK economy it is in the 30%-50% range - still a very broad range.

And yes if other taxes were changed then in theory the RMP for income tax might change. But in the UK economy Capital Gains Tax is difficult to collect and increases would be problematic on many levels. Indeed probably it should be lower. Corporation Tax needs to be lower. If anything changes with other taxes would reduce the RMP.

The Laffer Curve is a model for visualising a situation where we cannot tax the rich. We can of course tax the poor. And often the middle. But taxing the middle strangles an economy.

 

[B_crackoff]

Dandelion, I agree that the Laffer Curve is an imprecise model. There are real difficulties in determining just where the RMP is. There are arguments anywhere between 20% and 80%! But it does suggest that for a particular economy the RMP can be identified. There is some level of agreement that for the UK economy it is in the 30%-50% range - still a very broad range.

I'd like to point out, that in times of recession, or war, the effective tax take is far higher than in normal times, & people bear it.

The problem the UK has, is that it taxed so much during the credit filled good years, & gave away too many benefits, that would always become unsupportable in lean times, that there isn't any leeway for increased taxation not to have a very nasty bite.

That said, individuals will suffer massively reduced circumstances in order to pay debts, or indeed to save & invest now for the prospect of a better tomorrow.

That's why it's better to take some hard hits now, in order to get back up & running more quickly. By that time, expectation would be less, & the labour force would be leaner & more efficient, with a society perhaps more focused on performance & improvement, rather than the entitlement & dependency culture that exists now.

And yes if other taxes were changed then in theory the RMP for income tax might change. But in the UK economy Capital Gains Tax is difficult to collect and increases would be problematic on many levels. Indeed probably it should be lower. Corporation Tax needs to be lower. If anything changes with other taxes would reduce the RMP.

I think a simple withholding tax on all predesignated types of capital transactions would be very easy to implement. Rather like PAYE & NI, it can be collected immediately at source by financial institutions.

Actually, that's a bloody good idea. I should be Chancellor! It would also force all beneficiaries of gains to be far more transparent, & to provide the relevant information more expeditiously!