And no, the One-Eyed Fuckwit PM of Doom doesn't seem to believe in it.
But, via The Englishman, the Gobblin' King's about to find out that just because he doesn't believe in it, that the Laffer Curve won't come and bite him on the fucking arse anyway.
Treasury officials admitted last night that the Government would lose out on billions of pounds of revenue as they expected high earners to sidestep the 50 per cent tax rate (see Commentary, facing page).
Speaking to the Treasury Select Committee, Mike Williams, the director of personal tax at the Treasury, said that the Government expected to receive only 31 per cent of the possible total income from the tax increase announced in the Budget.
The Chancellor said last week that the 50p income tax rate for those earning more than £150,000 would raise £1.1 billion, but figures revealed yesterday suggest that he expects to lose £2.5 billion as many of the 350,000 higher earners take action to avoid, through legal means, paying the rate by working fewer hours or moving abroad.
Angela Beech, a tax partner with Blick Rothenberg, the accountant, said: “Some of our clients are already talking about leaving the country, while others are looking to retire early or cut their hours to reduce their income.”
However, the Treasury expects the tax take to rise from 31 per cent to 38 per cent in 2011, when new rules will make pension contributions much less tax efficient.
So, it's a double whammy. Not only will the Treasury take less tax than before, but the British economy loses the efforts of some of our most successful people.
Thanks a fucking bunch, Gordon, you fucking moron.
P.S. For a more detailed discussion of the Treasury's delusion over the Laffer Curve and the 50% tax, see this post at Burning Our Money.
P.P.S. For more discussion of why these "new rules [that] will make pension contributions much less tax efficient" are such a colossally bad idea, you might want to switch on your TV, tune to Channel 4 on Monday at 8pm, and watch the Dispatches programme.
According to their press release...
This week’s Dispatches lifts the lid on the pensions’ crisis. The programme reveals what life in the future will be like for the workers who today have suddenly found their pension plan in disarray.
According to the Governor of the London School of Economics and former advisor to No 10, Ros Altmann: “If the pension system carries on as it is with no real change, it will just explode.” She also adds: “…I don’t think you can rule out social unrest…”
According to Altmann: “I can’t help wondering if the reason that the (pensions) policy is such a mess is that the policy makers themselves are fine. Politicians and civil servants have incredibly generous pension arrangements for themselves and have not had to grapple with the problems of private pensions that everyone else faces, because tax payers automatically will pay them their good pensions anyway.“
So, we have a pensions crisis and what does the government do? That's right: it discourages people from investing in a pension.
Are these people absolutely fucking insane...?