{"id":18342,"date":"2012-11-26T09:33:55","date_gmt":"2012-11-26T09:33:55","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=18342"},"modified":"2012-11-26T16:07:17","modified_gmt":"2012-11-26T16:07:17","slug":"laffer-said-when-tax-rates-are-cut-tax-revenues-will-rise","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/11\/26\/laffer-said-when-tax-rates-are-cut-tax-revenues-will-rise\/","title":{"rendered":"Laffer said when tax rates are cut tax revenues will rise"},"content":{"rendered":"

The Laffer curve is based on a simple claim<\/a>. It is that when tax rates fall tax revenues will increase. That is because tax is supposedly a\u00a0disincentive\u00a0that prevents\u00a0private\u00a0sector\u00a0activity. Therefore if less tax is charged \u00a0as a percentage rate on each individual or company the amount they do increases so actually more is paid. This is the logic that underpins George Osborne's beliefs on tax - and most especially\u00a0corporation\u00a0tax.<\/p>\n

As a result the UK rate of\u00a0corporation\u00a0tax has been falling heavily:<\/p>\n\n\n\n\n\n\n\n
Tax year<\/th>\n2010<\/th>\n2011<\/th>\n2012<\/th>\n2013<\/th>\n<\/tr>\n<\/thead>\n
<\/th>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
Main rate of Corporation Tax<\/th>\n28%<\/td>\n26%<\/td>\n24%<\/td>\n23%<\/td>\n<\/tr>\n
<\/th>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

And as the Independent reported this month<\/a>:<\/p>\n

Last month Treasury receipts from VAT and income tax \u2014 which we all pay \u2014 rose by 6.4 per cent relative to October 2011. But corporation tax receipts \u2014 levied on the profits of the largest firms in the land \u2014 fell by 10 per cent on the same month a year earlier. In October companies poured \u00a37.8bn into the state's coffers, down from the \u00a38.7bn they handed over last year.<\/p><\/blockquote>\n

So much for the Laffer curve then.<\/p>\n

As I've always said: we're already on the upward sloping part of the Laffer curve. That means cutting rates means less tax. And as night follows day, that' s what is happening.<\/p>\n

So much for Laffer.<\/p>\n

So much for the right wing advocates of Laffer.<\/p>\n

So much for George Osborne.<\/p>\n

Now shall we have some plain common sense on this issue in future?<\/p>\n","protected":false},"excerpt":{"rendered":"

The Laffer curve is based on a simple claim. It is that when tax rates fall tax revenues will increase. That is because tax is
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