If you want the rich to pay more, create a flatter and simpler tax system. This is partly a question of closing loopholes (mansions put in company names to avoid stamp duty, capital gains tax exemption for non-doms etc). Mainly, though, it is a question of bringing the tax rate down to a level where evasion becomes pointless. As Art Laffer keeps telling anyone who’ll listen, it works every time. Between 1980 and 2007, the US cut taxes at all income levels. Result? The top one per cent went from paying 19.5 per cent of all taxes to 40 per cent. In Britain, since the top rate of income tax was lowered to 40 per cent in 1988, the share of income tax collected from the wealthiest percentile has risen from 14 to 27 per cent.
Art is right, it is an excellent policy measure, and a great way to ensure that the state gets a good penny from the rich for compensation of use of infrastructure, law system, etc. Simple tax system, reasonable rates, and the economy will prosper as state funding increases. I dont think that necessarily cutting the tax rates is necessary though - looking at examples like denmark and norway with massive GDP yet a solid amount of taxes to ensure low Gini score and good social welfare and justice.
That’s a very interesting artical. I think that the argument for at least a somewhat progressive tax system is very hard to beat so long as we assume that a state is necessary. If you are trying to abolish the state then you want it as flat as possible so that everyone feels the repurcussions state actions without having people blame everything upon the evils of regressive taxation.
There is one thing to keep an eye on from that statistic, however, the general wage rates of the rich have risen, so it’s natural that no matter what the tax rate, they are likely to still pay more. A greater deal of statistics are needed on the subject then simply that one.
