TaxAdministrationThink tank says taxing rich is ‘counter-productive’

Think tank says taxing rich is ‘counter-productive’

The Institute of Fiscal Studies says increasing tax for the rich is unlikely to raise extra revenue

The Institute for Fiscal
Studies
says fresh ‘albeit tentative’ evidence has revealed ratcheting up
income tax rates for those earning more than £100,000 is likely to be
counter-productive.

The latest IFS study calls for a radical makeover of Britain’s tax credit and
benefit system, noting tax cuts are needed for low income earners, who face weak
work incentives, the Financial Times reports.

Mike Brewer of the IFS told the FT that raising tax rates for the
highest income earners was likely to lead to less returns as the higher taxes
stopped them from working as hard and encouraged them to go abroad or to engage
in more aggressive tax planning.

The research was commissioned by the Mirrlees Review of the British tax
system, chaired by Nobel Prize-winner Professor Sir James Mirrlees for the IFS,
but its conclusions may not necessarily be adopted in the final report.

Further reading:

Darling’s Budget leaves only £2.8bn leeway

Think tank warns govt risks breaking debt rule

Read
story in the Financial Times

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