31 January 2011

Tax rates in Britain "could rise to 83%"

From a column at The Guardian today:
Nearly a million people will see their tax rates soar as the government's austerity package kicks in this spring, potentially to as high as 83%.

Analysis from the Institute for Fiscal Studies today reveals that changes in April will drag 750,000 people into the 40% tax bracket. Meanwhile, little-publicised tax credit cuts will push the marginal rates of 175,000 working parents up above 70%. In theory, effective tax rates in Middle Britain could reach 83%, the rate that Labour levied on Britain's top earners before 1979...

This is on top of the extra VAT which families at all income levels have been paying since the start of the year....
Not to mention the austerity-related cuts in public spending. Some lessons for the U.S. here, for those willing to learn.  More at the link.

1 comment:

  1. Austerity measures have hit Portugal quite hard as well. My wife, a professor at a state university, just took a 9.2% pay cut. This cut is universal across all public employees in our salary bracket. Combined with the 2% increase in VAT (which now sits at 23%), our purchasing power has nosedived.

    What really hurts, economically, is the knowledge that at no time in the future is the Portuguese government ever going to say, "Okay, we're all fixed now, here's your 9.2% salary increase to get you back to where you were." That income is lost forever. For a person at the very beginning of her professional career (my wife just became a full professor two years ago), that represents lost income of tens of thousands, and will in turn affect our retirement.

    Cutting a deficit and balancing a national budget hurts everyone except the rich. (Although it's hurting the rich over here in one way: they're having a hard time selling their yachts.) At some point, this pain will have to hit the US. Having sent its manufacturing jobs overseas and concentrated its economy in the financial sector (which benefits only a handful of wage earners), the US cannot grow its way out of the deficit this time. But it's political suicide to admit this, so the day of reckoning keeps getting put off -- and the Bush tax cuts are actually extended.

    When the hurt comes, it's going to be big.


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