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( 2 comments — Leave a comment )
andrewducker
Mar. 11th, 2011 08:46 am (UTC)
Okay, so if we're pulling in more tax than most other countries, what the hell are we spending it on that we also seem to have a higher deficit than most of them?
philmophlegm
Mar. 11th, 2011 09:34 am (UTC)
Ah - we're not talking about total tax revenue here or even average tax rates, but _marginal_ tax rates. That is, how much tax people would pay on an extra £1 of income. High marginal tax rates act as a disincentive to increased economic activity (why bother working more if the extra mostly goes in tax).

Britain's high marginal tax rates are a result of a) sharply higher tax rates at higher incomes b) largish personal allowances and c) wide gaps between the tax rates.
( 2 comments — Leave a comment )