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The Necessity of Raising Taxes

John on December 10, 2009 at 7:42 am

Meant to post this in the am, but didn’t have time. Not unlike our situation here in the US, the Labour government in the UK has presided over a terrible economic downturn combined with record setting deficits amounting to as much as 12% of their GDP. Not surprisingly, the way out of this mess is going to be through higher taxes:

In what the Tories branded a ‘pre-election report’, the Chancellor slapped a 50 per cent ‘super tax on bankers’ bonuses, affecting all payouts above £25,000.

An extra tax on big bonuses…sound familiar?

And he revealed thousands more high earners would be clobbered through tweaks to the 50p top tax rate, which will now be widened to include pensions as well as pay.

Middle-earners also stand to lose out thanks to National Insurance rises. Contributions will go up by 1 per cent for all workers earning more than £20,000 a year from 2011, with those on more than £44,000 a year facing a second hit on their pay above that threshold.

That’s an increase in health insurance rates. Their system is exactly the kind liberals in Congress want us to emulate here.

In proof of the drastic action needed to re-balance the public finances, the Chancellor was forced to announce a 1 per cent pay freeze for the public sector.

A freeze on public sector raises, but notice no cuts.

Heavily-trailed green measures, including a scrappage scheme for inefficient boilers and a £900 tax-payout for homeowners with wind turbines and solar panels, were also unveiled.

Instead of “Cash for Clunkers” the UK is doing Buck for Boilers.

Jonathan Loynes, chief European economist with Capital Economics, said the Chancellor’s speech was ‘largely a non-event’ in addressing economic recovery and the dire state of the public finances…With the general election only six months away, this was always likely to be largely a holding operation. A much bigger fiscal tightening is still likely to be unveiled after the election, whoever is stood at the despatch box.’

In other words, much higher taxes to come. We can expect the same thing here in the US before long. All those promises Obama made not to raise taxes have been overwhelmed by stimulus and health reform spending.

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Category: Energy & Economy |

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