I'm reading Arthur Laffer's excellent book, The End of Prosperity - How Higher Taxes will Doom the Economy - If We Let It Happen and I'm struck by one particular passage on then Senator Obama. He was caught out last year when he said that he wanted to raise the level of Capital Gains Tax, even if revenues went down, because it was "fair".
Are we poised to do the same thing with a higher rate of top income tax and retreating from an inheritance tax cut because we want to look fair?
In the short run, revenues may rise a bit, but government will swiftly find that they will quickly drop off. Some of us still dare to think that there's plenty of room and public support for cutting public expenditure instead. As Roger Bootle said in the DT today;
"On the latest figures, while pay in the private sector was down over the year by 1.1pc, in the public sector it was up by 3.7pc. If you are employed by the public sector you don't know what recession is all about. No reductions in salary or disappearing bonuses; no worries about your pension; no anxiety about losing your job; no increased tensions at work because of the pressure. You just sail blithely on. Whenever I travel about the country I never cease to be struck by the depth of anger about this contrast. It is going to intensify.But this contrast will be temporary. For there will be yet another stage to the recession. As soon as the economy starts to recover, and maybe even before, the next government will have to bring in massive cuts to public expenditure programmes".
