The Dead Hand of Government Intervention

Recovery from the recession is slow world-wide, particularly in socialist Europe.  Now the opposition Labour Party in the U.K.  proposes a new tax to redistribute wealth - give the poor a leg-up as they say.  Essentially the tax would take 50% of all income over 150,000 pounds earned by individual tax payers.  Talk about regressive!  Why can't these economic geniuses understand that wealth is not finite - it has no limit beyond the innovation, good business practices and positive energy of wealth creators and entrepreneurs.  Wealth is not a pie where the rich 1% own or control 70%, 80%, 90% or whatever, while the masses shudder in their poverty.  In fact, consumer economies depend on the upward financial mobility of the people to be successful. That's what grows the pie!

Time after time, history has shown that higher taxes hurt revenues and they hurt the economy.  But the siren-song of entitlements and redistribution continue to seduce like a magnet- enchanting even good-intentioned people to destroy the very fabric of success.

Thankfully, in the U.K. ,  even Labour supporters see the error of this folly.  Lord Gulam Noon, British peer and Indian born curry tycoon worth 45 million pounds, donated 760,000 pounds to the Labour Party.  Yesterday, Lord Noon called the announcement "terrible".  "There are other means to augment the Treasury not by penalizing the business community, which is already hard-pressed.  Any tax going up is not an incentive - it's a disincentive."  Another rich Labour supporter, Sir Maurice Hatter, said raising the top rate of tax was "a stupid message to send..... it's bull, a bad move".

A 50%  top rate would put Britain above most countries in Europe, including Germany.  It would encourage entrepreneurs and wealth creators to find "loopholes"  and tax-evasion schemes and it would discourage chief executives of multinational firms from locating their corporate headquarters in the U.K.   And for those doubters here is one indisputable fact:  in 2013,  the top 1% will contribute 29.8% of all income tax collected by government, up from 26.9% last year.

As one British newspaper (Sunday Times)  succinctly summarized:  "Take care, anybody in business, because the dead hand of intervention and state control could descend"  (if  Labour gets into power and raises the individual tax rate to 50%.