The negative effect of the 50% tax rate

Last night I was listening to the Aston Villa v Arsenal game on Radio 5 Live. The commentators observed the lack of effort made by the Russian player Andre Arsharvin and made the point that he stopped trying when then 50% tax rate came in. Apparently he is on record as saying that it is a major disincentive and he wants to move in the January transfer window to a lower tax country.

It's hard to feel any sympathy with such a highly paid player, but it does neatly illustrate the point about how much a disincentive 50% tax is - and of course it's not really 50%, but 52% when you take into account the NIC.

Keeping 48% of what you make is never going to incentivise anyone.

It's no surprise that economic growth is sluggish when there is no incentive to grow your business.

Instead of our economy getting 40% of Arsharvin's wages, we are now going to get nothing and someone else's economy will benefit instead.

It makes no sense.

Tax rates need to be reduced to stimulate the economy.

Maggie Thatcher proved that in the early 1980's when she reduced Labour's basic rate of tax of 34% and look what happened - we had a boom all through the 1980s!!