Conclusion
So in 2011 (after another general election) we will start repaying this extra debt by increasing the amount of tax paid by richer people. That all seems fair enough but this is hardly the first time an increase in the redistribution of wealth has been proposed as the solution to society's ills.
The eternal problem with increasing the tax burden on the rich is that this also increases the incentive for them to find ways of avoiding paying it.
The search for the rate of tax that will yield the highest possible revenue is illustrated by the ‘Laffer curve' model. It could be that, in the pre-Bankageddon political climate at least, we had already reached optimal taxation levels and any attempt to tweak them could backfire.
It will be interesting, however, to see if the failure of the private sector, in the form of the banks, has precipitated a general leftward lurch in political sentiment in the West. Redistributionist political policies will have to receive greater popular support than they have in the past if they're to achieve their stated aims.
We would like to know what you think of this move. As a consumer are you more likely to spend as a result of the reduction? Do you think this will have a beneficial effect on the overall economy? Do you think the government's plans for repaying this increased debt are well conceived? What would you rather see the government doing to help us? Let us know in the HEXUS.community.
