With today's budget, there is little to be gained from rising taxes.
History points out that there is a point where rising taxes shrink the economy and increase evasion and avoidance reducing the total tax take.
American economist Arthur Laffer, came up with his Laffer Curve.
It shows that at 0% tax you raise nothing and at 100% tax rate you also raise nothing because no one works!
In the middle is a point beyond which raising taxes actually pushes tax revenue down.
Here is the thing, in the UK the highest tax as a percentage of GDP was 38.2% in 1982. The lowest was 31.8% in 1993.
The average is around 36% of GDP.
With public spending at around 50% of GDP, whatever George Osborne does today, it is impossible to raise taxes to 50% of GDP to cover current spending.
This means forever borrowing!
