As a dog returneth to his vomit, so a fool returneth to his folly.
– Proverbs 26:11 (HT: Bible.cc)
One of the first things new British Prime Minister David Cameron did in order to fix Great Britain’s recent economic problems was to tax the rich. He raised Great Britain’s top tax rate to 50% and his economists predicted that this would raise an extra billion pounds of revenue per year from the HATEFUL1%™. The Telegraph UK describes how this worked out below.
The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period. (My Bolding)….It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.
When asked just how he would address this 1.5£Bn miss on their revenue targets, David Cameron brings to mind my biblical quote above of Proverbs 26:11. One of his mouthpieces explains their resolute intent to ride into this leftwing populist dung heap all the way up to the tops of their spurs. Perhaps our “Conservative” Prime Minister should Atlas Shrugged to his pile of books by the nightstand.
senior Government source said last night: “This is not now something we are moving on any time soon.” Another source said: “We are repeatedly emphasising the need for those with the broadest shoulders to do more….So we can hardly turn around and start cutting taxes for them first. George [Osborne] said last year, that it was not the time to scrap the 50p rate and that is even more the case now as the economic situation has deteriorated.”
Meanwhile, across the Bloody, Old Pond, we have a Presidential Budget submission that not only matches Prime Minister Cameron’s egregious stupidity, but also raises it several negative IQ points worth of collateral damage to American retirees. The Wall Street Journal tells us just how President Obama intends to stick to it The Man.
Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today’s 15% rate. Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.
The Obama tax hike is specifically targeted towards individuals making $200 or more per year; $250K for married couples. Yet, the recent histories of dividend income totals suggest that it is highly sensitive to tax rates. The more dividends get taxed, the fewer corporations pay them out. The corporations return cash to shareholders through stock repurchases instead.
But “!So what?!” Harry Waxman would loudly ask. This just hits the HATEFUL1%™. It’s like that Buffet Tax that won’t quite buffet anybody named Warren. Actually, Nostrildamus, most dividend income goes to retires. According to the IRS, ¾ of that income goes to people older than age 55. And not only that, anything that reduces the overall value of equity as an asset class; also reduces the economic value of every share of stock held by the general public. This tax does for stock holdings what the recent MBS meltdown did for our housing values.
So never you mind that 51% of all Americans hold common stock personally, or through their retirement plan. Forget that the smart money would be selling this as fast as HFT algorithm could compile and execute. We’re all about taxing HATEFUL1%™. And if other people get hurt in the process, keep in mind the old, dark humor espoused by the Field Artilleryman concerning collateral damage from indirect fire: “(Bleep) ‘em if they can’t take a joke!”