LOWER top tax rates are associated in the minds of many people with higher rates of economic growth: stop penalising success, goes the argument, and the economy will soar.
That was the rationale behind the steep cuts in top personal income tax rates in America and Britain in the 1980s setting off a trend which has since swept the world.
Economists are not so sure about the relationship between these two things: America’s economy grew strongly in the 1920s and 1960s, when top rates were high.
It fared better in the 1990s, when top rates increased a bit, than in the 2000s, when they declined. Whatever the relationship, it seems likely that this trend towards ever lower top rates of tax is now over, and may even be about to go into reverse.
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