U.K Tax Increase of 25%: A Sign of Things To Come?
Posted by Larry Doyle on April 22, 2009 1:36 PM |
If you think things are challenging here in the U.S., be thankful you do not currently live in the United Kingdom. Given the massive deficits in both countries, the debts are already sizable and GROWING.
How does an individual, a company, or a government pay a massive debt? Pay it, borrow more, decrease headcount, scale back services, and increase the price of admission–as in higher taxes!! Actually, most private and public entities are utilizing a combination of these tactics – if not all of them – to combat outstanding debts.
In the face of rising deficits and soaring government spending globally, we are also witnessing significant social frustrations. The frustrations here in the U.S. were evidenced by the number of Tea Parties on April 15th.
Across the pond in the U.K., the deficit relative to GDP is off the charts. Some have speculated that the U.K. may need financial assistance from the IMF. Before the Gordon Brown led government does that, though, it will utilize all the other tools in the bag. To that end, the tax rate on the upper income will be increased by 25%, from a 40% level to a 50% level!! That increase is being accelerated from a 2011 implementation to 2010. A U.K. government promise of “no new taxes” just went the way of George H.W. Bush.
The BBC sheds light on the massive fiscal problems facing the U.K., Tax Rise As U.K. Debt Hits Record.
While I thought our fiscal problems were bad, the current U.K. fiscal situation is a nightmare. Given the similarities in our fiscal policies, is the current reality in the U.K. a sign of things to come here in the United States?