Sara Luder (Slaughter and May) explains why politicians should think carefully about the consequences of proposed tax changes
As we move closer to the general election we will undoubtedly see the manifestos of major political parties proposing new tax rules to encourage changes in behaviour. Perhaps businesses could be encouraged to make long term investment in infrastructure or individuals encouraged to provide for their retirement. To what extent can tax rules be successful in changing behaviour and are the changes always those that were intended?
It is generally accepted that there is not a linear relationship between tax rates and tax revenues. The Laffer curve beloved of US Republicans represents how both a 0% and a 100% tax rate generate zero tax revenues...
