Now I wonder why they looked at the USA when the proposal being made here is that CGT be changed so that it is paid at the taxpayers highest marginal income tax rate.
Nigel Lawson did that in 1988. As a result we have a case study on whether it worked or not reasdilty available.
The stats are here.
The yield rose by 68%.
Odd that the Adam Smith Institute didn’t spot that.
Do, please, look at those stats.
1) They are not inflation adjusted.
2) Anyone remember what else happened in 1988/89? No? How about the peak of the Lawson Boom?
Yes, how remarkable, CGT revenues rose in a boom.
Now, let us have a closer look. CGT revenues in 1987/8, the tax year before the rise in CGT rates, were £1,379 million. In 93/4 they were £710 million.
That may be many things (for example, the effects of booms and busts upon CGT revenues) but it most certainly ain’t an example of a sustained rise in CGT yields from a rise in CGT rates.