Evil Diaries: All this is quite interesting

The Labour party in the late seventies imposed a top rate of income tax of 98%. To nobody’s surprise, the economy was poleaxed by that and other lunatic poses. Many able people simply emigrated.

Thatcher’s first Chancellor, Geoffrey Howe, recognised that although 40% would be a sensible top rate in the longer term it would be best to stop at 60% on the way down. This worked.

Over the last forty-five years I have often discussed with taxpayers who are sufficiently lucky/able to face paying the top rate. 40% they will pay and, above that, they get jumpy. I suspect 40% is the top.

In practice, 45% (preceded by Gordon Brown’s 50%) was presented in the usual cack-handed manner which attends political decisions. As I lay flat on my back in ChelWest for five months some three years ago I was minded that the State should encourage doctors to work hard. In fact, doctors were retiring early to avoid the practical result that they had to pay to work (i.e. the tax rate was 100%+) because of the margin provisions. So 45% was never tested as the new practical marginal rate.

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The BBC’s journos are generally unable to handle financial matters. For instance, time and again, they would assert that HMG had spent £65bn in the gilts suppose operation last week whereas HMG had laid out that sum with every expectation of getting it all back. This is not expenditure.

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I was in touch with Tom Hayes over the weekend. The principal cause of our conversing is that he is back in the Court of Appeal in a fortnight’s time and may at very long last be found innocent. It would be too early to start celebrating but he must have a very good chance of succeeding.

Elsewhere he thinks Cable might top out at 113.5. My fat finger is fumbling with the sell button.

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I hold the lingering suspicion that during the prolonged PM selection procedure Truss declared for her “growth plan” since she thereby distinguished herself from Sunak who, acquainted with the gilts market and quite possibly better informed, preferred to keep the tax rates up where they were. Fortunately for Truss, the average member of the Conservative Party does not understand the gilts market and prefers to latch on to a hope plan at any price. This self-induced anaesthesia is all very well but it does not persuade the gilts market favourably. Sterling-expressed interest rates are still going up.

This is not bullish for UK-facing indices.