Arthur Laffer warns UK may be 'taxing itself to death'; columnist outlines the signs

# What Laffer said and why it matters Arthur Laffer, inventor of the Laffer Curve, has publicly warned that the UK risks "taxing itself to death." Hamish McRae summarises Laffer's argument and sets it against recent British tax policy and revenue trends ahead of the October Budget.

# The basic argument: where the UK sits on the Laffer Curve

The article reports that Laffer believes the UK may now be at or beyond that peak. He uses anecdotes about wealthy people relocating or using expensive advisers to avoid higher taxes, causing the taxed base to shrink.

# Concrete evidence cited in the article

• Top income tax: The UK's top rate is 45%. The top 1% of earners supplied 30.7% of income tax receipts in 2020–21 but fell to 26.6% in 2025–26, a decline cited as a sign of behavioural response.

• Stamp duty on shares: Receipts peaked at £4.8bn in 2000 and are around £4.32bn now, a real-terms fall according to the article.

• National Insurance: A recent increase attributed to Rachel Reeves brought in roughly £25bn a year, but the article links it to higher prices and an estimated 100,000 lost jobs.

# Fiscal context and policy choices McRae notes the government is facing borrowing above target, and higher gilt yields combined with higher inflation make more borrowing difficult. That narrows policy choices for the Chancellor, John Healey, and raises the likelihood of tax rises or spending cuts in the upcoming Budget.

The article presents two policy tensions: raising taxes to meet fiscal needs versus avoiding rates that provoke behavioural responses that shrink the tax base. Advisers such as Claritas Tax are reported to think the UK is at the top of the Laffer Curve and could see receipts slide.

# Behavioural responses highlighted Laffer's anecdotes focus on relocation (wealthy individuals moving to lower-tax jurisdictions), avoidance via advisers (lawyers and accountants), and corporate relocation or structuring. The article names recent high-profile moves as examples of this dynamic.

# What the author suggests next McRae says he does not know what the October 28 Budget will contain but suggests the Chancellor should at least consider Laffer's view — he even quips that Healey should invite Laffer to lunch.

# Bottom line The article compiles recent revenue and behavioural signals to argue that further tax hikes risk backfiring by shrinking the taxable base. It stops short of definitive proof but frames the Budget choices as constrained by both fiscal needs and the possibility of perverse revenue effects if rates go higher.