The recent Tory backdown on cutting taxes, especially the highest rates, sadly came as no surprise to me, even though the wind and noise generated by new Tory PM Liz Truss, was an impressive change from the Green world of Boris.

After several days of the markets shitting themselves over the increased debt and various other forecasts, Liz backtracked. Obviously the Supply Side arguments that worked for Reagan in the early 1980’s – no direct spending cuts to compensate, with economic growth spurred by the tax cuts doing the job instead – did not work this time. Perhaps the Conservative Party, which the Financial Times somehow ridiculously thinks is now the most right-wing party in the world, didn’t support the tax strategy, and threatened Truss’s tenure as PM? It’s what did Thatcher in at the end.

But let’s compare these Massive Tax Cuts to other things that cost the government money.

Oh yeah, that’s some blow to fiscal stability.

Gerard Baker summed it up well in the Wall Street Journal:

You probably wouldn’t have guessed that, after these measures, the size of the U.K. tax burden has gone all the way back to what it was in 2021. . .

Try to shave a little off tax to improve incentives for work and investment and raise Britain’s abysmal productivity, and you are cast by the vast army of U.S. and international financial bureaucrats, socially conscious asset managers and media organizations as a heartless Hayekian tyrant, kicking away the crutches that keep Brits from being consigned to the poorhouse. . .

The wider message for conservatives everywhere: Any effort to depart from the trajectory of expanding government will be met with fierce resistance. Flinch and watch as the ratchet moves higher.

That laughter you hear in the background is me looking at the ACT posters that are already up: Real Tax Cuts.

And as for that Ratchet of State Power, I was amused by this from Guido Fawkes:

“I always knew that it was going to be a political problem. I mean, let’s be honest, this was a political trap that was set by Gordon Brown in the dying days of his role as PM, right. And I paid the 50% tax. I was in business then. And I remember how devastating it was because actually, it meant you were paying about 65% tax. And there’s something in your mind, which is like, really, you know, only 35% for me? And I’m doing all these hours. I was a business person, then it was set as a political trap…. In theory it [the top rate of tax] should never have been there.”
– Foreign Office Minister Gillian Keegan 

A bomb designed to blowup David Cameron twelve years ago finally exploded. As Guido points out, the additional laughter you can hear is that from Gordon Brown.

 Even the IFS’ Paul Johnson thinks in revenue terms “It might plausibly cost nothing at all”. The tax was not about raising revenue – it was about political positioning.

Stop laughing. What do you think Labour’s 39% income tax rate on those earning $180,000+ was really all about here in NZ?

I very much doubt that Liz has this poster anywhere near her.

Nor is she probably aware of this speech by Thatcher to the Conservative Party conference in 1980:

It isn’t the State that creates a healthy society. For when the State grows too powerful, people feel that they count for less and less. The State drains society not only of its wealth but of initiative, of energy, the will to improve and innovate, as well as to preserve what is best. But our aim is to let people feel that they count for more and more. If we can’t trust the deepest instincts of our people, we shouldn’t be in politics at all. . .

To those waiting with bated breath for that favorite media catchphrase the “U-turn,” I have only one thing to say: You turn if you want to: The Lady’s not for turning.