Back in 1980, as Britain’s economy fell into steep recession along with much of the rest of the world, recently installed prime minister Margaret Thatcher came under fire for her policies of spending restraint and tax cuts. Much of her own party wanted her to backtrack, never mind the opposition Labour Party and the media. It was in the midst of this that the “Iron Lady” lived up to her name, declaring at a Conservative Party conference that “The lady’s not for turning.”
One wishes that new prime minister Liz Truss was similarly resolved. Last week the financial community threw a fit over Truss’s plans to cut income tax rates. Even Joe Biden (or one of his ventriloquists) joined the pile on:
Yesterday the Truss government backtracked, canceling part of its proposed rate reduction. 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 was a front- and back-bench rebellion against Thatcher that ultimately did her in back in 1990.
But how great a blow to fiscal stability was the proposed income tax rate cut? This chart from our friends at the Committee to Unleash Prosperity puts it into perspective:
Gerard Baker sums up the scene in the Wall Street Journal this morning:
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.
Let’s hope we still get more of this Truss from here on out:
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