UK Raises Personal Tax Rate to 50%

From ClusterStock

London is burning, with the UK facing the most serious economic downturn in generations. So what is the response of the British government? Raise taxes to shockingly high levels.

The BBC is reporting that UK chancellor Alistair Darling is proposing to hike taxes all the way up to 50% for anyone earning more than £150,000. That tops the 45% rate Darling indicated in a pre-Budget report last year. The UK is struggling with falling tax receipts due to the economic slow down while spending to combat recession and its effect increases.

One question: which economic theory tells you to announce a giant tax hike in the midst of a recession?