⚠️
CONTESTED ESTIMATE
Significant methodological disputes. View caveats below.
💰Fiscal
Laffer Curve Tax Cuts
Upfront
£0m
Annual
-£45.0bn
Revenue
+£7.5bn
Net Annual Effect
-£37.5bn/year
GDP +2%Productivity +0.4%very high uncertainty
UNCERTAINTY RANGE (Annual Net Effect)
Most Pessimistic
-£60.0bn
⟷
Most Optimistic
-£20.0bn
⚠️
MAJOR CAVEATS
- •Static vs dynamic scoring contested: OBR uses static, but 2024-25 receipts below forecast after tax rises
- •Laffer curve position uncertain: record millionaire exodus (UK now global leader) and non-dom flight suggest behavioural response stronger than models predict
- •Elasticity assumptions vary widely: academic models (0.1-0.3) vs observed capital flight response
- •International evidence mixed: Ireland corporate tax success, UK 50p rate underperformed, Kansas cuts failed (context-dependent)
- •Transition costs real: static cost £40-50bn/yr requires offsetting measures or borrowing
- •Counter-evidence: UK highest tax burden since 1948 correlates with stagnant growth, not revenue maximisation
4 sources