Labour Party leader Jeremy Corbyn aims to become Britain’s next prime minister following the Dec. 12th general election. But where incumbent Boris Johnson is campaigning with promises of populist conservatism, Corbyn is offering the most socialist platform in 35 years.
I am not exaggerating. Judging by his official campaign manifesto released on Thursday, Corbyn doesn’t simply want to pare back the free market, he wants to suffocate it under a supremely powerful government. Consider some of the details:
On spending, Corbyn proposes to increase annual government outlays by a staggering $103 billion per year by 2023-2024. Were that spending hike applied to U.S. federal spending on a U.S.-U.K. GDP proportional basis, it would mean an additional $740 billion annual spending. That’s what we’re talking about here: A truly vast expansion of the state. But leaving no doubt as to his intentions, Corbyn proposes to renationalize vast sectors of the economy, including rail, utilities, the postal service (which has performed better under privatization), and broadband internet services.
So how to pay for it?
Well, for individuals, Corbyn would increase the tax rate on earnings over $161,400 to 50%, and lower the threshold for 45% rated income tax from $187,200 to $103,300. This means a tax bill of thousands more for families up and down Britain. But that’s just the start of Corbyn’s plan to pummel working-class people. The Labour leader also says he’ll introduce a tax surcharge on second homes, cap residential rent increases to inflation, and tax capital gains at income tax rates. A recipe for the annihilation of investment and entrepreneurial opportunity.
This is mad enough, but it gets crazier. Businesses that face the worst of Corbyn’s socialist wrath.
Corbyn would reverse planned corporate tax rate cuts from the current level of 21%. Instead, he’ll bring in a 26% corporate tax rate. Britain’s Institute for Fiscal Studies, a widely respected and bipartisan think tank, observes that this is an “enormous increase in the amounts they want to raise from corporation tax. If their proposals did raise the sums they suggest, then we would be raising more in corporation tax, as a fraction of national income, than any other country in the G7, and more than almost anywhere else in the OECD. This would clearly come with substantial risks. The truth is, of course, that in the end corporation tax is paid by workers, customers, or shareholders so would affect many in the population.”
That simple analysis cuts to the heart of the issue here: corporation taxes, in the current globalized economy, are a very fine way to raise goods and services prices, increase corporate barriers to entry, and force companies and jobs offshore. In short, raising corporation taxes is a very stupid thing to do.
There are other gems from the manifesto.
Corbyn says he’ll prevent necessary increases to social security eligibility and greatly increase welfare benefits. That obviously appeals to many voters, but with Britain’s population aging, it will add what the IFS expects to be “around $31 billion per year to the cost of state pensions by the late 2050s.” Again, remember that Britain’s economy is roughly seven times smaller than the U.S. economy.
This is an effort to turn Britain into a freer version of Cuba. But the IFS assessment of its prospective effect is clear: it would “push the tax burden well above levels sustained in the U.K. since the Second World War.”
