As debate continues over whether the top rate of income tax should be reduced from the current level of 50 per cent, I'm reminded of 1988 when the then chancellor Nigel Lawson cut the top rate from 60 to 40 per cent. Part of the justification put forward by commentators at that time was that the reduced rate would in fact raise more revenue, since it would remove the temptation to find ways of avoiding payment.
'I like that argument, but it isn't true,' said Lawson. 'More tax would have come from the top one to five per cent in any case because the salaries of the top earners have been put up so enormously. But still, let's go on using the argument.'