Ed Balls' proposal of a 50p top tax rate has led to talk of a "disaster" or "suicide." This is silly hyperbole.

My chart shows why. It shows 30-year trend growth in GDP per capita, plus or minus a standard error. It'c clear that trend growth doesn't much change. "A bit above 1% before WWI, a bit below 2% since WWII with a lull in the interwar years" pretty much tells the story*. Growth is resilient to policy changes - perhaps because it is determined instead by technological opportunities. The idea that a tax tweak will cause disaster is historically ignorant.

To see why, let's assume that higher taxes do reduce labour supply. Let's say that the 50p rate causes Per Mertesacker (pbuh) to leave Arsenal. What happens?

Arsene Wenger does not decide to field only 10 men. He hires a replacement. The loss of GDP is therefore the difference between the BFG's salary and his replacement's. This will be small. It might even be zero; if the 50p tax rate deters footballers from coming to the UK, Arsenal will have to pay higher pre-tax salaries in which case the incidence of the top rate falls upon profits, not wages.

So, who loses in this case? The Exchequer might not; we might well be on the good side of the Laffer curve for footballers. And there's no loss of GDP - though there might be a shift from profits to wages.

Instead, the losers are Arsenal fans, who see a weakened team. But their loss is a gain for their rivals.

If the BFG isn't the only player to leave then fans generally will suffer a loss of consumer surplus from seeing worse football. If this reduces their willingness to buy tickets, football clubs will suffer. But GDP won't, as the fans spend their money elsewhere.

As go footballers, so go other employees. If the 50p tax rate causes Tesco's boss to leave, he'll be replaced. Tesco might lose from having to hire a second-rate CEO. But Tesco's loss will be Asda'sgain. And if many CEOs leave, we'll have worse-managed companies, but this might mean lower consumer surplus rather than lower GDP.

My point here is that productivity and hence earnings are properties of jobs, not individuals. If the jobs remain, any loss of income is small.

How can GDP fall, then? One possibility is that insofar as the incidence of the 50p tax falls upon profits, firms will have less motive and opportunity to invest. But this effect will be tiny. Another possibility is that the new CEOs, being second-raters, will be less able to innovate and expand. But again, this will be a small effect. And it might be non-existent, if the inferiority of the CEOs consists instead in their being less able to exploit workers effectively.

No. The way in which top taxes would reduce GDP is by either deterring entrepreneurs or driving them overseas. The former effect requires taxes to reduce effort - which might not be the case. And the latter ignores the many things that keep businesses in the UK, such as proximity to clients, a skills base or agglomeration effects. If top tax rates were important, the media would be worrying about migration to Bulgaria, with its 10% tax rate, rather than from it..

None of this is to deny that higher top taxes might have some disincentive effect - though some good work suggests they won't. It is just to note that there's no justification for talk of "disaster."

* We might note that growth was lower in the low-tax 19th century than it was in thr high-tax post-1945 period.