With all the due respect, Kindermann and Krueger fail to see the effects of the extremely high income tax rates on the British economy in the pre-Thatcher period:
The highest rate of income tax peaked in the Second World War at 99.25%. It was then slightly reduced and was around 90% through the 1950s and 60s.
In 1971 the top rate of income tax on earned income was cut to 75%. A surcharge of 15% kept the top rate on investment income at 90%.In 1974 the cut was partly reversed and the top rate on earned income was raised to 83%. With the investment income surcharge this raised the top rate on investment income to 98%, the highest permanent rate since the war. This applied to incomes over £20,000 (£181,858 as of 2014). In 1974 750,000 people were liable to pay the top-rate of income tax.
Margaret Thatcher, who favoured indirect taxation, reduced personal income tax rates during the 1980s. In the first budget after her election victory in 1979, the top rate was reduced from 83% to 60% and the basic rate from 33% to 30%. The basic rate was also cut for three successive budgets - to 29% in the 1986 budget, 27% in 1987 and to 25% in 1988. The top rate of income tax was cut to 40% in the 1988 budget. The investment income surcharge was abolished in 1985.
... and this was the outcome:
So much for confiscatory tax rates.