November 28, 2012

Idiotic tax policy

Over in Britain, they have been trying to soak the rich for ever increasing taxes. How did that work out?

Two-thirds of millionaires left Britain to avoid 50p tax rate: "In the 2009-10 tax year, more than 16,000 people declared an annual income of more than 1 million to HM Revenue and Customs.
This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than 1 million has risen to 10,000."

So to recap for those of you who actually believe that raising taxes on rich people leads to more revenue:

1. Britain raises the top tax rate to 50%
2. Ten thousand rich people fled Britain to avoid said tax increase
3. Lowering the rate to 45% either magically created four thousand rich people or the ones who fled ran the numbers and it made sense to come home again
4. The net loss of tax revenue was on the order of 7 billion pounds.

This is the same idiocy Chairman Zero has decided will work here somehow. If I were a younger man I'd be heading out for all those offshore tax havens that are about to see billions of dollars pouring in.

Posted by Duffy at November 28, 2012 03:15 PM | TrackBack

Comments  (We reserve the right to edit and/or delete any comments. If your comment is blocked or won't post, e-mail us and we'll post it for you.)

It is doubtful that 10,000 people actually left Britain. They most likely just reduced their workload (and therefore earnings) so as to dodge the new rate.

Posted by: Jeff the Baptist at November 28, 2012 03:40 PM

I've certainly reached the point where I don't begrudge millionaires for putting their money in offshore tax havens, since the government wastes so much of our money on things that don't matter. Hell, if I was rich, that's something I'd consider doing because I think people are entitled to have more of their hard-earned money.

Posted by: Carl at November 28, 2012 03:41 PM

I wonder when the government will decide to start taxing currently tax-free investments like munis and UITs

Posted by: Arthur at November 28, 2012 04:32 PM

Pretty soon we'll be hearing about millionaires leaving America for offshore tax havens. What dolts like Obama fail to understand is that the rich can get up and leave whenever they want to; they can afford to so. They can go to countries that allow them to keep their money and have lenient tax laws.

Posted by: Carl at November 28, 2012 05:26 PM

@Carl: More likely they changed their primary residence to an offshore site. The way that people who are very wealthy will have a house in Florida and make that their primary residence even though they live in NYC. It's very difficult for the IRS to prove you were not there for more than half the year.

Also, many shift their income to investment based income. If you own your own business you can easily change your salary down and declare the rest as business profit and thereby avoid the taxman.

Posted by: Duffy at November 29, 2012 11:44 AM