Wintery Knight

…integrating Christian faith and knowledge in the public square

Two-thirds of British millionaires disappeared after income tax increase on the rich

What happens when you “tax the rich”, like Obama wants to do?

The UK Telegraph explains what actually happens when you tax the rich.

Excerpt:

Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.

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.

[...]Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.

Similarly in France, with their Socialist leader’s 75% top tax rate: (worse than Obama!)

A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say.

“It’s nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market,” said managers at Daniel Feau, a real-estate broker that specialises in high-end property.

[...]While the Socialists’ plan to raise the tax rate to 75 percent on income above 1.0 million euros per year has generated the most headlines, a sharp increase in taxes on capital gains from the sales of stock and company stakes is pushing most people to leave, according Didier Bugeon, head of the wealth manager Equance.

French entrepreneurs have complained vociferously against a proposal in the Socialist’s 2013 budget to increase the capital gains tax on sales of company stakes, which they argue will kill the market for innovative start-up companies in France.

Entrepreneurs in the high-tech sector in particular often invest their own money and take low salaries in the hope they can later sell the company for a large sum.

They say a stiff increase in capital gains tax would remove incentives to do this in France. They also argue that capital has already been taxed several times in the making.

Rich people are not stupid. If you change the rules of the game, they make adjustments. Why on Earth would anyone keep working as hard as before when the government takes more of what they earn and gives it away to left-wing special interest groups? You either stop working as hard as before or you leave the country entirely. Rich people are not our slaves.

We let people keep the profits they make so that they will risk their capital and try to invent new things and create jobs. If we don’t let them keep their profits, then they will not save, invest, take risks and create jobs. People who depend on “Obamaphones” don’t create jobs. Only rich people do. And the more you tax the rich, the fewer jobs you will have. That’s the way the world really works. Taking money from those who work and giving it to those who don’t sounds “nice”, but it doesn’t actually help the poor. What helps the poor is having a job, not giving them free stuff paid for by others who work. You should not be able to make more money by not working than by working in this country, either.

Remember what happened when Reagan and Bush cut taxes? Massive drops in unemployment and higher revenues from taxes.

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19 Responses

  1. “We let people keep the profits they make so that they will risk their capital and try to invent new things and create jobs. . . . . And the more you tax the rich, the fewer jobs you will have. That’s the way the world really works.”

    Well put. As I think Mitt Romney used to say, if you punish success, you will get less of it.

    What always gets me is when liberals inconsistently try to deny this principle. It is universally known in general that if you tax something, you get less of it; liberals are perfectly happy to acknowledge this fact when it suits them. (E.g., they wanted “cap and trade” to tax carbon emissions so that we would get less of them; states tax cigarettes to discourage smoking; etc.) Likewise if we tax work, earning, or wealth creation, naturally we’ll get less of it.

  2. I’m a fiscal libertarian.

    With that said…have you ever heard of horse and sparrow economics? We call it “trickle down” now. It didn’t work back then either.

    But since high taxes are bad…can you explain why exorbitantly high top tax rates coincided with the strongest growth in US history?

    http://www.nytimes.com/2012/11/19/opinion/krugman-the-twinkie-manifesto.html?_r=0

    • Can you explain why in the seventeenth century, when there was no gasoline tax, there was nevertheless so little global warming?

      • You said, “can you explain why exorbitantly high top tax rates coincided with the strongest growth in US history?” You’ve already answered yourself—they coincided, you observed a coincidence of these two things. You’ve taken two variables, out of all the complexity of an ever-changing world, and correlated them. That’s fine, but were you trying to prove something about causation?

        If you’re willing to use abstract reasoning (which I think is the only option for answering a question like this), and you want to argue that (all other things being equal) taxing earning will not result in less of it, then you should explain why you imagine that the normal rules don’t apply here, or alternatively explain why you don’t even believe in the normal rules in general (the more you tax something, the less of it you get, all other things being equal).

        If you insist on simplistic empiricism (when all other things are necessarily not equal), then I’m just pointing out that that kind of argument can “prove” all sorts of things—that taxing carbon emissions doesn’t result in less of them, for example. Or, as a friend of mine once said,

        As long as we’re debunking theories, I’d like to disprove the myth that tobacco use is linked to shortened life expectancy. Average life expectancy in Norway is approximately 80 years, while Ethiopia and Ghana—each of which has a much lower rate of tobacco use—have average life expectancies of 53 and 60, respectively. Case closed.

        If this still leaves you confused, I would next refer you to “Professor Tevyeh” for a brief introduction.

    • For further reading, I think you’ll both be interested to see this:

      “Peer-reviewed Academic Studies: More Taxes, Less Prosperity”

      https://enjoymentandcontemplation.wordpress.com/2013/01/18/peer-reviewed-academic-studies-more-taxes-less-prosperity/

    • Tom says:

      Citing facts from an opinion column is really not a good way to prove a point. Neither is comparing the economy of the 1950’s to today’s economy. In the 1950’s most of the jobs were from manufacturing and today, well lets just say that isn’t so. Facts are facts and the facts are this. In today’s societies when taxes are jacked up high on the highest earners these earners are moving. In 1955 if you owned a business in CA and it made you over a million a year, you could NOT just move yourself and it to another state or country. Today since most companies in the US are NOT manufacturing and with technology allowing you to work from any and everywhere, you can move your company and yourself and even do it pretty darn quickly. Look at CA’s lose of high earners, an actor can live anywhere they want and then just ‘work’ on set as needed. Tech jobs are the same way. What will all the liberal tax the rich morons say when CA is totally broke? Not that it isn’t already, but I mean when it can’t even pay its state workers, keep the parks open or give away all those free goodies to those that don’t work? I know what I say, maybe then TX can buy CA for real cheap, Hahaha. France is on the downward dive with rich folks leaving, the UK saw 2/3 leave in a year. The world is not the same as it was in 1950. The lucky places will be those that are realizing how to attract those that work hard and earn a lot, the unlucky people will be those stuck in the places like CA and soon the US.

    • mark says:

      The simple answer is…and nobody ever says this…is that the tax RATES were high the tax PAID was low. Well, how can that be? Simple, there were massive deductions. Period. Nobody ever paid those rates and the suggestion that the rates coincide with strong growth is deceptive at best

  3. Jason says:

    You mean the “Clinton” boom of the late 1990’s (which he always claimed to be the longest period of economic growth and expansion in US history. President Clinton seems to forget the period from 1948-til about 1973). Nobody remembers the Republican victory in the House and Senate in 1994. Nobody remembers Clinton being “dragged” to the table because his polls were so low in 1995, he gave in to many of the Republican requests and then made them his “own” in 1996. Nobody remembers that tax increases came later in his second term, and thus the dot-com bust shortly thereafter (May 2000). Nobody remembers that small businessmen built most of the public Internet (not Al Gore, like they are teaching in California public schools now). Nobody seems to remember the budget surplus we had for ONE year, and then we spent more than another twenty five years of surpluses. Nobody remembers any of this stuff.

  4. [...] Of course we already know that only one year after the UK imposed a “Millionaires Tax” two thirds of the millionaires in England disappeared off the tax rolls. [...]

  5. The Tax Rebellion Begins : Personal Liberty Digest™ says:

    [...] course, we already know that only one year after the U.K. imposed a millionaire tax, two-thirds of the millionaires in England disappeared off the tax [...]

  6. [...] Obama became President. Of course, we already know that only one year after the U.K. imposed a millionaire tax, two-thirds of the millionaires in England disappeared off the tax rolls. We already know that [...]

  7. [...] course, we already know that only one year after the U.K. imposed a millionaire tax, two-thirds of the millionaires in England disappeared off the tax [...]

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