TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, December 4, 2012

Millionaires Flee Britain's Millionaires Tax

Following up on last week's post:  Wall Street Journal editorial, Britain's Missing Millionaires: Income tax Rates Rise but Revenues Fall:

A funny thing often happens on the way to soaking the rich: They don't stick around for the bath. Take Britain, where Her Majesty's Revenue and Customs service reports that the number of taxpayers declaring £1 million a year in income fell by more than 60% in fiscal 2010-2011 from the year before.

That was the year that millionaires became liable for the 50% income-tax rate that Gordon Brown's government introduced in its final days in 2010, up from the previous 40% rate. Lo, the total number of millionaire tax filers plunged to 6,000 in 2010-2011, from 16,000 in 2009-2010.

The new tax was meant to raise about £2.5 billion more revenue. So much for that. In 2009-2010 British millionaires contributed about £13.4 billion to the public coffers, or just under 9% of the total tax liability of all taxpayers that year. At the 50% rate, the shrunken pool yielded £6.5 billion, or about 4.4%....

Politicians would love to lay the whole burden of their policies on a tiny minority of the rich, but you can't finance the welfare state on the shoulders of the 1%. That's something for the U.S. to remember as President Obama pretends he can fill a $1 trillion budget hole with tax hikes on "millionaires and billionaires."

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Misses the point that for a US millionaire taxation follows citizenship. In Europe and the UK in general all a millionaire needs to do is move domicile to a low tax jurisdiction

Posted by: MacK | Dec 4, 2012 7:54:48 AM

It's like we're back to the 70s again, but back then for them I think it was 90%. Those who do not learn from history...........crash & burn.

Posted by: Sandy P. | Dec 4, 2012 10:03:06 AM

This is indeed a lovely story. It is a bit of a shame, though, that the Telegraph journalist completely misunderstood the numbers (and no, it wasn' the Guardian, which would never have allowed its journalists to publish such nonsense.) The story is completely bogus. Watch it being demolished here.
You would have thought that if the majority of rich people in Britain had suddenly disappeared, someone might have noticed. But I concede, it is a great fun story: don't let the facts get in the way of that!

Posted by: Nicholas Shaxson | Dec 7, 2012 4:23:05 AM