11/28/2012

"Two-thirds of millionaires left Britain to avoid 50% tax rate"

People are so much more mobile now than they used to be.  With the internet, you can often do work any place in the world.  Other countries also used to have much higher tax rates so there wasn't the same ability to avoid the high rates.  This shows what happened when Britain's top tax rate was raised from 40 to 50 percent and then again when it was lowered back to 45 percent.
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. . . .
Paul Krugman seems to seriously argue that we could raise today's tax rates to what they were in the 1950 and everything would work fine.
But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich. 
Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.” 
Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today. 
Nor were high taxes the only burden wealthy businessmen had to bear. They also faced a labor force with a degree of bargaining power hard to imagine today. In 1955 roughly a third of American workers were union members. In the biggest companies, management and labor bargained as equals, so much so that it was common to talk about corporations serving an array of “stakeholders” as opposed to merely serving stockholders. . . . 

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2 Comments:

Blogger Chas said...

Markie Marxist sez: "It does a great job of driving them out, doesn't it? Eventually, we'll have them all located in Botswana or someplace like that. Then we can finish them off. Ha! Ha! All your millionaires are belong to us! Eventually."

11/28/2012 5:48 PM  
Blogger Chas said...

I have nothing to say.

11/28/2012 7:56 PM  

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