UK Gives US A Prelude To Soaking The Rich! Will Zero Take Notes?

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From the Telegraph…..

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.

This is magical!  How do you make millionaires disappear?  Raise their taxes.  It turns out rich people don’t happily give their hard earned money to the government for certain waste.  Weird, isn’t it?  These people will do one of two things.  They will move away from the tax or simply move the money away from the tax. 

How to you make the rich reappear?  Lower the taxes………

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.

However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.

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.

“Labour now needs to admit that their policies resulted in millionaires paying less tax and come clean about whether they would reintroduce this failed policy if they were in power.”

So, raising taxes actually cost money?  Wooda thunk it?

Maybe this sort of magic only works in the UK and not the US.  Using my abilities to see in the future, I predict this news will be entirely ignored by Barry Zero and his leftist minions, just like they ignore all of the historical facts on taxation and it’s impact on economic conditions. 

h/t Lat

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30 Responses to UK Gives US A Prelude To Soaking The Rich! Will Zero Take Notes?

  1. kim2ooo says:

    Reblogged this on Climate Ponderings and commented:
    Who’d thunk it?

  2. HankH says:

    I get such a laugh out of the “lets tax the rich” mentality of the left. Few are actually business owners. Had they any experience in the business world, they wouldn’t push such ignorance. They would become fiscal conservatives and create a political environment that incentivizes business growth (and profits) rather than being antagonistic towards it.

    It’s rather satisfying to see the results of such failed experiments put the spotlight on the failures themselves. I hope Zero is taking notes.

  3. gator69 says:

    Where are our favorite marxists?

  4. leftinbrooklyn says:

    Uh-oh, Middle-class. Too we’re not as much of a moving target as the rich are…

  5. kelly liddle says:

    From the information provided it is all anecdotal. Correlation does not mean causation and saying they left does this mean those people did not file tax returns?

    “However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis. ”

    This could be as a result of the 3% being as an example the approximate number of people with margin loans to buy shares in Aus. I am going to use myself as an example here. My highest income year due to capital gains was the 07/08 financial year. The reason partly being margin calls on my shares so have to sell them. Second best year 06/07 and third best 08/09 (the crash and entirely margin call selling) I did well on the initial bounce and sold out at one time but since then I am more conservative so not likely to show as high incomes also a flat market is much harder to make money on.

    There is a much better fit to the markets which are clearly led by the US. http://au.finance.yahoo.com/q/bc?s=^FTSE&t=5y&l=on&z=l&q=l&c=^DJI

    Here is a very strange comment in the article either to put balance or an accident “Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.” So people have now decided they want to pay 50% tax with numbers increasing by over 50% and not even willing to wait for the lower rate in the next tax year.

    I am making the assumption that the Million Pound earners have something to do with capital gains.

    • suyts says:

      Kelly, you’re missing the forest through the trees. Sure, it probably has a lot to do with capital gains. But, that’s not the point. In my reading of the article is that they won’t pay the 50% but expect their tax liability to be 45%. But, even if it is that they’ll pay 50% for one time, they may have found it cheaper for the one-time charge but not for a permanent outcome.

      But, towards the capital gains, you have to consider the millionaires. Yes, there was a lot of profit taking. But, the rich don’t typically pull all of their money and play elsewhere. Remember these are people reporting millions per year income. They take their profits and then repeat.

      While it is true, correlation doesn’t equal causation, we have seen this throughout history. Earlier this year I reported on a very similar, yet more immediate reaction to trying to soak the rich. https://suyts.wordpress.com/2012/07/16/italy-proves-laffer-curve/

      The same thing has happened in Greece, France and Spain as well. One can speculate on the underlying causes, but the reaction to higher taxes on the rich is always tax avoidance.

      • kelly liddle says:

        Suyts
        I don’t doubt the general theory but this particular article proves nothing. To use something that proves nothing except that reported incomes are volatile does not help your argument. The 50% jump in reported millionaires since the 50% rate means the rate is at best only a secondary effect and personally I would argue lower than that so long as the rate is within certain parameters of the laffer curve. US should be a complete failure (it might be heading in that direction but it isn’t there yet) based on it’s corporate tax rate only being competitive with a few African and communist countries as I have pointed out before.

      • suyts says:

        Kelly, one will not find one article to prove or disprove anything. These observations need to be viewed in the aggregate. As to the jump, the article points out that it only happened after the announcement of the 45% rate.

        And, yes, the corporate tax rate in the US is obscene, but so are the loopholes. We only pick certain types of winners and losers here.

      • kelly liddle says:

        Yes the announcement a full year before the new lower rate kicks in.

        One thing I just came accros which is about taxes I happened accross is that in Texas the State government taxes natural gas extraction at the rate of 7.5%. I am guessing this happens if you own the land and the gas is supposibly yours. In Australia where these rights have been taken off almost all land owners the Queensland royalty rate is 10% for natural gas. So ownership in reality doesn’t seem to make much difference except that in Aus the owner can’t stop miners coming on their land but must be compensated. Our governments don’t really care so long as they get a cut each, state and federal.

        “And, yes, the corporate tax rate in the US is obscene, but so are the loopholes.” This is in part my point other things should be dealt with before rates. Another thing which I think would be more detrimental than higher tax rates is just general beauracracy.

  6. gator69 says:

    Not all millionaires are mobile. Many are business and land owners who cannot just divest themselves of their resources and move. But just look to California, and see how many businesses have relocated, and many to Texas.

    When I decided to buy some land and build my home, I chose a county with a very low property tax. And when I buy gasoline, I buy it across state lines where I work, and deny my home state all of the related revenues. Same goes for internet purchases, and on down the line.

    • leftinbrooklyn says:

      And, there is more than one way to ‘move’ from the extra tax burden. Business owners, for example, pass it on to…guess who….

      • cdquarles says:

        :Yep. No business, corporate or otherwise, pays taxes. It collects them from owners (pension funds), operators (employees), and/or customers and forwards the proceeds. Remember that Robin Hood did not ‘take from the rich and give to the poor’, he took from the tax man and returned it to the taxpayers.

    • kelly liddle says:

      When talking about million dollar earners you must consider who they are. In Aus or UK if your earnings from business are this then you are likely to be incorporated and not fill in a personal tax return for that amount. This differs in the US at least on a federal basis as the personal rate is the same as the corporate rate so no reason to incorporate for tax. Another point is in the US you do not get franking credits or dividend imputation in Aus we do and the UK sort of does http://en.wikipedia.org/wiki/Dividend_imputation . So a likely outcome if the personal rate is increased and corporate rate not is that many businesses will be incorporated even if they are not now. But don’t worry this has been thought of, that is why the increase in the dividend tax rate as well.

      • gator69 says:

        I don’t ever worry Kelly. I, like all humans, avoid taxes wherever they may be found. 😉

        • kelly liddle says:

          Gator You can’t avoid death and taxes, but maybe can limit taxes.

        • gator69 says:

          Apparently you do not read well…

          “When I decided to buy some land and build my home, I chose a county with a very low property tax. And when I buy gasoline, I buy it across state lines where I work, and deny my home state all of the related revenues. Same goes for internet purchases, and on down the line.”

          As for death, that depends on your belief in an afterlife, and wether or not you are right.

        • kelly liddle says:

          Apparently you can’t even comprehend your own writing “I chose a county with a very low property tax” So You do pay taxes.

          I won’t get into an argument about afterlife though, just have to wait and find out or not find out.

        • gator69 says:

          I’m sorry I confused you with so many words.

          By choosing a county with lower taxes, I am avoiding taxes I would otherwise have to pay. By making purchases on the internet, I avoid taxes I would otherwise have to pay. By purchasing my gasoline in another state, I avoid paying taxes I would otherwise have to pay.

          Kelly, I am avoiding taxes.

          I choose which taxes I wish to pay, where possible, and avoid the others.

          If I say I avoid work, that does not mean that I do not work.

          Why must we explain such simple concepts to you?

          You waste alot of our time here.

        • kelly liddle says:

          Gator
          You are only avoiding paying higher rates if possible you still pay taxes and therefore they are unavoidable. Or as I stated before you might limit your taxes.

        • gator69 says:

          Kelly, you are a waste of time. Proven wrong, you still crow.

  7. DirkH says:

    kelly liddle says:
    November 29, 2012 at 9:59 am
    “US should be a complete failure (it might be heading in that direction but it isn’t there yet) based on it’s corporate tax rate”

    Google pays no corporate tax in the US.
    (The US company pays a company in Ireland which pays a company on the Bermudas or somesuch)

  8. philjourdan says:

    The old adage is “the only thing sure in life is death and taxes”. In the modern era we can also add liberals shirking responsibility. They will not see their actions as the cause, they will simply blame the apple for following the law of gravity.

    In short, no zero will not learn.

    • suyts says:

      I think Zero is intentionally trying to kill our economy. I’ve a post coming up. He’s going to drive us over the cliff one way or the other.

    • gator69 says:

      Here is how leftists see taxes…

      “Sen. John Kerry, who has repeatedly voted to raise taxes while in Congress, dodged a whopping six-figure state tax bill on his new multimillion-dollar yacht by mooring her in Newport, R.I.

      Isabel – Kerry’s luxe, 76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage – was designed by Rhode Island boat designer Ted Fontaine.

      But instead of berthing the vessel in Nantucket, where the senator summers with the missus, Teresa Heinz, Isabel’s hailing port is listed as “Newport” on her stern.

      Could the reason be that the Ocean State repealed its Boat Sales and Use Tax back in 1993, making the tiny state to the south a haven – like the Cayman Islands, Bermuda and Nassau – for tax-skirting luxury yacht owners?

      Cash-strapped Massachusetts still collects a 6.25 percent sales tax and an annual excise tax on yachts. Sources say Isabel sold for something in the neighborhood of $7 million, meaning Kerry saved approximately $437,500 in sales tax and an annual excise tax of about $70,000.”

      At least we are honest about it.

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