Britain’s millionaire exodus is a wake-up call to Barack Obama’s high tax America
November 28, 2012
Millionaires and their wealth are not just fleeing Hollande's France, with its new 90 percent top rate tax. They've also been escaping Britain's 50 percent tax too. As The Telegraph's Robert Winnett reported earlier today, "almost two-thirds of the country's million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax."
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.
Since George Osborne announced a reduction of the top rate to 45 percent in his April budget "the number of people declaring annual incomes of more than £1 million has risen to 10,000." This is a figure still significantly below earlier levels, and it will be a huge challenge for Britain to recover its lost wealth. As Conservative MP Harriet Baldwin puts it, "Labour's ideological tax hike led to a tax cull of millionaires," costing the UK around £7 billion in lost tax revenue.
There are important lessons here for the White House, and the figures coming from the UK should be a wake-up call for President Obama, who has pledged to force "the wealthiest Americans to pay a little more in taxes." Specifically, Obama wants to raise the top rate tax in the United States for those earning $250,000 a year or above by nearly five percentage points, from 35 percent to 39.6 percent (which may rise as high as 43.4 percent according to Jennifer Rubin at The Washington Post). Compare this to the current top marginal individual income tax rate in Singapore of 20 percent, and Hong Kong at 15 percent.