The Millionaire Man Exodus: What Obama Can Learn From The UK's "Tax The Rich" Plan

Tyler Durden's picture




 

Regardless if the Fiscal Cliff is resolved tomorrow (impossible), on December 31 (unlikely), or in tandem with the debt ceiling hike some time in March 2013, after all the government fund buffers have been soaked dry as they were back in August 2011 (most likely), one thing is certain: America's wealthiest (billionaires and millionaires) are about to see their taxes soar - that's more or less a given.

The question is what happens then. Will, the wealthiest - those who have access to and can buy banking, incorporation, citizenship and legal services in any global jurisdiction in a world that has never been this decentralized and this , take it all quietly up until that point on the Laffer curve says they will commit mass suicide, or maybe, just maybe, because they don't feel like being force to pay uncle Sam even more than they currently do with the proceeds not used for something constructive like paying down debt, but instead to fund government corruption and inefficiency, they will pick up and leave without saying goodbye or even looking back, and in the process crush future US government tax revenues even more and send the deficit soaring more. After all it is the "1%" who pay 30% of all income tax. This means roughly about $600 billion in tax revenues annually.

"No risk in that", many will say - after all where can they go? Well, apparently many places. Because if the UK, where as the Telegraph reports a stunning two-thirds of domestic millionaires opted to leave the country than pay a "punitive" 50% tax, is any indication it is possible that the imminent tax hike on America's wealthiest is going to be one of the most destructive things that can happen to America's already unsustainable budget deficit.

From Telegraph:

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.

 

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.

 

Mr Osborne argued earlier this year that the 50p rate was deterring entrepreneurs from coming to Britain.

It appears that at least the UK has learned its lesson:

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Sadly, even with this largely cosmetic move, the UK too is grappling with a far bigger issue: it has never been about revenue. It is all about spending. And both in the UK and the US government spending is simply too big. How big? So big that all tax revenues couldn't fund just the mandatory payments (which exclude military spending), let alone discretionary.

But both the UK and US know that revealing this little factoid would lead to the beginning of the end, as the realization that the welfare state myth, which has perpetuated a tenuous peace in the "developed world" ever since the advent of Otto von Bismark, has been one big lie. And anyway, with some additional money still entering the ponzi system, one does not need to pull the plug on it just yet: it will likely last at least one or two more years before it all comes crashing down.

Yet while the UK learned the hard way that in today's world jumping on one's G-6 timeshare private jet and becoming a citizen of XYZ takes a few hours top of preparation and execution, the US is only now going to learn this very hard lesson.

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Thu, 11/29/2012 - 18:16 | 3022025 LawsofPhysics
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Unless these folks are going to mars, it won't matter.  The earth is drowning on debt.

Thu, 11/29/2012 - 18:18 | 3022032 Pladizow
Pladizow's picture

Every country will eventually follow suit and there will be no where to hide!

Thu, 11/29/2012 - 18:23 | 3022049 CH1
CH1's picture

One by one, the producers are walking away from a game that offers them no role to play but that of sacrificial animal.

Thu, 11/29/2012 - 18:26 | 3022059 redd_green
redd_green's picture

Producers?  Heh, we're talking about the crooks here, not the folks who run small family businesses that are the backbone of our economy.   Dude.   <shaking head>

Thu, 11/29/2012 - 18:46 | 3022077 BKbroiler
BKbroiler's picture

millonaire exodus, what a load of bullshit.  Atlas Shrugged will never happen in real life, sorry, no one's going Galt.   2/3 of english millinaires are leaving?  Will they all live in Singapore, abandon their extended families and friends to save some tax money?  get real. anyone tied closer to their bank account than their family, community or country can go... beat it.

Thu, 11/29/2012 - 19:19 | 3022212 LostAtSea
LostAtSea's picture

sorry, but it is happening.  Angry because you can no longer steal from them?

Thu, 11/29/2012 - 20:05 | 3022331 BKbroiler
BKbroiler's picture

haha nice avatar, jackass, guess I insulted the queen, lol. hive mentality.

Steal from them? I pay 35% here in the apple and 4% more won't kill me or turn me into some secessionist fool or some deserter, for that matter.

pay yer taxes, quit yer bitchen, life is good above the fray.

Thu, 11/29/2012 - 20:47 | 3022415 notbot
notbot's picture

Sadly, even with this largely cosmetic move, the UK too is grappling with a far bigger issue: it has never been about revenue. It is all about spending.

+1

This whole tax debate is a complete misdirection.  

Thu, 11/29/2012 - 21:42 | 3022519 economics9698
economics9698's picture

Uh, the rich can afford plane tickets and trips to jolly old England any time they want.  Let’s see here $1,600 for a trip from Singapore to London or pay $50,000, $100,000, $150,000 more a year in taxes?

I thought you guys were financial wizards.  WTF?

Thu, 11/29/2012 - 21:51 | 3022535 firstdivision
firstdivision's picture

I say let them move to Singapore and give up their citizenship. I'll stay here near the largest fresh water basin on the Planet. http://www.nytimes.com/2012/07/26/business/global/26iht-green26.html?_r=0

Thu, 11/29/2012 - 22:16 | 3022592 Cathartes Aura
Cathartes Aura's picture

um, "the rich" don't ever "leave" - they just get a tax accountant to stash their loots/pixels in various places, then buy property in various places, and bounce around according to their advisors - a month here, 6 weeks there - no real "home" - just fully staffed houses they can drop into on a moment's notice. . .

been since forever.

Thu, 11/29/2012 - 22:32 | 3022625 Harlequin001
Harlequin001's picture

No they do leave, they go to other places where foreigners aren't taxed at nearly the same rates.

Every country stiffs their own because they can, but when you're in the business of attracting foreign capital the rules change and considerably.

Oh yes they do leave, and when they are eventually enticed back by domestiuc government with tax breaks they leave behind the overseas structures they put in place which the govt is happy to ignore (if only to get these revenues back) leaving those who chose not to to pick up the bill.

But that's how a free market economy works isn't it?

Thu, 11/29/2012 - 23:18 | 3022701 Cathartes Aura
Cathartes Aura's picture

perhaps we're quibbling over degrees of wealth, and whether the "rich" are familied, or newly casino'd "first generation" solo types. . .

it's been my experience that the majority of people who have come into large sums of monies over the past couple of decades just. . . working vacation. . . a lot.

Thu, 11/29/2012 - 23:22 | 3022707 Bicycle Repairman
Bicycle Repairman's picture

"Will, the wealthiest ... pick up and leave without saying goodbye or even looking back, and in the process crush future US government tax revenues even more and send the deficit soaring more."

No, because the USA is NOT the UK.  Even if you leave, the IRS still wants 10 years income tax from you.  NO escape by running away.  For anyone, including billionaires.

Fri, 11/30/2012 - 01:14 | 3022852 smiler03
smiler03's picture

Well said, it's a huge difference. Meanwhile Roman Abramovich (Russian billionaire), is resident in the UK, or is it Monaco and he justs lives here < 30 days/year? Sean Connery, Bond, James Bond lives in the Bahamas. Most European tennis players are Swiss residents. That Romney person has most assets in the Carribbean. I worked and lived in Belgium but paid UK taxes because they were less...

Whoever you are, wherever you are, tax is always less somewhere else but if you're rich, you win, wherever you are, or aren't.

Meanwhile, Syria has no internet: http://www.nytimes.com/2012/11/30/world/middleeast/in-syria-internet-and...

Bradley Manning in court: http://www.guardian.co.uk/world/2012/nov/30/bradley-manning-keeping-sane...

Fri, 11/30/2012 - 01:24 | 3022872 Harlequin001
Harlequin001's picture

Land of the free eh...

You wouldn't necessarily want to leave, just place your assets in a vehicle which is not taxed at home...

The Brits pay Estates taxes regardless of where you move to.

But you can get around that...

Thu, 11/29/2012 - 22:57 | 3022667 A Nanny Moose
A Nanny Moose's picture

Is that before, or after Ogalala dries up?

Fri, 11/30/2012 - 01:26 | 3022878 smiler03
smiler03's picture

+1 And the "bread basket" of the US (& World) depends on the High Plains Aquifer. Folks in Wisconsin could go hungry, well in 50 years perhaps, or a lot less maybe, but they won't be thirsty ;O)

http://liferaydemo.unl.edu/web/sdn/bread_basket

Thu, 11/29/2012 - 23:10 | 3022687 A Nanny Moose
A Nanny Moose's picture

Obtaining fresh water is merely an engineering problem. It rains more in Singapore, than in the US Plain States.

Thu, 11/29/2012 - 22:56 | 3022666 A Nanny Moose
A Nanny Moose's picture

Why wait for CONgress to force you to pay? You are 100% free to write a check to the Bureau of Public Debt...right THE fuck now.

Let's see that pen and checkbook, bitch.

Fri, 11/30/2012 - 03:57 | 3022952 Matt
Matt's picture

You understand that until spending is cut to meet revenues, making payments to pay off the national debt is like pouring out a bottle of water in the Sahara? You can sit there dumping bottles out all day, you are not going to make the desert wet.

Fri, 11/30/2012 - 00:15 | 3022776 LostAtSea
LostAtSea's picture

BKbroiler: so, you are ok with 39% taxes.  How about 45% ?   50 % ?   75 % ?   At what point is it not ok for you? 

And no, it takes a lot more than name calling to offend me. 

To quote Doug Casey, "A person who feels threatened by ideas and who responds with emotion is acting irrationally".


Fri, 11/30/2012 - 01:33 | 3022882 smiler03
smiler03's picture

"At what point is it not ok for you?"

Is that word "not" in italics and the "45% ?   50 % ?   75 % ? " question mark overkill because you are responding with emotion?

To quote Doug Casey, "A person who feels threatened by ideas and who responds with emotion is acting irrationally".


Fri, 11/30/2012 - 03:55 | 3022950 Matt
Matt's picture

it's called rhetoric, look it up.

Thu, 11/29/2012 - 21:11 | 3022452 mark mchugh
mark mchugh's picture

Steal from THEM?

Let's review: 10.7 TRILLION deficit dollars blasted into the economy since 2001.  Where do you think it is now?  In poor peoples matresses?

 

Thu, 11/29/2012 - 18:41 | 3022095 A_S
A_S's picture

big businesses also provide jobs, services and goods

Fri, 11/30/2012 - 05:15 | 3022983 Lord Koos
Lord Koos's picture

So what -- they won't be leaving the US. And if they did, all the more room for the little guy to compete.

Thu, 11/29/2012 - 18:58 | 3022161 CH1
CH1's picture

we're talking about the crooks here

All millionaires are crooks? (Who's the commie now?)

Thu, 11/29/2012 - 19:48 | 3022288 LawsofPhysics
LawsofPhysics's picture

I know many tradesmen who's labor is extremely valuable. None of them are millionaires. Good luck with your argument.

Thu, 11/29/2012 - 20:29 | 3022374 CH1
CH1's picture

That was a complete non sequitur, LoP.

You can do better than that.

Thu, 11/29/2012 - 20:37 | 3022393 nmewn
nmewn's picture

I've been a tradesman, I'm not rich and I still don't hate them for being rich. I also don't hate the welfare mom who hits the lottery and becomes rich either. But I do notice the state really doesn't hate the rich as much as they would like everyone to believe. They just want the people to hate them.

Kinda weird that only the "statist rich" advocate for this kind class warfare don't you think?

Last I checked Buffet was still fighting the IRS yet he wants someone else to pay higher taxes...very odd ;-)

Thu, 11/29/2012 - 21:33 | 3022504 CH1
CH1's picture

the state really doesn't hate the rich as much as they would like everyone to believe

Exactly. The state needs the rich like the Arabs need Israel - they are essential to deflect anger and frustration.

Thu, 11/29/2012 - 22:02 | 3022566 Anusocracy
Anusocracy's picture

And the rich need the state like Israel needs the Arabs.

Thu, 11/29/2012 - 19:17 | 3022208 LostAtSea
LostAtSea's picture

The crooks are staying...they run the government.  The honest ones will and are leaving.  Just because they have money does not make them guilty.

Thu, 11/29/2012 - 21:14 | 3022459 mark mchugh
mark mchugh's picture

See if you can get a ride.

Fri, 11/30/2012 - 00:20 | 3022792 LostAtSea
LostAtSea's picture

I don't take free rides.

Thu, 11/29/2012 - 18:27 | 3022060 Boris Alatovkrap
Boris Alatovkrap's picture

There is millions of uninhabited hectares in Siberia!

Thu, 11/29/2012 - 18:37 | 3022081 Things that go bump
Things that go bump's picture

And they are welcome to them.  

Thu, 11/29/2012 - 22:23 | 3022608 Harlequin001
Harlequin001's picture

and there are lots of really nice places throughout Asia...

They are welcome to those too...

Fri, 11/30/2012 - 01:41 | 3022885 smiler03
smiler03's picture

And humungous natural resources in Siberia. Yes please but can I be a commuter?

Thu, 11/29/2012 - 18:51 | 3022137 sgt_doom
sgt_doom's picture

Exactly!

Let's be serious for a moment: back in the 1960s, the plutocrats didn't like the tax and budget proposals of the Kennedy administration (taxing offshore movements of money, taxing foreign subsidiaries of American-based multinationals, drastrically lowering that oil depletion allowance, first instituted in 1913 [along with the Federal Reserve Act (the Aldrich, or John D. Rockefeller's son-in-law act), the tax exemption for foundations so the rich could hide their money and ownership within the aegis of those foundations, and the 16th Amendment for taxation purposes], and the financial-intelligence-complex responded by murdering President Kennedy, murdering Rev. Martin Luther King, Jr. (who came out stridently on behalf of workers' rights, and anti-Vietnam War, etc.), and then Bobby Kennedy when he looked like a strong presidential possibility.

Also, they probably took out Malcolm X, and certainly took out Larry Stern, ace investigative reporter for WaPo, Dorothy Kilgallen (after her series of interviews with the jailed Jack Ruby, before she could write up her biggest story ever), and numerous others to cover up their evil.

Certainly, the gov't should be able to confiscate all their assets, and then allow the rich to vacate the premises --- might be an excellent withdrawal of psychopathological genes from the gene pool.

 

Thu, 11/29/2012 - 19:25 | 3022233 LostAtSea
LostAtSea's picture

so by what right does the government have to confiscate assets that were (in most cases) earned through hard work?  Hide their wealth?  Of course, woudn't you hide your money if people wanted to take it from you?  Sure, there are some rich scums out there who got their money illegally, so individually go after those who broke a law.  But, universal confiscation of wealth?  By what measure?  Who gets to define what is "too much" wealth? 

Thu, 11/29/2012 - 21:18 | 3022335 Cleve Meater
Cleve Meater's picture

It's not just about government's grabbing wealth... It's about government getting offended when you get too uppity. Check out what they are doing to Eustace Conway down in North Carolina. He's one of the most self-reliant, independent, freedom loving dudes in America today. He's also one of the last real mountain men. Such thinking is threatening as hell to government... He doesn't need them. That's why they are doing everything they can to shut him down.

Check it out: http://www.theresilientfamily.com/2012/11/who-is-eustace-conway-and-why-...

Thu, 11/29/2012 - 22:29 | 3022626 Cathartes Aura
Cathartes Aura's picture

thanks for that link, it's a good read.

This is how predatory government often works… Even at the local level.

ahh, good to realise this, as some do.

Thu, 11/29/2012 - 23:01 | 3022675 A Nanny Moose
A Nanny Moose's picture

predatory government

Is there any other kind?

Thu, 11/29/2012 - 23:21 | 3022706 Cathartes Aura
Cathartes Aura's picture

most likely not.

yet there are some cheerleaders here for devolving to local gov'ts as a solution.

which is a tad too inbred for my tastes.

Thu, 11/29/2012 - 20:12 | 3022345 Wjunk
Wjunk's picture

Who?

The jealous, the lazy, the illegals and the dead, They all get to vote on what's for dinner in this brave new world.

That's who.

Thu, 11/29/2012 - 19:31 | 3022243 Aurora Ex Machina
Aurora Ex Machina's picture

Karen Silkwood

Gary Webb

Danny Casolaro[1]

...those are just notable names though. Check out Syria [57 journalists killed], Serbia and so on. And let's not forget the environmentalists ~ An estimated 711 people were killed over the last 10 years. Last year alone 106 people were killed, according to a report by the human rights group Global Witness.

 

Bottom line: open information and sharing with as many people as possible is the only way to stop yourself from loneliness, suicidal thoughts and shooting yourself twice in the back of the head.

 

[1] Those interested in squids might want to look into this one a little closer

Thu, 11/29/2012 - 18:19 | 3022037 tmosley
tmosley's picture

All except one nation.  

Little Iceland.  Probably the only place left where I would flee to to do work, rather than just laying down on some tropical beach and drinking mojitos.

Thu, 11/29/2012 - 18:42 | 3022098 Spastica Rex
Spastica Rex's picture

They wouldn't have you.  I know Icelanders.

Do NOT follow this link or you will be banned from the site!