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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 - 18:52 | 3022144 sgt_doom
sgt_doom's picture

Hmmmm.....I knew Snorri, and she did indeed have me!

Thu, 11/29/2012 - 20:48 | 3022416 Spastica Rex
Spastica Rex's picture

Yeah, I knew a Finn, and they wouldn't have me (or anyone who doesn't speak Finnish) as a resident, either. As long as you fluently speak Old Norse, you're golden in Iceland.

Those far northern Europeans truly love themselves. And I don't say that as a dick. Not entirely.

Thu, 11/29/2012 - 21:51 | 3022539 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

audgr bikkja

Fri, 11/30/2012 - 01:56 | 3022891 smiler03
smiler03's picture

I call Shenanigans Mosley. Would you like to pay these tax rates in Iceland?

 

The rate of income and municipal tax for the income year 2012 is calculated on three levels;  


37.34% for income between  ISK 0-230.000 pr. month
40,24% for income between ISK 230.000-704.367 pr. month
46,24% for income exceeding ISK 704.367 pr. month 

Notice that the starting income to pay tax is ISK 0.00, all income is taxable

$7.95 = 1000 ISK

https://www.nordisketax.net/main.asp?url=files/isl/eng/i07.asp&c=isl&l=e...

Thu, 11/29/2012 - 18:45 | 3022111 ACP
ACP's picture

If you could, like John Carter, I bet the first thing you'd say is, "God dammit, this planet is fucked up too! Martian-backed securities, WTF?"

Thu, 11/29/2012 - 19:11 | 3022197 Boeing Boy
Boeing Boy's picture

well, the uk is a socialist hell hole, so don't come here

Fri, 11/30/2012 - 02:00 | 3022902 smiler03
smiler03's picture

Yep, thanks Tony Bliar (war criminal) and GORDON Brown (fuckwit)

Thu, 11/29/2012 - 19:19 | 3022216 WhiteNight123129
WhiteNight123129's picture

A lot of countries are knee deep in debt, but leaving in non OECD country myself, I can still a lot of people without a bank account when I travel. So OECD drowning in debt yes, but OECD <> earth. It is just the end of Western dominance.

 

Thu, 11/29/2012 - 21:46 | 3022527 CynicLaureate
CynicLaureate's picture

The statistics don't say they're actually going anywhere.... there are simply fewer people reporting high incomes.  They might just be giving up.

Thu, 11/29/2012 - 18:16 | 3022027 MillionDollarBogus_
MillionDollarBogus_'s picture

A cruise ship parked 11 miles offshore might make a nice tax haven..??

Thu, 11/29/2012 - 19:31 | 3022244 poor fella
poor fella's picture

And target... But please wait for the Geethner/Blankmind/Daymon-awards ceremony for super bonus points.

Thu, 11/29/2012 - 19:33 | 3022257 Aurora Ex Machina
Aurora Ex Machina's picture

You're waaaay too late for that piece of snark.

 

Since Jeff Bozo, the floating ships or owning your own third world country are for saps. First comment had it correct; the Red Planet is where it's at.

Thu, 11/29/2012 - 19:49 | 3022290 jimmytorpedo
jimmytorpedo's picture

I think I'll check out some of Jupiters moons.

(insert uranus joke here)

Just try and avoid hitching a ride with the Vogons.

Fri, 11/30/2012 - 02:06 | 3022908 smiler03
smiler03's picture

The Red Planet is where it's at. You might be right:

 

SpaceX Billionaire Elon Musk Wants A Martian Colony Of 80,000 People. $500.000 ticket

 

http://www.forbes.com/sites/alexknapp/2012/11/27/spacex-billionaire-elon...

Fri, 11/30/2012 - 04:07 | 3022955 Matt
Matt's picture

Keep in mind, this is the guy behind the Fisker Karma. As well, they are talking about 10 people iniially, maybe 10 years from now. Also, keep in mind the actual conditions on Mars. 1/3 gravity, so you will lose calcium out of your spine like no tommorow. No ozone, no magnetisphere. 

Fri, 11/30/2012 - 02:08 | 3022909 smiler03
smiler03's picture

Waterworld. Buy your own VLCC at bargain prices. Cheap to fill, oil seller accepts Gold.

Fri, 11/30/2012 - 04:13 | 3022956 Matt
Matt's picture

Have they figured out a way to make a corrosion-proof platform? That russian oil rig city in the Black Sea is what comes to my mind when I think of floating cities; as soon as the maintenance stops, whole sections of city start sinking beneath the waves.

Thu, 11/29/2012 - 18:17 | 3022028 Motley Fool
Motley Fool's picture

Seems gold is not the only thing migrating East. ^^

Thu, 11/29/2012 - 18:17 | 3022029 bank guy in Brussels
bank guy in Brussels's picture

Paging Simon Black the Sovereign Man!

Thu, 11/29/2012 - 18:17 | 3022030 Zero Govt
Zero Govt's picture

the rich aren't turkeys waiting around for a stuffing

nor should any of us be

Stop Paying Tax ....stuff the parasites this Christmas

Thu, 11/29/2012 - 18:21 | 3022041 buzzsaw99
buzzsaw99's picture

message to criminal maggot billionaire kleptocrat assholes: don't come back!

Thu, 11/29/2012 - 18:41 | 3022090 Things that go bump
Things that go bump's picture

With the proper capital controls in place, we can be rid of them and still keep their money. 

Thu, 11/29/2012 - 19:22 | 3022228 11b40
11b40's picture

Yes, and make sure they renounce their citizenship and move out of the country.  Flag their passports, marking them as parasites, and keep their asses out.

Thu, 11/29/2012 - 22:34 | 3022633 robobbob
robobbob's picture

a 12B40 says I didn't spend years fighting red commie bastards to have them set up shop here. and yes, I include squishy socialists in the same catagory

you took an oath to the constitution, not dear leader, class warfare, wall street or the empire.  some who have money are the enemy, but having money does not make you the enemy. IFF. you better take a class on target identification before its too late. many of the first to flee will be those not under the protection of the thugacracy.

when the government becomes so repressive that police state tyranny is required to force compliance with its diktats, and fleeing becomes a realistic option, it's existence is no longer legally justified by the document that created it.

Sat, 12/01/2012 - 13:06 | 3026446 11b40
11b40's picture

Then build your bridge to paradise and haul ass to a new 'land of the free' - if you can find one.

What commie red bastards were you fighting?  Me, I was engaged in trying to save my ass and those around me from a bunch of little brown peasants, who were essentially defending their land and way of life.  We were sent there on a mission by the military industrial complex, under a false flag justification, to advance corporate interests of the empire.  All my efforts then lead to today, where our fearless leaders think it is fine to privitize profits and socilaize losses for wealthiest, while turning middle America into a land of peasants.

...and just FYI, my target I.D. was pretty good.  I had to look at 'em when I pulled the trigger....not just blow 'em up from a distance.

We have met the enemy, and he is us.......POGO

Thu, 11/29/2012 - 19:27 | 3022236 LostAtSea
LostAtSea's picture

what right do you have to claim their money?

Thu, 11/29/2012 - 20:04 | 3022304 Things that go bump
Things that go bump's picture

Silly, of course I have no right.  Government, however, gives itself all kinds of rights and change rules and laws to suit its purpose.  If you believe you own something, you had better hope your government doesn't feel its need is greather than yours or you are liable to find that your property belongs to the state.  They can and often do make laws retroactive. There is no defense.  I wouldn['t lose sleep over some multimillionaire who lost his money though. 

Thu, 11/29/2012 - 21:26 | 3022489 mark mchugh
mark mchugh's picture

When private wealth is created from public debt, I've got every right.

 

Thu, 11/29/2012 - 23:30 | 3022715 nmewn
nmewn's picture

You sayin confiscate bankrupt Solyndra's (etal) board members & CEO's wealth or just anyone who enriched themselves through the public debt system?

That position won't go over well with public employee unions ;-)

Thu, 11/29/2012 - 23:55 | 3022745 Things that go bump
Things that go bump's picture

I fear the public employee unions are destined to be disappointed in a great many things.

Fri, 11/30/2012 - 00:27 | 3022805 LostAtSea
LostAtSea's picture

Sure do.  That public debt was created by the government, so you should be aiming for those people.  But it is quite an over-generalization to assume that everyone who has wealth obtained it by coherting with the government.

Thu, 11/29/2012 - 19:51 | 3022294 glenlloyd
glenlloyd's picture

First, I don't know what you think 'proper capital controls' are but capital controls in general tend to be negative for anyone.

Second, I'm in agreement with the prior poster...what right do we have to seize their wealth? None what so ever.

As has been said before, capital flows to where it's best treated, and in typical fashion politicians don't think about how their actions will create a reaction on the part of the populace. Anyone who falls in the category of income we're talking about who didn't take action to preserve their wealth by moving et al I would think stupid.

In the end it will be just like the UK where a high tax bracket actually created a losing situation for the govt coffers.

To act on your own best interest is natural and not something that others should treat negatively, I would expect you to do the same, as you should I, if the situation impacted me as such.

Thu, 11/29/2012 - 20:10 | 3022339 Things that go bump
Things that go bump's picture

Mark my words.  Before this is done people will be handing over everything they have to get out and consider it well worth the price.  

Thu, 11/29/2012 - 18:21 | 3022043 Urban Roman
Urban Roman's picture

The IRS claims it has the right to go after you, whether you renounce your citizenship or not.

So, you'll probably want to store your wealth in some other currency or perhaps some other thing, and be relatively hard to find.

Thu, 11/29/2012 - 18:26 | 3022056 CH1
CH1's picture

Pretty much everywhere outside the US is "relatively hard to find."

Don't make a spectacle of yourself and get on with living.

Thu, 11/29/2012 - 18:50 | 3022136 Whalley World
Whalley World's picture

John Williams of Shadowstats inverview stating hyperinflation in USA guaranteed by end of 2014

http://www.silverdoctors.com/john-williams-current-president-and-congress-is-the-one-that-will-see-hyperinflation/#more-18050

Got gold?

Thu, 11/29/2012 - 20:05 | 3022329 surf0766
surf0766's picture

Has he ever dated a prediction before?

Thu, 11/29/2012 - 18:22 | 3022044 BigInJapan
BigInJapan's picture

Kanye don't pay no tax!
Jay-z don't pay no tax!

Thu, 11/29/2012 - 18:52 | 3022141 Whalley World
Whalley World's picture

If they DON'T  pay NO tax, then the only question is how much do they pay!

Thu, 11/29/2012 - 18:23 | 3022048 Fidel Sarcastro
Fidel Sarcastro's picture

who is John Galt?  

Thu, 11/29/2012 - 18:24 | 3022050 CH1
CH1's picture

YOU ARE!

Thu, 11/29/2012 - 18:54 | 3022148 bulbous_walrus
bulbous_walrus's picture

A crooked tax dodger.

Thu, 11/29/2012 - 18:55 | 3022149 sgt_doom
sgt_doom's picture

Many, many different guys who would always give your mother the same name.

Poor devil, you still haven't figured it out.....

Thu, 11/29/2012 - 19:41 | 3022278 Urban Roman
Urban Roman's picture

Me. I "went Galt" right outta high school.

Nobody cared or noticed.

Eventually I had to get a job.

Thu, 11/29/2012 - 18:25 | 3022051 Big Ben
Big Ben's picture

Taxing the rich isn't about raising money. The real purpose is to convince the average voter that all those expensive government programs will be paid for by someone else.

Thu, 11/29/2012 - 18:48 | 3022128 calltoaccount
calltoaccount's picture

taxing the rich is just the cover story.

the real issue is that in the financial zone (and numerous others), most of the biggest winners have lied, cheated, bribed, defrauded and stolen their way to great wealth.

that's the real story withheld from the american people by the sycophantic, wealth-serving msm.

the only crime story they go out of their way not to tell.

Thu, 11/29/2012 - 19:57 | 3022307 glenlloyd
glenlloyd's picture

It's quite apparent that asking the wealthy "to pay a little bit more" or "pay their fair share" is just a mechanism for getting us closer to a full fledged wealth tax.

Seizure of 401k, Ira etc is another move in that direction.

Both of these will eventually come, without question.

Thu, 11/29/2012 - 18:57 | 3022152 jimmytorpedo
jimmytorpedo's picture

Taxes are just a boot on your throat when they print 40bn a month. Taxes are about control, not raising revenue. It's not just the rich who are fleeing amerika, all the poor mexicans are running the border, the other way. You don't need to have money to flee tyranny, just morals. That little voice in your head, you got that for free, just like an obamaphone!

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