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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 - 18:48 | Link to Comment Jaspergers
Jaspergers's picture

Same with france and greece, raising taxes does not necessarily increase tax revenue, but it does strangle the economy. Greek shipowners, even sentimental ones, are thiiis close to changing flag. Kkbb!

Thu, 11/29/2012 - 19:34 | Link to Comment 11b40
11b40's picture

Greek ship owners are some of the biggest cheats in the world.

Thu, 11/29/2012 - 19:52 | Link to Comment Urban Redneck
Urban Redneck's picture

Who moved to London for "low" taxes, so where are they now?

Thu, 11/29/2012 - 18:50 | Link to Comment surf0766
surf0766's picture

I believe in the U.K all you have to do is live abroad for 89 days and you are exempt from the 50% tax

Thu, 11/29/2012 - 19:36 | Link to Comment Aurora Ex Machina
Aurora Ex Machina's picture

There's certainly a reason why London has so many second homes for billionaires, yes.

Thu, 11/29/2012 - 18:51 | Link to Comment Yen Cross
Yen Cross's picture

 Dinner time / Bugs and Barrumundi... BUGS are better than Lobster/

Thu, 11/29/2012 - 18:57 | Link to Comment smacker
smacker's picture

Osborne reduced the rate from 50p to 45p but not any lower because of venomous attacks by the Labour Party.

Thu, 11/29/2012 - 19:02 | Link to Comment Nassim
Nassim's picture

I do wish pundits like this one would stop confluting those who earn a lot and those who are wealthiest. It is not the same thing and these are not the same people.

A professional who earns a lot of money by working hard as a dentist or whatever is not the same as a lady who marries a series of elderly men who passed away leaving her all their wealth. The former is most unlikely to leave, while the latter can go anywhere where there are elderly wealthy guys to get married to.

Thu, 11/29/2012 - 19:03 | Link to Comment williambanzai7
williambanzai7's picture

They are all welcome in the People's Republic of China.

Thu, 11/29/2012 - 19:10 | Link to Comment Magnum
Magnum's picture

Unwelcome.  Horrible visa/residency rules for Americans to live in China, if only we had a reciprocal agreement and treated Chinese immigrants the way Americans who want legal residency in China are treated.

 

Thu, 11/29/2012 - 20:33 | Link to Comment Non Passaran
Non Passaran's picture

Where is the Chicoms' ZH spokesperson Laomei to say a word or two jn China's defense?

Thu, 11/29/2012 - 19:30 | Link to Comment spooz
spooz's picture

So, fine, they can go.  They'll pay an exit tax on their way out of the US and any US heirs will have steep tax bills.  These globalists will also not be able to return to the US if Schumer's Ex-Patriot Act passes.

Don't let the door hit you on the ass, douchebags.

Thu, 11/29/2012 - 19:42 | Link to Comment LostAtSea
LostAtSea's picture

why does one's freedom to choose where to live make them a douchebag? 

Thu, 11/29/2012 - 20:15 | Link to Comment spooz
spooz's picture

I'm more sympathetic to draft dodgers than I am to billionaire tax dodgers.

 

Thu, 11/29/2012 - 20:21 | Link to Comment Central Bankster
Central Bankster's picture

I'm more sympathetic to bank robbers than I am to people who steal via taxation.

Thu, 11/29/2012 - 20:27 | Link to Comment spooz
spooz's picture

As a bankster, I imagine you are.

I particularly despise the greedy elites hitching a ride on the common man's issues.

Thu, 11/29/2012 - 22:46 | Link to Comment mark mchugh
mark mchugh's picture

They steal via deficit spending, taxation is just an attempt to collect kickbacks.  Trouble is there's no honor among thieves.  You wanna be against higher taxes, fine.  All's I ask is that you be against deficit spending too.

Fri, 11/30/2012 - 05:47 | Link to Comment Colonial Intent
Colonial Intent's picture

In Soviet america, bank robs you! (TARP)

Thu, 11/29/2012 - 20:31 | Link to Comment Non Passaran
Non Passaran's picture

Of course you are!
Because you are more likely to be drafted than to become a millionaire.

Thu, 11/29/2012 - 21:00 | Link to Comment spooz
spooz's picture

A million ain't that much these days, so you're probably wrong. 

 

Thu, 11/29/2012 - 22:26 | Link to Comment hawk nation
hawk nation's picture

Im hoping you are just looking for an argument and dont actually believe what you are writing since if you actually read and comprehend the articles on taxation you would not say such nonsense

Fri, 11/30/2012 - 10:14 | Link to Comment spooz
spooz's picture

Would those be the articles on taxation written by mises misers? Or written by the Economist:

"A charitable interpretation of the position that the rich already pay enough taxes is that its advocates have simply made a good-faith oversight about all those other pesky levies that the vast majority of Americans get stuck with. If they really think that a world where people earning the top 32% of income pay 59% of the taxes is fair, then they should support radical reform to make that a reality.

To start, we’d have to eliminate the flat payroll tax and its $110,000 income ceiling, and replace those revenues with the progressive income tax. We’d also need to tax dividends and capital gains as ordinary income. Then we’d have to modify sales taxes—by, say, taxing things rich people buy, like yachts, at a higher rate than things poor people buy, like generic-brand groceries."

http://www.economist.com/blogs/democracyinamerica/2012/07/taxes-and-rich-0

Fri, 11/30/2012 - 05:45 | Link to Comment Colonial Intent
Colonial Intent's picture

Draft dodgers had morals and principles, billionaire tax dodgers have none.

Thu, 11/29/2012 - 20:20 | Link to Comment Central Bankster
Central Bankster's picture

He's obviously a fucking fascist piece of shit.

Thu, 11/29/2012 - 21:43 | Link to Comment spooz
spooz's picture

And you're a greedy elitist scumbag.

Thu, 11/29/2012 - 19:38 | Link to Comment EscapingProgress
EscapingProgress's picture

All of you ZHers do realize that the problem is not the wealthy, right? The vast majority of the wealthy are caught up in the web just like we "average" chumps are. The problem is the government and its monopoly on force. Claiming that a continuation and expansion of gov't theft and extortion will solve our economic and financial problems is like prescribing HIV to cure AIDS.

Thu, 11/29/2012 - 19:38 | Link to Comment Aurora Ex Machina
Aurora Ex Machina's picture

Darlings, you need at least £10m to live a millionaire lifestyle: Former Tatler editor says survey’s £2.6m claim is a woeful underestimate

 

Please bear in mind this is from Tatler, via the Daily Mail, making it less reliable than 4chan.

Thu, 11/29/2012 - 19:51 | Link to Comment Segestan
Segestan's picture

Justice will see a pike up the banksters ass. Liberal financiers will regret what they spent 50 years pushing down the west's throat.

Thu, 11/29/2012 - 20:08 | Link to Comment goldenbuddha454
goldenbuddha454's picture

Why do you think John Lennon left England back in the 1970's?  95% tax rates that's why!  History always repeats itself and the tax the rich scheme has been tried over and over in England and it always fails.  O'Leader is trying it here and it will also fail.

http://concerttour.org/most-famous-tax-evading-musicians.php

Thu, 11/29/2012 - 20:27 | Link to Comment Non Passaran
Non Passaran's picture

Imagine there's no taxman, it's difficult if you try,
No tax forms or filling deadlines, above us only sky....
-- Harriet and Blah Blah Baldwin

Thu, 11/29/2012 - 23:49 | Link to Comment Orly
Orly's picture

Wear clever pennies on your eyes...

Thu, 11/29/2012 - 20:24 | Link to Comment Everybodys All ...
Everybodys All American's picture

It's not just millionaires ... they are eyeing your retirement.

http://news.investors.com/101211-587818-dems-mulling-ways-to-cut-deductions-for-401ks-iras.aspx?p=full

If that don't make you want to cash out and go to gold or precious metals nothing will.

Thu, 11/29/2012 - 20:22 | Link to Comment iamtheeggman wh...
iamtheeggman whooooooooooooo's picture

Our Govenor, Martin O'Marbles tried this "tax the hell out of the millionaires" in Maryland and huge numbers of millionaires left the state- (was it 30%-40?) in the first year of the program. They just sold their homes in MD. They had others. Within the US it is easy for the wealthy to move their main address and assets to a more tax friendly state. I haven't read any follow up reports on what this has done to the loss of business, but it has to have impacted the number of businesses relocating.

Many countries are now flat tax, with simple tax laws, or so I have read. 

Thu, 11/29/2012 - 20:36 | Link to Comment The Count
The Count's picture

So, let them F-off! As if that would be the end of the world if some spoiled, tax evading scum threatens to go somewhere else (where it is either shitty or they tax too).

Thu, 11/29/2012 - 20:50 | Link to Comment ShrNfr
ShrNfr's picture

As a practical matter, most folks who are earning that kind of money have the ability to time when they receive it. Consider Warren Buffet (sic). He evades his "fair share" by simply refusing to recognize his capital gains. Fucking hypocrite. I suspect most of them are still around. Just not taking the draw at the moment.

Thu, 11/29/2012 - 20:56 | Link to Comment gwar5
gwar5's picture

WTF? Where did all the marxists pussies come from?? The vast majority of the average 'millionaires' are just the hard working guy next door. In 1964,  $125,000 was worth one million $ today, and just a $33,300/yr income then is $250,000/yr today.  We have lots more 'millionaires' now thanks to socialism and inflation.

 

So what you say? Well, under Jimmy Carter, the top tax rate was 70% and the top earners paid only 19% of total tax revenues. But with the top tax rate thereafter cut in half, the rich now contribute double the percent of tax revenue -- 39%.

Lessons learned, pussies.... we need to allow the creation of more growth and 'rich' people through the free market system in order to pay for the unsustainable socialism and pig-trough feeding if marxists really want it to continue. Confiscation is not 'sustainable' and only leads to the predictable exodus, black market, or going Galt. Duh!

Have no fear, the sociopaths are already safe or have an exit. You are merely cannabilising the rest of the productive good people and shutting the door on the generation of superproducers who will otherwise keep you from eating dog food in your own golden years.

 

 

Thu, 11/29/2012 - 21:06 | Link to Comment spooz
spooz's picture

The millionaire-next-doors are not the ones who are threatening to go globalist to avoid taxes.  Another case of the elites hitching a ride on the common man's cause. 

And the reason the elites pay more is because the economy has destroyed the middle class.  Can't squeeze blood from a stone.  A better way to look at tax burdens is to look at ALL taxes paid (payroll, sales, excise, state income tax) and see what percent of income is paid in taxes by those on the lower rungs.  But of course, a focus on federal income taxes and percent of total taxes paid makes the elites look better, so thats your argument.

Thu, 11/29/2012 - 21:58 | Link to Comment gwar5
gwar5's picture

Hey Spooz! Elites and globalists will be elitists, so they're safe.

 

But the sheeple millions of Millionaires next door, who own small businesses and hire workers, and create jobs, will shut down and quit. Eventually, they will also move if things get Draconian. I am already making plans. In a land awash in debt there can only be a search for additional revenue and assets to seize, wherever it may be. When they run out of flow, they will confiscate fixed assets.

Spooz: "A better way to look at tax burdens is to look at ALL taxes paid (payroll, sales, excise, state income tax).

Spot on! But the biggest tax on the poor and middle class (everyone) is the under reported inflation tax, which is crushig all. There is no escape. Moreover, per your reference of ALL taxes: Cass Susstein (behavioral economist, Obama chief regulator Czar) already wrote in his book that "Deceit before receipt" should be the Government motto; which merely means to hide taxes, and steal from people, at the point of transaction, in nickel and dime fashion, instead of billing them later  so they don't see it, or feel it. Creepy is, as creepy does.

 

Run, Forrest! Run!

 

Thu, 11/29/2012 - 23:04 | Link to Comment spooz
spooz's picture

Why will the small business owners shut down and quit?  They only pay taxes if they are profitable, and if they are profitable, why would they shut down? A 45 year study shows low tax rates do not lead to economic growth.  Your other comments about confiscating assets is just silly speculation/scare tactics.

http://finance.yahoo.com/news/tax-cuts-dont-lead-economic-175341899.html

Thu, 11/29/2012 - 21:20 | Link to Comment CheapBastard
CheapBastard's picture

15%-20% tax on overseas money flooding into the USA to buy real estate. Hong Kong does it (just passed recently)...Caymans does it (I think it's 20%)...why not the USA?

Fri, 11/30/2012 - 10:21 | Link to Comment spooz
spooz's picture

But that would hinder the fed's efforts to prop up the real estate market.

Thu, 11/29/2012 - 21:25 | Link to Comment roadhazard
roadhazard's picture

Let them leave just like the jobs they create everywhere but here. Good riddence, asswipes.

Thu, 11/29/2012 - 22:03 | Link to Comment 123dobryden
123dobryden's picture

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.

 

 

 

I Am not an expert here, but learning lessons looks different :)

Thu, 11/29/2012 - 23:16 | Link to Comment David Wooten
David Wooten's picture

"...where can they go?"

 

Those who don't have a lot of debt can simply retire or become 'consultants' who work sporadically and have lots of free time while not having as large an income.

Fri, 11/30/2012 - 02:24 | Link to Comment Harrison
Harrison's picture

The author of this article has completely missed an important aspect of the U.S. income tax code.

American citizens anywhere in the world are taxed based on their total income, no matter where it is earned.

The British millionaires could simply piss off to the French Riviera for eleven months out of the year and avoid the tax.

Any American millionaires wishing to avoid being taxed will have to gain citizenship elsewhere (e.g., Belize) and renounce their U.S. citizenship.

Fri, 11/30/2012 - 04:44 | Link to Comment poldark
poldark's picture

As more and more countries increase taxes on the rich there will be fewer places for them to go.

Will they all end up in Hong Kong?

Fri, 11/30/2012 - 05:41 | Link to Comment Colonial Intent
Colonial Intent's picture

Never happen, only country that ever voted to shut down tax havens was france, everyone else is on the take from multinational corporations, as long as the govt gets its bribe fuck the proles, its the same no matter which country you are in.

Fri, 11/30/2012 - 05:09 | Link to Comment etresoi
etresoi's picture

I have some news for all you amerikan debt slaves and tax serfs...  Getting free is easy but it takes some time and planning.  The method is quite simple - leave the usa, become a citizen of country "A", renounce citizenship, establish legal residency in country "B".  Do not reside in any one country for more than 180 days each year.

Country "A" must be a country that does not tax citizens, who reside outside the country.  HINT - USA and Eritrea are the only two countries, which tax citizens no matter where they reside.

Country "B" must be a country, which does not tax income from outside the country, which is many.

Do a bit of research and see that there are dozens of options, with a wide range of requirements.

In my case, I renounced US citizenship after gaining Swiss citizenship.  I have never lived in Switzerland an do not want to live there.  Six months of the year I live in France; six months I travel.

My legal residence is a post office box in the Philippines.  I chose the Phillipines because I am only required to be there 10 days, every three years and the costs are very reasonable.

I tax myself by donating 15% of income to various non-governmental organisations.

 

Fri, 11/30/2012 - 10:19 | Link to Comment spooz
spooz's picture

Which is why we have an exit tax for globalists such as yoursel and, if there is any justice, a law preventing you from ever reentering the US.  And your heirs will have to be happy living the life of the global elite. Doubt you would be so selfless as to have children, however.  That would mean sharing.

Fri, 11/30/2012 - 10:40 | Link to Comment etresoi
etresoi's picture

I knew some fool would write, as you did.

I have no desire to enter the usa.  As a matter of fact, I boycott all USA and israeli products and services.

For children, I got them out first. I did not want them to be cannon foddr for the war machine. All have succesful professional careers, in peaceful, prosperous and safe places and I enjoy visiting them and the grandchildren.

In fact, you are correct... there is no justice in amerika..  Why do you stay?

Fri, 11/30/2012 - 05:58 | Link to Comment Colonial Intent
Colonial Intent's picture

Great start to the article, then you quoted the telegraph.

Do you not know anyone who lives this side of the pond?

Its like a uk version of WND.com and is not taken seriously by anyone under 65.

just have a look at their finance section, its funny but for all the wrong reasons.

The Daily Mirror is read by people who think they run the country;
The Guardian is read by people who think they ought to run the country;
The Times is read by the people who actually do run the country
The Daily Mail is read by the wives of the people who run the country;
The Financial Times is read by people who own the country;
The Morning Star is read by people who think the country ought to be run by communists
The Daily Telegraph is read by people who think it is.
Sun readers don't care who runs the country, as long as she's got big tits.
Fri, 11/30/2012 - 06:01 | Link to Comment John1950
John1950's picture

They never left the country, they forestalled the tax rise by moving their income back by a year....the gov announced the tax rise a year before so they had plenty of time to prepare.

http://blogs.channel4.com/faisal-islam-on-economics/budget-2012-tax-avoi...

http://www.taxresearch.org.uk/Blog/2012/11/28/the-telegraphs-claim-that-...

Fri, 11/30/2012 - 07:44 | Link to Comment Tsukato
Tsukato's picture

Its a little disturbing to see these above posts, and so many green arrows. What the hell are you people doing on this site, if I might ask? Such hatred for the wealthy makes my skin cold. You rats need a good exterminating. Why all the hatred for your superiors? If you are too lazy or stupid to be rich, why take out your self hatred on those that are? Just take pride in being plebs. You can still scrounge up some pleb pussy like the gals on Rosanne Barr's show a while back. Just stop with the hatin and... "get er done!".

Fri, 11/30/2012 - 10:41 | Link to Comment blunderdog
blunderdog's picture

Just who exactly is it who needs to stop wit da hatin, dawg?

Fri, 11/30/2012 - 14:02 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

To "the Wealthy" and their apologists, of which this author is one:

I didn't realize a 3 percentage point increase amounted to "soaring." Seems to me you've gotten off pretty cheap for years with the biggest sources of your income being charged rates that are far less than that charged for wages.  And for you carried interest earners, don't even get me started.  Bunch of Wall Street thieves not paying their fair share. 

As for the notion of leaving, there's the door and see ya - good riddance. 

 

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