October 21, 2024 - 10:00am
Jean-Baptiste Colbert, chief minister to Louis XIV, understood the art of taxation. It was about “plucking the goose to obtain the largest possible amount of feathers with the smallest possible amount of hissing”.
Rachel Reeves, the Chancellor of the Exchequer, also fancies herself a clever plucker. Ahead of her first budget next week, she’s been trailing various cunning plans to increase tax revenues. By targeting the wealthy, she reckons she can minimise public anger. And sure enough, there’s plenty of polling to show that squeezing the rich is popular. Then again, taxing other people is always popular. You could double the rates on every odd-numbered house in the land and the people across the street would heartily approve.
The trouble comes when the geese fly away. The richest people in the country are also the most mobile — and with Reeves bearing down on them, they’re already fleeing. According to Fraser Nelson in the Telegraph, nearly 10,000 millionaires are set to quit the UK this year, which is double last year’s total. Nelson also points out that the top 1% of earners pay 18% of all income tax receipts and the top 0.01% over 5%. Our public finances are therefore vulnerable to an exodus of millionaires and billionaires.
Faced with the possibility of full-on capital flight, the supposed solution is an exit tax. This would relieve the departing rich of at least some of their wealth. Unfortunately, it would also turn this country into the equivalent of a dodgy strip club — the sort that promises you a good time only to charge you an exorbitant (and violently non-negotiable) sum for each drink. There are two points to bear in mind here. Firstly, this is not an autobiographical detail; and secondly, it’s a non-repeatable scam. Anyone fleeced in such a manner is unlikely to return.
Some, such as Polly Toynbee in the Guardian, argue that an exit tax could raise £500 million a year, but for how long? The disincentive to new investment is obvious and has the potential to cost us much more.
The mainstream Left can moan all they like about our well-heeled, footloose elites, but this is the globalised economy that they signed up to. If cheap labour can flow back and forth across our porous borders, then how much easier is it for plutocrats to withdraw themselves and their wealth once a revenue-hungry Labour government comes calling?
During the Brexit wars, Remainers were forever lamenting the loss of UK access to the European Single Market and its “four freedoms”. The first of these is the freedom of movement of people across borders, which receives a big tick from the liberal Left. Most progressives also like freedom of movement for goods and services. What they forget, however, is the fourth freedom, which is of capital — i.e. rich people’s money.
Reeves is in a particularly poor position to complain. An ardent Remainer, she also flew out to the World Economic Forum in Davos, where she banged the drum for foreign investment in the UK economy.
Well, easy come, easy go.
Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.
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SubscribeNot long now, England, before you hit the bottom.
The damage to my pocket-book is outweighed by the sheer delight of watching this Labour government collapse after just 3 months! How beastly for their supporters who thought this was the Return of the Grown Ups.
Either of the Tory leadership candidates should be able to hole the government below the waterline in pretty short order. They will limp along like the last government did for a few years – probably jettisoning 2TK along the way (especially if the rumours turn out to be true).
Grown-ups don’t listen to Taylor Swift. I don’t have much time for Angela Merkel, but at least she went to hear Wagner at Bayreuth.
The Taylor Swift thing is very weird for grown men like the PM and the Mayor of London. Surely her music is aimed at teenage and younger girls. Odd, and a bit sinister, that middle-aged men should be so enthusiastic about attending her concerts.
And let’s not forget that she is a billionaire, i.e. a class enemy, according to all leftist textbooks 😉
And now there’s something weird about his “children”. Journalists have ” got birth certificates” but an injunction prevents them from revealing what is on them. Is there a reason OTHER than protecting his pizza eating sons privacy for never showing them or being seen with them. Are they like Harry and Meghans kids.
Socialists have little tolerance for millionaires and would sooner be rid of them and the revenue they would collect. This government belives in levelling down based on the politics of class envy. Whatever the masses can not have, then nobody will have, a ‘policy’ of failure really and the result is state ridden mediocrity.
In the Socialist fever dream of the glorious Utopia everyone is happy to live on the minimum wage. Except for Party apparatchiks whose jobs are too important to be constrained by income.
Socialists have little tolerance for millionaires who are not their friends.
Notice the deafening silence about Jeff Bezos and his exploitation of Amazon workers who, until recently, didn’t even have the right to be unionised. Not a single squeak from the left.
And that’s just one example.
At the same time, the organised leftists’ hatred towards E. Musk is off the charts and there’s never been even a feeble attempt to provide rational grounds for this uncompromising stance against the super-rich man who happens not to fit in with the leftist agenda.
Yes and have you noticed how in the US, Kamala Harris’s ‘plan’ to rectify the economy is to increase taxes on the very wealthy and even introduce a tax on unrealised capital gains. That and printing oodles of money and fixing prices.
Oh, tried-and-tested ways to boost the economy, I know! 😉
Crying wolf. There won’t be an exodus. This is not a 90% tax rate c1975. The UK is also looking much more stable than alot of alternatives right now.
There was some research on this earlier in 24 by the LSE. Concluded such emigration deterred by career risk, burden of moving – it’s a proper admin hassle, family upheaval, attachment to the place one calls home. And the cultural desert some of the places like Dubai or Cayman Isles turn out to be an additional factor – nice for a holiday, but beyond that not all it’s made out to be.
Then maybe Spain? Oh yes they have a Wealth tax already.
Classic story put out by the Rich to frighten the rest of us. Hardly a surprise a story played in here on Unherd as owned by a Billionaire who may find themselves paying a bit more tax. It’s why such Billionaires buy up chunks of media – all the better to influence narratives.
Since.learning a little bit more about this world it is a great.deal more.nuanced than.you suggest. Kids in boarding school, summer in chanmel isands, winter in caymans favoured by Finance crew as an example. Of course Reeves in and of herself won’t cause an exodus but she may prove to be the last straw. A great seal of disquiet was caused by Russian sanctions (if it can happen to them, it can happen to anyone) and push factors like the perceived randomness and viciousness of London street crimeall bear on decisions. The Conservaives also did a pretty good job of soaking the millionnaire class as the IFS is the first to admit. Reeves may simply bear the consequences of.a much deeper, multi-factorial decision made over years rather than months.
No evening out at the Convent Garden Opera on the Cayman’s SG. The millionaires don’t live where knife crime etc happens either. That clusters in the poorer areas not in Mayfair, Chelsea, or the weekend retreat in the Cotswolds.
It’s Covent Garden, not ‘Convent’. How much else do you not know?
Wonderful comment!
He probably knows not to show himself up as a complete bellend by picking on a typo!
It is now. It once was the other spelling. Back in 1140 or something.
No doubt the Chancellor will take your advice and then get a nasty shock. It isn’t really about millionaires or billionaires directly, but about the businesses that are set up somewhere else or the highly skilled people who settle someone else.
And, yes, we have been through it before in the 1970s. I know dozens of people who chose to take up jobs outside the UK and never came back. Perhaps that is just the normal brain drain but it was certainly helped by stupid tax rates. The world has really changed since then. International mobility is normal, especially if, as for most of my family, households are composed of several nationalities or dual nationals.
Most don’t go to tourist tax havens but places with somewhat less onerous marginal tax rates. Who cares enough about live opera to pay thousands or tens of thousands for the privilege rather than watching performances streamed for £100 per year? Anyway after a brief period away any tax exile can come back for short visits if that is what they want.
I’m confused how research based on interviews with 35 rich people in January is more trustworthy than the projected 9,500 millionaires leaving this year, assuming the current rate continues for the next 3 months?
And whose projection is that J0? Somewhere on Tufton st?
The splendid More or Less (Radio4 – sorry BBC-haters!) did a detailed analysis of that 10,000 millionaires figure a couple of weeks ago; in case you were wondering it fully engaged with the source of the figure. It’s fair to say that the conclusions reached from the survey were somewhat flawed – easy enough for you to find and listen to.
That is one of the few things the BBC gets right. I’m reading.his book. Who knew supermarkets were SO sneaky and clever with their pricing strategies.
Good 4wks back I think TP? And yes I heard it. One of my ‘go to’ Radio 4 progs. Will have to re-listen, but from recollection the research predated the GE and sampling flawed. I think also that probably what I remember most, is included alot of dollar millionaires and if the Banker on £600k goes to Dubai it’s not quite the same as a Multi-Millionaire moving their Business. Given how much wealth in UK is property some probs with moving that too.
I thought they all left after Brexit, isn’t that the “remainer” lament? I’m not a “leaver” by the way, I just find the left’s position on wealth, confusing or should that be amusing.
I suspect you’d find AR that alot of Brexit support, and alot of Reform supporters, driven by the same sense the wealthy done v well whilst they haven’t. It is of course one of the dilemma’s for the Right now and how it squares this. The Red Wall recapture by the Right requires folks feel the growth in inequality rebalanced.
Yep, let’s go on taxing productive activity and bringing in millions of immigrants so that the suburban middle class can go on getting richer every year thanks to artificially inflated house prices, unfunded pensions and all the other perks we shower them with so they’ll vote for us.
So long as the most reliable way to get rich in Britain is to work for the government and get a mortgage the economy will continue to stagnate.
Yes, it will hurt Labour in the long run but they don’t care, because like all politicians in our benighted country, they’re only able to deal with the short term. Their main objective is simply to retain power, not to look after the long term good.
I think that you mean all politicians everywhere,
Any government can make unannounced raids on wealth, but you can only do that once. Because people will not trust you again. That point about trust is the point about the UK as nation – people are willing to do business here and invest because the UK has slowly and painfully built the reputation of stable laws and playing fair with investors, regardless of Conservative or Labour. Once that reputation is lost, it ain’t coming back. And the second, related point is this: you can hit the types of people who have weath once, but those are precisely the people who have the options and skills to regenerate their wealth, but why would they then do it again in the UK instead of somewhere else?
Nelson also points out that the top 1% of earners pay 18% of all income tax receipts and the top 0.01% over 5%
Interesting. In the US the top 1% pay 46% of all income tax (for 2021).
https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2024/
The average rate paid by that top 1% was 25.9%. Go figure.
So much could be said on this topic, in addiction to the excellent article and comments.
Still, I would limit myself to one widely- known fact: dekulakization inevitably results in mass famine….
Enough said
‘Not an autobiographical detail’ means that Mr Franklin has never been to an overpriced strip club himself?
Maybe he went but didn’t buy any of the overpriced drinks.
What are we going to cut in terms of public spending, if we can’t ask those higher up the income or wealth scale to pay a little more? Cutting education just means your future workers entering your business, are less trained, cutting police means you have spend more on security features, cutting council budget means your car gets recked on the bumpy roads & you can’t enjoy the park, cutting the NHS means more people off sick, cutting benefit to borderline clueless mental means more crime and squalor.
Get used to it,the new mindset,the political administration don’t care,dont have to care,are not going to care. Open your eyes and smell the coffee,you can’t afford to actually buy one and drink it!
And I’ll tell you where you can see in plain view the result of rich plutocrats exodus. It’s the you tube channel of Hannah,lovely young lady has for several years now been treating us to shopping trips in bougie stores or meals in high end restaurants,that often turn out a bit more naff than their tv celeb chef owners would like us to know. Hannah is the least political person ever yet her recent forays into Bond St,Bayswater,Eaton Square and other traditionally exclusive neighbourhoods and venues have taken on an unavoidable tinge of political remark.at least. In lovely Hannahs innocent and ingenuous films MONEY FLIGHT is so plain to see and feel it’s like a whole zoo of Elephants.
This is the “somewheres” vs “anywheres” debate. Some are grounded, by disposable income mostly, in places. Some own houses in many places. When you are an “anywhere”, you have no loyalty to a specific place. This taxing scheme is not going to work.
The top 1% or so already have most of their wealth sheltered overseas in other countries, offshore trusts and tax havens. This is just a weak scare story, aimed by right wing “the rich are being picked on” nonsense. It’s also bolstering the “wealth creator” myth. Jim Ratcliffe pays no personal UK tax, hiding his money out in Monaco. The Dyson chappy likewise in his current domicile.
The rich have always hated paying high taxes and feel it’s disgraceful that they should be criticized for their objections. But just like Mick Jagger, et al who ran away last time Labour did this, they soon skulked back without a peep a few years later. The country needs higher taxes on the rich. Suck it up people!
Good points. Well, except for a bit too much familiarity with dodgy strip clubs.