Britain’s missing millionaires a lesson for California
Californians okayed Governor Brown (and the labor unions’) plea for 30% higher taxes on the rich — making the “Golden State” BY FAR the highest income tax state in the nation. Perhaps voters should have first looked “across the pond” at England’s similar “soak the rich measure” recently put in place.
Britain raised its income tax rate on the wealthy from 40% to 50%. According to the WALL ST JOURNAL editorial below, the following year the number of millionaire tax returns dropped more than 60%. Just a coincidence, I suppose.
Some of the wealthy left the country, others rearranged their finances to avoid the new 10% tax increase — which resulted in less of the OLD 40% tax being collected.
The year before the tax passed, millionaires paid “about £13.4 billion to the public coffers, or just under 9% of the total tax liability of all taxpayers that year. At the 50% rate, the shrunken pool yielded £6.5 billion, or about 4.4%.”
The 10% tax increase was supposed to raise an additional £2.5 billion. Yeah, THAT went well!
California’s experience could be even worse, as the wealthy seldom leave a country because of taxes, but they are highly mobile, and too often will leave a high-tax state.
- REVIEW & OUTLOOK EUROPE
- November 29, 2012, 2:56 p.m. ET
Britain’s Missing Millionaires
Income tax rates rise but revenues fall.