Two-Thirds of Millionaires Left Britain to Avoid 50 Percent Tax Rate
December 3, 2012
In Britain, figures show that a 50 percent tax rate on the country's top earners has resulted in less revenue for the government, says the Telegraph (U.K.).
- In 2009, more than 16,000 people declared an annual income of more than £1 million.
- However, since the 50 percent top rate was introduced before the 2010 election, only 6,000 people reported an annual income of more than £1 million.
- This has cost the UK £7 billion in lost revenue.
Conservatives are using this as fodder against the Labour Party's claim that a higher tax rate for the wealthy is necessary to increase government revenues. It is believed that many of the richest Britons either left the country or took steps to avoid paying the taxes. Moreover, entrepreneurs are deterred from coming to the country because of the tax rate.
In response to the failure of the tax increases, Chancellor George Osborne announced that the 50 percent top rate would be reduced to 45 percent from next April. Since the announcement, the number of people declaring incomes over £1 million has risen to 10,000. However, this is still below the number even at the height of the recession.
Osborne proposed a plan to eliminate the top rate for those earning more than £150,000. However, this was blocked by the Liberal Democrats because a mansion tax was not included in the package. Liberal Democrats have long advocated increases in taxes for multimillion pound properties.
As the government continues to debate tax policy, the Tories advocate a freeze on out-of-work benefits. Because an increase in inflation also means an increase in handouts, the unemployed are likely to receive a higher rise than most workers. However, the Liberal Democrats will only consider the freeze if taxes on the rich get increased.
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