Monday, 27 April 2009

Incentives matter: income tax file

From the an article, We’re fleeing high-tax Britain, say City tycoons, from the Times Online.
Two of Britain’s best known entrepreneurs are considering leaving Britain in protest against Alistair Darling’s new 50 per cent tax rate, as leading figures from business and the City warn of a talent exodus.

Hugh Osmond, the pubs-to-insurance entrepreneur, is thinking about a move to Switzerland. Peter Hargreaves, the £10 million-a-year co-founder of Hargreaves Lansdown, the financial adviser, is looking at the Isle of Man or Monaco. More are likely to follow.

Osmond, whose net worth is estimated at £230 million, said: “A lot of people will be off. It’s highly unlikely that I will continue to have the UK as my country of residence. It’s just as easy to work from any close location – Switzerland or wherever.”

Hargreaves, facing an extra £500,000 on his tax bill, warned: “I won’t pay, I’ll leave.”

Robert Pfeiffer, a partner at Compass Advisers, a mergers and acquisitions firm, said that businesses such as his did not need to be based in Britain. “We all love living in London but in the end it becomes an economic decision. The clients don’t care.”

He and his partners were discussing a move to Geneva. “Do we want the hassle of moving? Probably not. But there comes a point economically when it’s hard to justify being here.”

And Philip Lambert, chief executive of Lambert Energy, said his consultancy was “seriously considering” relocating abroad, saying the state had “total hostility or apathy towards entrepreneurs”.
Greg Mankiw asks,
Do economists tend to migrate toward low-tax states? I have not noticed much evidence of it, but perhaps they should.
I'm thinking that few of them make enough money to make it worthwhile. Except, perhaps, those who write bestselling textbooks!

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