Top rate of taxation too high?

Interesting post from the Spectator about cutting the top rate of tax. Obviously a very right wing view and some quite tendentious use of figures: 

“Just 44 per cent of millionaires are committed to staying in the UK, while nearly 8 per cent are actually planning to leave, according to a June survey by Skandia. High taxation was the most frequently cited reason for leaving”

 Note they have no figures for people actually leaving!

  I am, however,  struck by a couple of points that are worth using in any essay about how little government control there is over the economy.

For the rich, taxes are a voluntary contribution

With the new science of ‘wealth management’, there are now convenient and legal ways for high earners to arrange their finances so they effectively decide how much tax they pay. A ‘tax-yah’ – spending a mid-career tax year abroad so one can claim non-residency to Britain – is now de rigueur among the rich.

The wealthy can also: move from income investments to investments that are subject to capital-gains tax; transfer income-producing investments to a spouse; set themselves up as a company; engage in ‘salary sacrifice’ such as opting for enhanced benefits at work rather than a pay rise. Venture capital trusts, offshore bonds, enterprise investment schemes – all these financial products

The UK is plunging in tax competitiveness

All over the world, nations are using income tax as a tool to attract high-income individuals, slashing top rates and the like. This means the revenue-maximising rate of income tax is falling globally, as the wealthy move money to friendlier tax regimes. While it’s hard to compare income-tax structures across countries, given their complex nature, the global revenue-optimising rate of corporation tax has fallen to 26 per cent, from 34 per cent in the 1980s.

Meanwhile Britain has gone the other way – our tax structure has been made more punitive. The results are only too real – Twitter relocated its international HQ to Ireland partly because of the lower corporation tax rates there, for instance. The UK now has one of the least competitive tax environments in the world. Since 1997, we have dropped from 4th place to 95th in the World Economic Forum’s tax competitiveness ratings.

The whole article can be found here - http://bit.ly/t2Hu14