This is actually not a bad point. Or, rather, in the short term, it isn't a bad point. But I think that the problem isn't so much that people would leave, in that new people wouldn't come. This is what happened in the 1960s and by the mid-1970s it was assumed that New York and Frankfurt would be the future centres of finance. And where is Frankfurt in the world of finance today? Nowhere, buried under German bureaucracy and UK laissez-faire. And, sad though it might be to say, that brought a lot of wealth into the UK (not least a support of asset prices), which many of us have been living off.
The tax level that you want to impose on anyone is the tax level that will maximize income without causing a revolution. This is not necessarily the highest tax rate, because the Conservative argument is that lower tax rates stimulates financial activity which, eventually, increases the overall take.
As an addition to this, of course, is tax enforcement, an additional complication whose cost/revenue factor has to be added into the mix. I didn;t say it was easy :-).
The general solution is to "tax what you can" rather than "tax what you should". Hence the increase in stamp duty on property purchases -- something that you can't take offshore and something which you can't do much "under the counter". However, the downside is that it causes a reduction in mobility of labour. However, if we brought in some "tax what you shoulds" and introduced tougher enforcement and propaganda to "bring people round", you might get a better long-term result.
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Let 'em go
Date: 2010-05-05 12:40 pm (UTC)The tax level that you want to impose on anyone is the tax level that will maximize income without causing a revolution. This is not necessarily the highest tax rate, because the Conservative argument is that lower tax rates stimulates financial activity which, eventually, increases the overall take.
As an addition to this, of course, is tax enforcement, an additional complication whose cost/revenue factor has to be added into the mix. I didn;t say it was easy :-).
The general solution is to "tax what you can" rather than "tax what you should". Hence the increase in stamp duty on property purchases -- something that you can't take offshore and something which you can't do much "under the counter". However, the downside is that it causes a reduction in mobility of labour. However, if we brought in some "tax what you shoulds" and introduced tougher enforcement and propaganda to "bring people round", you might get a better long-term result.