New York and California have demonstrated what happens when governments try to soak the wealthy for more taxes, the wealthy leave. Before Britain’s last general election the country’s government raised the top tax bracket to 50 percent. Needless to say the things went exactly as expected:
In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.
This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.
One of the reasons taxing the wealthy to makeup for government shortfalls doesn’t work is because the wealthy have the means to leave. What motivation does a person making $1,000,000 have to stay in a country if they are being forced to give $500,000 of it to the government?
Of course this only applies to declared income. As we agorists know the state can’t tax what it doesn’t know about.