Our book, Flight of the Golden Geese, will be out in February 2015. Its message has leaked out early. The wealthy are tired of being taxed ‘until the pips squeak’. We are warning that these geese that lay golden eggs are gathering in numbers, preparing to fly away to more welcoming tax jurisdictions. Every time a populist politician dreams up a way of robbing the rich, more of the wealthy are making plans to escape.
“You can’t make the poor richer by making the rich poorer”: a quote attributed to both Abraham Lincoln and Winston Churchill. Having money means you are able to fight back, and the simplest way is to leave, so the Treasury not only fails to gain from the new taxes, they lose the huge amounts that they would have made from taxes the leavers would have paid.
The Mansion tax, touted in the UK by both Labour and the Lib-Dems in order to win votes from the vindictive losers in society, is but the latest example.
Griff Rhys Jones, the well-known comedian, summed up his position, like so many self-made men and women. “I mustn’t equate my own personal angst about the mansion tax with a national policy angst. No way. It’s quite likely that the population is very keen on seeing rich people squeal. So I’m not going to squeal to make them feel better.”
He said he’d sell his large house in Fitzrovia, which he bought fifteen years ago as a slum, and renovated the property. If labour wins the next general election he says he will move overseas.
Sol Campbell, the former England soccer star, called the tax “a cheap and easy way to extract money from people who have done well.” He has gone so far as to put his house on the market for £25 million.
If enough of the wealthy follow suit and sell up, and significant numbers of foreigners reverse the trend of buying property (in London), then we will see a slump in house prices. A good thing for the first time buyer? Not necessarily. The high level of property prices, increases the scale of repayable debt among the population and maintains the value of the capital assets of the state, which in turn underpins the strong value of sterling. A drop in house prices leads to huge negative equity, consequent reneging on debt a la the US subprime mortgage debacle of 2008, less house building, increased unemployment, a lowering of the tax take, and entry to a vicious circle of calamity for the economy.
But what the hell. “Don’t tax you. Don’t tax me. Tax the guy behind the tree.” What do you mean the guy behind the tree has flown away?