So it’s no more pretending. In his latest outpouring, Ed Milliband is clear that Labour Party policy is the unfettered politics of envy. Whenever the word `fair` appears in their propaganda you can be sure they are pandering to the petty, mean-spirited and vindictive among the electorate. Will they ever listen to Abraham Lincoln’s profound words: “You cannot help the poor by destroying the rich.You cannot lift the wage-earner up by pulling the wage-payer down”.
So it is with Milliband’s determination to end non-dom status in the UK, irrespective of the damage it would cause to the economy. Be sure these high net worth individuals (HNWIs) will leave, just as we describe in Flight of the Golden Geese (www.flightofthegoldengeese.com), taking their spending power, their innovation, and their creation of employment with them. Furthermore, if these HNWIs sell up, then property values will drop across the board, eventually hitting sterling.
The simple fact is that these people don’t need to be here. HNWIs are made to feel welcome most places in the world. They are no cost to the state, and they are bringing `free` money into the economy. No doubt there will be many whingers who will say `good riddance` when they pack up and leave … just like they said in France. And look at the mess they are in.
Far from raising billions in taxes, this programme is likely to see a fall in tax revenues, as the taxes HNWIs do pay will cease, and unemployment will increase in the service and entertainment sectors.
There is no such thing as Newton’s Law of Taxation: where to every action (that is an increase in tax rates) there is an equal and opposite reaction (namely everybody pays up in full). According to politician’s simplistic arithmetic logic, tax creates a revenue stream, and higher tax levels make for a larger stream. Not in the non-linear world of consequences, of the Laffer Curve, it doesn’t.
The only law the Revenue should consider is that of Diminishing Returns. Taxing is disturbing. There is an uncertainty principle at play here. The act of taxing disturbs and changes the attitude of the persons being taxed, and those doing the taxing. Keep increasing tax levels, and the tax-base collapses. And when the tax-base collapses, so does the economy, and ultimately so does the country. Death by taxes – a lesson that every socialist state eventually learns.
Unfortunately the rate of tax needn’t even be that high – the mere introduction of a new tax is interpreted by HNWIs as a statement of intent, a signal of more to come. And be sure these Golden Geese will fly away.