to think 51% tax is ridiculous, and already to be planning to move to Asia

[hedgiemum]

Namechanged. Married to someone who earns well in excess of £150,000 a year, though neither does he earn 7 figures.
He is still quite young in his career - a recent promotion to a senior position, but has not been earning this kind of money of long, so we still have a mortgage and haven't saved large amounts (what we have saved is through his pension which is no longer going to be particularly worth doing.)

He phoned me a minute after end of budget to say he'd watched it with his boss whose reaction was that he would move the company (not a bank, but in finance) to Asia. Probably Hong Kong - 12% tax rather than the 51% we'd be paying here.

Seems like a kneejerk reaction, and clearly we can afford to pay more, but boss doesn't feel he'll get good productivity from staff if they are getting to take home less than half their income. Plus it decreases ever-present risk of them being headhunted by companies in lower-tax economies.

AIBU to be PLEASED (I used to hate tax exiles.) Partly because it just does not seem fair. Partly because this country has been run so badly by New Labour of whom we had such high expectations, and the medical care we have received has been shite, the local schools are shite, the roads are insanely busy and yet is costs so much to live here.

All this bravado and thumping on tables saying that people will leave the UK is rubbish and a knee jerk reaction. It's 51% on amounts over £150,000, honestly it's not enough for the hassle of going elsewhere.It's only an extra £100 per £1,000 over £150,000 there were paying anyway.

The real problem is it is a ridiculous policy as it will raise so little money. Complete and utter publicity stunt and everyone is going to be taxed to high heaven for the next ten years, they just need to get the election out the way first.

Actually the new tax increase combined with the reduction in personal allowances for high earners means that the marginal rate of income tax for certain chunks of income over £150k is now 60%, the highest rate in the developed world. That will definitely impact the incentive factor.

I think a few will leave but mostly it is bravado. But is just such a shock - to be told that overnight you'll lose thousands and thousands of pounds. It is very hard to say 'whoopee, I'm only to glad to fill the whole the bankers have left.'
Coincidently DH was offered a job yesterday in a country with 0% tax but he won't take it as it's not somewhere he wants to live. Similarly I could live in Ireland and pay no tax - but I don't want to. I do wonder though if tax kept going up and up whether I'd rethink that.

I love Wilf's 11.45 post

The liberal-lefties are BACK and we are SLIGHTLY BLOODY ANNOYED

too and hole obviously.
Sky - I think that's right. More like 60% than 50%, then there's the pension stuff, which given DH and I are self employed is a big factor.
It did make me gulp.

I'm sure there will be some flight of capital - there are always going to be a few selfish tossers who choose to opt out of the social contract because they don't want to support the vulnerable - just as there are always one or two badly brought-up children in a classroom who simply cann't see why they should share.

I think it's inevitable, and it's what drives the pendulum-style political system - socialism represents social conscience/collective responsibility (the clue's in the name) and conservatism represents the selfish individual's desire to conserve his slice of pie without having to give a crumb to anyone else.

Moving to HongKong would be a fantastic idea!!! Have lived there and rest of SE Asia as an expat for couple of decades and would go back in a heartbeat.
Great expat schools, fantastic level of education, affordable household help, great climate. A bustling cosmopolitan city that has some of the wolds best beaches and resorts just an hour away, very central for travel in the region.
Most of all, an absolutely fantastic expat community.

I would have thought that a 50% tax rate only makes sense if it results in increased tax income plus capital inflows for distribution. Otherwise it's not a progressive tax and may actually be regressive (i.e. businesses and rich people relocate and/or use tax efficient schemes, net tax inflows fall, public sector spending is reduced, less well off people see services cut).

The balance is clearly whether the increased tax revenues from the higher tax rate are offset by reduced tax income (from individuals and companies relocating) and reduced capital investment by firms in the UK. I don't know the answer but I suspect it's a very fine balance.

I read somewhere this morning that to really effect some redistribution in this country, we need more property taxes as well as income taxes.

This new 50% tax rate raises tiny amounts. And if it desperately needs doing, and the wealthy really don't need that income then why didn't it come into effect immediately?

Yes, that's a key prob, isn't it? £150 000 and over is only 1% of the pop I think. Is it just a gesture, to keep the heartlands happy??

theoldestcat - my point was that 3x a £150k salary still doesn't buy you much anywhere in greater London and a year ago probably wouldn't have bought much in Lewisham. If you are on significantly less income, you probably bought quite a while ago.

I really hope the tax heavens will get regulated. It is also worth remembering that those are the places where major money laundering takes place.

By 2012/13 the higher tax rate will raise an additional seven billion. That's hardly small beer now is it? Sounds more than worth having.

Threadworm: yes, I think you're right, there's a rather good piece by Anatole Kaletsky in The Times on it today. The 50% tax rate is really about electioneering and taking a populist stand by taxing the "fat cats" rather than any economically coherent policy. The fiscal impact is at best probably neutral and may actually slow recovery from recession if capital inflows and investment into the UK economy slow as a result.

Sorry, but as an American living in the UK, I cannot believe the nonsense spouted by another American on the thread. The economics in the US are ridiculously skewed so that the rich get richer and the gap between the rich and everyone else widens every year. It is far from the "land of opportunity" that people spout on about. Children without access to medical care due to no insurance, homeless, gangs, violence. I prefer the UK, which at least looks after it's own to some extent with some family friendly work policies and the NHS (which I think is wonderful). At least here, children all have access to medical care without having to worry about affording it, which is more than I can say about the US. Yup, trip on back to the US if you don't like it here. God, I tire of the rampant over-patriotism that makes people think you can live in another country and then spout about how yours is so much better - especially when it really isn't. Sorry, rant over now.

Yeay Triggles. We're glad you're here..

samsonara, can you explain how the Scandinavians are still going, after 50 odd years of high taxes if all it leads to is people going off and taking their money with them

I would suggest that in a country where the state is actually working to some degree (so not the old communist countries, obviously), this doesn't happen to the extent that people believe. Ok, some rich whingers go off, some have left Scandinavia, but to everybody's surprise it turns out they were not as irreplacable as all that. The countries still keep going. As no doubt will this country.

I think much of the thinking behind it is to punish the rich who the country some how blame for the economic crisis. I've seen it said countlessly on here that those of us on 150k should pay more to help bail out the mess we've caused.
I've tried to point out that really, many of us had nothing to do with it but people don't want to hear that - which goes to show that it probably be popular.

It's ridiculous to say £150k in London doesn't make you rich. DH and I live in London and earn a lot less than that combined and we manage to have a nice 3 bed house with a pretty big mortgage (bought only 3 years ago so not when houses cost pennies) a car and a DD - if we had £150k income we would definitely be very rich indeed!
Like theoldestcat we live in a more affordable area in SE London (Lewisham).
OP doesn't realise how lucky (and rich) she is and needs to stop complaining.

Smee - ALL the increases will raise £6bn by 2012 according to the BBC (so that includes duty rises etc) not the 50% tax rate from 1% of the population. There are just not enough people earning this amount to raise any real revenue.

This really is nothing more than a PR excercise as only 1% of the nation are negatively affected. The general public see it as a tax on 'bankers' and therefore everyone is happy.

What I don't understand is why there is no geneuine ire against a government who has so spectacularly mishandled this economy, we (and I mean ALL of us) will be paying for this for decades, we will all be worse off.

We could reduce taxed and improve public services if only we could go back and not get involved in vastly expensive wars.

Cory - though isn't it the case that many would stay in the Scandi countries because the servises really are second to none whereas here they can be seen as poor. And indeed these increases are not for improvement to services but to shore up the hole of debt.

Goodnightmoon, until Dec last year our combined income was less than £23000, yet, surprisingly, we managed to live quite comfortably in sunny Lewisham. People have been known to rent you know. Property ownership is not mandatory.