Would a Corbyn government trigger a mass exodus of wealth?

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A Jeremy Corbyn-led government will lead to an exodus of high-net-worth individuals from Britain, warns the CEO of one of the world’s largest independent financial advisory organisations.

The warning from deVere Group’s chief executive, Nigel Green, comes as UK Prime Minister Boris Johnson today launches his official election campaign with a column in The Daily Telegraph in which he compares Labour Leader Jeremy Corbyn to Stalin over his “hatred” of wealth creators.

Mr Green notes: “Whilst I wouldn’t have used the language employed by Mr Johnson, through his anti-business rhetoric, and high tax and low-profit policies Jeremy Corbyn does routinely take swiping broadsides at the wealthy.

“It’s our experience that an increasing number of high-net-worth clients are legitimately worried about the damaging impact of a Jeremy Corbyn-led government on their finances.

“There are real concerns from these individuals that should Mr Corbyn sweep into power he would increase inheritance taxes, income taxes, stamp duty and capital gains taxes, potentially even roll out capital controls, and slash other areas, such as pensions tax relief.”

He continued: “I believe we can realistically expect a Corbyn government would trigger an exodus of the country’s most successful and wealthiest individuals who contribute a disproportionately high amount both directly and indirectly to the British economy.

“Soaking the rich doesn’t work because these people, typically, have the resources to move to lower tax jurisdictions if the tax burden in the UK becomes too great. They are internationally mobile.

“Should these largely job and wealth-creating individuals emigrate – and according to our anecdotal evidence a high number very well could – government finances will suffer considerably because they contribute a disproportionately large amount to the state’s coffers.”

Green added: “It would also likely deter top international talent and investors from coming to the UK too, which would negatively impact long-term, sustainable economic growth prospects.”

The deVere CEO concluded: “If Mr Corbyn is serious about having the better-off pay more tax, they should cut rates further and allow them to become wealthier.

“This would incentivise top achievers, who prop-up ‘The System’, to remain in the UK. However, I suspect that implementing this economically-sound philosophy would be political suicide for Jeremy Corbyn.”

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  1. It’s a familiar argument – the super rich will leave if their ability to avoid tax is in any way impinged upon by government. But beyond a few anecdotes and threats, there’s little evidence it happens. Cristobal Young’s 2018 book ‘The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich’is worth a read if you want the real picture. And even if some were to leave, given their tendency to avoid tax wherever they are, would it be economically significant? It’s similar to the thinking behind the Laffer curve in which tax revenues supposedly tail off if you raise rates. It was an invention used by Rumsfeld et al to persuade Reagan to drop tax rates for the rich, a policy that resulted in the US national debt rising from $997 billion to $2.85 trillion during his presidency. Meanwhile there is ample evidence that inequality itself drives all sorts of social ills with enormous economic costs, so perhaps the net effect of a few conspicuous billionaires taking their wonga elsewhere would be positive. Do we want them here if they don’t want to support our public services? I also question whether lower tax rates make the rich less likely to avoid paying tax. Their tax affairs are managed by advisers, who will always be looking for ways for them to pay less. A cynic might wonder if perpetuating myths about tax flight is just another ruse by the rich to frighten voters off choosing a government that might make them pay a bit more.

  2. As I recall, that has been the mantra every time an election loomed, but strangely, when Labour took office, the few that may have departed were dwarfed by the massive inwards investment that occurred. How many names have left during these last ten years with the Tories in power, how many major retail chains gone under, how many small businesses too.?
    But it’s not only financial mistruths it’s the rhetoric about the crime levels, the military, the NHS, immigration, you name it, the right leaning factions invariably oversee all those aspects of the social spectrum rise and rise, as they dramatically rise in importance on their watch but drastically diminish under a Labour administration.

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