Bloomberg and Mugging the Rich
I am not a fan of Bloomberg News, finding that it’s about as whimsical as the billionaire mayor of New York City who founded it. But even a blind squirrel finds a nut every once in awhile. Today’s bit of acorn goodness is about taxing the rich, “Taxes on Millionaires Make Great Politics, Poor Economics.” This is something that libertarians and conservatives have been saying for awhile, even before Bloomberg leapt into bed with the Occupy movement last autumn. Now Bloomberg seems to understand a basic economic fact: People are not going to stand around and get mugged if they can make a run for it. Case in point: 50 percent tax rate for people earning more than 150,000 pounds enacted in the UK.
To give an idea of the distorting effect of ill-conceived taxes on the rich, consider the 50 percent tax rate for people earning more than 150,000 pounds that Gordon Brown, the U.K.’s last Labour prime minister, introduced just weeks before losing elections to Cameron in 2010. The U.K. Treasury estimated the increase would generate an extra 2.4 billion pounds a year, adjusted for all the people who would respond by leaving the country or designing ways to avoid the tax. If no one changed their behavior, the tax change would raise more than double that amount, 7.8 billion pounds. Cameron’s government says it wants to reverse the 50 percent tax rate, just two years after it was introduced.
(A)djusted for all the people who would respond by leaving the country or designing ways to avoid the tax... The wealthy have the incentive to avoid taxes, and they have the methods to do it (move the wealth offshore, hire tax accountants like conglomerate GE does to find every possible loophole and deduction.)
Glad to see Bloomberg wake up from its stint with the unwashed in Zuccotti Park and shower up to economic reality.
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