What if 70% Tax Becomes a Reality for High Achievers in UK?

The latest talk in the British press is about the pre-Budget Report, due out tomorrow, and the fact that it is expected to herald even greater taxation increases for British residents in a bid for Britain to claw its way back from the brink of having its top-tier credit rating pulled.

The deficit is believed to be about to reach £180 billion by the end of 2009, and the Chancellor has got the next 4 years to halve it if he wants Britain’s competitiveness to remain intact, according to economists.  Therefore everyone is currently speculating about the levels Alistair Darling will go to in his pre-Budget Report in an effort to bring more money in to the economy and to pay less out…

So, what if the much talked about 70% tax becomes a reality in the pre-Budget Report for high achievers in the UK?  Business groups such as the British Chamber of Commerce have vociferously warned about a brain drain – but we’d like to suggest that whilst a UK exodus would be a reality, a national wave of depression would be an equal reality.  You cannot expect people to work hard all their lives, commute in the rain for God knows how many hours a day and then have to give up more and more of their wage to a government that wastes that money on bailing out banks and funding a war and ask them to remain happy about it…

There are those who don’t seem to think that up to a 70% tax on the wealthiest in our society is such a bad thing.  They talk about these people’s greed, and how it is right and fair that the burden of tax falls harder on them, relatively speaking, than anyone else.  Well, that is an argument for sure!  However, it is perhaps one that should be tempered with the point that those who earn high salaries put in at least as much effort as the average working person, they commute in the rain on terrible public transport, spend hours in the office away from their loved ones, give great commitment to their companies, strive so that they can enjoy the trappings of their success – and they are as equal in society as everyone else.  So why should they have the burden of the public deficit more heavily on their shoulders than anyone else?

How is it fair that if you work harder in your particular profession and therefore earn more, you are taxed more heavily and lose more of your wage to the taxman than anyone else?  What has that got to do with an individual’s perceived greed for wanting to earn a higher wage in the first place?

So, having put that argument to bed as best we can – let’s look at the reality of the situation in the UK at the current time, let’s examine what’s expected in the pre-Budget Report and what it could all mean for the number of British residents who are likely to emigrate in the future!

The British economy is in a dire state.  Fact.  The government has to do all it can to crawl back from the brink of economic collapse without causing a double dip recession, without making the nation any less competitive and without upsetting the country’s credit rating.  However, unfortunately that’s not a reality!  There is no way Britain can save its economy without making cuts here and there and damaging the reputation it once held as a strong nation with a solid and robust economy, in which it was safe and competitive to do business.

It’s expected that the government is planning greater tax increases – up to 70% on the income of the highest earners – and it is expected that at the same time, public spending will be slashed.  These efforts may well save the economy some cash – but they will impact heavily on the lives of everyday people and make the country a far less happy place to live.  After all, who wants to again live through a period in Britain where the country is crumbling, infrastructure is creaking, strikes are a reality, jobless queues are lengthening, more shops are boarded up and no one is investing in anything because Britain is not considered worth it.

The last time taxes were anywhere near as high as are being discussed currently, the brain drain from the UK became an ever greater visible reality on a daily basis!  This time around, voices such as those from the British Bankers’ Association and the Chamber of Commerce are trying to shout loudly enough to discourage the Chancellor from making a damaging mistake.  Businesses will relocate, individuals will emigrate, people will do all they can to avoid the excessive levels of taxation.  No one will stand or sit still and take on an extra tax burden.  It will not happen.  All that will happen is that the UK as we know it will be damaged further as talented people leave, they will take with them the taxation revenue they would have paid into the economy had tax remained at a palatable level, no new nations, corporates or individuals will invest in Great Britain and it will take the country a very long time to achieve fiscal stimulus.

If the 70% tax becomes a reality, Britain can kiss goodbye to economic strength for a very long time – but let’s see what Alistair has for us in the pre-Budget Report tomorrow and take it from there…