From the TUC

Attacks on the PBR 2

26 Nov 2008, by in Economics, Society & Welfare

Some commentators think that the rich will mainly accept the PBR’s higher tax rates, but it hasn’t stopped all the usual arguments coming out of the woodwork.

We’ve already met Mr Dampier and we all feel really, really sorry for him.

The Guardian says that:

London property firms, already struggling from the downturn in the fortunes of City workers, immediately dubbed the tax rises a “body blow” to the capital and its future as a financial centre. They said the tax rises, which follow the £30,000 charge on wealthy non-domiciled workers introduced this year, were “short-sighted” and would further discourage companies from basing their operations in London.

And the London Standard says that:

“Tax hikes ‘will cause City exodus’

SENIOR City figures today warned of a new “brain drain” that will threaten London’s status as the world’s leading international financial centre. They said Alistair Darling’s decision to focus tax-raising measures on high earners will push many hedge funds and other firms into abandoning London for alternative bases such as Geneva.

but perhaps they won’t as:

“Accountants were busy today looking at schemes to prevent City high-flyers and other top earners being hit by a massive near-60% rate of taxation on their pay packets.

There were immediate predictions that share schemes in which high earners get paid in their employers’ stock will come back into fashion to reduce their tax liabilities to less than 20%.

Indeed the IFS say that avoidance will be such that this might not raise any extra cash for the government (though they are clear that this is very hard to estimate).

But the right – and popular – conclusion from this is that such modest increased expectations on the rich should be done in a way that they cannot avoid or evade.