Talent is being forced out of Britain by the twin blows of a levy on non-domiciled individuals and by the impending 50 percent tax rate on incomes above £150,000. The latest to go is reported to be David Landau, a philanthropist who made his fortune selling the advertising paper Loot, and who has given several millions to charitable causes in the arts and education. He has left for Italy. He will not be the last.
George Bull, head of tax at accountants Baker Tilly, warned that half of his US clients were considering leaving Britain because of the "double whammy" of the non-domicile levy and the new 50 per cent tax rate.
The Chancellor, Prime Minister and the Treasury blithely behave as if their new taxes on high achievers will yield the expected revenue without triggering any behavioural changes. They just cannot seem to get their heads around three very simple words: TALENT IS MOBILE.
Governments can tax land which is impossible to move. They can tax factories which are difficult and expensive to move. But when they try to tax talented people they run up against that mobility. The plain fact is that many high-earning individuals are able to move to a friendlier jurisdiction which does not take away most of what they have earned.
Guy Hands, the British head of private equity company Terra Firma, which owns EMI, relocated to Guernsey earlier this year. Many more have threatened to go, including Sir Michael Caine, Tracey Emin, Hugh Osmond – the entrepreneur behind Pizza Express – and Peter Hargreaves, founder of the investment company Hargreaves Lansdowne. Premier League football players including Liverpool's Xabi Alonso and Arsenal's Andrei Arshavin have also identified Britain's tax regime as a problem, raising fears of an exodus of top talent.
High earners do more than create wealth and help generate and sustain jobs; they act as role models to young people, and inspire them, too, to greater ambition and effort. Without these achievers Britain will become a duller, more mediocre place, as those who want to achieve things themselves and to make good in the process will go to do it elsewhere.
The pity of it is that it will all be for nothing. The Treasury will almost certainly raise less revenue, rather than more, as a result of its twin attacks on high earners.
Dr Madsen Pirie has recently authored "101 Great Philosophers".