Yes folks, believe it or not, it’s true [emphasis mine]:
In the 2009-10 tax year, more than 16,000 people [in Britain] declared an annual income of more than £1 million to HM Revenue and Customs.
This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election…
It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.
George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.
Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.
However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.
Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.
Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.
We don’t know what really happened to all those millionaires, or why. But that up-down-up-down pattern is mighty indicative that the tax-raise and tax-cut were partly or even mostly to blame.
And it’s “interesting” that a lot of people don’t seem to get the difference between tax rates and tax revenues, the difference that makes a difference. So, why don’t they get it? One reason is that tax rates are something you can legislate, whereas the tax revenues that result can only be estimated (often wrongly), calculated ex post facto, and any drop can be blamed on some other factor.
What’s more, tax rates are what politicians campaign on. Lately the public seems to like to stick it to the rich, and so liberals who advocate such tactics (such as our very own president) are often elected. What happens later in terms of actual revenues is easier to ignore and/or explain away—and after all, what we are really interested in these days is the show, the narrative, the appearance of things (fairness! reducing income inequality!) rather than the actual long-term results.
[NOTE: And yes, I’m aware of all the brouhaha around the blogosphere lately about the fact that the higher rate is not paid on the millionaires’ entire incomes. I’m not going to get into that issue right now, except to say that there’s disagreement among more expert pundits than I on the subject of how much the tax hikes really affect the rich. Here’s a summary of some of the major points, and also see this.]