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UK and California to lose millionaires due to wealth tax proposals

EditorAmbhini Aishwarya
Published 10/17/2023, 01:40 AM
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As per predictions by Henley & Partners, the UK is expected to lose approximately 3,200 dollar millionaires by 2023, largely due to taxation policies. A similar trend is also anticipated in high-tax states in the US such as California and New York, where a significant number of affluent young professionals are relocating to states with no personal income tax like Florida and Texas.

California's recent wealth tax proposal, which imposes a 1% tax on household wealth exceeding $50 million and a 1.5% tax on wealth over $1 billion, has reportedly caused discomfort among the wealthy. Norway too has witnessed a billionaire exodus following the implementation of wealth taxes.

Despite these moves, research from the London School of Economics suggests that the top 1% contribute 30% of all income tax revenues in the UK. However, the amount of tax paid can vary significantly depending on whether it's income or capital gains. About one-quarter of people earning over £1 million annually pay considerable taxes, while one in ten pays an 11% rate — equivalent to someone earning £15,000 (GBP1 = USD1.2197).

Research studies indicate that income tax rates have minimal effects on economic growth, with high growth periods often coinciding with high tax periods. Lower tax rates may lead to increased self-pay at the top, resulting in skyrocketing executive pay while lower-level wages stagnate. The proposition is that billionaires should contribute more taxes as they benefit from societal infrastructure.

Katharina Hecht from LSE’s International Inequalities Institute found that about a third of the top 1% and 0.1% earners in the UK support higher taxation for themselves to reduce inequality and fund public services, notably the NHS and education.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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