Will 50% tax rate cause a mass exodus from the UK?

*Note that from 2013-14 tax year the top rate of tax in the UK has been changed to 45%. However the aggressive tactics of HMRC and overall tax burden on high income earners means there is still a flight of capital from the UK.*

On the heels of Wolseley uprooting to Switzerland http://www.thisislondon.co.uk/standard-business/article-23884845-timing-off-as-wolseley-takes-a-tax-break-in-switzerland.do apparently 1/5 big corporations have are considering leaving the UK http://www.telegraph.co.uk/finance/economics/7962524/Tax-regime-drives-20pc-of-big-businesses-to-consider-leaving-UK.html and it's hardly fairly easy to see why. Why pay 28% Corporation Tax when you can move to Ireland and pay 12.5% or Switzerland and pay 10% (depending on Canton)? Add to this the ridiculous amount of red tape,  a lack of transparency from HMRC, the Tier 2 Work Permit caps and the threat of regulation.

Further, the recent increase in the higher rate of personal income tax (to 50%) has also resulted in a mass exodus of high income earners. Reportedly 1 in 4 hedge fund managers have already moved to Switzerland, http://www.ft.com/cms/s/0/19d6e46c-cd97-11df-9c82-00144feab49a.html?ftcamp=rss.

It is understandably that the government need to claw back some of the massive debt they inherited from the Labour Party but surely driving away international organisations, higher income earners and any potential high income earners is not necessarily the right way to go about this. It would appear that the only beneficiary of this sort of legislating is the Swiss Cantons tax coffers.

Big business and its employees are not going to pay the bill for the mismanagement of the economy by the previous administration when they can just as easily pack up and move to Switzerland. Morally reprehensibly as it may be (particularly given that many of them are in part responsible for the current situation) this is the reality and unless the government acts to retain these organisations the UK is going to find it infinitely more difficult to crawl out of this economic situation.

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