1. Home
    2. »
  2. Inflation
    3. » Do rich people make others poor?

Do rich people make others poor?

Inflation
henry

Our tax revenues go down as taxes go up

By Sir johnredwood on June 14, 2025

The OBR in March, reviewing its budget forecasts, quietly cut its forecast for capital or wealth taxes by £2.8 bn for 2025-6. It slashed £5 bn off the forecast for 2028-9, an 18% fall to a £23 bn total. Capital taxes are Inheritance tax, capital gains tax and Stamp duties. So much for Labours plan to soak the rich to pay for everything.

The government has to learn that energetic entrepreneurial people and people who have worked hard and built up their savings do not need to stay here to pay extra taxes on their efforts. Indeed they are leaving in their droves for lower taxes and sunnier climes. We are not just losing the ultra rich, the Non Doms driven out by the abolition of the right to just pay here on their wealth and earnings here. We are losing the modestly affluent, retiring abroad, and young strivers who want to set up a business or get a well paid job somewhere where they can keep more of the reward.

It is also the case that those with savings and wealth who do stay decide to pay less capital tax as the rates go up.People with second homes bought a long tine ago do not feel able to swap them for a more appropriate sized or located property because the CGT and Stamp Duty is crippling. Housing becomes less well adjusted to needs as a result. People with shares bought a long tine ago, or tec shares bought well more recently sit on large capital gains. They are not going to switch the capital into something new or better if they face a big tax bill to do so. Capital is less well allocated and the government loses out on Stamp duty on switching assets.

Jealousy is a bad basis for public policy. The notion that there enough rich people to stay and pay even more of the tax to cover a spendthrift government has always proved wrong. 1970 s UK had the brain drain with sky high tax rates. The Labour government had to borrow from the IMF and cut public spending as tax revenues disappointed. Cuba and Venezuela impoverished themselves by blaming the rich.

Tags