Monday, December 07, 2009

let he bankers go

there seems to be an inordinate fear of taxing people that earn silly money based in the theory that when you have a higher tax bracket for bigger earners, they will go elsewhere and take their money and skills with them.

Firstly, there isn't a lot of evidence for this - we've had different tax rates in different countries at different times - I dont see any correlation between GDP or quality of life of a nation and whether it has high tax for high earners - people choose to stay or go based on many factors. secondly, there's plenty of evidence that countries like Ireland and the UK (and probably the US) that give huge tax breaks to the ultra rich, actually end up in a state of hopeless corruptin in the financial services area with government implicated alongside it (see Fintan O'Toole's excellent "Ship of Fools" recent book about the Celtic Tiger trainwreck).

Of course, there's a risk of losing businesses, if you tax an industry significantly more than elsewhere, if the industry isn't just geo-politically tied to an area (i.e. isn't goods, services, housing, transport, energy, food, for the local people). Of course things like financial services are about as virtualised and non-local as you can get - so in this global economy, we want the services here, but do we care who runs them? do we really believe that if we tax bankers (see
bbc report) then all the "talent" will leave the sector?
1/ what talent?
2/ where are they going to go if the services stay "here"?
3/ lets try it and see :-)

2 comments:

瞌睡蟲 said...
This comment has been removed by a blog administrator.
clog said...

google CEO seems t agree with me, viz today's telegraph interview...

http://www.telegraph.co.uk/finance/financetopics/davos/6953842/Googles-Eric-Schmidt-on-why-bankers-deserve-little-sympathy-and-Obama-does.html