Capital flight is a really big risk with this idea. I don't see the ignorance in that comment but then I am not an economist.
Land wouldn't be moved but what about the other taxable wealth items such as insurance, corporate stock and bank deposits.
Land wouldn't be moved but what about the other taxable wealth items such as insurance, corporate stock and bank deposits.
However, looking at the history of tax rises and the competitive landscape, people don't move.
Broken down:
UK top rate tax was raised from 40% to 50% two years ago. They said people would leave. No-one did. Actually, more wealthy from BRIC nations came to the UK
The US is the only competitive English speaking country for people from the UK to move to. And I'm sorry to say that US taxation is horrendous and massively uncompetitive.
So while capital flight is a risk, it is improbable.
Income can already be circumvented by leaving money in corporations or paying out to subsidiary companies. There are so many ways people can declare lower income that the 10% becomes insignificant in the big picture.
Capital flight/wealth tax is a different ballgame, I think.
Under this system, both corporates will pay 3% on all UK based revenue, so that they pay the same proportion as everyone else.
More tax from the wealthy, and a reasonable proportion from those who are currently on the poverty line (which is many million people).
Also, would the wealth tax be placed on the stockpile of cash/assets of businesses? I.e. their properties, bank deposits, and so on.
But bear in mind Google's margin is 24%+
So basically businesses would charge a sales tax (3%) increasing prices for the consumer.
Then the consumer would also pay 3% income tax. The consumers would pay 4% wealth tax. The business pays 3% revenue tax, taken from the consumer. The business wouldn't pay 4% wealth tax. Essentially the business would pay 0% tax, and the consumer would be on the hook for it all.
So a person who earns $50,000 and saves $20,000 per year would pay the following: Year 1, $1,500 on $50,000 Year 2, $1,500 on $50,000 $20,000 from previous year saved - 4% tax $800 a year $2,400 in total taxes. Year 3, $1500 on $50,000 4% on $40,000 = $1,600 $3,100 total tax
By year 20, the consumer who would have accumulated $400,000 would end up paying a total of 170k in taxes on savings, resulting in almost a 42% tax rate on their wealth.
The US and UK are slowly becoming dinosaurs. The amount of taxes they need to keep functioning as handout societies will be the end of them.