Eat the Rich

How's that 'soak the rich' policy working out? The London Times reports on the reaction to the new 50% tax rate on banker's bonuses:

Britain’s financiers and entrepreneurs are quitting the UK at a rate of 10 a week to avoid Labour’s new 50% taxes.

The burgeoning exodus threatens to deepen a £178 billion black hole in the public finances and leave middle-class voters with higher taxes for years to come, figures obtained from Companies House reveal.

The number of directors of British businesses registered as living in the low-tax centres of Jersey, Guernsey or the Isle of Man has risen by almost 500 to 6,729 in the past 12 months.

The British Virgin Islands is also a popular destination, with 615 directors of UK companies now based in the Caribbean tax haven — an 18% rise on a year ago.

Those known to be fleeing the UK include hedge fund managers, property tycoons, bankers and people who made their money setting up companies organising private healthcare, call centres and luxury holidays.

“The UK model is broken,” said Stephen Hedgecock, a partner in Altis, a £1 billion hedge fund company with 35 staff that has relocated to Jersey, leaving only a small presence in London.

“It’s not just the 50% rate — it’s National Insurance, the treatment of pensions ... everything. It’s just a ridiculous amount of taxation.”

Russell Newton and Danny Masters, co-founders of Global Advisors, another hedge fund with hundreds of millions of dollars under management, also abandoned London for Jersey’s thriving finance community in the summer.

Another 100 Britons have begun working in the island’s businesses since the downturn began two years ago. The Jersey government said it had seen a 20% increase in interest from people looking at moving to the island. A new marketing brochure published by the island’s authorities promises “in Jersey, keep more of what you earn”.

The authorities impose corporation tax at 10% and income tax at 20%. There is no inheritance tax or capital gains tax. Property taxes are also low.

Jersey Finance, an agency set up to attract financial talent to the island, has held a series of private dinners in London to woo new residents. Geoff Cook, the agency’s chief executive, said: “The 50% tax rate does seem to have been the tipping point for many people.” However, the island’s authorities maintain that the rich often favour Jersey because of the easy access to London, the sandy beaches, low crime rates and the use of English as the first language.

“There is a lot of interest right now,” said Nigel Philpott, the Jersey government’s head of high net worth residency.

“Last year I was getting one or two calls a day from people who wanted to come and join us. Now I get four or five on some days.”

Paul Bater, 52, a former bank manager from Swansea, is so happy with his move to Jersey that he has allowed himself to be used as a case study in promotional literature for Jersey Enterprise. “I love living in Jersey. The pace of life is much more civilised than anywhere else I have worked,” he said.

John George, the owner of Jag Communications, the UK’s third biggest mobile phone retailer, has moved to Guernsey, Jersey’s neighbour.

The 48-year-old businessman now commutes by private plane to his company’s office at Perranporth, Cornwall. The journey takes just 30 minutes — and ends at his privately owned airfield.

“It’s very easy, very straightforward and I never get stuck at the lights or any of that,” said George. His office is fewer than five minutes from the airfield.

His wife Susan, who joined Jag’s board in March, is one of 498 directors and partners of UK companies identified on a list from Companies House of those who now give their addresses as Jersey, Guernsey or the Isle of Man. A further 91 UK companies have registered in these islands in the past year. The research also includes islanders who have joined the boards of British firms in the past year.

The tally, assembled by Philip Beresford, compiler of The Sunday Times Rich List, represents one of the first attempts to quantify the scale of the exodus.

For years considered little more than family holiday resorts, Jersey and Guernsey have become a playground for the rich in recent years, with Michelin-starred restaurants, luxury spas and hotels. Almost one in five of the island’s workers has a job in financial services. There are nearly 3,000 experts who help people set up trusts and companies — a rise of 12% since the onset of economic downturn.

It is a similar situation in the Isle of Man, which says it has seen a 20% growth in the non-banking financial sector.

The influx has also proved lucrative for Jersey’s estate agents. James de la Cloche, director of Edge, a property consultancy, said: “We love Gordon [Brown] and Alistair [Darling] over here — we rather hope they get another term.”

Meanwhile, City bankers and dealers are turning to libel and privacy lawyers to try to stop the media scrutinising their earnings, assets and lifestyle. Bankers say the row over their bonuses means they are seen as targets.

They complain of being pursued by paparazzi, of reporters trawling through their social networking sites and long-range telephoto lenses being trained on their living rooms.

As in NY and California, the socialists in the UK will stand around wondering why their tax revenues have declined precipitously as they raise taxes on everything that moves. Not only will they not see higher tax revenues but they will have chased large proportions of the wealth creating segments of the population away, permanently lowering the local living standards.