Tuesday, January 5, 2010

Higher Tax Rates Causing More Problems in London

With Barack Obama planning big tax rate increases in America, it's useful to see how that policy is working in the United Kingdom. According to the Mayor of London, the answer is not very encouraging. Many successful entrepreneurs and investors are fleeing for other nations, and now companies are joining the rush to the exit. The Daily Telegraph reports:

Boris Johnson, the London Mayor, has suggested that he is deeply troubled that Goldman Sachs is considering moving parts of its business out of Britain following the Government's 50pc tax on bonuses. "I am extremely anxious about rumours in the City that seem to confirm that the recent knee-jerk and ill-thought-out tax grab by the Government to punish bankers is causing some of our most important institutions to consider their options," Mr Johnson told The Daily Telegraph. "This should act as a strong wake-up call to our leaders that their policies could seriously threaten our competitiveness with long-term consequences for both London and the UK economy," said the mayor amid growing speculation that London could face a mass exodus of City workers in the wake of the bonus tax. Goldman Sachs is the latest investment bank to review its London operations, joining broker Tullett Prebon which told its staff it would give them the option of moving overseas to avoid the tax. ...Goldman, which paid £1.1bn in corporation tax last year, has launched an internal review of London operations which could see its proprietary trading desk and foreign exchange business relocating to Switzerland or Dubai.

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