Guy Hands heads for the islands

A very brief piece in The Times today reports that the new 50% tax rate for Britain’s top earners is starting to have its predicted effect, of persuading some of those top earners to take their income elsewhere. Guy Hands, owner of EMI and the Terrra Firma private equity company, is leaving the UK to move to Guernsey and take advantage of its lower ‘tax haven’ rates. This is a textbook response - supply-side fiscal policy would suggest that a reduction in tax rates will encourage entrepreneurs and high earners into a country. Many city analysts predicted that the opposite would happen as a result of the ten percent rise in the top rate of tax, and that is what appears to have happened.