There are two more letters in the FT that are of sufficient public\u00a0importance\u00a0to be reproduced in full\u00a0given\u00a0the importance of the 50p tax rate in current debate.<\/p>\n
The first says<\/a>:<\/p>\n Sir, I assume the group of economists who are calling for the\u00a0abolition of the UK\u2019s 50 per cent tax band<\/a> (Letters, FT.com, September 6) have carried out the necessary research to support their arguments. The required evidence would be: what proportion of those falling into the highest tax band are actually \u201chighly talented entrepreneurs\u201d, as opposed to the \u201cbusiness people\u201d who got us into the financial mess we are suffering in the first place, and what proportion of these genuine entrepreneurs have now fled the country?<\/p>\n Perhaps one of the professors could answer these questions. Without credible answers their letter will simply be regarded as an ideological petition in favour of the very rich.<\/p>\n Ian Rutledge, Hon Senior Research Fellow, School of Management, University of Sheffield<\/p><\/blockquote>\n And the second is more important still<\/a>:<\/p>\n Sir, My colleagues\u2019 letter (September 7<\/a>), which argues that the UK should abolish its\u00a050p income tax rate<\/a>, cites no evidence. Such evidence exists. It is not favourable to the authors\u2019 case.<\/p>\n The best-designed recent study, which also gives references to the research literature, is \u201cMillionaire Migration and State Taxation of Top Incomes: Evidence from a Natural Experiment\u201d by Cristobal Young and Charles Varner in the 2011 National Tax Journal. The authors examine what happened when New Jersey abruptly raised its income tax rate on those people with incomes above $500,000 a year.<\/p>\n This is a helpful case study for those who wish to think about the design of UK tax policy because although the rise in the tax rate was fairly small, the authors\u2019 statistical analysis is an unusually careful one and because it is easier for a person to move 30 miles from New Jersey to Pennsylvania (where the top rate of tax is then immediately 6 percentage points lower) than it is to move from the UK to another country.<\/p>\n The study finds that the effect of the New Jersey \u201cnatural experiment\u201d was, in the authors\u2019 words, minimal. Yes, the data reveal that there was some out-migration, but it was tiny. Moreover, the migration occurred among the retired and those living on investment incomes. The study did not find that entrepreneurs were pushed out of an area by a rise in the top rate of income tax.<\/p>\n Andrew Oswald, Professor of Economics, University of Warwick, UK; Senior Advisor (Research), IZA Institute, Bonn, Germany<\/p><\/blockquote>\n In other words, pensioners move in\u00a0retirement, which is hardly news: they always have. Entrepreneurs and people in employment hardly do at all, based on a very large survey of data, a serious tax increase and the opportunity to avoid it by moving 30 miles down the road.<\/p>\n Shall we now say the case is closed? And that the 20 economists who wrote to the FT were wrong?<\/p>\n But will the BBC now give prominence to that fact? That's the question.<\/p>\n","protected":false},"excerpt":{"rendered":" There are two more letters in the FT that are of sufficient public\u00a0importance\u00a0to be reproduced in full\u00a0given\u00a0the importance of the 50p tax rate in current
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