London’s ‘Twin Pillars of Doom’ May Spark Hedge Fund Exodus

In order to raise tax revenues, the UK government has announced some significant tax changes that will increase taxes. Result, businesses and people are leaving. Anyone surprised? What will be the net result do you think; will tax revenues increase or fall? Should anyone then be surprised? Yet, many will be surprised as the tax revenues drop.

April 30 (Bloomberg) -- After helping to move 23 hedge funds to Switzerland from London in the past two years, David Butler describes the flow as a “steady trickle.” Now he’s bracing for a flood.

“Call it the twin pillars of doom,” said Butler, a founding partner at hedge fund consultancy Kinetic Partners LLP in London. “Put together the U.K. tax changes and what the ogres in France and Germany have created and you will see a mass migration.”

UK Raises Personal Tax Rate to 50%

From ClusterStock

London is burning, with the UK facing the most serious economic downturn in generations. So what is the response of the British government? Raise taxes to shockingly high levels.

The BBC is reporting that UK chancellor Alistair Darling is proposing to hike taxes all the way up to 50% for anyone earning more than £150,000. That tops the 45% rate Darling indicated in a pre-Budget report last year. The UK is struggling with falling tax receipts due to the economic slow down while spending to combat recession and its effect increases.

One question: which economic theory tells you to announce a giant tax hike in the midst of a recession?