Do Higher Taxes Drive Out the Rich?

Posted: 16 Apr 2012 12:36 PM PDT

Today's wealth headline out of London seems tailor-made for the anti-tax crowd.

: Agence France-Presse/Getty Images

According to a new study from Lloyds TSB, nearly one in five affluent Britons plan to leave the country in the next two years. That's up from 14% a year ago. The study measured those with around $400,000 in investible assets.

Conservatives point out this sudden flight comes on the back of the 50% tax rate that was imposed on top earners during the recession. That hike was widely blamed for U.K. wealth flight and for not raising nearly as much revenue as expected.

But a closer look at the study provides a different picture. The top reason that the study group (it's a stretch to call them “wealthy”) gave for leaving were crime and “anti-social behavior.” About the same number, however, cited the British weather as the top reason for leaving.

The study really gets interesting when you look at where these affluent folks want to go to. The top destination is high-tax France, where the leading Presidential contender is pushing a 75% tax rate on the wealthy.

The second choice is Spain, followed by the U.S., Australia and New Zealand.

When asked what would make the U.K. a better place to live, most cited infrastructure spending. That was followed by “cutting red tape for business.” Cutting taxes got about the same number of votes as “improving public services like healthcare, education and the police.”

In other words, the affluent want more government services not less. And taxes were a relatively minor concern in their decision to move.

Granted, the study doesn't argue that taxes don't matter in the decision on where people move. Taxes are clearly a factor – sometimes the biggest one. And the study group doesn't reflect the super-mobile, super-wealthy, who tend to be more tax sensitive and more mobile.

Still, the survey shows that when it comes to where to live, “quality of life” factors may matter more to the affluent than their tax rate.