The Laffer Curve is alive and well. The economic theory is based on the fact that if people are taxed too much, they will eventually vote with their feet, thereby reducing the tax revenue that policymakers anticipated when raising taxes.
It has been widely reported that the UK’s attempt to boost government revenue by taxing wealthy “Non-Doms” has backfired. Other jurisdictions are happy to accept the economic boost that accompanies the wealthy, and the tax change on Non-Doms has had the expected effect (according to Laffer) of lowering tax revenue for the UK.
An article in the Sunday Times this week reported that Labour’s “flagship” policy of fleecing the wealthy may be “watered down” to stem the exodus of people with money. Quoting an unnamed government official, the report claimed that “there will most likely be some tweaks to inheritance tax to stop the non-dom exodus.”
A separate article in the Times reports that over 4400 directors have fled the UK, and exits in April were 75 higher than the year prior.
Bloomberg recently reported that estimates of lost revenue may exceed £12 billion, not to mention the loss of jobs.
Additionally, Oxford Economics research indicates that individual non-doms contribute around £400,000 annually while investing around £118 million in the UK. That’s a lot of money.
So why would you want to chase that type of economic activity out of the country? That is difficult to explain. You may want to ask the Chancellor, Rachel Reeves, who is running tax policy.
While the UK may be suffering under misguided tax increases, they are not alone, and misery loves company.
Kathy Hochul, the Governor of New York, has seen thousands of residents flee her state to low-tax or no-tax jurisdictions, such as Florida, in recent years. The state is facing a budget deficit of around $14 billion on a state budget of around $254 billion for 2026. So is Hochul going to raise taxes on the wealthy to fill the money gap?
Nope.
In a recent interview, Hochul stated that she did not “want to lose more people to Palm Beach,” as this area of Florida has seen a dramatic increase in financial services firms setting up shop, and is now known as Wall Street South.
Interestingly, Florida’s state budget is approximately $115 billion, which is less than half of New York’s. Florida also has a budget surplus measured in the billions.
Insult to injury: New York’s population is about 19.87 million. Florida’s population is over 23 million.
I wonder what they are doing differently in Florida?
$14B in income vanished from NYC after residents fled to Florida https://t.co/R4VQIc6kAh pic.twitter.com/WPV2HZra7X
— New York Post (@nypost) May 1, 2025
