Many wealthy individuals, including billionaire investor Warren Buffett and author J.K. Rowling, have publicly stated a willingness to pay more in taxes. However, according to a ProPublica report, Buffett pays a relatively low proportion of his income in taxes. While philanthropy is a common practice among the rich, critics argue it does not effectively substitute for taxes and can consolidate power within an already influential group. Legal tax-avoidance strategies allowed the 25 wealthiest Americans to limit their federal income tax bills to $13.6 billion over five years to 2018, even as their wealth increased by an estimated $401 billion, suggesting that while some may vocalize support for higher taxes, their actions often differ.
Despite the common argument that increased taxes would drive the wealthy away, some research suggests this is not always the case. A study by the London School of Economics found that rich people are unlikely to relocate solely due to tax increases, particularly those in major global cities like New York and London. Many high-net-worth individuals interviewed for the study expressed that they would not consider moving for tax reasons, often finding tax havens "too boring." However, other analyses point to an exodus of millionaires from high-tax areas like California and New York to states with no personal income tax such as Florida and Texas, and Norway has seen billionaires leave after introducing wealth taxes.
A surprising number of wealthy individuals, including more than 100 millionaires this year, have actively advocated for higher taxes on the rich, signing open letters and stating that the current tax system is unfair. American signatories included Morris Pearl, a former managing director at BlackRock, and entrepreneur Nick Hanauer. In the UK, some affluent individuals, including retail billionaire John Caudwell and actor Steve Coogan, have also voiced support for higher taxes. This shift in sentiment, potentially influenced by the pandemic and a perceived fraying of public services, suggests a changing mood among some of the wealthy, moving from a "heads we win, tails we win" attitude towards tax cuts to a call for collective, compulsory taxation.
