In 1973, Pink Floyd released The Dark Side of the Moon which included the single ‘Money,’ on which Roger Waters snarled:
I’m alright, Jack, keep your hands off of my stack
‘Money,’ according to one critic, “deals with crass materialism.” But by the time Pink Floyd recorded The Wall in 1979, they did so in France and the United States because remaining in Britain would have incurred a massive tax bill.
British income taxes post-1945
Hiked to 99.25% during World War Two, Britain’s top rate of income tax did not return to its pre-war level when the war ended, hovering around 90% through the 1950s and 60s. These rates were a bane of Britain’s entertainment industry. In ‘Taxman,’ released in 1966, The Beatles sang:
There’s one for you, nineteen for me
‘Cause I’m the taxman
Yeah, I’m the taxman
“‘Taxman’ was when I first realized that even though we had started earning money, we were actually giving most of it away in taxes,” George Harrison wrote in 1980. “It was and is still typical.”
The 1970s: The Age of the ‘Tax Exile’
In 1971, a Conservative government cut the top rate of tax on ‘earned’ income to 75% but a 15% surcharge on ‘unearned’ investment income kept the top rate at 90%.
In 1974, a Labour government hiked the top rate on ‘earned’ income to 83% for a top rate of 98%, the highest permanent rate since the war.
The Government thinks it’ll tax us bastards right up to the hilt because we won’t leave, but that’s wrong because I will if I want to…with a 90 percent tax ceiling, it’s just not worth living in England any more.
The Stones and Stewart became known as ‘Tax Exiles.’ They were joined by others. Jethro Tull went to France, Marc Bolan to Switzerland, Tom Jones and Bad Company to California – lead singer Mick Ralphs citing “ridiculously high tax in England” – Ringo Starr to Monte Carlo, and Cat Stevens to Brazil. In 1978’s ‘Dead End Job,’ Sting sang “I don’t wanna be no tax exile.” He moved to Ireland in 1980 where musician’s royalty earnings were exempted from income tax.
If, in many cases, exile marked a vertiginous decline in the quality of the exile’s music, this wasn’t so in every case. David Bowie went to Switzerland where, according to his wife, Angie, he got “an almost ludicrously low tax rate of about 10 percent.” “The Swiss take their residency requirements seriously,” she wrote:
This led Bowie to Berlin where he recorded his classic trilogy of albums – Low, Heroes and Lodger – between 1977 and 1979.
The 1980s: The end of the Tax Exiles
In 1980, Margaret Thatcher’s Conservatives cut the top rate of income tax to 60% and reduced it to 40% in 1988. The investment surcharge was abolished in 1985 and the era of the Tax Exile ended.
A recent paper by economists Henrik Kleven, Camille Landais, Mathilde Muñoz, and Stefanie Stantcheva that: “review[s] a growing empirical literature on the effects of personal taxation on the geographic mobility of people and discuss[es] its policy implications” found that:
The era of the Tax Exiles illustrates that perfectly. “We left England because we’d be paying 98 cents on the dollar,” Rolling Stone Keith Richards explained, “We left, and they lost out. No taxes at all.”