Tax Exiles


In 1973, Pink Floyd released The Dark Side of the Moon which included the single ‘Money,’ on which Roger Waters snarled: 


Get back

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:

Let me tell you how it will be
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%. 

The Rolling Stones had had enough and went to France to record Exile on Main Street. “[I]n those days, in England, the high tax rate was 90 percent,” Mick Jagger explained:

You made 100 pounds, they took 90. So it was very difficult to pay any debts back. So when we left the country, we would get more than the 10 pounds out of 100. You know, we might get 50 or something.

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. 

Rod Stewart fumed:

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.


He left for California in 1975 – his first subsequent LP was titled Atlantic Crossinginfuriating Elton John. “Round at his place one evening,” Stewart wrote in his autobiography: 

I told him I was thinking of quitting Britain, and he called me a traitor and put on Elgar’s “Pomp and Circumstance Marches” at a volume so high that we couldn’t talk over it.

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:

…and demand that their resident foreigners spend significant amounts of time at ‘home.’ Therefore you ‘stay’ or ‘work’ or ‘holiday’ in your London flat, Berlin garret, or wherever, and return to Switzerland when you have to.

This led Bowie to Berlin where he recorded his classic trilogy of albums – Low, Heroes and Lodgerbetween 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:

There is growing evidence that taxes can affect the geographic location of people both within and across countries. This migration channel creates another efficiency cost of taxation with which policymakers need to contend when setting tax policy.

More specifically:

This body of work has shown that certain segments of the labor market, especially high-income workers and professions with little location-specific human capital, may be quite responsive to taxes in their location decisions.

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.”




Thomas L Hutcheson
Aug 25 2023 at 1:27pm

Yes, you need to balance the tax rate against the quality of life it supports. Personally I think we could ask for more to reduce deficits and promote long term growth without sending many into exile.

Aug 25 2023 at 8:04pm

If tax authorities “ask” for higher taxes, does that mean we have the option of declining the request?

Is stronger long term economic growth associated with higher tax rates?

Thomas L Hutcheson
Aug 26 2023 at 7:20pm

Require.  Does that resolve the disagreement?

Well, additional revenues to reduce deficits might be generated by changing deductions and credits or definitions of income without changing rates.  But if it took higher rates to reduce the deficit, yes.  Lower deficits translate to higher growth.

Aug 28 2023 at 10:59am

Which would be more pro-growth:  Reduce the deficit by increasing tax  revenues, OR reduce the deficit by reducing government spending?

Aug 26 2023 at 1:26am

Unfortunately Americans don’t have the option of fleeing if taxes get too high-even if they could find lower taxes elsewhere, the US Federal Government, alone among developed western democracies-indeed nearly alone in the whole world except for a small number of dubious peers-claims the right to tax its citizens even when they reside outside the country.

Jim Glass
Aug 29 2023 at 9:52pm

I don’t see the point.  People don’t like paying taxes and move to avoid them? OK. Say, “Florida”.

Taxes in general in the US are too high?   You ain’t seen nothing yet.  Right now they are really low — compared to spending and liabilities.

The US Treasury says that using the same accrual basis accounting the private sector is required by law to use (but from which the government exempts itself) the real deficit in 2022 was $4.2 trillion, 3x more than than the “official deficit” of $1.4 trillion — in fact, the one year increase in it was $1.4 trillion.

The problem isn’t taxes, the problem is spending.  As Milton Friedman used to say, every $1 of spending forces another $1 of tax as the other side of the coin because you have to pay for the spending.  If you finance the spending by growing the debt, you still have to pay the same amount of tax to service the interest on the debt.   You defer it but it grows, discounted to present value the tax is unchanged.

But hey, the people have been voting for a generation:  “Lower taxes or more spending?”  “YES!!”

In the 2030s when the other side of the coin appears they’ll all be moaning like Bloom in ‘The Producers’, “No way out, no way out, no way out…”

So arguing against taxes is pointless.  They are set already.  To make a difference let’s all argue against spending — on Medicare, Social Security, government pensions, the military.   Try to cut the real annual deficit down to only a couple of trillion.  Let’s see how that goes!

And get ready to enjoy the 2030s.

Comments are closed.


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