Taxing talent: How Britain can attract and retain the world’s best workers
Our new report, ‘Taxing Talent: How Britain Can Attract and Retain the World’s Best Workers’, looks at the challenges the UK will face in terms of migration policy over the coming years. It argues that Britain must focus on attracting highly skilled migrants and that the key to doing this is to lower income taxes.
The report reveals how critically important immigration is to the British economy. With an ageing population and a looming pensions crisis, the UK needs to attract about 270,000 new migrants each year. Furthermore immigration is important in creating a flexible workforce, which is necessary if we want to see economic prosperity.
Although we have the 4th highest number of highly skilled immigrants in the OECD, we also have one of the highest rates of emigration by highly skilled workers. In light of this, the government needs to focus on policies that will both attract and retain the most valuable migrants and native workers.
The report reveals that there are a number of factors that impact a migrant’s decision to move to or stay in Britain. These include social and professional networks, employment prospects, wages and professional development prospects. However the report also revealed that the tax burden is a crucial factor influencing highly skilled workers’ choice of where to emigrate to. Furthermore it is one of the only variables that the government can influence in the short run with any success.
Where tax breaks have been tried, they have failed. Tax breaks don’t retain migrant workers: Instead, the government should abolish the 50p tax rate and reduce the 20p and 40p rates to attract the most productive migrants to Britain. We need to have an internationally competitive tax system if we want to keep our native highly skilled workers and attract talent to Britain.
The government’s current policy of an immigration cap could lead to negative economic consequences. Instead our report proposes introducing an “open borders, closed public accounts” system, which would make migrants use private insurers for healthcare and other large welfare expenditures. This would make the UK open to migrants whilst addressing concerns over public service abuse.
If we want to see the UK’s economy revitalised, we need to make Britain amongst the top places in the world for highly skilled workers to live. As our previous report on the 50p tax outlined, it’s crucial we cut taxes to remain internationally competitive. As our report argues, we cannot afford to keep on taxing talent out of the UK.