As Alastair Darling prepares to deliver a kick in the bonuses to successful bankers, pause for thought.  As the bankers eye up properties in Zug and sunnier islands the tax burden falls heavier on those left behind.  The harder you squeeze high-earners, the more will leave these shores – the tax on the many is increased by the few who leave.  That is what happens when looters try to fleece the productive too much.

Bob Diamond, head of investment bank Barclays Capital,  warned yesterday that businesses and individuals could flee the City – “both financial capital and human capital are extremely mobile”.  Tory appeasement of City bashing will continue, led by the son of a son of a son of a stockbroker they stand on the sidelines for fear of being painted as friends of the City.  Guy Hands is just one high-profile tax exile, many more are fleeing the 50% tax rate.  We already seeing human capital flight…

UPDATE : How will the plan to tax bonuses cover the hedge fund community? It won’t is Guido’s guess, they are unregulated in the most and the capital is nominally held offshore. The hedgies in St James are the ones who take home 8-figure sums. Bankers and brokers will have to re-define bonuses as ‘profit shares’ and their limited partnerships as “mutual cooperatives”…