The Government was warned it could face a mass exodus of high earners after it tore up a manifesto commitment to introduce a new top rate of income tax.
Chancellor Alistair Darling announced that those earning over £150,000 will face a 50p rate from next April, while everyone on more than £100,000 will lose their personal tax allowance at the same time.
The measures will affect around 300,000 people above the higher limit, and some 600,000 whose pay packets are in six figures.
An individual pulling in £150,000-£200,000 can expect to pay around £80 per week more.
Chief Secretary to the Treasury Yvette Cooper defended the 50p move as the right response to "exceptional circumstances".
Asked whether the hike represented a breach of the 2005 General Election commitment not to raise the "basic or top rates of income tax in the next parliament", she told Sky News: "Well, it is. We never expected that we would have this kind of global financial crisis on a scale not seen for almost a century.
"In those circumstances, what we need to do is to make sure we are being fair."
But financial experts questioned whether the hikes would bring in the revenue predicted by the Treasury - £2.4 billion a year by 2012-13.
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Robert Chote, director of the independent Institute for Fiscal Studies, said that the tax hike may actually lose the Exchequer money.
"We would look at past evidence and say you have to be doubtful as to whether increases in tax rates on these sorts of people will actually bring in all the money you expect," he said.
"If you look at what happened when higher rates were last changed in the 1980s, that might lead you to suggest that such a move might actually lose you revenue, rather than gain it, as people actually declare less income for tax."
There were also warning that the wealthy would simply avoid the levies or vote with their feet.
Sean Drury, a partner at PricewaterhouseCoopers, said that from next Spring the UK would rank 18th among the G20 economies in terms of income tax and social security rates for senior executives.
"Countries like Switzerland will look increasingly attractive to some of the people in the key industries needed to lead the UK out of the recession," he said.
Stuart Fraser, policy chairman of the City of London Corporation, said the new higher rate could put the Square Mile at a disadvantage compared with financial centres overseas.
Mr Fraser said: "The new top rate of income tax at 50% may damage the City's competitiveness - we operate in a global market for talent, and that talent is expensive.
"Our competitive position will always depend on the stance taken by other financial centres. Thus it is essential that we keep a continuous eye on changes in other centres to make sure that we do not put ourselves at any disadvantage."
