Wolf: the world will not fall apart

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Martin Wolf is one of the best respected economic commentators in the world. His column in the FT this morning is a classic. He argues that:

Am I the only person to be surprised not by the complaints [by the non-domiciled], which are predictable, but by their lack of ambition?

And he goes on, by arguing in absurdum, that if the non-doms arguments are right:

a) Everyone in the UK should be able to use the remittance basis and so pay tax on an optional basis;

b) There should be no tax on incomes over £100,000;

c) Because they generate so much wealth those earning over £100,000 should in fact have a negative tax rate;

d) Billionaires should be paid to come to the UK.

As his argument makes clear, no one has put forward such claims because they know that tax has to be paid by someone. What the wealthy want is that it is paid by anyone but them. As Leona Helmsley put it:

We don't pay taxes. Only the little people pay taxes.

This is what the non-dom debate is about. But as Wolf puts it:

From long experience, I am deeply sceptical of special interest "the sky is falling" pleading. More fundamentally, I am opposed to this particular pleading because it is subversive of any enduring political compact among citizens. If we take the principle that successful people are too important and too mobile to pay tax to its logical conclusion, political community will collapse.

And as he concludes:

Yet the experience also shows that the case for a simple, neutral and stable fiscal system, which taxes the worldwide incomes of all long-stay residents on the basis of ability to pay, is overwhelming. As soon as one departs from that principle one enters in a maze of special pleading or invidious distinctions, in which failed ideas of industrial policy - subsidising winners through the tax system - return to the fore. If the application of that great principle means some rich people leave the country, so be it.

I agree. Entirely.

I also agree (and some should note this) with the simplification part of this argument. Getting rid of the domicile rule would be a great way to do that. But for once the professions seem quite opposed to simplification. Is it because they too think that only the little people should pay tax? I fear it is.


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