Treasury revises revenue from 50% rate - Accountancy Age.
The Age says:
The Treasury is expecting to take much less from the new 50% rate of income tax than it first estimated, according to Treasury minister Lord Myners.
Speaking in the House of Lords yesterday the financial services secretary said the rate would still be beneficial in terms revenues, but suggested the full extent to which tax payers would avoid the new rate had not been correctly gauged in advance.
Oh dear: shooting oneself in the foot time Lord Myners.
As the Compass report showed and as the TUC have argued (and I admit, I influenced both) there are two simple solutions to this conundrum.
One can either set minimum tax rates when gross income exceeds a certain level (e.g. 32% at £100,000 of gross income and no amount of allowances or reliefs can reduce tax paid below that - equivalent to the US alternative minimum tax) or better, perhaps, simply limit the value of relief given to those earning more than £100,000 a year.
The average relief claim above the personal allowance for those earning £70,000 to £100,000 in the UK is about £5,000 a year. I see no reason why those on income in excess of £100,000 need to receive subsidy for their saving which is directly akin to additional state spending of more than that a year.
So, my suggestion is simple - limit the total value of releifs a year to £5,000 and the 50% tax rate will work very well.
And yes some people will go each year - so what? As many will come here.
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Could it be that the Chancellor simply has it wrong and set tax rates too high? I’m thinking about the Laffer curve here.
John
Your evidence that a 50% tax rate puts anyone on the downward slope of the Laffer curve?
No one has eve yet found it – except in the imagination of the right
Richard
That’s the problem, so many come here each year and are a drain on the system. I know this is not an immigration site but it is all related. 50% tax – a waste of time and another knee jerk reaction from our non elected leader. This just stifles growth and discourages people from being successful. This government should spend more time and resources getting more people back to work and therefore more money into the coffers instead of just paying out in needless benefits.
@MikeSmith
Can you please tell me of any people known or imagined who deliberately forego success because of tax rates – except, of course, those who think they are better off on the dole than working.
Perhaps you could enlighten us as to the well-known methods of govts ‘getting more people back to work’ too, while you’re at it.
Otherwise we can do without such inane comments on Richard’s excellent blog.
Carol
Thanks!
Sometimes I just have to show up the absurd thinking of the right!
It’s lazy, ill informed and prejudiced. All of which suits them but not debate or the country
Richard
“Can you please tell me of any people known or imagined who deliberately forego success because of tax rates – except, of course, those who think they are better off on the dole than working.”
It’s not a choice of foregoeing success or not. The key issues are whether someone keeps working and whether someone chooses to work in the UK.
While I don’t particularly lose sleep over their loss, it is well documented that the cost of employing footballers in the UK is now far higher than it is in Spain, and as a result, a number of top English based players have or may go to play in Spain – Thierry Henry, Cristiano Ronaldo, Xabi Alonso for example have already gone. Of course, football is a peculiar industry – one where there clearly should be a salary cap but that’s another issue.
However, if you are saying that in a global environment national differentials in tax rate will not affect where people choose to locate I would beg to differ. Whether one cares is another issue.
As for “getting people back to work” why not have a national scheme whereby those who are out of work and physically able clear up public land and coast, build footpaths, plant native trees and lay insulation in the attics of the infirm. If they refuse, they don’t get benefits. That would surely be a good idea.
Also, in the Times today the point was made that the proportion of income tax paid by the top 1% of earners increased between 1979 and 1999 from 11% to 22%. That is surely evidence in support of the Laffer curve (though there could be other factors).
One of the underlying themes of your post is the institutionalised lying that Treasury and HMRC have indulged in under New Labour – and we can probably blame most of it on the incumbent at Horseguards from 97-07. I realise that an election looms, but government is for the country surely, not the party?
Milk the rich with a 50% rate sounded like a loverly policy to play to the faithful in Labour’s heartlands, until we all come to realise that it is hollow.
Here is the Irish level of honesty:
•Corporate and capital tax breaks for start-ups have been extended
•Corporation tax rate of 12.5% is ‘here to stay’
•“Green tax cuts” for zero emission vehicles
‚Ä¢VAT has been reduced by ¬?%
•Public services efficiencies sought
•Welfare benefits reduced to 2006 levels, social welfare bill cut by equivalent to 1.5% of public expenditure
‚Ä¢Dole allowance to be reduced to €150 a week
•Social welfare to be cut 4.1%
•Politicians’ pay will be reduced in line with public sector grades
‚Ä¢Public sector pay cut of 5% on first €30,000 salary, 7.5% on the folllowing €40,000 of salary and 10% on next €55,000
•Taoiseach to have pay cut by further 20% on top of previous 10%
‚Ä¢Permanent pay reduction of 12% for those on over €200,000 in the public sector
‚Ä¢Savings of over €1bn on public sector pay bill
Wouldn’t that be refreshing in the UK?? Girrl
Mike, I am an immigrant and proud to be one.
The amount of direct and indirect tax that I have paid over the last 10 years has probably funded an entire precinct of the London PD, a small hospital, and has left some pocket change for the wars this administration has chosen to wage but which, since I am not British, I am not given the opportunity to opine on.
will you please think of me next time you rant about immigrants.
Richard,
We may not be (yet) on the downward slope of Laffer, but there is a clear demonstration that the incremental taxes to be raised immediately are de minimus. The evidence of the real damage will take longer to emerge.
Just think of how how many potential immigrants like myself will be put off from coming to this island.
Richard,
If the 50% rate does not produce the expected increase in tax revenue, will you accept that the Laffer point has been reached. Even the HM Treasury report that Myners quoted yesterday mentioned he “behavioural consequences” of the 50% tax rate – i.e. avoidance.
As for foregoing success due to high tax rates, both you and Carol miss the point as usual. They don’t forego the success, they just base themselves in offshore territories and/or leave the country.
If tax wasn’t an important consideration to them then places like BVI, Channel Islands, IoM wouldn’t exist. Come on, how do you explain the existence of these places?
As for “inane comments”, Carol, I had to laugh at that coming from a self-professed Marxist whose only comments on this site tend to involve the words “land”, “value” and “tax”.
@mad foetus
I think you make the point very well indeed that the capacity to raise tax from the well off has clearly not been exhausted
Thank you
@mad foetus
Why not reintroduce slavery?
Wouldn’t it be easier?
Or put people in workhouses?
Why not have Arbeit machet frei written over the entrance?
@Jersey Girrl
How enlightened of you to promote the idea that the UK should emulate a country whose GDP is dropping like a stone, whose banks have all failed, who may default, where the poor might well starve again, where the young, the old and the unemployed and the elderly can all go to hell but corporate profiteers can run amok
Clearly what we want
How come I hadn’t noticed that before now?
And incidentally – anything like this happening in Jersey – where you know a little bit about massive state deficits?
@Peter
Fantasy time
Have you noticed the near impossibility of moving to such places
You may not have been there – but can I remind you they are very, very small?
To Edouard – I am deeply sorry if I offended you, it was not my intention. My rant was really to do with people who come here and ‘sponge’ off our benefit system, thus contributing nothing to our tax revenue. My point is that some people have a fixation with tax evasion and avoidance whereas I think the real root of the problem is the lack of revenue coming into the country from the taxation of the normal working person. ‘Milking’ the rich like this is counter productive to an entrepreneurial society where we should be looking for ways of getting people back to work. A 50% tax rate is not the answer in my humble opinion.
I now realise that this is probably not the site for my comments even though I do find it very interesting. It is also interesting that Richard is a staunch Labour supporter and defender and Tory bashing now seems to be the main thrust of his postings. Richard would do well to remember who got us into this mess with their lack of financial regulation and budgetary controls. I don’t care who comes to power, but I would like a job again soon!
For the record I am not a member of the Labour Party
I advise or have advised at least 5 UK parties represented in the UK and European parliaments
I’ve even spoken to Tories on occasion quite happily
But not when they’re set on destroying well being
My concern is policy based
The Tories have some very bad ones
Sorry Richard, I didn’t realise asking able bodied people to carry out minor works that improve the environment for everyone in return for benefits was the same as setting up prison camps and gassing millions.
In all seriousness, there are plenty of able bodied young men who have never worked and who have never lived with anyone who has worked. Is it really outrageous to ask them to clean up the local park or plant a few trees in return for getting benefit? Or does the social contract only work one way?
At least pay them a wage
And why the sexism?
If Thomas Jefferson thought taxation without representation was bad, he should see how it is with representation.
Rush Limbaugh
Jersey Girrl quotes Rush Limbaugh.
‘Nuff said.
Although as a postscript I too enjoyed Jersey Girrl’s lauding of a set of government policies which has tipped Ireland’s GDP towards negative 15pc growth.
Ireland is THE proof that the naive – yet self-indlugent – rightwing obsession about paying down an abstract national debt are ludicrous and inhumane.
Richard,
Why not have Arbeit machet frei written over the entrance?
I believe the socialists (national variety) have tried that before, no?
Georges
@Georges
Georges
Only someone from the far right could write that
Richard
@Richard Murphy
I have seen so many contradictions from you in recent days, Richard.
If it is so difficult to move to these places, then tax avoidance shouldn’t be an issue. Yet you spend practically your whole life writing on the subject as if it’s the biggest concern to the world.
Either it is hard to avoid tax or it isn’t. I suggest, for the very rich, it’s pretty simple.
For heaven’s sake show some understanding of the subject you’re commenting on
Tax havens don’t exist for all but a tiny number to move to – and most of them go there to sell abuse
They exist to artificially relocate the recording of transactions via companies, trusts and so on
That’s the major abuse
Please try to get some understanding of what the issue is
“Tax havens don’t exist for all but a tiny number to move to”
Hold on – I thought we’d established that London was the biggest tax haven of them all.
Also, you didn’t comment on my earlier factual statement:
“in the Times today the point was made that the proportion of income tax paid by the top 1% of earners increased between 1979 and 1999 from 11% to 22%.”
Perhaps you could answer a simple question: what proportion of income tax do you think should be paid by the top 1% of earners? Is 22% too low or too high?
And why do you think the proportion paid increased at a period during which the tax rates decreased?
@BenM
Benny Boy
You and Richard missed my point; which was not to laud Lenihan and the Irish govt other than to the extent that they are now being honest and dealing properly with their issues.
Brown and Darling are lying through their teeth in a desperate attempt to get re-elected.
Sorry for the confusion.
Girrl
Research is not your strong point is it?
There are 30 million in the UK tax paying population, near enough
So you’re wildly out
You also make the absurd assumption that if these people go value follows them
It won’t
Richard,
I am happy to admit that I was making an assumption about the number of taxpayers on this island. Thank you for the correction.
I don’t think it makes any difference to central point I was making that it would take a very small number of people to leave for the UK to be worse off form a tax revenue perspective.
And these people have plenty of places to re-locate to; remember that there are over 500,000 American and 200,000 French citizens (just to take a couple of examples) living in London, many of whom will be among the top 1% and 5% earners, and all of whom are mightily pissed off.
That is even before we start taking into accounts the high-earnings Brits who will want to go.
As for the point about “value”, I really have no idea what you are talking about. You may want to clarify.
I was talking about basic maths. Time to demonstrate maths are your strength.
Your trouble is basic maths
I do complex maths
And I’m an accountant – I can make 2 + 2 = anything
The idea that people on tax equalisation deals leave becuiase of tax is laughable
The idea that London will cease to be the location of added value when these people go – as they do, all the time – is absurd
They’ll simply be replaced
You really should try living with complexity
200,000 French people in London. How many do we think are living there for tax reasons? After all, what does London have to offer than Paris doesn’t other than a bigger financial sector and lower taxes?
And yet Richard would have us predict that nobody chooses where to live on the basis of tax.
Anyway, we’ll find out soon enough. My real fear is that this is navel gazing while the Chinese take over, and that Europe ends up an impoverished demographic nightmare within a generation.
Most don’t
Most people here are on tax equalisation deals
You’re wrong, again
Richard,
The vast majority of these foreign citizens are NOT on tax equalization deals. This is simply an INVENTION of yours. I am challenging to produce any data to back this up.
In their overwhelming majority, these are people who, not unlike me, came to London because (i) business opportunities were attractive, (ii) business and financial regulations was relatively friendly, and (iii) the tax regime was favorable.
Since most of these people do not hang out at trade union congresses or far-left party conventions, I don’t believe you get to meet them very often. you should make an effort to go out more.
@Edouard (London Expat)
Edouard
There’s much more to me than I blog
You have no idea who I meet, where and how often
I may well meet and discuss these issues very much more than you think – not least with their employers
Richard
Richard,
I congratulate you on your many appointments.
From you extensive Board-level contacts at US and international companies, you will have heard that the age of large expatriate packages is long gone (since the 80’s) but for a tiny minority, certainly not several hundred thousands in total.
So I am still challenging to you to produce any reliable data to back you statement that most foreign nationals in London are on tax equalization packages.
It is a simple question. Can you answer it.
Employer organisations fo good repute tell me that they are commonplace
I believe them
Richard, of course they are commonplace, but at most a for few thousand professionals, NOT for hundreds of thousands.
At your next weekly one-on-one meeting with the CEO’s of Goldman, JP Morgan BNP Paribas or Fidelity, why don’t you ask them what proportion of their non-British workforce is on expatriate versus local packages?
I can give a preview of the answer. The proportion of expatriate contracts is de minimus.
And remember that with UK taxes now above any other major developed country, the cost to the employer of tax equalization packages are increasing. So it is now the employers that will pull out the employees from London even before the latter ask to leave.
eg
Edouard
Stop talking twaddle
The UK is not highly taxed at all
Which is why people won’t be leaving
And in the real world people know that
It’s fantasists like you not telling the truth who are out of touch witgh reality
Which is why I cease to engage with you, again
Richard
Richard,
I think the issue is around the relative level of taxation, not the absolute level. I would agree that until this year the UK was relatively (though not absolutely) low tax.
Starting from next tax year, this becomes much more questionable. Taxes will be higher than in France, Germany or the US.
If you you and others on the far-left had their ways (as far as I can tell from the Compass Report you once posted here), the level of taxation would become completely disaligned from other countries.
TGB
Compass – far left?
Pull the other one
Bang in the centre of labour politics
Come on – let’s get terminology right
This is mainstream UK politics
If Osborne is not far right (and he’s not) stop being silly with your language about mainstream thinking
Reserve ‘far’ fro UKIP, the BNP, and the like who are beyond the fringes
Richard this is a rather personal and out of context attack.
If someone wrote this about you would not publish the comment.
So, out of decency alone, there is no reason to make this type of attacks
@Edouard (London Expat)
But I was being objective
And anyone else who was would be allowed to comment
Richard,
You are free to map UK politics as you please. It is not the point of this debate.
The topic was rather that the proposed tax rises would make the UK an unattractive for international professionals.
A contribtor was making a valid point that there was a high risk thst the many foreign nationals among the top 1%-5% of UK earners would factor in the tax increases (together with relatively average helathcare, high crime rates, terrible transportation infrastructure and expensive housing) to re-assess their decision to base themselves in London rather than in their home ountries (let alone Switzerland).
Your counter-argument that many such nationals are on expatriate compensation and equalization packages is ill-informed. It is an a position you are unable to support with facts.
You then resorted to baseless and undignified personal attacks rather than discussion.
Do you have anything more substantial to add to this debate? Otherwise I would suggest you take your losses and fold.
@Ted B
“Do you have anything more substantial to add to this debate? Otherwise I would suggest you take your losses and fold.”
That’s an arrogant remark to make on Richard’s own blog. Are you suggesting that he should quit? If you can’t stand the heat why bother to come into the kitchen? You could just ignore him.
@Ted B.
The reality is that all those people are here
And for years naysayers like you have siad they’ll be leaving on the next boar / plane / train
And they’re all still here
That’s because you’ve always been wrong
And you are now
And you will be in future
When Edouard says he’s leaving I’ll believe him. Until then it’s just BS
And all the evidence favours me
So politely – unless you have a shred of evidence to support your case (bar the sad example of Guy Hands) I think it’s you who loses and folds
what about this?
http://www.bloomberg.com/apps/news?pid=20601109&sid=alNiweY01.Mk
That only says
Advertisement: “FOREX.com — Learn How to Trade Currencies Get a Free eBook and Forex Practice Account.”
Aug. 26 (Bloomberg) — Andrew Wesbecher moved to London from New York in 2006 to sell software to banks and hedge funds. This month he joined the exodus of American expatriates fleeing high taxes and the city’s shrinking financial industry.
“I’m the last guy to leave that I know,” said Wesbecher, 29, who worked for Tibco Software Inc. and lived in Notting Hill, the London neighborhood that’s home to billionaire Richard Branson and model Elle Macpherson. “We are all packing up.”
The number of U.S. citizens in Britain fell 3.8 percent to 126,000 in the 12 months through September, according to the Office for National Statistics. The trend probably continued this year, with the Confederation of British Industry estimating the U.K. financial industry will lose about 45,000 jobs in the first nine months of 2009, or 4.3 percent of the total.
Americans are heading home as Britain plans a 50 percent tax rate for those who earn more than 150,000 pounds ($248,000) a year and employers cut benefits for workers living abroad, reducing the allure of London. That comes a year after the U.K. said foreigners who have lived in the country for more than seven years must pay 30,000 pounds annually or give up the special status that shields overseas income from British taxes.
“Expats feel the tone has changed; it’s less welcoming,” said Mark Tilden, a consultant at CRA International Inc. who wrote a report for the City of London last year on the impact of taxation on corporate relocation decisions. “London’s ability to attract talent has gone down.”
‘We Are Fed Up’
The worst recession since World War II has left U.K. residents facing tax increases and spending cuts after Britain’s monthly budget deficit ballooned to a record 8 billion pounds in July. In addition, some employers are reducing benefits such as tax equalization, school tuition for children and cost-of-living allowances that supplement expatriate salaries.
Schools catering to international students report a drop in enrollment for the first time in seven years, and relocation companies say they are moving fewer people to Britain.
Janet Sherbow lives in London’s Chelsea district with her husband, Nikos Mourkogiannis, the former chief executive officer at the European arm of Cambridge, Massachusetts-based management consulting firm Monitor Co. The family plans to move to Greece after their daughter finishes high school next year.
“We are fed up with all the stealth taxes, the non-doms levy, and now the 50 percent tax rate,” Sherbow said. “Six American families have moved from my street in the last six months.”
Quality of Life
Forty-one percent of employers plan to review expatriate programs, according to a study by KPMG International. KPMG surveyed about 100 companies, 60 percent based in the U.S., and found that 22 percent had recalled overseas workers or turned them into local employees in the past 12 months.
Huddling under an umbrella during a July downpour, Wesbecher said he was no longer willing to put up with the frustrations of life in London after his commissions dropped and Palo Alto, California-based Tibco eliminated his expatriate benefits, cutting his take-home pay by 75 percent.
“This is what passes for summer in London,” he said, sipping an iced latte in the city’s main financial district. “The quality of life is a lot harder. Things are more expensive and the houses are smaller. Even public transport is cramped. A New York subway car is like real estate in comparison.”
The economic picture is also gloomier in Britain. The U.K. economy shrank 5.6 percent in the year through June, compared with 3.9 percent in the U.S. London’s financial industry lost 29,371 jobs, or 8.3 percent of the total, last year, according to the Centre for Economic and Business Research. Financial companies in New York cut 20,200 jobs, or 4.3 percent, data from the state Labor Department show.
‘Highly Competitive’
“The U.K. remains a highly competitive center for finance and investment and has excellent infrastructure for businesses,” the Treasury said in an e-mailed response to questions.
The American School in England, based outside London in Thorpe, Surrey, expects enrollment to fall 4 percent this year, the first drop since the Sept. 11 terror attacks, said Karen House, interim admissions director. The school charges about 29,000 pounds for boarders, and 70 percent of its 750 students are American.
ACS International Schools, which has 2,500 students on three campuses in the London area, will see a “small decline” in student numbers, said marketing manager Mark London. Fees for boarding students run about 33,000 pounds a year.
“Overall, this year we won’t be at capacity,” London said. “The majority of our families are expat families who are working in London or the U.K. on an assignment. Undoubtedly, major companies will be cutting back on those.”
‘Anything to Make Money’
Transfers to Britain from the U.S. fell 25 percent in the past year, according to Primacy Relocation LLC, a Memphis, Tennessee-based company that moves more than 50,000 people a year for corporate clients around the world. Repatriations were almost unchanged, suggesting the net American population is declining, said CEO Matt Spinolo.
There are signs of recovery, said Sharon Gulden, co-founder of Basingstoke, England-based Phoenix ARC Corporate Relocation. U.S. to U.K. traffic has increased to about 10 percent of its peak after dropping to “almost zero” 18 months ago, she said.
“It’s just starting,” Gulden said. “Green shoots of recovery, as they say.”
Wesbecher isn’t convinced the boom times will return.
“The ethos of the ambitious, high-earning American is ‘I will do anything to make money, even if it means moving my family,’” he said. “When the performance bonuses go away, the value of being in this country goes away.”
To contact the reporter on this story: Tommy Stubbington in London at tstubbington@bloomberg.net. Andrew MacAskill in London at amacaskill@bloomberg.net
Last Updated: August 25, 2009 19:01 ED
There you have the crux of it:
“When the performance bonuses go away, the value of being in this country goes away.”
Does Britain really owe a free ride to people who only come to take our money back with them, anyway?
The 50% tax rate (other than on bankers’ bonuses) doesn’t kick in until 6th April. That’s one reason why many haven’t actually gone yet. A second reason is that many are waiting for the outcome of the General Election in May in the hope and belief that either a Labour Government or a hung Parliament is not the result. A third factor is that those with children are waiting until the completion of the current school year in July. The real exodus will happen in July/August, but less so if the Tories win the election as there will at least be a belief that nothing will get worse for the wealthy nondom City professionals.
I have precisely 26 clients in the above position, biding their time. Extrapolate that figure and you get a pretty good picture of the scale of things.
Edouard,
Your numbers do not tie up. You wrote that there are 500,ooo US citizens in London, but the Bloomberg article syas the number is around 126,000.
Don’t become another Murphy. Please have your facts right.
TGB
Carole,
Richard has a rather “combative” style in his conversations. Sometimes the other participants feel the need to raise the tone.
TGB
Interesting article in the Guardian about Guy Hands’ situation in Guernsey. His dislike for being socially responsible to the country that made him, has led him to never visit his wife and children, and parents, in England. The local industry commentators and the local paper hold guys like these in extremely high esteem.
Oh yeah, and then there’s EMI.
He’s a keynote speaker at some bash soon…
@Ted B.
I’m the judge of that
@Edouard (London Expat)
What a silly billy you are
First the person interviewed says he’s the last to go, but you’re still here. Not very convincing as an argument, is it?
Second, he’s left because his US employer has cut his pay. Is that anything to do with the UK?
As spurious arguments go this one is dredging he bottom of the barrel
You really must try harder
@Rupert
If you believed the efficient market hypothesis they’d have all gone by now
Of your clients 2 will go
And they’d have gone anyway
That’s what temporary residents do. It’s inherent in the definition. Maybe you hadn’t noticed
@Carol Wilcox
It takes time for high taxes to have an effect, but I know several people who have moved out of the UK, mostly into early retirement because they have no incentive to keep working because they can live off their savings and still keep more of their income wile playing golf in Bermuda than they can earning an income in the UK and paying 50% tax on their salaries and investment income.
Some of us remember the 1970’s and 1980’s when the term “tax exile” was much more common.
Richard
They have no need to go yet. They believe that the Tories will win. They also have no wish to disrupt their childrens’ education for the sake of one more school term.
And who said they are temporary residents ? Just under half are British (UK-domiciled), and of the remainder, two-thirds have lived and worked in the UK for at least 10 years and, based on the ages of their children, would probably have spent another 5 or 6 years in the UK. Whilst 15 years-plus may not be permanent, its a darn sight more than temporary. And that’s 15 years-plus of tax revenues and NIC revenues on their very substantial earned income lost to the UK.
I really don’t think that you can be mixing with the right people if you are hearing anything other than that large numbers are preparing to leave the country. But you are quite right that they haven’t left yet. They don’t need to press the button yet but have made their contingency plans in case Labour gets re-elected. You won’t see the proof until its too late.
Richard,
I bet you that these are NOT temporary residents; if they were, they would not worry about the non-dom rules introduced in 2008.
The other point is that, if 2 of Rupert’s clients go and 24 stay, the Treasury will only be very marginally better off.
If 3 of his clients go, the Treasury will be worse off.
The margin of error is non-existent.
It is this uncertainty around the tax increase’s revenue-raising effect which makes it, among many other things, a complete imbecility.
@Edouard (London Expat)
And you guys willingly ignore the fact they are being replaced
All very odd on your part
Of course clients go. It’s your business to advise them on that
And of course you have older clients more inclined t retire
That’s a function of your own age
Your younger partners will see the arrivals
I really do find your distorted evidence irrelevant
I also know those who let the tax tail wag the dog are incapable of adding value – all they can do is save tax because they can’t create value
So who cares if they go?
]
They will not be replaced, this is the whole point. The recent tax policy intiatives (non-doms, 50% marginal rate, the bonus tax) have been very bad advertising for the UK.
In fact, it will be an even more serious problem for the UK to attract people than to retain those who are already here.
Richard, sorry to break the news, I am 37. My partners are the same age. The people who are considering leaving are in the same age range too. When they do, the UK will be missing on 15-20 years of future tax contribution.
For a start, the entire communities that depend on their spending. How many school teachers in London’s SW and NW zip-codes depend on these “parasites” for their living? How many local back-office employees? How many general merchants and contractors?
I think that you will find that many people in London are extremely concerned at the prospect of these people leaving.
But David, do those people owe a free ride to the British Treasury when they can earn the same salary and bonuses elsewhere and pay tax on their income at a rate lower than 50%?
Richard
If they are being replaced then I’ve no idea who by, other than low-income immigrants. Speak to the London estate agents – they certainly aren’t seeing high-income earners arriving from abroad in anything like the same numbers as those going. Not surprising really – they jobs market isn’t exactly thriving. And the age range of my potentially-departing clients is around 35-45 – hardly retirement age.
And actually its not in my interests at all for them to go – I’d much rather have the long-term annual fee income from their offshore nondom structure than a one-off advisory fee following which the offshore structure is redundant.
I don’t see the relevance to my age, but as it happens I’m only at the top end of that 35-45 age range myself. I’m going to be working for another 10-15 years for what its worth.
With respect, my view isn’t distorted at all. I’m telling you how it actually is – from the coalface. You are clearly not talking to the right people if you are forming your own distorted views on the market from what they are telling you.
I just did a quick tally-up…the 26 potential clients of mine currently pay an average of around £400,000 per annum in UK tax. That’s more than £10m per annum of actual tax at risk. You are obviously more concerned with what they are avoiding (legitimately) than what they are paying, but do you seriously think that those who might be coming in (if indeed they exist) are going to be paying £400,000 of UK tax each ? Do you really think that the UK is currently attracting wealthy foreigners earning £800,000 per annum ? I’m afraid that this Labour Government has made sure that such individuals choose several other places before they will even consider the UK. You may think that the UK is socially better off without those departing, but please don’t try to convince anybody that the lost tax revenue is insignificant.