According to the FT:
Rich Russians are gaining entry to the UK in record numbers amid a worsening economic outlook in their home country.
The number of Russians who were granted investor visas this year has soared by 69 per cent, according to Home Office statistics. The visas gave foreigners from outside the EU a fast track to residence and citizenship in return for buying gilts worth £1m to £10m.
So, capital flight funds that destabilise the Russian economy, boost house prices here at cost to UK resident people and which will, no doubt, in due course be invested offshore to avoid UK tax using the domicile rule allow a person entry to the UK when the desire to actually work in this country and pay tax as a consequence and add to GDP is apparently considered a problem by our authorities.
It has to be said that the paradox is bizarre and the logic simply bankrupt.
But then, some have always been more equal than others.
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Well, that’s politicians and the state for you. Unaccountable, out of control, bereft of any common sense or appreciation of how things need to work.
Such generalisations are not useful
You would concede though that the government will at least be introducing Capital Gains Tax on disposals of UK residential property by non-resident individuals from April 2015 onwards. Changes like this are at least a step in the right direction?
Scrapping the domicile rule would be a lot better
But this change is useful
An ad valorem annual tax on all property/land would be much more sensible and would bring prices down to affordable levels for all.
Undoubtedly true
Of course linked to a fair and decent planning system. The planning system creates an artificial land shortage ratcheting up land values right now. Introduce a ad valorem annual tax on all property/land would be the ideal fair method. Then extending it to all land, with a house on it or not and it will be the ultimate and most sensible method of bringing prices down to affordable levels for all. Extending the annual tax, collected each month or week out of wages, would enable income and sales taxes to be abolished.
I regret your faith in LVT is misplaced and would result in massive injustice
I believe in it – but it can never replace income tax
Richard
It’s been evident for some while now, that insofar as wealth is concerned there’s no such thing as an economic migrant, immigrant, refuge, or any other inherently racist and/or zenophobic classification of people so beloved of UKIP, the Tories and almost every party of the right and centre. For this “elite” – as I’m sure they would prefer to see themselves – nationality and ethnicity are no longer a defining characteristic – money is their passport.
Put simply ‘the rich’ have become a class unto themselves and because governments worldwide are ultimately controlled (and political parties bankrolled) by such people the borders and controls that apply to the vast majority of us have simply vanished. In short, the wealthy – “the 1%” – have become a globalised elite with common interests, economics, and fears, and a globalised system of institutions (e.g. OECD, IMF, etc), organisations (e.g. accountants, law firms, etc), and individuals (e.g. the directors of shell companies, etc), ready to serve their every whim, advance their interests, and fight their battles.
But then what should we expect. The private schools and universities that school and educate the children of the wealthy – and who as adults then go on to dominate key professions and occupations worldwide – have a globalised intake, allowing the wealthy of any country in the world, be it an oppressive dictatorship, a so called communist one party state, an oil-rich sham democracy, or what masquerades nowadays as a representative democracy, to meet and interact, sharing their values and prejudices and further reinforcing the sense of privilege and superiority the vast majority of them will have been brought up to believe is their birthright.
Just as much as we now have a globalised economy, and all the systems that support such an entity, we also have a globalised “ruling class”. And while charlatans such as Nigel Farage and his ilk tour their respective countries spreading fear, mistrust and hatred, the rich – whose interests they ultimately serve (but without ever admitting it) – continue to tighten their grip on every vestige of the lives of ordinary citizens. Here lies the path to serfdom and, ultimately, neofuedalism for the majority – and we are already a long, long way down that road.
The ability of the likes of UKIP to use populism to support this process is also profoundly worrying.
Thanks for your contributions this year by the way
A good analysis Ivan. I’m sure the wealth syphoners and rentiers are perfectly happy that farage and co. are selling the populace red herrings and an abundance of decoy arguments while we have a Labour party who have raised issue avoidance to an art form.
Richard,
Faith in LVT is not misplaced. Although only having LVT and no other taxes maybe. No one has ever proven theoretically or in practice that LVT is misplaced. I am still waiting for proof. Reclaiming all commonly created wealth to use for common services while reducing, or eliminating most other taxes is not misplaced. There are other mechanisms to reclaim commonly created wealth. LVT falls into this as only one of the reclaim mechanisms. Such a system is named Geonomics.
Most wealth in the UK and most other western countries ends up in the hands of a small percentage of the population. That tells us the economic system we use is not working if most of the wealth of a nation ends up in the hands of a few people. A lot of the wealth this few percentage own comes from appropriated commonly created wealth. In short, legalised stealing. Stop the stealing and reduce or eliminate most other taxes.
Income tax is relatively new introduction, being a temporary tax for the Napoleonic wars which was never rescinded. The USA never had income taxes before 1913. Yet the USA had an army, navy, railways, public sewers, electricity, schooling, gas, road systems, etc. They even fought wars (8 of them) and never needed income tax.
Not all wealth is land
Not all rents are based on land
Why ignore the others?
Using LVT alone would be like playing a round of golf with only a sand wedge – a massive handicap when there are many clubs available
I know I’ll be accused of being overly timid, but I still believe that small incremental changes are far better (like the introduction of CGT on disposals of UK residential property by non-resident individuals from April 2015 onwards) than huge sweeping tax reforms (e.g., the introduction of a land value tax). Small changes tend to be politically acceptable to a greater number of people – it’s much harder therefore to oppose them. In the long run, small changes have a progressive effect and can lead to further changes (for example, see the introduction and subsequent increases in the remittance basis charges regime).
Over the past 10 years, non-residents/non-domiciles have gone from paying relatively little tax … to a great deal more. Progress? I’d say so. This has been achieved by small changes gradually introduced over time.
I too am an incremental ist in many ways
But wish for bigger steps than you
Richard,
I did write: “Reclaiming all commonly created wealth to use for common services while reducing, or eliminating, most other taxes is not misplaced. There are other mechanisms to reclaim commonly created wealth. LVT falls into this as only one of the reclaim mechanisms. Such a system is named Geonomics.” I am actually with you.
The Henry George view was that all eventually soaks into the land, so have one tax and reclaim from one point. It makes it simple and does have appeal. However not all “economic rent” soaks into land. Extracting economic rent from all sources is the key. However land is probably the larges pool of economic rent to be reclaimed with LVT solving many problems with one swipe.
I’m not a Georgist
Johnny B,
The economic system is flawed without doubt. It needs a large change at its core. The around the edges tinkering has done nothing whatsoever.