Duncan’s Economic Blog

The Uber Rich

Posted in Uncategorized by duncanseconomicblog on May 1, 2009

There’s an interesting post up on the Spectator blog analysing last weekend’s Sunday Times Richlist as compared to the first one back in 1989.

As this is the Speccie, this is all quickly related back to how a 50% tax will ‘wreck Britain, drive away all wealth creators and generally cause the sky to fall’.

In light of last week’s announcement, the most pertinent entry of the Sunday Times Rich List 1989 is probably that of packaging mogul Hans Rausing (4th in 1989, 5th in 2009) which read:

“Few millionaires flee to Britain to escape higher taxes elsewhere but that is what the Rausing brothers did in 1982 when they left their native Sweden.”

Such a move may soon look like a relic from a bygone era. We shouldn’t only fear a hemorrhaging of Britain’s rich from our shores; we should also be aware that fewer foreigners will choose to come here. From April, only three other countries in the world will have higher top rates of tax than us (Denmark, Sweden and the Netherlands). Britain is surely going to look a little less appealing.

I’m Sure the Rausing would be a huge loss to Britain and drastically reduce our tax take. Or maybe it wouldn’t:

Dr Rausing is non-domiciled for tax purposes and an analysis of his affairs, published five years ago, revealed clever, but entirely legitimate, tax avoidance. This analysis claimed that while Dr Rausing does pay tax on part of his income, he manages to save millions by being non-domiciled.

I mean seriously – how does one respond to the argument that ‘if we have a 50% tax rate then lots of wealthy foreigners who don’t really pay us any tax anyway will leave’ ?

Going back to my favourite issue of the moment, how should we balance the books post-recession – is the existence of 1,000 in Britain with a collective net worth of over £250bn not a great argument for a low, but fair, wealth tax as used in France?

The 2009 tax bands are

– to 790000€ 0%
– 790,000 to 1,280,000€ 0.55 %
– 1,280,000 to 2,520,000€ 0.75 %
– 2,520,000 to 3,960,000€ 1.00 %
– 3,960,000 to 7,570,000€ 1.30 %
– 7,570,000 to 16,480,000€ 1.65 %
above 16,480,000€ 1.80 %

7 Responses

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  1. tim f said, on May 1, 2009 at 7:31 pm

    It does make you think some of the tories don’t particularly care about revenue, just want to collect rich people like top trumps.

  2. Tim Worstall said, on May 2, 2009 at 9:44 am

    “I mean seriously – how does one respond to the argument that ‘if we have a 50% tax rate then lots of wealthy foreigners who don’t really pay us any tax anyway will leave’ ?”

    I?n the same way as one would to the argument that “Here’s someone who moved for tax reasons so people don’t move for tax reasons” perhaps?

    • duncanseconomicblog said, on May 3, 2009 at 6:57 pm

      Fair enough Tim. My point is they don’t pay us much tax anyway.

  3. hop said, on May 2, 2009 at 9:22 pm

    “I mean seriously – how does one respond to the argument that ‘if we have a 50% tax rate then lots of wealthy foreigners who don’t really pay us any tax anyway will leave’ ? ”

    Oh! do they not pay VAT on their (large) restaurant bills. Do they not pay stamp duty on their (large) properties. Do they not give charitable donations. Yeah get rid of them. The country doesn’t need them. My neighbour (single mum on tax credits) can pick up the slack from the income we’ll lose.

  4. charliemarks said, on May 4, 2009 at 2:33 am

    All of this is rather a sideshow for more important issues – like tax havens and transfer pricing, which the government has to act on.

    Consider the effort that goes into tackling benefit fraud, the amount the govt loses, and the amount it regains from its efforts.

    Then consider the effort that goes into tackling tax dodging, the amount the govt loses and the amount it regains…

  5. Keith said, on May 5, 2009 at 1:11 am

    I wondered how long before single mums would be dragged into make an irrelevant point. in this debate.

    Quite right send them to the Gas chambers at once!

    I hear they not only have sex but enjoy it too!

    Quite outrageous if you ask me Gov.

    • hop said, on May 5, 2009 at 7:21 pm

      Many thanks to Kieth the Keen Economist for telling us that losing people who make a positive contribution to the economy is not important. Many thanks for stating that the resultant shortfall, which someone has to pick up, is an ‘irrelevant point’.

      Could this be the type of brain that has left us with a 46Billion payment each year on the interest on our debt? (For the arithmetically challenged, that’s 87,519 Pounds every minute going up in smoke). Oh! And I forgot PFI, an idea that could have only come from Enron* with their – ‘lets keep debt off the books’ philosophy. And Opps! I forgot the public sector pensions, totally unfunded, another large promised debt. But heck, ignore all this, let’s keep going as we are.


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