Mark Steel: Idiot

New Labour certainly keep their promises. Before they were elected, they promised to reform the loophole that enables the super-rich to avoid paying tax, by claiming "non-domicile tax status". And now, 11 years later, they\’re still promising to do it.

This ruse involves living in Britain while not being an official resident, and is one of the main ways in which the richest 54 billionaires in the country have paid on average 1 and a half per cent tax.

Erm, no.

If you are not resident in the UK you do not pay tax at all in the UK. Non-doms are resident in the UK which is why they pay full UK tax on their UK earnings and full UK tax on earnings from other countries which they bring into the UK. But because they are resident but not domiciled they do not pay UK tax on money that they earn in other countries anddo not bring into the UK. If they were not residents we would call them non-residents: the fact that we call them non-domiciles rather than non-residents might be the smallest of clues to the fact that they are not "living in Britain while not being an official resident"

Sigh.

And to claim that billionaires pay 1.5% tax….1.5% of what? Their wealth? We don\’t even have a wealth tax, dingbat!

7 comments on “Mark Steel: Idiot

  1. You could also have pointed out that £1bn less £30k is not £999,999,970.

    But I think your coverage of this whole issue has been a bit hysterical too – I’ve only really got my information about this from you and was under the impression it was a complete non-starter. Reading Willem Buiter’s column today I see that there is, confirmed by some Irish paper guy who was threatening to leave the country (and his wife and children!).

  2. Ack, the Guardianistas are always going on about “billionaires” who only pay “1.5%” tax (i.e. tax which equates to 1.5% of their wealth).

    A moments thought and you see that this is quite fair (to the UK Government, anyway). Equity assets will grow at, ooo let’s say, 4% above inflation per year, bonds somewhere around 2%, with an asset split that gives an average growth of, say, 3.5%. Paying tax at 1.5% of wealth therefore equates to an investment income tax of 43%.

  3. Do you pay tax only on the real return on assets, not the nominal retunrn? Anyway I’m not sure billionaires tend on average to get only a 3.5% real return on their assets. If they get a 7.5% real return that would mean they are paying only 20% tax.

  4. Perhaps he doesn’t understand the difference between capital and revenue. I wonder what his own tax rate would be if it were compared percentage wise to his total assets. I suspect that Mark Steele would himself be paying a much lower percentage than someone on the minimum wage with no property.

    But I like to think of folk like him, eating their hearts out with the nagging jealousy of other peoples money and pretending they are being spiteful and greedy on behalf of “the poor”.

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