Isn’t this just great science from the Senior Lecturer?

One of the classic claims of the wealthy, and their friends on both the political right and in the tax abuse industry, is that if the rich are taxed then they up and leave a place. Except now we know that is not true. A new study by Cristobal Young shows that.

Well, yes and no. But, let’s stick with the results of this one study then, shall we*?

This is, of course, what we could expect. It’s easy to move when you have very little, or when you’re young. It gets harder the older you get. And incidentally, as he finds, when people do move then it’s to the sun, and not for low tax. Again, there’s nothing new in that.

But what does that mean? It means we can tax wealth because the rich stay put.

And we can have progressive taxation.

Well, obviously we can have progressive taxation. We do have progressive taxation after all. And the US tax system is significantly more progressive** than the UK one too. So, agreed. But does that then mean we can tax wealth?

Well, we don’t tax wealth currently, do we? We do tax income from wealth, but not the wealth itself. So, the predictive power of this paper upon the effects of the taxation of wealth is?

*My own anecdata of those USians I know with substantial incomes is that 100% of them moved out of a 10% income tax state into a 0% one. Small sample mind.

**This is using “progressive” in the context of tax systems properly. That is, the progression of average tax rates as income rises. Not what Tuber would claim, high tax rates.

18 thoughts on “Isn’t this just great science from the Senior Lecturer?”

  1. If more tax and Brexit are both costs to individuals and more tax doesn’t make people move, does that mean no one will leave the UK due to Brexit?

    Not necessarily my thoughts/opinion but wondering if one needs to be consistent between the two or if not have a suitable explanation for any divergence.

  2. Bloke in North Dorset

    I’m,

    One of Spuds great strengths is his larger capacity for cognitive dissonance, which is exceeded only by his Dunning–Kruger score.

  3. “We do have progressive taxation after all.” Tut, tut, Mr Tim. If you mean “income tax” you should say so. Lots of our taxes are regressive. Perhaps the tax system in toto is roughly flat. Anyone know?

  4. “This is, of course, what we could expect. It’s easy to move when you have very little, or when you’re young. It gets harder the older you get. And incidentally, as he finds, when people do move then it’s to the sun, and not for low tax. Again, there’s nothing new in that.”

    Fuck me, he’s really lacking in the imagination stakes isn’t he? It appears he can’t imagine having the amount of money that all you have to do is say to someone ‘I’m moving to my house in Switzerland(or New York, or Paris or Hong Kong)’ and just go there. Which is what we’re talking about here, the uber-uber-uber wealthy. The billionaire hedge fund/entrepreneurs/Russian expat types, who have people to manage the people who manage the people who actually do stuff for them. Its hardly that difficult for them they just have to pick up a phone and put the wheels in motion. The Bentley will be round later to take them to the airport…….

    Just round my way I could point you to several types of exactly that level of wealth, they’ve been buying up land by the square mile.

    The people that Spud can just about manage to imagine are not even on the same radar – people who have a nice house in the country and a decent share portfolio, maybe net assets of a couple of million. They’re the ones who would be screwed by the wealth taxes, the retired business owners, the middle class family wealth types. They are the ones who would struggle fund a move abroad, and who have roots here. The 0.001%ers already have one foot abroad, leaving is a piece of piss.

  5. If he is that indifferent to people moving why bother with exchange or capital controls – the man is the epitome of the modern moron

  6. There is the example of a wealth tax not 20 miles away. It’s called France. A right success that was…

    Incidentally, a wealth tax ACTUALLY means tax inspectors coming round to your house to check your furniture. And as a lot of people said in France :”but I’m not rich, it’s the other guys you should go and check…”. Definition of rich is very flexible in socialist land, and tends to move the limit ever lower…

  7. Monarco is a country based almost entirely on tax refugees. (Unless the filthy rich like to live piled on top of each other.)

    Other countries at risk of that avoid it by allowing only very limited immigration. Norfolk Island, for example, would be flooded if it allowed people free entry. Aren’t the Channel Islands in that boat too?

    What people don’t do is move cultures and thousands of kilometres just to save money. But if the cultures are similar and the spots are close and nice, they’ll flood in.

  8. Americans, who make up a big proportion of the world’s megarich, are taxed on their worldwide income, even if non resident. So there’s no incentive to move to another country. So we shouldn’t be surprised that they don’t.

  9. To back up what Jim said, for the vast majority of those whom Spud would describe as rich, their assets are tied down in-country in the form of real estate. Hard to shift that physically or to realise its value when the market crashes due to a wealth tax.

  10. @ Dearieme
    The tax system in the UK is progressive despite the “sin taxes” on tobacco and alcohol being heavily regressive. I have banged on about the phony dats produced by New Labour to the point that even I have got bored with it so I’ll just say that if you ignore those for whom tax is a negative percentage of income (because income *for that year* is negative) even they show that total tax is progressive until you get to the top decile for whom tax as a %age of income is lower than the 9th decile (but higher than for all the rest) because they are saving over one-third of their income after income taxes so not paying indirect taxes on that third.

  11. j77: including VAT? Fuel taxes? Council tax, Stamp Duty? IHT?

    National Insurance (if you think that should count: I incline against)?

    Insurance tax, air passenger duty, and miscellaneous?

  12. Dearieme, HMRC publishes lots of data that you could look at in order to come into agreement with John77. The oddity is really the top decile. I guess they are on their yachts and refuelling outside the UK for significant parts of the year and getting their mansion taxes paid by companies. But incidence…

  13. @ Dearieme
    Yes, except for IHT which is paid by the estate and not the legatees.
    It is interesting to note the amount of stamp duty on house purchase paid by those in the bottom decile – and the Employers’ NI Contributions and the “Air passenger duty” and the custoims taxes paid on the stuff that they bring bacvk from foreign holidays in excess of the duty-free allowance and …
    Thanks for mentioning IHT – I had overlooked its omission which means that the progressive nature of UK taxation is understated. I shall need to reanalyse the data with some un-/less-reliable added data on the distribution of inheritance among deciles to produce some *even more* boring statistics. It will probably show that the top decile pays a higher %age of income in tax than the 9th decile although the tax breaks introduced by G Brown for entrepreneurs selling their businesses may stop that.
    National Insurance is now a tax on income (it had always been partially so) for those under 65 and I consider that it *should* be included. Contribution-based JSA does exist but is a relatively small part of the total.

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