The Risk of Driving out the Billionnaires!
In the wake of radical tax changes targeting non-domiciled residents, the UK is suffering an exodus of the super-wealthy.
By charging inheritance tax (IHT) on the global assets of non-doms, Labour has triggered a capital, talent, and investment drain, and The Treasury, it seems, will reap less — not more — tax income, as a result!
According to Bloomberg stats, more than 4,400 company directors left the UK last year, with April, the month the tax changes took effect, witnessing a 75% rise in departures.
The outlook doesn't get any better: 60% of tax consultants now expect to lose more than 40% of their non-dom clients within two years. These include high-profile figures like Magda Wierzycka, a billionaire venture capitalist, who has warned that foreign exchange controls would make it difficult for her estate to pay the added tax bills.
What is interesting here is Labour's failure to see the consequences of its tax increases, how could have Labour have failed to predict the scale of the exodus so utterly...?
Unintended Consequences....
Non-doms are, by definition, footloose. If the UK government threatens to take more of their wealth -they will go elsewhere. Other countries, from Italy to Portugal to the UAE, are actively chasing wealthy residents with hospitable tax regimes. The UK is at risk of being uncompetitive unless it finds a more subtle balance.
Also, the perception that Britain is closing its doors to entrepreneurial and wealthy foreigners can have reputational consequences in the future. Once the ultra-rich have relocated and invested their fortunes elsewhere, it will not be easy to bring them back — especially if they no longer trust the UK to provide a stable fiscal environment.
Labour is possibly considering a U-turn now, but the harm may already be done.
A solution...?
It's a tough one... crude tax regimes now mean the UK is uncompetitive, less attractive to the super wealthy.... maybe more carrot and less stick could be a way forward, I'm just not sure what that might look like?!?
Congratulations @revisesociology! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)
Your next target is to reach 720000 upvotes.
You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOPIt's hard not to think about how Labour missed the signs of such a big loss of money and skilled people.
Sometimes it's not just about the money maybe..?!?
And with this, a lot of skilled jobs which could mean normal people end up moving abroad too? Especially those who favour the high profile salary jobs.
It cld well have knock on effects!
These people are fickle and will go wherever suits them, but there are a fair few rich people who really want to live in the UK and will pay more tax. I keep seeing stuff about the Patriotic Millionaires. The government needs to talk to them to see what can work. What they should not do is suck up to rich people. They still only get one vote each and the majority may decide we need an alternative.
Ys fair point- thankfully we don't have stake weighted government IRL!
They could buy a "Gold Card" from Trump and come to the US 😆 🤣
It's an option until we get something similar!
Sure, what else can we expect in the modern world? If you have money, the world is open to you, and cities offering top-notch facilities and economic freedom are plentiful nowadays - often cheaper and safer.