Sorry Mr. Stevenson, taxing the rich doesn’t work
Gary Stevenson, the tax the rich populist du jour, continually tells us that taxing the rich is easy. Because while the individual might move they’ve still got assets. We can just tax the assets and so tax the wealth wherever the individual wealth owner happens to be.
Hmm, well, yes:
Steel tycoon Lakshmi Mittal plans to leave UK after non-dom tax change
Indian businessman would join an exodus of wealthy individuals prompted by Labour’s reform
Mittal is a non-dom. We get to tax anything he makes in the UK, we tax his spending in the UK and we get to tax as income whatever foreign money he brings into the UK to spend. What we don’t get to do is tax his foreign money made in foreign and kept in foreign. We think that’s an excellent idea, others don’t. Ho Well.
We’re changing those rules and hoping to tax him on his global income and, if there’s a wealth tax, his foreign wealth. He’s noting that this is a change in the social contract as it applies to him. He’s also not signing up to that change and is off - or so it is said. Given that it’s us changing that social contract that seems fair enough - no one does have to sign a new contract now, do they?
But, according to Gary, this doesn’t matter. Because even if Mittal races off into the sunset we can still tax his assets and isn’t that lovely?
Umm, really? We think that ArcelorMittal owns a few scrapyards in Scotland, true, but it is a Luxembourg based company. And:
Operated by ArcelorMittal:
ArcelorMittal Ghent – Zelzate, plants in Geel, Genk and Liège, Belgium
ArcelorMittal Kryvyi Rih in Kryvyi Rih, Ukraine
Plant in Dunkerque, Desvres, Fos-sur-Mer, Mardyck, Montataire, Basse-Indre, Florange, Mouzon, Saint-Chély-d'Apcher, France
Plants in Bremen and Eisenhüttenstadt, Duisburg Germany
ArcelorMittal Mexico – plant in Lázaro Cárdenas, Michoacán, Mexico
Katowice Steelworks – Dąbrowa Górnicza, Tadeusz Sendzimir Steelworks in Kraków, Sosnowiec, Swietochlowice, Chorzów, Zdzieszowice, Poland
Hunedoara steel works – Hunedoara, Galați steel works – Galaţi, (operated by Liberty Galati)
ArcelorMittal Spain, plants in Avilés and Gijón, Etxebarri, Lesaka and Legasa, Sagunto and Sestao (part of Greater Bilbao), Bergara, Olaberria
Plant in Belval, Esch-sur-Alzette, Differdange and Rodange, Luxemburg
Dofasco – Hamilton, Ontario, Canada
Acindar – Villa Constitución, Argentina
Hibbing Taconite (62.3% interest) – Hibbing, United States
Vanderbijlpark, South Africa
ArcelorMittal Aços Longos – Brazil
It’s not wholly obvious to us that any of those assets - the real economic assets that are so easy to tax - fall under any form of UK taxation jurisdiction.
So, err, there’s that big house in Kensington that we can tax - and which we do tax. But the only other part of the Mittal £14 billion we get to tax is the UK residence - but not domicile - of Mr. Mittal. And if he decides to not sign up to this new and changed social contract then we don’t get to tax that now, do we?
Taxing the rich isn’t easy. Especially taxing the foreign rich because they’re foreign, see? With their assets in foreign? Which is the very basis of the non-dom arrangement, we don’t tax the foreign assets of foreigners because those foreign assets are in, well, they’re in foreign, see?
By the way. The supposed 2% wealth tax that won’t be paid. This one individual would be 1% (£14 billion times 2% of the claimed £28 billion yield) of the projected yield of the entire tax. It’s not easy to tax the rich you know.
Tim Worstall