Three things deflected attention – briefly – away from the war in Ukraine in recent days. Non doms, the latest Federal Reserve plans, and the closely fought presidential contest in France which is threatening to topple Emmanuel Macron from power. All three stories share at least one thread in common – that of wealth inequality, although they also each go far beyond this one issue in their own ways.
First, and closest to home, revelations that the spouse of the second-highest ranking politician in the land, who decides how much tax we all pay and who has upped the amount extracted from ordinary taxpayers from this month, holds the rather special tax status known as non domiciled, and as a result can pay a portion of her tax bill overseas rather than in the UK, were not well received. The anger expressed over what is being interpreted as a textbook example of one rule for them and another for us, alongside evidence that the chancellor himself has a strong allegiance to another country (the US), have almost certainly put paid to Rishi Sunak’s prime ministerial ambitions and increased the chances that we will have a new chancellor of the exchequer sooner rather than later, either through a resignation or a cabinet reshuffle.
And as luck would have it, this week a juicy piece of research by the LSE and Arun Advani at the University of Warwick – The UK’s Non Doms: Who are they, what do they do and where do they live? – fell into the laps of the non dom critics. This paper revealed that around one in five of the UK’s bankers are non doms – not in itself surprising given the global nature of the UK’s banking sector and its workforce – and the status is highly represented in sport and the oil industry. The report’s authors claim that clamping down on such tax treatment would not trigger a flight from the UK by the affected individuals (the vast majority were born abroad). But that’s not supported by evidence on wealth taxes which indicate that people do indeed flee. Indeed, one of Macron’s first acts as President was to abolish France’s more-trouble-than-it-was-worth wealth tax.