The vast majority of Britain's super-wealthy will never leave the country for tax reasons, but one reason is that they are reluctant to do so, according to new research from the LSE's Institute of International Inequality. This is due to the stigma associated with it.
Tax-favored destinations are widely considered “boring” and “culturally sterile” among the wealthy, and tax-funded immigration is viewed as economically unduly selfish on moral grounds. It is determined that Therefore, moving to a tax haven poses a reputational risk, the study found.
Researchers Professor Sam Freedman, Dr Victoria Gronwald, Dr Andy Summers and Dr Emma Taylor conducted in-depth interviews with 35 people in the top 1 per cent of UK income and/or wealth. We found that no one is currently planning to move outside the UK for tax reasons or is actively considering moving outside the UK for tax reasons in the future. The sample was politically balanced and included individuals leaning both to the left and to the right on issues of taxation and wealth redistribution.
Typical interviewee responses include:
“My regret is that I have a wonderful life here (London). My clients who moved to the Bahamas were bored to death. Sun, sea, sand. Well, it's good for a few weeks to recharge the battery, but after a while you think, oh, I want to go see the opera, but you can forget about it, we don't have theaters in the Bahamas.'' Luke, 50s, law)
“I don't want to go to a tax haven. Can you imagine anything worse than going to a tax haven? A tiny little place with just people with yachts and servants. No, I'm not going to quit for that reason. So I'm desperate, or rather, I'd like to live in a vibrant economic climate where there's room for innovation and people are inventing, and London is just that. I think so.” (Mr. Lian, 60s, consulting)
But many feared that the UK's top tax rate was currently too high and would rise further. A small number of interviewees said they would not rule out the possibility of tax immigration, but only if the political and economic situation in the UK changes dramatically. A return to the top tax rates of the 1970s and a Jeremy Corbyn-style government were frequently cited as conditions for a 'red line'.
Interviewees living in London said the most important factors underpinning their reluctance to migrate were the capital's unparalleled cultural infrastructure, private health services and private schools, along with the ability to maintain important social connections. He revealed that he is attached to him.
There was also a strong attachment to British culture and values, as well as general concerns about career risk, administrative burden and family disruption.
Despite persistent media reports that policymakers need to limit tax increases to avoid large numbers of rich people leaving, interviewees were skeptical about the prevalence of tax immigration in the UK. While most people acknowledged that taxes were a factor in their and their wealthy colleagues and friends' decisions about where to live, it was rarely the deciding factor. The report builds on LSE's previous research using tax data, showing that previous reforms to non-Dom tax status resulted in a small increase in immigration for those affected. .
The paper says: “These findings raise important questions: Why do these findings fall in line with general media reports that the wealthy are fleeing the UK to avoid tax?'' Is there really such a striking contrast?” he concludes.
“We propose two main reasons. First, the voices of wealthy people that get attention in the media are usually highly selective. In some cases, the interviewees have already been candid about their taxes. Sometimes it's because they're known to be outspoken, but more often it's because their perspective is secondhand from tax advisors and other wealth management professionals.
“Second, media coverage of wealthy migration is often framed in the political context of proposed tax increases, and wealthy interviewees either threaten migration or at least place taxes front and center as a factor in their decision-making. They may have a vested interest in pushing them out.”
Sam Freedman, Professor of Sociology at LSE, commented: Not only are the wealthy more aware of this, they are also acutely aware of the stigma of tax immigration, where they are unfairly seen as selfish or move to places that others consider culturally sterile and boring. That's what I'm doing. ”
Emma Taylor, Visiting Research Fellow at LSE's International Inequality Research Institute (III), said: “When it comes to the wealthy, location matters. London has an unparalleled cultural infrastructure to which the wealthy are very tightly connected. “We are providing the following.”
Victoria Gronwald, researcher at LSE III, said: “Politicians need to think more about how to make Britain attractive to high earners and the wealthy, rather than overlooking general quality of life, health, education and cultural infrastructure. by protecting vital public revenues from new and higher taxes. ”
