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Henley and partners published 
their private wealth migration 

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report once a year. 
In their latest edition, the UK 

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ranks dead last for the first 
time, with a net outflow of 

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00:00:11,960 --> 00:00:16,560
16,500 millionaires. 
This figure has been quoted in 

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00:00:16,560 --> 00:00:20,000
parliament, picked up by 
newspapers and used to frame 

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debates about Britain's global 
competitiveness. 

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It's a very worrying number, but
it's also quite hard to verify. 

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Tim Hartford looked into this 
claim on his BBC podcast More or

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00:00:33,240 --> 00:00:35,440
Less. 
He interviewed the head of 

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research at New World, Weld, who
did the research underlying the 

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00:00:39,520 --> 00:00:44,000
migration report, who explained 
that their estimates rely on 

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social media profiles, press 
coverage and company filings. 

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Hartford argued in his podcast, 
quite rightly, that their sample

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was not representative and that 
you couldn't draw conclusions 

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from it. 
Dan Needle of Tax Policy 

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Associates went further in a 
forensic review published on his

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website. 
He pointed out that the report 

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was riddled with statistical red
flags. 

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The firm had dropped all 
property wealth from its 

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analysis between 2023 and 2025, 
yet it's millionaire counts 

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barely moved, a result Needle 
described as impossible if the 

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00:01:21,840 --> 00:01:27,040
published methodology were real.
New World Weld later told the FT

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that they hadn't actually 
changed their methodology, just 

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their description of it. 
Needle found digit patterns in 

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the data with a suspiciously 
high frequency of even numbers 

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and numbers where trailing 
digits cluster on zeros and 

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fives with almost no ones. 
Statistically, he points out, 

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the chance of that occurring 
naturally is about one in 

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240,000 More evidence, he says 
that the numbers were either 

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manually created or manually 
adjusted. 

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Needle's analysis used well 
established techniques to detect

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rigged numbers. 
I'll put a link to his more 

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detailed analysis in the 
description, but he concluded 

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that the figures were likely 
engineered rather than observed.

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Now this doesn't mean that the 
rich are not leaving the UK, it 

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00:02:17,920 --> 00:02:21,040
just means that it's very 
difficult to know whether they 

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are or not, simply because good 
data doesn't exist. 

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To highlight the difficulty, the
UK Office for Statistics 

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00:02:29,160 --> 00:02:33,440
Regulation recently suspended 
the official statistics status 

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of the government's own Wealth 
and Asset Survey collected by 

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the Office for National 
Statistics, following concerns 

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raised by the ONS that the data 
is no longer of sufficient 

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quality to meet users needs. 
The Financial Times in a 

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00:02:49,400 --> 00:02:53,840
separate analysis, found that a 
wave of company directors have 

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left Britain since the 
government abolished it's 

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00:02:56,480 --> 00:03:00,560
favourable tax treatment for non
domiciled residents and raised 

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00:03:00,560 --> 00:03:04,400
other duties on the wealthy. 
They analyzed Companies House 

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00:03:04,400 --> 00:03:08,960
filings looking for directors of
UK firms who updated their 

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00:03:08,960 --> 00:03:11,440
addresses to overseas 
jurisdictions. 

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This is not a perfect 
methodology either, which the FT

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highlighted in their column, as 
plenty of wealthy people don't 

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run companies and plenty of 
directors don't update their 

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filings in a timely manner. 
But a trend is visible in the 

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data. 
In the most recent report, 3790 

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00:03:32,160 --> 00:03:37,920
directors reported leaving the 
UK, up from 2710 the year 

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00:03:37,920 --> 00:03:42,160
before, and the spike that 
occurred in April coincides with

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the new tax changes. 
There are other signals being 

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00:03:46,080 --> 00:03:49,600
reported, too. 
Butler agencies report fewer 

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placements, wealth managers say 
that some clients are leaving, 

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and London's luxury property 
market has softened. 

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None of this is conclusive, but 
it's not nothing either. 

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EU KS non Dom tax regime is not 
a recent invention. 

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It dates back to the very first 
income tax in 1799, introduced 

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by William Pitt the Younger to 
fund the Napoleonic Wars. 

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At the time, all residents were 
taxed only on UK income. 

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00:04:21,519 --> 00:04:26,360
In 1915 the rules changed. 
UK residents were taxed on 

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00:04:26,360 --> 00:04:31,040
worldwide income unless they 
could claim non domicile status,

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00:04:31,280 --> 00:04:34,960
and that carve out remained 
largely intact for over a 

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century. 
Non Dom describes Auk residence,

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whose permanent home for tax 
purposes is outside the UK 

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domicile under British tax law 
has always been a bit of a funny

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thing. 
It's the place that someone 

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considers to be their permanent 
home and where they have the 

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closest ties, and it refers to 
their tax status and doesn't 

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00:04:58,480 --> 00:05:02,480
necessarily relate to their 
citizenship or resident status, 

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although it can be affected by 
these factors. 

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A non Dom only paid UK tax on 
the money they earned in the UK.

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00:05:12,000 --> 00:05:16,000
They didn't have to pay tax to 
the UK government on money made 

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elsewhere in the world unless 
they transfer that money back 

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00:05:19,760 --> 00:05:23,040
into the UK. 
For wealthy individuals, this 

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00:05:23,040 --> 00:05:27,680
presented the opportunity for 
significant and entirely legal 

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tax savings, especially if you 
could claim a lower tax country 

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as your domicile. 
One of the best known non doms 

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00:05:35,720 --> 00:05:39,520
was former Prime Minister Rishi 
Sanak's wife, who, after a 

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00:05:39,520 --> 00:05:43,240
scandal broke a few years ago, 
announced that she would start 

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00:05:43,240 --> 00:05:45,920
paying UK tax on her worldwide 
income. 

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00:05:46,280 --> 00:05:49,960
Attempts to reform the non Dom 
rules over the years were 

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00:05:49,960 --> 00:05:52,680
frequent. 
Labour nearly abolished it in 

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00:05:52,680 --> 00:05:56,040
1974. 
Niger Lawson tried again in 

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00:05:56,040 --> 00:05:59,480
1988. 
During the financial crisis the 

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00:05:59,480 --> 00:06:03,680
regime was tightened where 
annual charges were introduced 

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00:06:03,920 --> 00:06:08,520
for long term non DOMS. 
You had to pay £30,000 a year if

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00:06:08,520 --> 00:06:12,080
you'd been resident in the UK 
for seven of the past nine years

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00:06:12,280 --> 00:06:17,600
and £60,000 a year if you'd been
resident for 12 of the past 14 

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00:06:17,600 --> 00:06:19,800
years. 
The remittance basis was 

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00:06:19,800 --> 00:06:24,200
preserved, but access became 
more expensive and conditional. 

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00:06:24,880 --> 00:06:29,520
George Osborne made further 
changes in 2017, removing 

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00:06:29,520 --> 00:06:34,200
benefits for those who had lived
in the UK for 15 of the past 20 

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00:06:34,200 --> 00:06:36,800
years. 
But each time adjustments were 

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00:06:36,800 --> 00:06:41,120
made, Treasury officials warned 
of tax flight and ministers 

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00:06:41,120 --> 00:06:44,200
backed down. 
The fear was that driving the 

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wealthy abroad would harm the 
economy more than it would 

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00:06:47,520 --> 00:06:50,440
benefit from taxing them on 
their foreign earned income. 

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00:06:51,000 --> 00:06:55,760
In March 2024, then Chancellor 
Jeremy Hunt announced the 

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00:06:55,760 --> 00:07:00,000
abolition of the Non Dom rule. 
Ahead of the general elections 

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00:07:00,160 --> 00:07:04,120
in October, Labour Chancellor 
Rachel Reeves confirmed the 

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00:07:04,120 --> 00:07:08,240
policies and extending it to 
offshore trusts to prevent 

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inheritance tax avoidance. 
Now, foreign income and gains 

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00:07:12,920 --> 00:07:17,560
are taxed in the UK as they are 
earned once an individual has 

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00:07:17,560 --> 00:07:20,400
been resident in the UK for four
years. 

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00:07:20,680 --> 00:07:25,160
On top of that, inheritance tax 
will apply to worldwide assets 

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00:07:25,160 --> 00:07:29,600
after 10 years and continue for 
10 years after departure. 

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00:07:30,000 --> 00:07:33,760
The excluded property trust 
loophole is closed and the 

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00:07:33,760 --> 00:07:38,040
concept of domicile for tax 
purposes has been retired. 

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00:07:38,680 --> 00:07:43,600
There are transitional rules. 
Assets held before April 2025 

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can be rebased. 
Foreign income and gains can be 

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brought into the UK at a flat 
12% rate for a limited time. 

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00:07:51,640 --> 00:07:55,000
New arrivals get a four year 
grace period under the 

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00:07:55,000 --> 00:07:59,080
qualifying new resident regime. 
But the overall direction is 

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clear. 
The UK is no longer a tax haven 

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00:08:02,400 --> 00:08:05,680
for the globally mobile. 
The Office for Budget 

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00:08:05,680 --> 00:08:10,960
Responsibility says that they 
expect up to 25% of non Doms to 

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00:08:10,960 --> 00:08:15,200
leave the UK. 
The Treasury forecasts £12.7 

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00:08:15,200 --> 00:08:18,080
billion in revenue over five 
years. 

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00:08:18,440 --> 00:08:22,840
Research from Warwick University
suggests the fears of a mass 

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00:08:22,840 --> 00:08:27,960
departure may be overstated as 
when Osborne's 2017 change took 

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00:08:27,960 --> 00:08:32,919
effect, only 6% of affected non 
Doms left the UK. 

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00:08:33,200 --> 00:08:36,679
Those who stayed paid 
significantly more tax, on 

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00:08:36,679 --> 00:08:41,280
average an extra 100,000 £1000 
per year, and the predicted mass

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00:08:41,280 --> 00:08:45,600
exodus never came. 
The debate is still not over. 

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00:08:45,800 --> 00:08:49,320
This June, the Financial Times 
reported the chancellor, Rachel 

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Reeves, was exploring A partial 
reversal of the inheritance tax 

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changes. 
Following lobbying from the City

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of London and a spate of high 
profile departures. 

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00:08:59,920 --> 00:09:03,200
The government is said to be 
considering adjustments to the 

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00:09:03,200 --> 00:09:07,160
10 year tale or reintroducing 
trust protections. 

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00:09:07,440 --> 00:09:11,000
No formal announcement has been 
made, but the Treasury is 

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00:09:11,000 --> 00:09:15,040
watching the fallout closely. 
The VAT change on private school

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00:09:15,040 --> 00:09:20,320
fees has added to this mood. 
From January 2025, independent 

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00:09:20,320 --> 00:09:25,760
schools are subject to 20% VAT. 
The government expects a 10% 

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00:09:25,760 --> 00:09:31,080
average fee increase and up to 
35,000 pupils to shift to state 

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00:09:31,080 --> 00:09:33,600
schools. 
For wealthy families already 

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considering relocation, it's one
more nudge. 

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00:09:37,720 --> 00:09:40,720
There have been a number of high
profile exits. 

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00:09:40,920 --> 00:09:45,160
Lakshmi Mattal, the Indian born 
founder of Arsalore Mattal and 

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00:09:45,160 --> 00:09:49,800
Britain's 7th wealthiest man, is
reported to be leaving, as is 

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00:09:49,840 --> 00:09:53,280
Nassif Sawaras, Egypt's richest 
person. 

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00:09:53,520 --> 00:09:57,400
Richard Nodi, the South African 
born vice chairman of Goldman 

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00:09:57,400 --> 00:10:01,960
Sachs International, has left 
Britain for Milan and Beaufort. 

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00:10:01,960 --> 00:10:06,280
The Sanofi heiress moved her tax
residence to Switzerland. 

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00:10:06,840 --> 00:10:11,440
A study of non doms in 2018 and 
those who had claimed the state 

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00:10:11,440 --> 00:10:18,000
has since 1997 found that more 
93% were born abroad and another

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00:10:18,000 --> 00:10:21,680
4% had lived abroad for a 
substantial period. 

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00:10:21,920 --> 00:10:25,080
Most have genuine international 
ties. 

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00:10:25,320 --> 00:10:29,080
When the UK changes the rules, 
these people have real ties 

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00:10:29,080 --> 00:10:33,840
abroad and can choose lower tax 
regimes if it makes sense for 

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00:10:33,840 --> 00:10:36,600
them. 
A paper from the London School 

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00:10:36,600 --> 00:10:40,720
of Economics on tax flight 
points out that people who have 

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00:10:40,720 --> 00:10:45,880
already migrated ones tend to be
more responsive than natives to 

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00:10:45,880 --> 00:10:49,440
tax changes, and there's often a
statistically significant 

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00:10:49,440 --> 00:10:54,160
migration response overall. 
None of this proves a mass 

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00:10:54,160 --> 00:10:57,240
departure, but it's not just 
noise either. 

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00:10:57,480 --> 00:11:02,320
HMRC payroll data this August 
found no evidence to suggest 

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00:11:02,480 --> 00:11:07,080
that more non Doms left Britain 
than the 25% official 

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00:11:07,080 --> 00:11:11,760
prediction, according to the FT.
Countries around the world are 

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00:11:11,880 --> 00:11:14,400
constantly adjusting their tax 
regimes. 

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00:11:14,480 --> 00:11:18,280
Switzerland offers lump sum 
taxation to high net worth 

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00:11:18,280 --> 00:11:22,120
individuals where a flat tax 
rate can be negotiated with 

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00:11:22,120 --> 00:11:27,480
local government authorities. 
Italy introduced a €100,000 flat

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00:11:27,480 --> 00:11:33,600
tax on foreign income in 2017, 
later raising it to €200,000. 

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00:11:33,840 --> 00:11:37,240
This has been popular with 
footballers, fashion executives 

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00:11:37,440 --> 00:11:41,440
and hedge fund managers. 
Portugal replaced its non 

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00:11:41,440 --> 00:11:46,640
habitual resident regime in 2024
with a narrower scheme focused 

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00:11:46,640 --> 00:11:51,400
on innovation and research. 
The UAE has no personal income 

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00:11:51,400 --> 00:11:55,680
tax and a nine percent corporate
tax above $1,000,000. 

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00:11:56,320 --> 00:12:01,880
Andura offers a 10% income tax, 
no well tax and no inheritance 

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00:12:01,880 --> 00:12:04,880
tax. 
Golden visas are part of the 

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00:12:04,880 --> 00:12:08,320
strategy too. 
The UAE offers long term 

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00:12:08,320 --> 00:12:12,040
residency to investors. 
Italy and Greece have property 

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00:12:12,040 --> 00:12:15,960
linked visa schemes. 
Donald Trump recently proposed a

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00:12:15,960 --> 00:12:21,920
$5,000,000 Gold Card Visa for 
the US, a rebranding of the EB5 

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00:12:21,920 --> 00:12:25,400
immigrant investor visa with 
fewer restrictions. 

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00:12:25,800 --> 00:12:30,120
To highlight how complicated 
some of this can be, last month,

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00:12:30,120 --> 00:12:33,600
several senior bankers from 
Pictay, one of Switzerland's 

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00:12:33,600 --> 00:12:37,840
most prestigious private banks, 
relocated to Italy where they 

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00:12:37,840 --> 00:12:41,920
could get lower taxes. 
The move triggered a tax debate 

187
00:12:41,920 --> 00:12:45,160
in Geneva. 
A point of contention is that 

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00:12:45,160 --> 00:12:49,600
some foreigners in Switzerland 
pay less tax than citizens do. 

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00:12:49,920 --> 00:12:53,120
Critics argued that 
Switzerland's rigid enforcement 

190
00:12:53,240 --> 00:12:58,000
was pushing talent away, while 
Italy's flat tax regime was 

191
00:12:58,000 --> 00:13:01,320
pulling it in. 
Tax is only part of the 

192
00:13:01,320 --> 00:13:03,960
equation. 
Wealthy individuals also 

193
00:13:03,960 --> 00:13:08,080
consider lifestyle, legal 
stability and access to global 

194
00:13:08,080 --> 00:13:10,720
markets. 
Jurisdictions that offer the 

195
00:13:10,720 --> 00:13:14,160
right mix attract the rich, 
while others lose them. 

196
00:13:14,520 --> 00:13:18,320
Gabrielle Zilkman, the French 
economist known for his work on 

197
00:13:18,320 --> 00:13:23,360
tax havens and inequality, has 
proposed a 2% annual wealth tax 

198
00:13:23,360 --> 00:13:26,480
on billionaires. 
The idea gained traction in 

199
00:13:26,480 --> 00:13:30,240
France's political circles 
earlier this year, with support 

200
00:13:30,240 --> 00:13:33,760
from parts of the left and 
criticism from business leaders 

201
00:13:33,760 --> 00:13:36,000
and economists across the 
spectrum. 

202
00:13:36,600 --> 00:13:41,080
Zupman argues that the ultra 
wealthy are under taxed relative

203
00:13:41,080 --> 00:13:44,840
to their income and assets. 
His proposal is designed to be 

204
00:13:44,840 --> 00:13:48,200
enforceable through 
international cooperation and 

205
00:13:48,200 --> 00:13:51,240
automatic exchange of financial 
information. 

206
00:13:51,520 --> 00:13:56,480
He's also advising the G20 on 
global wealth taxation, pushing 

207
00:13:56,480 --> 00:14:00,160
for a coordinated approach that 
would prevent capital flight. 

208
00:14:00,880 --> 00:14:03,560
France has a history with wealth
taxes. 

209
00:14:03,760 --> 00:14:08,720
It repealed its own version in 
2017 after years of debate over 

210
00:14:08,720 --> 00:14:12,080
its effectiveness. 
The tax raised modest revenue 

211
00:14:12,240 --> 00:14:15,480
and was blamed for driving 
wealthy residents to Belgium, 

212
00:14:15,480 --> 00:14:20,040
Switzerland and the UK. 
The debate over how taxes should

213
00:14:20,040 --> 00:14:24,360
work has spilled across borders.
The former French Prime Minister

214
00:14:24,360 --> 00:14:28,800
recently accused Italy of 
engaging in fiscal dumping by 

215
00:14:28,800 --> 00:14:32,600
luring wealthy French citizens 
with its flat tax regime. 

216
00:14:32,960 --> 00:14:36,800
The Pictay bankers move from 
Geneva to Milan has sparked 

217
00:14:36,880 --> 00:14:41,640
fierce debate in Switzerland. 
Wealth taxes are politically 

218
00:14:41,640 --> 00:14:44,160
popular but economically 
fragile. 

219
00:14:44,400 --> 00:14:48,400
According to Economics 
Observatory, the number of OECD 

220
00:14:48,400 --> 00:14:53,800
countries with annual wealth 
taxes dropped from 12 in 1990 to

221
00:14:53,800 --> 00:14:57,200
just three today. 
The reasons for dropping them 

222
00:14:57,200 --> 00:15:01,720
are consistent low yield, high 
avoidance and administrative 

223
00:15:01,720 --> 00:15:05,760
complexity. 
Mobility is no longer limited to

224
00:15:05,760 --> 00:15:08,600
billionaires. 
Increasingly, professionals in 

225
00:15:08,600 --> 00:15:11,760
the upper middle class are 
making decisions about where to 

226
00:15:11,760 --> 00:15:15,520
live based on tax, lifestyle and
legal stability. 

227
00:15:15,800 --> 00:15:18,200
The barriers to relocation have 
dropped. 

228
00:15:18,480 --> 00:15:21,560
Remote work, international 
schools and digital 

229
00:15:21,560 --> 00:15:25,160
infrastructure have made it 
easier to live abroad without 

230
00:15:25,160 --> 00:15:29,320
severing ties to home. 
In the United States, internal 

231
00:15:29,320 --> 00:15:31,680
migration reflects similar 
patterns. 

232
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States like Florida, Texas and 
Tennessee, which have no state 

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income tax, continue to attract 
high earners from California, 

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00:15:40,000 --> 00:15:44,320
New York and Illinois. 
The shift isn't just about tax. 

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It's also about housing costs, 
crime rates and the quality of 

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00:15:48,480 --> 00:15:52,680
public services. 
Digital nomad visas have added 

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another layer. 
Estonia, Portugal, Barbados and 

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00:15:56,560 --> 00:16:00,760
many other countries offer 
residency to remote workers 

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00:16:00,760 --> 00:16:02,960
earning above a certain 
threshold. 

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00:16:03,240 --> 00:16:07,040
These programs target 
professionals who aren't wealthy

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00:16:07,040 --> 00:16:10,280
in the traditional sense but 
have portable incomes and 

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00:16:10,280 --> 00:16:14,720
flexible careers. 
Citizenship planning has become 

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00:16:14,760 --> 00:16:17,920
a cottage industry. 
Wealthy families now hold 

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00:16:17,920 --> 00:16:22,400
multiple passports, not for 
travel convenience but for legal

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00:16:22,400 --> 00:16:26,760
and financial flexibility. 
Some jurisdictions offer Plan B 

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00:16:26,760 --> 00:16:30,960
citizenships second passports 
designed to hedge against 

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00:16:30,960 --> 00:16:35,160
political or fiscal instability.
The wealthy have always been 

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00:16:35,160 --> 00:16:38,080
mobile. 
What's changed is the scale. 

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00:16:38,280 --> 00:16:41,240
Mobility now extends to a 
broader segment of the 

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00:16:41,240 --> 00:16:44,840
population and governments are 
adjusting their policies 

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00:16:44,840 --> 00:16:47,800
accordingly. 
Governments are also just 

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00:16:47,800 --> 00:16:51,640
starting to run out of room. 
Across Europe, deficits are 

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00:16:51,640 --> 00:16:55,160
widening and the cost of 
borrowing is no longer trivial. 

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00:16:55,480 --> 00:16:59,240
The post pandemic debt pile 
hasn't shrunk, it's instead been

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00:16:59,240 --> 00:17:03,520
layered with new obligations, 
energy subsidies, inflation, 

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00:17:03,520 --> 00:17:06,440
linked benefits and now military
spending. 

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Ageing populations combined with
high retirement benefits aren't 

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00:17:11,200 --> 00:17:15,400
helping either. 
Governments need to either raise

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00:17:15,400 --> 00:17:19,680
taxes or cut spending, and there
appears to be no desire to cut 

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spending. 
Tax revenue has to come from 

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00:17:22,720 --> 00:17:27,000
somewhere, but the traditional 
targets consumption, corporate 

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00:17:27,000 --> 00:17:30,680
profits and middle income 
earners are already strained. 

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00:17:31,320 --> 00:17:35,480
This is the tension. 
Fiscal sustainability demands 

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00:17:35,480 --> 00:17:38,760
revenue while global 
competitiveness demands 

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00:17:38,760 --> 00:17:41,800
restraint. 
The balance is hard to strike 

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00:17:41,840 --> 00:17:47,000
and easy to lose. 
In the 1970s, Britain raised its

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00:17:47,000 --> 00:17:53,640
top marginal tax rate to 83% and
98% on unearned income, which 

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00:17:53,640 --> 00:17:56,320
means investment income and 
royalties. 

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00:17:56,600 --> 00:18:00,000
The response was quick. 
The Beatles, whose music 

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00:18:00,000 --> 00:18:03,040
publishing income would have 
been classified as unearned 

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00:18:03,040 --> 00:18:06,440
income, shifted their financial 
operations offshore. 

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00:18:06,640 --> 00:18:09,040
The Rolling Stones left for 
France. 

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00:18:09,360 --> 00:18:12,680
Film stars, bankers and 
industrialists followed. 

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00:18:12,920 --> 00:18:16,120
Sotheby's held auctions on 
heirlooms from shuttered 

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00:18:16,120 --> 00:18:19,000
estates. 
Stately homes emptied out. 

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00:18:19,520 --> 00:18:21,920
The tax code had become a 
deterrent. 

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00:18:22,080 --> 00:18:26,720
High earners who could move did.
Today, the top rate of income 

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00:18:26,720 --> 00:18:32,240
tax in the UK on most income is 
45%, so you would expect that 

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00:18:32,240 --> 00:18:36,040
there must have been a lot more 
income tax paid in the 1970s 

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00:18:36,040 --> 00:18:39,000
than today. 
But this chart from Tax Policy 

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00:18:39,000 --> 00:18:43,400
Associates shows that income tax
raised about the same in the 

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00:18:43,400 --> 00:18:47,760
1970s as a percentage of GDP as 
it does today. 

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00:18:48,040 --> 00:18:51,200
It's worth noting that the rich 
didn't end up paying a higher 

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00:18:51,200 --> 00:18:53,560
percentage of taxes back then 
either. 

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00:18:53,800 --> 00:18:59,880
When taxes were at their highest
in 1978 and 1979, the top 1% 

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00:18:59,880 --> 00:19:03,600
paid 11% of all income tax 
collected. 

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00:19:03,880 --> 00:19:09,640
Today in the UK the top 1% pay 
about 29% of all income tax 

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00:19:09,640 --> 00:19:12,440
collected. 
There were a few reasons for 

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00:19:12,440 --> 00:19:16,480
this change. 
Firstly, the top 1% today earn a

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00:19:16,480 --> 00:19:20,000
lot more than the top 1% did in 
the late 70's. 

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00:19:20,280 --> 00:19:24,000
The nature of how money is made 
today, where technology can be 

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00:19:24,000 --> 00:19:27,840
leveraged to build scalable 
income, means that income is 

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00:19:27,840 --> 00:19:31,480
less tied to hours worked than 
it was in the past. 

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00:19:31,800 --> 00:19:36,040
Secondly, in the wake of the 
financial crisis, tax rates went

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00:19:36,040 --> 00:19:39,680
up a lot for higher earners. 
Thirdly, and possibly most 

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00:19:39,680 --> 00:19:43,600
importantly, higher earners are 
often in a position where they 

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00:19:43,600 --> 00:19:47,080
can control the size of their 
incomes and the timing of 

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00:19:47,080 --> 00:19:48,960
payments. 
While The Beatles and The 

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00:19:48,960 --> 00:19:52,760
Rolling Stones couldn't slow 
down their royalty payments, a 

300
00:19:52,760 --> 00:19:56,720
business owner or a senior 
executive could defer payments 

301
00:19:56,840 --> 00:20:00,200
waiting for a better tax rate. 
Why would you pay yourself a 

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00:20:00,200 --> 00:20:04,720
high dividend or a bonus if the 
government would take 98% of it?

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00:20:04,880 --> 00:20:06,800
You'd just leave it in the 
company. 

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00:20:07,520 --> 00:20:13,000
In the 1970s, benefits in kind 
were under taxed or completely 

305
00:20:13,000 --> 00:20:17,600
untaxed so an executive could 
eat out, have a company car, 

306
00:20:17,720 --> 00:20:21,320
take holidays and enjoy club 
memberships, all without being 

307
00:20:21,320 --> 00:20:24,000
taxed. 
As Dan Needle explains in his 

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00:20:24,000 --> 00:20:28,680
blog, the UK tax policies of the
1970s were a failure. 

309
00:20:28,840 --> 00:20:32,440
They failed to tax the rich 
effectively, they failed to fix 

310
00:20:32,440 --> 00:20:35,680
the government's fiscal 
problems, and they drove many 

311
00:20:35,680 --> 00:20:38,560
wealthy Brits abroad who never 
came back. 

312
00:20:39,320 --> 00:20:44,160
The 1970s are remembered for 
strikes and stagflation, but 

313
00:20:44,160 --> 00:20:48,160
they also marked a turning point
in how Britain treated globally 

314
00:20:48,160 --> 00:20:51,680
mobile wealth. 
When the cost of staying rises, 

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00:20:51,800 --> 00:20:54,680
those with options start looking
elsewhere. 

316
00:20:55,360 --> 00:20:59,000
Those calling for a return to 
those types of policies are 

317
00:20:59,000 --> 00:21:02,360
often doing so out of a desire 
to punish high earners. 

318
00:21:02,760 --> 00:21:06,280
According to Dan Needle, the 
lessons that can be drawn from 

319
00:21:06,280 --> 00:21:10,560
that era are that the best way 
to tax the wealthy is to expand 

320
00:21:10,560 --> 00:21:14,240
the base and close loopholes. 
Well, that makes a less snappy 

321
00:21:14,240 --> 00:21:16,640
sound bite than sending rates 
sky high. 

322
00:21:16,960 --> 00:21:21,120
The evidence and the history 
show that it's a fairer and much

323
00:21:21,120 --> 00:21:24,680
more effective method. 
The debate around wealth 

324
00:21:24,680 --> 00:21:28,200
inequality often starts with a 
statistic and ends with a 

325
00:21:28,200 --> 00:21:31,360
slogan. 
Oxfam's claim that the richest 

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00:21:31,360 --> 00:21:35,520
1% own more than the rest of the
world combined gets repeated 

327
00:21:35,520 --> 00:21:39,920
frequently, but the methodology 
behind it is rarely examined. 

328
00:21:40,200 --> 00:21:44,360
The figure includes negative net
worth, which means a recent 

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00:21:44,360 --> 00:21:48,080
medical school graduate with 
student debt is counted as 

330
00:21:48,080 --> 00:21:52,120
poorer than a homeless person 
with no debt but with no 

331
00:21:52,160 --> 00:21:53,640
employment. 
Prospect sex. 

332
00:21:53,880 --> 00:21:56,280
That's not a meaningful 
comparison. 

333
00:21:56,840 --> 00:22:01,000
Another example, Jerome Kerviel,
the rogue trader who lost 

334
00:22:01,000 --> 00:22:04,640
billions for society. 
Generale is technically one of 

335
00:22:04,640 --> 00:22:07,120
the poorest people in the world 
by net worth. 

336
00:22:07,360 --> 00:22:11,680
His debts are so large that they
skew the data, but he's not 

337
00:22:11,680 --> 00:22:13,920
representative of global 
poverty. 

338
00:22:14,520 --> 00:22:20,040
In the UK, the top 1% pay around
29% of all income tax. 

339
00:22:20,320 --> 00:22:23,720
That share has risen over time 
and not fallen. 

340
00:22:24,000 --> 00:22:27,960
The idea that the wealthy aren't
contributing is popular, but 

341
00:22:27,960 --> 00:22:30,040
it's not supported by the 
numbers. 

342
00:22:30,440 --> 00:22:34,880
Inequality exists, but the shape
of it is more complex than the 

343
00:22:34,880 --> 00:22:38,480
headlines suggest. 
Many of those counted as wealthy

344
00:22:38,640 --> 00:22:42,400
are business owners with 
volatile income or professionals

345
00:22:42,400 --> 00:22:44,720
with high earnings but limited 
assets. 

346
00:22:45,160 --> 00:22:49,000
Where you live matters too. 
You can probably live more 

347
00:22:49,000 --> 00:22:54,400
comfortably on $50,000 a year in
Texas than on $100,000 a year in

348
00:22:54,400 --> 00:22:57,720
California, where everything 
costs a lot more. 

349
00:22:57,920 --> 00:23:01,960
Many of those counted in broad 
based statistics as being poor 

350
00:23:02,160 --> 00:23:05,920
are young, educated and on 
upward trajectories. 

351
00:23:06,480 --> 00:23:09,840
According to research from the 
Institute for Fiscal Studies, 

352
00:23:10,040 --> 00:23:15,120
high earners in the UK are not a
stable group. 1/4 of those in 

353
00:23:15,120 --> 00:23:19,160
the top 1% in one year will not 
be there the next. 

354
00:23:19,360 --> 00:23:23,720
After five years, only half will
still be in the top 1%. 

355
00:23:24,240 --> 00:23:29,120
Research from Cornell University
shows that about 11% of American

356
00:23:29,120 --> 00:23:33,240
workers will move into the top 
1% of income earners for at 

357
00:23:33,240 --> 00:23:37,160
least one year between the ages 
of 25 and 60. 

358
00:23:37,640 --> 00:23:42,080
Hopefully you can see that the 
data is a bit more complicated 

359
00:23:42,080 --> 00:23:45,280
than it first appears to be, and
you need to look past the 

360
00:23:45,280 --> 00:23:49,080
headlines and slogans to see 
what's actually going on. 

361
00:23:49,760 --> 00:23:53,560
Whether the rich are leaving the
UK or not in meaningful numbers 

362
00:23:53,720 --> 00:23:57,800
is hard to pin down based on the
available data, and it will take

363
00:23:57,880 --> 00:24:02,480
some time to work that out. 
The bigger issue is whether 

364
00:24:02,480 --> 00:24:05,960
people, especially those with 
options, feel that they're 

365
00:24:05,960 --> 00:24:08,960
getting value for money with 
their taxes. 

366
00:24:09,360 --> 00:24:12,400
Tax isn't just about rates, it's
about trust. 

367
00:24:12,600 --> 00:24:16,800
In Sweden, high taxes are 
tolerated because the system is 

368
00:24:16,800 --> 00:24:20,600
transparent, the institutions 
are trusted and the public 

369
00:24:20,600 --> 00:24:23,960
services work. 
Civil servants disclose their 

370
00:24:23,960 --> 00:24:27,840
financial interests and one 
phone call will get you, your 

371
00:24:27,840 --> 00:24:31,680
lawmakers tax statements. 
That kind of openness builds 

372
00:24:31,680 --> 00:24:34,680
legitimacy and with it, 
compliance. 

373
00:24:35,120 --> 00:24:40,040
In the UK and the US, trust in 
government is lower, tax systems

374
00:24:40,040 --> 00:24:43,120
are more complex, and when 
people feel their money is 

375
00:24:43,120 --> 00:24:46,960
wasted or mismanaged, they start
looking for the exit. 

376
00:24:47,520 --> 00:24:51,720
There's no perfect formula, but 
history offers clues and the 

377
00:24:51,720 --> 00:24:54,800
international landscape offers 
comparisons. 

378
00:24:55,120 --> 00:25:00,160
The challenge is to tax fairly, 
fund public services, and remain

379
00:25:00,160 --> 00:25:03,160
globally competitive all at the 
same time. 

380
00:25:03,760 --> 00:25:06,800
Thanks for tuning into this 
week's podcast, with special 

381
00:25:06,800 --> 00:25:10,440
thanks to my supporters on 
Patreon whose funding makes this

382
00:25:10,440 --> 00:25:12,720
happen. 
Have a great week and talk to 

383
00:25:12,720 --> 00:25:14,200
you again soon. 
Bye.