The changing face of Britain's super-rich
Etan Smallman 12:06pm
So what effect will the 50p tax have on the super-rich? It depends who these people are – and surprisingly little is known about them. One of the most useful sources is the Sunday Times Rich List. One came out last week, and the first issue was in 1989. Unfortunately, it’s not online, but it is stored at the national newspaper archive in Colindale. As it’s the last day of my two-week internship at The Spectator, I went along last night to compare the Rich Lists of 1989 with 2009. This year’s Rich List shows 38 out of Britain's 100 richest people being immigrants. A healthy percentage – and one that would come as no surprise to any Bond St jeweller or to the maitre d’ of any top London restaurant. But the list of 1989, right after the Lawson budget which cut the top rate from 60% to 40%? There were just 11 immigrants. The Sunday Times argued then:
"The country has been enriched by 'outsiders' ... but again there are not enough of them. Instead of trying to bar the Hong Kong Chinese from Britain, we should be welcoming them. Perhaps only a huge influx of foreign entrepreneurs can transform the composition of Britain's rich. They could certainly do with some fresh blood.”And so it came to pass. Lawson’s tax rate then made London one of the cheapest places in the world to be rich (we know that most of the richest 1% live in the capital, and the South East). Immigrants now make up a third of London. And which section of the economy has the most immigrants? Anyone who thinks catering or agricultural work would be wrong: the answer is finance. Our benign tax regime made Britain a magnet to the wealthy over the last 20 years. As they come here, spend, opening companies, employing staff, their tax receipts have come cascading into the Government’s coffers. It stands to reason: the more the richest 1% pay (and it’s now about a quarter of all income tax) the less the other 99% pay.
In light of last week's announcement, the most pertinent entry of the Sunday Times Rich List 1989 is probably that of packaging mogul Hans Rausing (4th in 1989, 5th in 2009) which read:
"Few millionaires flee to Britain to escape higher taxes elsewhere but that is what the Rausing brothers did in 1982 when they left their native Sweden."Such a move may soon look like a relic from a bygone era. We shouldn't only fear a hemorrhaging of Britain's rich from our shores; we should also be aware that fewer foreigners will choose to come here. From April, only three other countries in the world will have higher top rates of tax than us (Denmark, Sweden and the Netherlands). Britain is surely going to look a little less appealing.
And the risk is clear. Wealth can go away as quickly as it comes. Britain could well return to being a "second-class" economic power. Globalisation has done our economy lots of favours – and London has become a capital of the globalised world. But ease of movement cuts both ways: as a Conservative government may well be about to find out.
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Cynical Voter
May 1st, 2009 1:02pm Report this commentPrior to 1914 over 10% workforce were in domestic service. No doubt Russian oligarchs could employ English butlers and maids and the country would be back to Edwardian splendour.
Some people think the nation has a resonance beyond tax exiles living in what the IMF called an onshore tax haven. It is a pity that Non-Dom status prevents Mittal from actually employing staff in his business in the UK, but his presence surely enriches the London society parties.
One of the charming aspects of the Third World is the opportunities for locals to witness the glorious frivolities of the foreign rich - rather as COMECON peasants could watch the foreigners spend Dollars in Intershops and Beriozkas.
We really need to have special shops and schools and polyclinics for the nomenklatura....of course - we already do and soon our universities will only be accessible to rich foreigners.
Oh to be British - the world's first denatured nation expunged of identity, tradition and heritage to be a casino island
Cynical Voter
May 1st, 2009 1:04pm Report this commentPrior to 1914 over 10% workforce were in domestic service. No doubt Russian oligarchs could employ English butlers and maids and the country would be back to Edwardian splendour.
Some people think the nation has a resonance beyond tax exiles living in what the IMF called an onshore tax haven. It is a pity that Non-Dom status prevents Mittal from actually employing staff in his business in the UK, but his presence surely enriches the London society parties.
One of the charming aspects of the Third World is the opportunities for locals to witness the glorious frivolities of the foreign rich - rather as COMECON peasants could watch the foreigners spend Dollars in Intershops and Beriozkas.
We really need to have special shops and schools and polyclinics for the nomenklatura....of course - we already do and soon our universities will only be accessible to rich foreigners.
Oh to be British - the world's first denatured nation expunged of identity, tradition and heritage to be a casino island
Demetrius
May 1st, 2009 1:15pm Report this commentThere is one name on the Rich Lists that comes to mind. He has not enriched hundreds of thousands of vulnerable aged people, he has made them all a lot poorer to maintain his high living celebrity life style. Think of people like this, and then try to imagine living in fear of the next bill, or a cold spell without heating or hot food.
jon
May 1st, 2009 1:16pm Report this commentAnd the English in London must sell their family homes to pay inheritance tax so making way for more non-domiciles.
James
May 1st, 2009 1:53pm Report this commentEnjoyed your article - no doubt the internship has been a success. Good luck with your future endeavours.
Susan Hill
May 1st, 2009 3:04pm Report this commentI can`t trust the rich list for the simple reason that about 18 years ago they put me in it, estimating my earnings for the year at something like 1.5 million. They were less than one third of that. They arrived at their figures by adding up estimates of literary and theatrical income but they made so many simple errors that it was clear they didn`t actually know what they were doing. For example, they estimated my earnings from the West End Production of the Woman in Black at so much, omitting to note that I receive 50% only because someone else adapted my book. They estimated my earnings from books at so much, without working out that agents take 10% and that in the case of my sequel to Daphne du Maurier`s Rebecca, I shared the earnings 50/50 with the du Maurier estate. As a result of their mistakes the Inland Revenue re-opened my tax files going back 5 years and caused a great deal of trouble and anxiety and cost me a lot of extra money in accountancy fees. (In the end, it turned out they they owed me some £2,000) But I have always looked askance at the rich list ever since, remembering so many elementary inaccuracies. Interesting piece Etan and good luck with whatever you plan to do in future.
Forlornehope
May 1st, 2009 3:04pm Report this commentIt would seem that jealousy of those who have made a bob or two is not confined to readers of the Guardian - or is it only a problem if they aren't native born Englishmen?
Verity
May 1st, 2009 3:33pm Report this commentThe Chinese have a saying: "Money is money." Not much nuance, but 100% truth. I don't think anyone cares whether contributions to the wealth of the nation come from us natives or foreigners, Forlornehope. Money is money.
Dog Snob
May 1st, 2009 5:09pm Report this commentCan't quite see which way the argument goes here: on the one hand, the rise in tax on the rich is scorned on the grounds that it will drive them away, leaving 60 million people without any means of support; whilst later you seem to celebrate the fact that: "the more the richest 1% pay ... the less the other 99% pay."
The article's nonsense but ticks all the right MSM boxes and so I look forward to your return on a permanent basis.
Simon Orr
May 1st, 2009 5:24pm Report this commentDog Snob:
When Etan says "the more the richest 1% pay...the less the other 99% pay" I'm sure he is referring to the total tax receipts from the richest 1%. This is maximised by a low top tax rate, so it's not contridictory at all.
Dog Snob
May 2nd, 2009 7:21am Report this commentSimon Orr.
No one yet has explained convincingly, just how a low tax rate yields a higher receipt and vice versa. Only if people default on payments due could this be so (or if they move away in sufficient number; which they don't)
The simple answer would be to pursue claims against defaulting/evading top rate payers more assiduously. Laffer Curvists seem to take it as a given that this can not happen.
Submariner
May 2nd, 2009 10:23am Report this commentDog Snob
It's very simple. You're ignoring the fact that people can't be bothered to work harder for a minority of the rewards. Lots of people with salaries of more than £100,000 a year, especially if they are membes of pension schemes, now face a higher than 50% marginal tax rate on any pound they earn. In such circumstances the genuinely rich (those in the Rich List) will move to other countries. The middle and senior management of the UK will either take early retirement or reduce their working hours to part time in order to keep their earnings below the punishment level, while improving their quality of life.
Dog Snob
May 2nd, 2009 8:18pm Report this commentSubmariner.
Well there's another plus: middle and senior management position requirements will rise, to be filled by younger, hungrier people. Those who retire, having amassed their pile, will get to live a little before pegging out. We all win, yes no?
The fact remains that for the vast majority of the working population, a salary of over £50,000 is paradise and for that figure they will work extremely hard. The people in question here and who will pay higher taxes, are on much, much more and should think themselves damned lucky.
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