Team Osborne (regular, if anonymous Coffee House visitors) call to take issue with my earlier blog. I am not right to say non doms will pay more than 50% tax rate, they say, because the £100k average annual earning figure does not include offshore earnings. They estimate the de facto tax rate will be much lower. (They don’t specify, but I get the feeling they mean 20% or so)
Previous “what if” studies on milking the non doms, have estimated that 20% would leave after a crackdown. Crucially, Osborne calculates his tax is benign enough that no one will actually do so. Non doms, he says, believe that £25k is a price worth paying for an assurance that the tax man will not hunt down their worldwide income. They assume some will come onshore rather than pay the £25k charge. They also estimate that there are 150,000 non doms, up from 112,000 in 2004/05.
Much rests on whether these figures stack up. Labour can’t moan much – due to the delicious fact that Gordon Brown’s chief fundraiser, Sir Ronald Cohen, is widely believed to be a non dom thus enabling him to dodge Brown’s outrageous taxes while lecturing us on inequality. But over at Tax Research UK, Richard Murphy has done sums suggesting the proposals will lose as much as they will raise.
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