The following passage is from “Why England is Rotting” in the June 11 issueÂ of Maclean’s:
London’s role as a financial centre on its way to eclipsing New York City has provided a vision of prosperity which, it is assumed, trickles down to the population at large.Â But it is a city in which increasingly only those on welfare, or the super-rich, can afford to live.Â It has become a playground for non-domiciled billionaires and financial wizards who receive multi-million-pound bonuses to artificially inflate property prices and average earnings levels.Â
The IMF recently ranked Britain alongside the likes Bermuda and the Caymans as a tax haven.Â Last year, accountants from Grant Thornton calculated that the U.K.’s 54 billionaires paid income tax of 14.7 million pounds ($32 million) on their combined 126 billion pound ($271 billion) fortunes.
Â«54 billionaires paid income tax of 14.7 million pounds ($32 million) on their combined 126 billion pound ($271 billion) fortunes.Â»
Why should they pay Â«income taxÂ» on a Â«fortuneÂ», which is capital and not income?
It is pretty obvious that $271b is indeed capital, as the per-billionaire amount is $5b, and it is hard to believe that each of those 54 billionaires have yearly incomes of $5b in average.
Such propaganda-style comparison (income taxes versus wealth) undermine the good point that most likely the taxes they pay are still very low.
Assuming that those fortunes return 5% net in nominal terms, one could imagine that the billionaires have aggregate income of around $13b, of which $32m is 0.25% at best.
However even that is flawed propaganda, as most likely the billionaires already pay some form of tax on income in the countries where they generate it, and they pay more tax than $32m, as there are other taxes than income tax; for example they probably pay a lot on their purchases of London real estate.
The final point is that yes they pay too little tax, but sensational, misleading comparisons are not the honest way to make that point.