A depressing little story from The Irish Examiner notes that “Ireland Inc is well positioned to benefit from new tax laws aimed at foreigners living and working in Britain, which may result in an exodus of wealthy expatriates.” The background to this story is straightforward. Resident, non-domiciled individuals in Britain pay tax only on income arising within the country and on foreign income only when it is remitted into the UK. Many are extremely wealthy, and keep this wealth offshore, avoiding tax. There has been considerable moral outrage in Britain at the fact that very rich people are enjoying life in London while paying virtually no tax. In response, the government now proposes a levy of £30,000 per year on such individuals, which many consider remarkably low. According to the article in Saturday’s Examiner, this represents an opportunity for Ireland. The idea is that these tax-dodging moguls will drift over west, and set up home in Dublin. This is, at best, implausible. Dublin and London are very different cities, and multimillionaires rarely relocate on foot of a £30,000 tax bill. More fundamentally, the idea is depressing.
These wealthy individuals, to be clear about it, are in the news because they have been avoiding tax in London, and now an Irish newspaper expresses the hope that they can be enticed to avoid tax in Dublin instead. I’ve written before about how Ireland has tailored its tax system to meet the needs of multinational corporations. However, getting excited at the prospect of welcoming in tax-dodging individuals would represent a new low in the Irish attitude to taxation. Apart from buying property, it’s difficult to see what contribution such people would make to the country. But of course, the article doesn’t mention the country. It’s not about Ireland. It’s about “Ireland Inc,” whatever that is.
This matters even if you’ve never been to Ireland, even if you don’t avoid tax by manipulating residence rules. It matters as an indicator of attitudes towards tax, government, citizenship and residence. Tax is part of the social contract, part of democracy. Governments collect it and use the revenue to serve the needs of those they serve; the country’s residents. There are people to whom residence means only tax status, who roam the world paying tax only when and where they choose. They are living outside of that social contract, while enjoying its benefits. They are undermining it in a very real way. It is the essence of social irresponsibility. If the article in The Examiner is not simply hyperbole, if we have really reached a point where countries welcome such residents, then that’s a milestone to be sadly noted.
Disclosure: I live in Ireland. I pay tax. I do not hold shares in Ireland Inc., and I am unsure where it is incorporated.
Photo:Toastyken , Creative Commons, Flickr
Photo:MikeSchinkel, Creative Commons, Flickr