The UK closed a tax loophole. Guess what. NYC can expect the same.
Extreme Wealthy Flee the UK
The Wall Street Journal reports The U.K. Closed a Tax Loophole for the Global Rich. Now They’re Fleeing.
The U.K. is trying to tax the superrich. It’s off to a bumpy start.
“I’m on my way out,” said Bassim Haidar, a Nigerian-born Lebanese businessman who moved here in 2010. “There comes a time when you don’t feel welcome anymore, and it’s time to just start packing and leaving.”
Haidar is one of the estimated 74,000 who used a centuries-old tax loophole, abolished in April, that catered to the global rich. The nondomiciled—or non-dom status, as it is known—allowed foreigners living in the U.K. to pay tax only on what they earned domestically. Profits made abroad were ignored unless brought into the U.K.
Beset by high public debt and crumbling infrastructure, the U.K. hoped eliminating non-doms would bring in about $45 billion by 2030. But instead of paying up, wealthy expats are rushing for the exits, sparking questions about whether the effort will raise any money at all.
The British experiment has laid bare the difficult politics of taxing the rich. Taxing high earners has become a rallying cry on the left as a solution to income inequality and fraying social-safety nets. Low-tax advocates say taxes on the wealthy are counterproductive, driving away job creators and big spenders.
One challenge of taxing the wealthy is that they are highly mobile, with houses around the world, private jets and an army of advisers who can sort out visas and bureaucratic paperwork quickly. Jurisdictions such as Dubai, Italy and Monaco have rolled out the red carpet, offering no taxation or structures similar to the U.K.’s old non-dom status.
Haidar is selling his U.K. properties and plans to leave this summer. He’ll split his time between Dubai and Greece.
Wealthy Britons have been trying to escape the U.K.’s high tax rates for decades. In the 1970s, the Rolling Stones moved to France to avoid taxes, while David Bowie went to Switzerland.
The lucrative non-dom loophole had the opposite effect, drawing rich foreigners to London.
The U.K. always knew that some rich residents would leave because of the tax changes and built that into its forecasts. The U.K.’s independent budget watchdog, the Office for Budget Responsibility, estimated that among a large subset of non-doms, around 12% will move. But it warned this month that departures could be higher and said the U.K.’s “growing reliance on this small and mobile group of taxpayers therefore represents a fiscal risk.”
A report from the Centre for Economics and Business Research, commissioned by the Land of Opportunity campaign, forecast that a higher share of non-doms would leave and suggested the government could lose money if the migration rate tops 25%.
Campaign Platform of Democrat Zohran Mamdani
In New York City, here is the campaign platform of Democrat Zohran Mamdani
- Freeze rent
- Create affordable, union-built, rent-stabilized homes – constructing 200,000 new units over the next 10 years.
- Create a network of city-owned grocery stores
- Free bus transportation
- Free childcare for every New Yorker aged 6 weeks to 5 years, ensuring high quality programming for all families.
- Wages for childcare workers to be at parity with public school teachers.
- New York City will renovate 500 public schools with renewable energy infrastructure and HVAC upgrades, transform 500 asphalt schoolyards into vibrant green spaces, create 15,000 union jobs, and build resilience hubs in 50 schools that provide resources and safe spaces during emergencies.
- The Mamdani administration will protect LGBTQIA+ New Yorkers by expanding and protecting gender-affirming care citywide, making NYC an LGBTQIA+ sanctuary city, and creating the Office of LGBTQIA+ Affairs. He’ll make NYC an LGBTQIA+ sanctuary city and protect reproductive rights.
- As Mayor, Zohran will reject Medicare Advantage, and reject higher copays for inservice workers.
- As Mayor, Zohran will champion a new local law bringing the NYC wage floor up to $30/hour by 2030.
How Will Zohran Pay for the Above?
- Zohran’s revenue plan will raise the corporate tax rate to match New Jersey’s 11.5%, bringing in $5 billion
- He will tax the wealthiest 1% of New Yorkers—those earning above $1 million annually—a flat 2% tax (right now city income tax rates are essentially the same whether you make $50,000 or $50 million).
Prisons Are Obsolete
Abolition of Private Property
Gender Affirming Care
Defund the Police
Mamdani now says he does not support defunding the police.
Wait a Second
He now does not want to “defund” the police. He just wants yo cut $1 billion out of a $6 billion budget.
A Pathetic List of Candidates
The New York Times addresses the question Who’s Running for Mayor of New York City?
- Zohran Mamdani is a state assemblyman and democratic socialist who stunned the political establishment with his victory in the Democratic primary.
- Curtis Sliwa, a Republican, lost the general election to Mr. Adams in 2021. He is running for the Republican nomination again.
- Eric Adams ran for mayor in 2021 as a former police officer who vowed to bring down crime, and his message four years later is similar. But he faces many challenges. He was indicted on federal corruption charges that were later dismissed by the Trump administration; his administration has been plagued by investigations and high-profile resignations; his approval rating is at record lows.
- Andrew Cuomo was elected to three terms as governor and resigned in 2021 after roughly a dozen women accused him of sexual harassment. He also faced criticism for his handling of nursing home deaths during the pandemic.
- Jim Walden, a former federal prosecutor who has handled high-profile cases, is running as an independent.
What a pathetic lot.
Sliwa, a Republican, has no chance and he won’t back out. That’s likely irrelevant.
However, three candidates running as independents is relevant. If they all stay in, they will split the vote ending what little chance they did have.
It’s even worse than I thought looking at the Platform of Jim Walden
To tackle affordability, he’s pledged $1 billion a year in rent relief for the city’s most rent-burdened tenants, funded immediately by cutting ineffective programs and using the city’s budget surplus, and in the future, by instituting a 0.75% “micro-tax” on goods and services, which he said would raise an estimated $60 billion over four years. Walden said the tax is small enough that it won’t cause companies to alter their business decisions. He would need state approval for the tax.
He also wants to create a contract-based rent-stabilization program to incentive more affordable housing.
Pretty Much Over
Mish Proposal
Given that anyone would be better than Zohran Mamdani, I suggest Andrew Cuomo, Eric Adams, and Jim Walden agree to pulling a single name out of the hat to run as the independent.
Otherwise, and perhaps anyway, a Marxist will be running New York City.
This post originated on MishTalk.Com
Thanks for Tuning In!
Mish
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