Taxing Tracey October 9, 2009 at 11:52 am

That most self-promoting and least deep of YBA artists, Tracey Emin, has threatened to leave the UK in protest at the forthcoming 50p tax rate on income over £150,000. My first reaction is to join many in promising the stand on the quay at Dover to wave good bye and good riddance, since her absence would hardly impoverish British cultural life. But there is a better approach, however appealing getting rid of Trace might be. Tax all UK citizens on their worldwide income regardless of domicile. That would mean that the only way to avoid UK would be to find another country which was willing to give citizenship, and to permanently give up your UK passport. If you combine that with tight non-dom rules on foreign nationals working in the UK, you would have a much fairer tax system for higher earners. It would also have the benefit that you could not represent the UK if you did not pay UK tax. That might appeal to Tracey: I cannot believe anyone would be foolish enough to let her represent Britain at the Venice Biennale, but she might stand a chance of being allowed to represent Andorra…

4 Responses to “Taxing Tracey”

  1. David,

    By US standards, your proposal doesn’t go far enough to deter people from renouncing citizenship to avoid tax. The US taxes citizens on worldwide income. The US saw a significant number of them renounce citizenship to avoid tax. The US has used 2 approaches to dealing with this: initially, the US taxed such an expatriate as if they were a citizen for 10 years following expatriation (absent very limited exceptions), and then opted instead to impose a tax at the time of expatriation on all the untaxed appreciation in the person’s assets.

    People continue to leave. But ultimately, if you really want to stop them, you need capital controls. Or maybe excise taxes on wealth.

  2. Thanks for the comment Joe. I did know that the US taxed citizens on worldwide income – that example partly inspired the suggestion, and the idea that you mark to market all their assets and tax any appreciate when they leave makes sense. While I agree with you that it is difficult to stop some people leaving without capital controls – bar tax inspector snatch squads doing extradordinary rendition anyway – at least these people will not be able to enjoy the tax-payer funded benefts of home ever again.

  3. I know that you’re joking, but it sounds a bit harsh to me. I am a UK citizen, living (and taxed) in Australia. Are you suggesting that I should be double-taxed, or that Australia should not tax me even though I am living there and enjoying all of the tax-funded benefits? Or, alternatively, that I should be forced to renounce my UK citizenship?

    I presume that US ex-patriots are not double taxed, but which country does get to tax them? The US, I would guess.

  4. Dave —

    Typically this is dealt with under double taxation treaties: you get to claim a rebate for US taxes paid on our Ozzie return and vice versa. To a certain extent that gives you a choice of who you pay tax to: but it does mean you have to pay someone.