The Queen of Mean should have lived in London
Experience also shows that the case for a simple, neutral and stable fiscal system, which taxes the worldwide incomes of all long-stay residents on the basis of ability to pay, is overwhelming. As soon as one departs from that principle one enters in a maze of special pleading or invidious distinctions, in which failed ideas of industrial policy – subsidising winners through the tax system – return to the fore.
That, in a nutshell, is what the Tax Justice Network is all about. And we suspect that once Martin Wolf has said this, Britain's "non-domiciled" people have finally lost the political argument. There is probably no way back from here. From a very different end of the newspaper market, Britain's Daily Mirror has said the same thing:
Resentment is growing here over freeloading Loadsamoney loudmouths who act as if they are too important to be taxed.
It is well worth reading both articles, but we would stress the importance of Martin Wolf's - because he has made one of the clearest and most concise arguments for abolition of the domicile rule. Here is an example:
Non-doms, we are told, make a gigantic contribution to the economy. If they are taxed too heavily, they will depart and the economy will suffer. Again, why not pursue this argument a little further? Should the UK not subsidise the inflow of human capital, just as many countries subsidise inflow of foreign direct investment? What about a negative tax (a subsidy) on all UK income earned by non-doms above, say, £100,000 a year?
Yet this, too, ought to be extended to highly paid citizens who, presumably, also provide big benefits to the economy. Why should the country wish to subsidise people to employ foreigners instead of citizens. So why not give everybody who earns about £100,000 a year a negative tax rate or at least a nice juicy lump sum? Moreover, if having non-dom billionaires resident in London is good, why not subsidise them too? So why not compete for billionaires the way countries compete for investments by Intel and the like?
The Mirror offers an easy path to for Britain's government on the domicile rule.
Brown should give the rich a squeeze, here and abroad, and ignore any pip squeaks. It would be fair and popular - and there aren't many government policies we can say that about at the moment.