onsdag 27 juni 2007

Britain's super-rich non-domiciled

The British government gives foreign nationals really good tax breaks to attract them to live in the country.

Last week the newspapers were runnings shock-horror stories about how these people were driving up the price of houses in London and pushing them beyond the reach of ordinary people. Worse still, it was reported that they are leaving them empty and helping to make the shortage worse.

There was nothing surprising about any of that. What was depressing was the poor quality of the analysis in the newpapers and the failure of any of the commentators to put forward the solution to the problem.

The government is quite right to give tax breaks to foreign nationals. In fact, it should give them to everyone, not just foreigners, so they everyone gets to keep everything they earn. But where then would the government get its revenue from?

The answer is simple. It should tax land, based on its market value - an annual rental value assessed on market evidence. The super-rich do not normally want to put themselves anywhere other than in the most desirable locations, the value of these locations is high. If the government taxes all location values, everyone gets to pay for the benefits they enjoy, and to keep the full value of their wages.

This is so simple in principle that one has to wonder why none of the journalists in the land have picked up on the idea.

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