Why the super rich love the UK

F. Scott Fitzgerald: "The rich are different than you and me."

Ernest Hemingway: "Yes, they have more money."

F. Scott Fitzgerald & Ernest Hemingway

Thanks to an article by John Lanchester on today's Guardian website, something I had suspected for some time has finally been confirmed. I'd always wondered, naively, why London is so jam-packed full of Saudi Sheiks and Russian Oligarchs...which has never changed under Labour or Tory governments...and now I know the answer. John Lanchester's novel, Capital, is published on 1 March by Faber & Faber and should be well worth reading. He talks about the UK Office for National Statistics which measures inflation using a basket of goods in common use – a category that is constantly shifting, and at the moment includes mobile phone downloads, sparkling wine and long-sleeved cotton shirts.   

The super-rich index, by comparison, includes items such as "a Russian sable coat at $240,000, a facelift for $18,500, a thoroughbred yearling racehorse at $319,340, a Sikorsky helicopter at $14.8m, an arrangement of flowers changed weekly for six rooms at $98,100 or a year's tuition at Harvard at $56,652. It is, in a dark way, hilarious that a Harvard education counts as a luxury good. If all that starts getting too much, you can always decompress with a week at the Golden Door Spa in California for $6,750, or 45 minutes with an Upper East side shrink for $325." 

 Photograph: Nick Ballon

"In 1990, to come in the top 200 of the Sunday Times annual rich list, you needed £50m. Now you need £430m. Income levels for most social groups have stagnated in the last few decades, but the super-rich have continued to get sharply richer, and to own an ever increasing share of the economic cake."

"The capital of the UK (London) has one of the world's largest concentrations of the super-rich, and the reason for that is that we have chosen to have them here, as a matter of deliberate government policy. The relevant policy is the notorious provision in relation to "domicile", as a definition of an individual's tax status. Every other civilised country in the world taxes its inhabitants on their income and capital: the basic rule is that if you live in a place, you pay its taxes. But it's different in the UK. Here, if you come from overseas, and can prove strong links with overseas, and can prove that you are going to return to overseas, and can therefore establish a "domicile" overseas that is different from your "residency" in the UK – well, in that case, you are treated entirely differently for tax purposes. You pay tax on your income in the UK, like the rest of us; and you can remit capital to the UK; but your overseas income, as long as you keep it overseas, is out of the reach of the Inland Revenue."

"Why doesn't it bring Americans here? Because American citizens pay tax on their worldwide income, wherever they are. If every government in the world followed that policy, things would look very different." 
http://www.guardian.co.uk/society/2012/feb/24/why-super-rich-love-uk

And before anyone accuses me of "the politics of envy", I hasten to add that I wouldn't thank you for any of the above mentioned "super rich" items...well, maybe a Sikorsky helicopter would come in handy on occasion...but it does seem rather obscene and partially explains why the UK is in the economic mire it currently finds itself in, when super rich residents don't pay any taxes into UK coffers.

Money, Money, Money by Abba (1976):