Mrs Sunak's taxes

The American justice Oliver Wendell Holmes Jr. defined taxes as "the price we pay for civilisation."  In that sense I am all in favour of them and think they should be sufficient to enable everyone in an economy to enjoy a secure, decent, and, yes, "civilised,", quality of life.  

I regret the use of the term "burden" in relation to taxes. Ideally citizens  should regard paying taxes as a "privilege."  (Many people in my parents' generation were quite chuffed when their earnings rose high enough for them to pay income taxes.) If "privilege" is a stretch too far,  then we could at least use a more neutral term such as the tax "take." 

 That said  I should not expect anyone  except the most saintly to seek out the opportunity to pay pay tax more than once on the same source of income.  But that surely is what we would be requiring people do if they earn income on one country but live in another and pay taxes in both.

 In the textbooks incomes are the reward for labour (wages), ownership or use  of capital (interest), entrepreneurship or risk taking (profits)  or rent resulting from  the possession of a scarce factor that cannot be competed away (normally land but can be a rare skill such as a voice like Pavarotti or the football-feet of David Beckham)

In a well-organised world taxes would be collected only in the economy in which the Income is earned,or, if not eared, then generated..  If Rishi Sunak's wife, Akshata Murty, "earns" vast sums through her holdings in he father's Indian IT company, has paid Indian tax on them and the "earnings" remain in India, then I can see no reason why she should pay British tax on the on top of that, even if her husband is our Chancellor of the Exchequer.

If however, M/s Murty has taken steps to pretend that this vast income is generated in some low tax haven, that is another matter. But I have not heard or read anywhere that this is the case.

 If any tax has been "avoided" India has still one of the largest measures of poverty in the world and their government needs it more than the relatively bloated British (see previous post.)

Rather than perpetuate the fanciful "non-dom " status,  the sensible way froward is for the world's financial authorities to get together and ensure that all income, however generated, is taxed in the country in which it is "earned.".

I recognise that this is not as simple as it could be.  Rich asset-holders employ skilled accountants to devise ways in which income generated in one economy can appear to have been earned in another.  It is quite  difficult to disguise where wages are earned and income from land (including  mineral rights) and physical capital are generated.

But it is possible to claim that the profits, the results of the daring skills of the risk-taking entrepreneur, are generated in some obscure tax haven where the company is registered.  

The UK, to our shame, is the titular "owner" of many, possibly most, of these havens.

 It would be a nice irony if Mr Sunak were the Chancellor of the Exchequer who took the first steps in sorting out this abuse, which deprives the poorest of the world of billions      ( of $s, €s, £s, yen or what you will.)