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“Switch to working from home could cost the Treasury £32 BILLION a year”

From The Daily Mail:

The Treasury could lose £32billion a year due to high-earners moving abroad as people begin to shift from working at the office to working from home, a study claims. Highly-paid workers who live abroad will pay their income tax in their country of residence rather than to HMRC. It may reduce the public purse by a sixth, adding to the economic crisis facing the UK, legal experts warn.

If people want to move abroad because they prefer the weather or the culture somewhere else, then there is nothing a UK govermnent can do about it.

But it appears that income tax rates are part of the motivation; why pay over 50% income tax in the UK if you can pay a lower rate somewhere else? As a kicker, these high earners can sell their over-priced UK homes and buy something sumptuous elsewhere and have plenty of change left.

How would this be different if the bulk of UK taxes were collected from land values and income tax rates were much lower?

For a potential emigrant…

1. Homes in the UK would sell for much less, which would take away that motivation to abandon ship.

2. UK income tax rates would be among the lowest in the world anyway.

For a potential immigrant or returnee (who doesn’t own a home in the UK to come back to)…

1. The only consideration would be whether the rents (inclusive of LVT, by definition) here offer better value than wherever they are. By and large, rents reflect the value of the benefits you get from living somewhere, so you are just paying the market rate for whatever you get, it’s neither an incentive nor a disincentive.

2. There’s a trade-off between tax rates and rents anyway, millionaires are prepared to pay ridiculous rents and prices to live in a small flat in the concrete jungle that is Monaco in order to save income tax; as long as the exorbitant rent is less than their tax saving, they are happy to pay it. So the UK would become attractive to a lot of the millionaires who are currently tax resident in Monaco.