Thread by @arunadvaniecon

Strange headline @BBCNews, which doesn't line up much with the content

A short 🧵 with some notes on errors made in the article, and the evidence on what we do/don't know about #nondoms responding to #tax reform

#TaxTwitter
bbc.co.uk/news/uk-politi…

Have to say, my least fav. way to start 'evidence' part of an article is with an interested party. This one starts by citing one tax advisor, who says potential tax changes are first topic of conversatn with his clients. I mean, 🤯? What else would you talk to tax advisor abt??

Then this famous graph based on the drop in the number of non-doms

My excellent colleague @D_Burgherr has said everything that needs to be said about this already.

https://twitter.com/D_Burgherr/status/1616412025005002753

TL;DR on *that graph*

1. It includes *non-residents* - ppl who are filing but don't even live here

2. Many of those ppl aren't using the remittance basis (the policy that means no inc tax/CGT on foreign capital income). Less than 1/2 have more than 2k in foreign inc+gains
arunadvani.com/papers/AdvaniB…

3. Graph shows nondom claims, not whether ppl leave. Fall is bcos ppl stop claiming, but largely stay.

Credit where due, @JoshuaNevett *doesn't* say ppl left. But how does the graph help then? is only going to mislead given title

https://twitter.com/D_Burgherr/status/1616412029925093376

Article does have couple of quotes from nondoms, one saying "he would only consider returning to the UK if he was able to reclaim non-dom status", the other saying '[she] has decided to give up her status and accept the consequences because "it's not a fair tax policy"'
#balance

Without surveying all the nondoms and asking them how they'd respond, how might we learn about this?🤔

Maybe looking at what they actual did would be good? 🧐

If only someone had data on the taxes all of nondoms covering two decades...oh wait! 🧑‍💼🧑‍💻

Turns out we increased the tax paid by some fmr nondoms by 10pp.

Impact of this was that 0.2% of remittance basis users left. Doesn't look like everyone is leaving...

But they don't all have to leave. Even if a few do, we'd lose all the tax from them. That might still make it not worth it.

So we take this into a/c in our calcs. As it happens, most of those who leave were the ones paying the least tax
warwick.ac.uk/fac/soc/econom…

The migration response would have to be more than 15 times larger to not ⬆️tax

Objections to removal can't credibly be based on these fiscal effects

The biggest area of uncertainty, for which we don't (yet) have results, is the impact of any non-doms who do leave on the businesses they run in the UK

Not obv there need to be any - can not live here but still manage businesses here - but there might be.

Worth also remembering that current regime explicitly *discourages* investment in the UK so that non-doms have 10x as much offshore as onshore

Abolition removes current tax penalty for investing in UK

In the end @JoshuaNevett covers, I think, pretty much all the right points - the area we don't have evidence isn't migration but investment - but the headline writer makes the article look out of step with contents

And here is a link to my prev mega-thread (with a couple of videos at the end) on nondoms, debunking zombie claims, and explaining the case for reform

https://twitter.com/arunadvaniecon/status/1593540632269684739

Oh, and here is a recent blog on the issue of nondom migration (again with @D_Burgherr )
blogs.lse.ac.uk/businessreview…

OTOH I think this tweet is pretty hopeless/scaremongery.

What "tax experts" are arguing it would "leave a gap in UK finances", and on what basis?
Remember, @BBCNews review says stop putting stupid political framings on econ questions + poor use of data

https://twitter.com/JoshuaNevett/status/1621095284431519744

Interesting twist on the issue of the headline - maybe someone responding to the criticism here (though not sure I like it that much better)

https://twitter.com/arunadvaniecon/status/1621127340393926661