In the last six months, the phrase "non-dom" has come to mean "a rich foreigner using Britain as a base for offshore trusts, global financial dealings and the like without paying their fair share of British taxes." The treasury, spurred in the autumn by Conservative proposals, has spent six months trying to run the non-doms to earth. But the authorities have little idea whom they are hunting, or how to hunt.
I am a non-dom and I am not rich. Nor are many of the doctors, scientists, academics and creative workers who have come to Britain to make professional lives. The government's blunderbuss may be aimed at City slickers and Russian oligarchs, but it has spread confusion and anxiety among us, and may wind up discouraging skilled foreigners from coming to Britain, while having little effect on the truly rich.
Anyone working in Britain on a work permit—including "non-doms" —pays British taxes, VAT and council tax. If you work here for two years or more you also pay into national insurance. If you work here for more than 180 days in any year, you may also pay British taxes on any foreign salaries, commissions, or royalties you declare (although tax treaties exist to ensure that the international worker is not double-taxed). Rich non-doms may or may not fork out for all these obligations, depending on how canny they are in setting themselves up in business.
The government's idea has been to bring the canny to heel, tracking and taxing offshore assets, an idea which has brought them to grief. British business leaders have taught the treasury an elemental lesson in global economics, by pointing out that the moguls can abandon Mayfair for Dublin. The government thought it was being clever by zooming in on people who had lived here at least seven years; greeted by name at Le Caprice, the children installed in posh schools, perhaps even furnished with British friends, such people seemed unlikely to pack their bags. But it turns out that even the resident super-rich are like camels; they think of places just as oases.
No one is sure how many non-doms there are in Britain—the government estimate is 112,000. But many US firms are talking about repatriating a sizeable number of these people within two to four years. To stem the flow, the treasury has recently promised to leave offshore assets alone and unexamined, for anyone who can stump up an annual fee of £30,000. Ambiguities and contradictions in the original law still bedevil those who remain and who lack £30,000 to pay the government to go away; the problems are particularly acute for professionals in laboratories, hospitals or schools, who cannot simply move to another office in another city.
Perhaps I can illustrate this mess with my own circumstances. For the last decade I have taught half time at the London School of Economics; I am employed the rest of the time at New York University. People like me are known as NYLONS, New-York Londoners; one estimate puts our total number at 40,000—comprising academic, scientific, creative industries, as well as law and finance in the two cities. Professional people who stay abroad for seven years are likely to remain for longer, which means transformation in their family histories. My own son has moved here in my wake, a non-dom avant-garde artist unlikely ever to see the inside of Le Caprice; his son—best British baby of 2006—is the only member of our extended family with secure rights in Britain.
Here are three ways the government blunderbuss may yet hit me—if I don't pay the levy. My wife and I have an "off-shore asset" in a trust fund we are setting up for best British baby of 2006, financed by the sale of a family apartment in Chicago. We may or may not have to pay British capital gains tax on this. My accountant, like a medieval scholar, is poring over the fine print of the legislation; no one I've asked in the treasury can give me a straight answer. Then there is my US pension, which was originally designed by Andrew Carnegie as a fund for poorly paid academics. In the US, pensions like mine have a preferential tax rate. The original treasury proposals would have subjected this US pension, into which Britain has put not a penny, to ordinary tax, further reducing my income.
Finally, there is the matter of philanthropy. Americans today, like Brits in the 19th century, are disposed to it. In the course of my errant life, I've been given photographs and paintings by artist friends, which I've brought here and intend to give to Tate Modern and the National Portrait Gallery when my time is up. In the US, the full value of donated works of art comes off my estate death duties; not so for non-doms who die in London—or perhaps not. A young, sympathetic treasury official, formerly my student at the LSE, told me "it's a grey zone; perhaps best take them back to New York."
I give all these personal details not to elicit sympathy but to make concrete the sort of problems that arise for people who cannot buy off treasury intrusion. Muddle of this sort sends a clear-enough signal: only the truly rich are welcome to remain. Though not camels in spirit, many younger professionals working internationally—Chinese and Brazilians as well as Americans—have reacted with dismay to this whole affair; the signal to them is: make other plans.
Gordon Brown's mantra of "Britishness" is a warning to poor immigrants that they must adapt or leave; it is aimed particularly at Muslims. The non-dom affair directs the same hostility to the other end of the economic scale. Common to both is the implication that the presence of foreigners is weakening Britain. This mantra makes no sense applied to people in the non-dom middle class; we are not parasites. We've certainly benefited from Britain's way of life and its concentration of talent; we have also given something back.
Socially, Brits are cosmopolitan; Londoners in my experience are certainly more outward-looking and better informed about other countries than New Yorkers are. Economically, Britain—and particularly London—is a complex international labour market. Yet politically, "Britishness" jars against both the outlook and the labour of professional Britain.
Having learned to drink warm beer without losing my New York accent, I hope the non-dom affair is a political hiccup. The super-rich may have bought your football teams, country houses and luxury handbags; we middle-class foreigners have brought you colleagues.
