McDowell: The super rich should not be able to avoid paying tax through non-residence

[Brendan Burgess]

Michael McDowell: Should the super rich get to opt out of paying taxes in the country that enriched them?

He has his critics, but unlike many others among Ireland’s immensely wealthy, Ryanair’s Michael O’Leary has always intended to remain tax resident here

www.irishtimes.com

In an era where money in the form of private capital is ever more free to travel and reside at the choice of its owners, we also encounter the phenomenon of non-resident citizens who, having accumulated major resources and incomes, change their tax residence so as to exempt themselves from our progressive income-tax rates in relation to their worldwide earnings.

It is hard to see how such a capacity on the part of the super wealthy to exclude themselves totally from tax liability to the State which has enabled their wealth to accumulate can be defended in terms of social justice. Why should the immensely rich be permitted to opt out fiscally from liability to the homeland that enriched them? Why should our progressive system of taxation be easily avoidable by those most in a position to contribute a fair share? Why should wealthy citizens continue to acquire, manage and control assets – commercial, agricultural and financial – in the State while paying little of their worldwide income to it?

...

The OECD has invested 25 years of effort into the project of minimum international corporate tax rates. But what would be wrong with requiring the super wealthy to pay minimum international rates of personal income tax? Does the world owe tax-free status to the super rich?

 

[Brendan Burgess]

Could Income Tax be levied on the basis of citizenship or owning a home or other property in Ireland?

Could Denis O'Brien, for example, be taxed on the basis that he is an Irish citizen? If he wants to avoid being taxed in Ireland, he would have to renounce his citizenship. Or tax him on the basis that he is or was an Irish citizen.

Boris Johnson was born in New York so had dual citizenship and had to renounce his citizenship to avoid paying US taxes.

UK Prime Minister Renounced US Citizenship to Avoid US Taxes

Few people know that new UKPM Mr Johnson was until 2016 an American citizen, and that he renounced his US citizenship to avoid having to file US taxes.

brighttax.com

 

[JoeRoberts]

Is it not a bit rich considering our corporation tax policies ?

 

[faketales]

I believe only the US and Eritrea tax all overseas citizens. I believe it’s very different to do and requires a lot of global cooperation. The US has the power. Not sure how well Eritrea do it…

But it’s definitely possible to go further than the 183 days rule when a person has interests in the country. Basically you have property, business interests etc. you are a resident for tax purposes.

The global citizen game can really only be played long term by people who have multiple homes and global business interests. Have kids? Well you can have a nanny and a home schooler in a few different countries. They get to play outside the rules of the game and still enjoy Irish society.

What’s worse is how the likes of JP are treated as hero for throwing a few bob exactly where they want.

 

[Brendan Burgess]

Is it not a bit rich considering our corporation tax policies ?

We are in a weak position ok. It is certainly hypocritical to allow big corporations to use Ireland to reduce their taxes while trying to tax Irish individuals who avail of similar tax rules elsewhere.

Both are wrong. We should facilitate the big corporations and we should not allow wealthy Irish people to pay less tax because they spend some time abroad.

Likewise it was wrong to allow artists to move here and pay no tax on their income. Although that is severely restricted now.

 

[Marsupial]

And what about stud farms and their wealthy owners, have they still got tax-free status?

 

[LarryScott]

I think they could tighten up the taxes levied when a person is leaving.

For example, CGT is taxed on disposal on the basis that that is when the gain is crystalized. The idea is that everyone will have to pay it eventually. If someone builds up an uncrystalized CGT liability, they are incentivized to leave before it gets crystalized.

I think it would be fair to say that if you change tax residency, then you have to work out "pending" CGT liabilities on non-disposed assets and pay them.

There is also an argument for getting rid of the CGT exemption on death. That also goes against the principal that it gets paid eventually.

Having said that, if someone leaves the country, then it doesn't seem reasonable that they are still expected to pay taxes to Ireland. You pay taxes because you are part of the community in the country and are using the services. If someone is living somewhere else, then they pay taxes there.

 

[gianni]

What’s worse is how the likes of JP are treated as hero for throwing a few bob exactly where they want.

Couldn't agree more. I've never been impressed by his "benevolence".

 

[presidenttttt]

And what about stud farms and their wealthy owners, have they still got tax-free status?

how does that one work?

 

[patfert1]

If someone builds up an uncrystalized CGT liability, they are incentivized to leave before it gets crystalized.

CGT is payable by non-residents on sale of irish property. I suppose you are thinking of CGT on moveable assets, such as stocks, but one can well argue if these are not irish based assets why would a non-tax-resident or even ex-tax-resident be liable to irish tax.

 

[JamieB_]

Keep poking them and the rich people will just find a way and you will get nothing at all from them.
If I was rich I wouldnt have a problem at all renouncing my Irish Citizenship to save on millions in tax. If staying in Ireland meant they still wanted millions off me im sure there would be plenty of destinations that I would happily live and become a citizen of.

 

[Raskolnikov]

I have no problem taxing Irish non-dom's in practice, but if we were to clamp down, what would it actually achieve?

Irish super-rich on the rise as 200 more join elite club with €20m

The number of super-rich people in Ireland has increased by 200 in the past two years, according to new figures from the Revenue Commissioners.

www.independent.ie

According to this there are 250 people in the entire country with a net-worth of €20m+ who are non-dom's.

Let's say we decided to crack down on them and enforced some sort of passport tax of €1m on average for them each. Assuming that everyone actually valued their Irish citizenship and paid the tax, we'd raise €250m.

Government expenditure for 2026 is forecasted at €126b. The money raised (assuming it's actually raised) would barely register as a rounding error on the government finances.

Maybe it's time to put Michael McDowell out to pasture? It was nice to read an article from him that deviated from his obsession with Donald Trump, but this one has fallen far short of the mark.

 

[Marsupial]

how does that one work?

It was a Charlie Haughey tax exemption and I don't know whether it's still there; hence my question, which no one has answered yet.

 

[ClubMan]

I don't know whether it's still there; hence my question, which no one has answered yet.

Horse racing: Irish breeders set to lose tax-free status

The stallion stud fees exemption scheme, which meant Irish trainers had no taxes levied on their thoroughbred breeding, is expected to be brought to an end.

www.theguardian.com

Ireland to scrap stallion tax break - Horse & Hound

Irish breeders will have to pay tax on income raised by stallion fees from July 2008

www.horseandhound.co.uk