The Collected Economic Nonsense

In his latest series of blogs, the Adam Smith Institute’s President, Dr Madsen Pirie took aim at 50 of the most prevalent and pernicious falsehoods about economics. Read them all here in this collection of all 50 pieces.

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New ASI paper: Non-Sense

Out today is a new ASI briefing paper examining Ed Miliband’s proposal to end the non-dom provision in the UK tax system.

It says:

  • Being a UK resident with non-domiciled status simply means that one does not intend to remain indefinitely. The tax system requires residents to be taxed on their foreign income. Non-doms resident in the UK elect to be taxed on either the arising basis (their worldwide income is taxed automatically) or the remittance basis (they are only taxed on worldwide income if they bring it to the UK). 2008 reforms mean that after 7 years of UK residence, non-doms who choose to be taxed in the latter way must pay a yearly fee of £30,000 (rising to £50,000 after more years of residence).
  • Ed Miliband has claimed that there are 116,000 non-doms but this ignores those of the UK’s 400,000 international students and 6 million foreign-born workers who did not have to file a self-assessment form and those who did file it but did not tick the non-dom box. It is estimated that something like 1 million are not permanent residents, so are by definition non-doms.
  • The rules introduced by Labour (and supported by the Tories) in 2008 ended up only hurting less wealthy non-doms and did nothing to really wealthy ones: electing to be taxed on a remittance basis benefits only those with very high foreign incomes.
  • While most countries tax worldwide income of residents, a significant number including the UK have exemptions for certain people (mostly foreigners) so that they only pay taxes on local income.
  • There is a substantial literature showing that tax systems are very important in deciding where top talent goes. It tells us that punitive changes to the UK tax system could discourage the most valuable potential immigrants from footballers to inventors.
  • Changing how we determine someone’s domicile is likely to have unintended consequences. First, making it easier to acquire a new domicile might reduce inheritance tax receipts, as UK domiciled residents of foreign countries currently pay UK death duties on their worldwide estates. Second, changes to the concept of domicile would have repercussions in other areas of law, such as matrimonial matters and determining the validity of wills.
  • The ethical justifications for Ed Miliband’s view that it is immoral that non-doms do not pay tax on their foreign income are deeply contentious. There is no principled moral case for taxing more than local income.

You can read the full paper here

Logical Fallacies: 20. Argumentum ad numeram


The final instalment in Madsen Pirie’s series on Logical Fallacies; here he looks at the ‘argumentum ad numeram’.

You can pre-order the new edition of Dr. Madsen Pirie’s How to Win Every Argument here

Logical Fallacies: 19. Wishful thinking


In his penultimate video on logical fallacies, Madsen Pirie takes a look at ‘wishful thinking’.

You can pre-order the new edition of Dr. Madsen Pirie’s How to Win Every Argument here

Logical Fallacies: 18. We must do something


The latest logical fallacy examined by Madsen Pirie is the idea that ‘we must do something’.

You can pre-order the new edition of Dr. Madsen Pirie’s How to Win Every Argument here