ASI briefing paper "Non-Sense" features in City AM

New ASI briefing paper “Non-Sense: Examining the arguments and rhetoric around non-dom tax provisions” features in City AM:

Ed Miliband's reform to the non-dom system ignores all the evidence, risks costing the country money and could make the UK less attractive to entrepreneurs.

That's the verdict of a new briefing paper from the Adam Smith Institute that aims to separate fact from fiction when it comes to the political rhetoric surrounding non-doms.

In a speech at the University of Warwick on Wednesday, the Labour leader claimed there were around 116,000 non-doms in the UK. According to the ASI, that isn't the whole story.

The 116,000 figure accounts for those people who filed a self-assessment form and ticked the non-dom box. However, the ASI reckons there are around  one million students and workers in the UK who don't have indefinite leave to remain in the country and are therefore, by definition, non-domiciled.

Read the full article here.

The briefing paper “Non-Sense: Examining the arguments and rhetoric around non-dom tax provisions“debunks the oft-quoted claims being made by politicians about non-doms and highlights the potential financial risks associated with Labour’s proposed changes to the rules.

The paper explains how Miliband’s proposed changes to the tax rules could cut government revenue, drive away investors and risk hurting middle-income migrant workers registered as non-domiciled in the UK.

Press Release: Political move to scrap non-doms ignores all the evidence, new paper argues

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07584 778207 Labour’s non-dom policies risk cutting off the country’s nose to spite its face:

  • There may be over a million non-doms in the UK, contrary to Miliband’s claim that there are 116,000; most of them are not rich people but foreign workers and students.
  • The UK’s non-dom system is not unique; countries like Australia, Japan and China all have tax systems that focus on local income for non-permanent residents.
  • The existing crackdowns on non-doms introduced by Labour (and supported by the Tories) have ended up particularly hurting less well-off non-doms (e.g. migrant doctors) while hitting the super-rich comparatively less.

A new briefing paper from the Adam Smith Institute debunks the oft-quoted claims being made by politicians about non-doms and highlights the potential financial risks associated with Labour’s proposed changes to the rules.

The paper “Non-Sense: examining the arguments and rhetoric around non-dom tax provisions” explains how Miliband’s proposed changes to the tax rules could cut government revenue, drive away investors and risk hurting middle-income migrant workers registered as non-domiciled in the UK.

The paper argues that recent reforms to non-dom tax laws, whereby one has to pay £30k after seven years of residence in order to be taxed on the remittance basis, has ended up hurting relatively less wealthy non-doms and has done very little to the very wealthy ones.

The further changes proposed by Miliband could push Britons to become ‘domiciles’ more quickly in other countries and deprive the UK the inheritance tax such people would have paid had they been domiciled in Britain. These changes would also affect many other parts of the law, such as family law, which depend on domicile status; such changes would have far-reaching implications, such as disputes over guardianship of children.

The paper explains that the status of non-dom is affiliated with any person who does not intend to remain in the UK indefinitely. International hedge fund managers, transfer students from Kenya, and Indian doctors working for the NHS are all considered non-doms. Potentially there are over one million non-doms residing in the UK, not 116,000 as Miliband claims. Most of these residents are not wealthy, but rather normal earners and students.

It is also not the case that the UK’s non-dom system is virtually unique in the world. Several former British colonies have exactly the same system as the UK, for example Ireland, Malta and Jamaica. Other countries such as Australia, China and Japan tax only local income for non-permanent residences as well.

Head of Research at the Adam Smith Institute Ben Southwood said:

Cracking down on non-doms may sound nice but proposals that sound nice aren’t always good policy.

Miliband’s scheme risks making both the UK and the Treasury poorer and less fair.

Scrapping non-dom status does make it easier for the Treasury to claw in the foreign earnings of people who intend to stay in the UK temporarily, but it also makes it harder for them to keep a hold on Brits who leave intending to come back.

Thankfully policymakers are not so easily swayed and MPs are often effective gatekeepers to populist wheezes - there is at least a chance this one will be stopped as well.

Notes to editors:

Read “Non-Sense: examining the arguments and rhetoric around non-dom tax provisionshere.

The Adam Smith Institute is a free market libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

ASI briefing paper "The Ties that Bind" features in Yorkshire Post article and editorial

New ASI briefing paper " " features a Yorkshire Post article as well as today's editorial. Article:

Increasing levels of racial diversity driven by immigration to British cities have very little negative impact on social cohesion, according to a repot which appears to contradict claims that migration undermines the country’s social fabric. 

The Adam Smith Institute concluded that higher levels of diversity can have a slightly negative impact on trust levels - but when it comes to other measures of social cohesion, including civic participation and volunteer work, there is virtually no evidence to suggest a negative effect.

The Institute reviewed literature on the subject which looked at communities in the United States, Europe and the UK. It found that if other factors are accounted for - including economic deprivation - the negative relationship between diversity and cohesion often disappears.

While research from the States found a clear negative relationship between immigration and social cohesion, research in Europe found no negative impacts.

Research in London had found that once economic deprivation is controlled, higher levels of ethnic diversity actually have a positive effect on social cohesion.

The research appears to contradict claims that immigration must be restricted as it undermines the country’s social fabric. The paper does comment on Bradford or other Northern cities which saw disorder in 2001.

Continued p. 2, Yorkshire Post.

Editorial:

Coincidentally, Sir Keith’s comments come on the day that the Adam Smith Institute claimed that greater ethnic diversity in the UK has not had a negative impact on community cohesion. This refutes Mr Farage’s alarmist assertion that children can no longer play football in the streets of some towns because of concerns about immigration. The think-tank also takes Ukip to task for claiming that migrant workers are taking the jobs of people born in Britain; it says immigrants contribute more to Britain’s debt-laden finances than they take out in benefits.

It is a compelling argument which should be heard before any post-election caps or quotas have a counter-productive effect on the economy. The problem for the country’s political elite is that they find themselves in the unenviable position where Mr Farage’s party is making all the running on this issue.

Read the full comment here.

The paper, “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration”, is a comprehensive review of the academic literature on the relationship between immigration and social cohesion in the Europe, the UK and the United States.

It concludes that higher levels of diversity only lead to a slight negative impact on generalized trust within UK communities; however, there is virtually no evidence to suggest that diversity undermines other measures of social cohesion, including civic participation, trust in authority and volunteer work in the UK. Furthermore, the paper finds that if other factors are controlled for – including neighborhood status and economic deprivation – the negative relationship between diversity and cohesion often disappears.

Mythbusting Nigel Farage on immigration - Ben Southwood highlights ASI report in CityAM

Head of Research Ben Southwood writes for CityAM on new ASI briefing paper “The Ties that Bind: Analysing the relationship between social cohesion, diversity and immigration”:

The political scientist Robert Putnam famously found that Americans “hunker down” in the face of social diversity, doing less in the community and trusting people less – even their own compatriots.

When Nigel Farage suggested that one reason kids tend not to play on the street nowadays was immigration, he was voicing a common concern: that immigrants undermine social trust and social cohesion.

Trust and social cohesion are important on more than just one level – they are a crucial correlate of output, living standards and growth. If immigration did undermine trust, it would be a major argument against it. But it’s not clear that the data can support this objection, whatever people’s anecdotal experience might seem to show.

A new Adam Smith Institute briefing paper out today “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration” looks broadly to see if Putnam’s result is held up by the wider research. There is some (albeit conflicting) evidence that immigration and diversity undermine generalised trust – how much people in society trust other random people in society.

Read the full op-ed here.

The paper, “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration”, is a comprehensive review of the academic literature on the relationship between immigration and social cohesion in the Europe, the UK and the United States.

It concludes that higher levels of diversity only lead to a slight negative impact on generalized trust within UK communities; however, there is virtually no evidence to suggest that diversity undermines other measures of social cohesion, including civic participation, trust in authority and volunteer work in the UK. Furthermore, the paper finds that if other factors are controlled for – including neighborhood status and economic deprivation – the negative relationship between diversity and cohesion often disappears.

Author of ASI briefing paper "The Ties that Bind" writes for Conservative Home

Author of new ASI briefing paper "The Ties that Bind: Analysing the relationship between social cohesion, diversity and immigration" writes for Conservative Home:

Claims that immigrants are undermining the social fabric of the UK are largely unfounded. A new briefing paper from the Adam Smith Institute released today suggests that restricting net migration is likely to be counter-productive at improving social cohesion.

Opinion polling regularly shows that immigration is one of the most important issues for the electorate. The social impact of immigration is frequently cited as a reason to contain migration flows.

Read the full op-ed here.

The paper, “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration”, is a comprehensive review of the academic literature on the relationship between immigration and social cohesion in the Europe, the UK and the United States.

It concludes that higher levels of diversity only lead to a slight negative impact on generalized trust within UK communities; however, there is virtually no evidence to suggest that diversity undermines other measures of social cohesion, including civic participation, trust in authority and volunteer work in the UK. Furthermore, the paper finds that if other factors are controlled for – including neighborhood status and economic deprivation – the negative relationship between diversity and cohesion often disappears.

ASI briefing paper "The Ties that Bind" features in CityAM

New ASI briefing paper "The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration" features in City AM:

IMMIGRATION is a boon for the economy and higher levels of ethnic diversity can actually improve social cohesion, the Adam Smith Institute will argue today.

In a new report published today, the free-market think tank has sought to tackle head-on the contentious issue of immigration and its effects on Britain’s social fabric. Looking at London-focused research, the institute found that where economic deprivation is controlled for, higher levels of ethnic diversity actually have a positive effect on measures of social cohesion.

Read the full article here.

The paper, “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration”, is a comprehensive review of the academic literature on the relationship between immigration and social cohesion in the Europe, the UK and the United States.

It concludes that higher levels of diversity only lead to a slight negative impact on generalized trust within UK communities; however, there is virtually no evidence to suggest that diversity undermines other measures of social cohesion, including civic participation, trust in authority and volunteer work in the UK. Furthermore, the paper finds that if other factors are controlled for – including neighborhood status and economic deprivation – the negative relationship between diversity and cohesion often disappears.

Press Release: Immigration does not significantly hurt social cohesion in Britain, new paper finds

For further comments or to arrange an interview, contact Kate Andrews, Head of Communications, at kate@adamsmith.org | 07584 778207.

  • There is no conclusive evidence that diversity within UK communities creates a negative impact on social cohesion.
  • The majority of the research shows a small negative association between diversity and generalized trust within a community; but controlling for other factors, including neighborhood status, can eliminate the negative association altogether.
  • Frequently when non-trust measures are used as an indicator for social cohesion no negative relationship between diversity and cohesion is found in the UK; diversity does not appear to affect civic participation, trust in authority, or voluntary work.
  • London-centred research shows that higher levels of ethnic diversity actually have a positive effect on social cohesion.
  • The research undermines claims by some politicians that immigration places burdens on Britain’s social fabric.

Ethnic, cultural and racial diversity, which immigration to the UK typically drives, have very little negative impact on social cohesion, a new briefing paper from the Adam Smith Institute has concluded.

The paper, “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration”, is a comprehensive review of the academic literature on the relationship between immigration and social cohesion in the Europe, the UK and the United States.

It concludes that higher levels of diversity only lead to a slight negative impact on generalized trust within UK communities; however, there is virtually no evidence to suggest that diversity undermines other measures of social cohesion, including civic participation, trust in authority and volunteer work in the UK.

Furthermore, the paper finds that if other factors are controlled for - including neighborhood status and economic deprivation – the negative relationship between diversity and cohesion often disappears.

While research from the U.S finds a clear negative relationship between immigration and social cohesion, research conducted on the national level throughout Europe finds no negative impacts of immigration on social cohesion; but neither sets of findings can be applied uncritically to the UK due to the specific, historical contexts of migration that occurred in each region.

Research that looks exclusively at London is also highlighted in the paper, which finds that once economic deprivation is controlled for, higher levels of ethnic diversity actually have a positive effect on measures of social cohesion. While London’s relationship with immigration is not directly comparable to the rest of the UK, the majority of migrants that come to the UK settle in London, making it an important finding.

The research contradicts the claim by some politicians that immigration, while economically beneficial to the UK, must be restricted because it undermines the country’s social fabric.

Author of the report, James Dobson said:

Immigration continues to be one of the most important and controversial issues in British politics. Whilst the economic debate surrounding migration is well-rehearsed, the social impact of migration has frequently been neglected.

Politicians have often claimed that migration damages community cohesion, but the evidence for this claim is far from clear. Studies in Europe and the UK have frequently failed to find a correlation between high levels of diversity and low levels of social cohesion. Indeed some studies have even observed that highly diverse communities can be more cohesive than more homogeneous areas.

Head of Research at the Adam Smith Institute Ben Southwood added:

The published economic research is clear that immigrants don't take away jobs—in fact they raise wages for natives; they help bear the UK's debt burden by taking out less in benefits than they pay in; and they increase productivity.

But do they undermine the social cohesion and trust that underlies the success of developed countries?

It's commonplace to say they do, with figures like Nigel Farage suggesting diversity might be one reason for the decline of children playing in the street. But the evidence is inconclusive. Our new paper finds little evidence at all of diversity and migration undermining the bonds that undergird society.

Lawmakers should be aware of the research before they rush to crack down on migration.

Notes to editors:

Read “The Ties that Bind: An analysis of the relationship between social cohesion, diversity, and immigration” here.

The Adam Smith Institute is an free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

ASI comments on Miliband's proposal to limit zero-hours contracts feature in The Telegraph

Dr Eamonn Butler's comments on Ed Miliband's proposal to crackdown on zero-hour contracts featured in The Telegraph:

The Adam Smith Institute, said Labour's plan would "harm the very people it is intended to help".

"The UK's economic success is founded on labour market flexibility, and politicians need to be very careful before messing with it," Dr Eamonn Butler, director, said.

"About two thirds of people on zero-hours contracts are happy with the hours they get—limiting the contracts they can sign hamstrings not just the firms that employ them but their own employment options.

"On top of this, we'd expect this labour market straitjacket to cut, rather than boost, productivity. The UK's productivity troubles are real, but they're also so hard to diagnose that the issue is known as the 'productivity puzzle'.

"The UK's labour market flexibility is the key reason we have been able to weather such a sharp recession and slow recovery while nevertheless hitting the highest ever employment level and rate. Chipping away at this is dangerous and counterproductive."

Read the full article here.