London as Theme Park for Billionaires

Fascinating article in today’s WSJ on how London (England, not Ontario) has become a kind of theme park for ex-pat billionaires.

Of the U.K.’s 10 richest people, just three are originally from here, according to the Sunday Times newspaper’s annual list. The country’s two wealthiest individuals are the Indian-born chief executive of ArcelorMittal, Lakshmi Mittal, who paid $141 million for his London mansion, and Russian oil magnate Roman Abramovich. About 65% of houses sold in central London for $8 million or more last year were purchased by people born outside the U.K., estimates British real-estate company Savills PLC.

Behind the surge of money pouring into London is the globalization of wealth. As new multimillionaires are minted in Russia, India, the Middle East and Europe, many are coming to London, drawn by a combination of low taxes, historical ties and a geographical location that makes the city attractive for people doing business in Eastern Europe, Asia and the Middle East.

The U.K. taxes foreigners who claim their true home, or “domicile,” is elsewhere only on the money they earn in, or bring into, Britain. All assets elsewhere aren’t taxed. The U.S., by contrast, taxes residents on their world-wide income.

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Comments

  1. Shefaly says:

    “The U.S., by contrast, taxes residents on their world-wide income.”
    I wish we in the UK had the balls to do that too.
    It will settle once and for all whether the non-doms live here for taxes or the love of London. (We all know the answer to that..) If they choose to stay here, the additional taxes could fund the London Olympics with its ever expanding budget. If they leave, the house prices could normalise just a tad, although many on Bond St will not have jobs any more!
    It may also reduce the future possibility of polonium-murders and the gross wastage of police time in investigating deaths of random people, just because they had money, while crimes affecting the poor suffer from resource crunch.
    RECLAIM LONDON, I say.

  2. lesa says:

    I am on a board with a number of a individuals that all made their money in the US as entrepreneurs but none of them live here due to tax issues. They tell me their kids live here so they have to carefully watch their 30 day in U.S. quota. They also don’t live in their country of origin due to tax issues so guess what – they all live in the UK.
    a policy issue worth addressing

  3. Dave says:

    RE: lesa’s comment above
    One of the main benefits of wealth in my mind is freedom, including freedom to live/travel wherever you want, despite the cost. Seems like those wealthy entrepreneurs have massively sacrificed their family relationships for the purposes of getting even more wealthy. They have let money enslave them to a degree. I guess that’s just Infectious Greed for you.

  4. alpha24seven says:

    You are also witnessing “flight to safety”. Many of these people fear for their personal and families safety in their originating countries. Taxes be damned.
    Witness all the children from wealthy South and Central America families that are dispatched to America and safe Western countries at a very early age for “education”. It is primarily motivated by fear of kidnap and other horrific possibilities.
    Witness racing driver Juan Pablo Montoya. He can’t even visit his home country Colombia any longer. He will be kidnapped or worse immediately on arrival. He had to migrate his entire family to Europe and the US.
    Taxes are an attractive reason to domicile, but more importantly are your and your families life.

  5. Gazouts says:

    In which case they won’t mind paying a bit more tax if they want to live in a stable low risk country. The only possible justification for special low taxes for the super rich is the “trickle down” theory, however I thought this has been largely disproved. All that ends up is that the tax burdened middle class has to pay even more tax because the super rich don’t pay their share.