British super-rich come clean: Billionaires find tax havens extremely boring

British super-rich people are attached to their home country – or so they say: they would not exchange their luxury life in London for a villa in the Bahamas just for cheap taxes. But to save taxes, they don’t even have to leave the UK.

Yachts, private planes, luxury villas: this is what most people associate with the super-rich. But we get less insight into how they really live and think. The world of billionaires is closed. They usually keep their private lives secret.

Researchers now have a little insight London School of Economics receive. They were able to chat to some of the richest people in Britain, the richest one percent.

The most astonishing result: they can’t stand tax havens, as the super-rich explain in extensive interviews. The vast majority are attached to Great Britain and would not leave the country for tax reasons. They say they would be “bored to death” in tax havens.

“Only people with yachts and servants”

There is simply not enough going on in the “tiny places”. Sun, sea and sand – all well and good, but that’s only great for a few weeks to recharge the batteries.

The super-rich don’t want to miss out on the city. After all, there are cultural offerings there: operas, museums, theaters – that doesn’t exist in the Bahamas. Health care is also better and there are private schools. In the tax havens they would lack the contacts they have in London. In their opinion, only people with yachts and servants live overseas. And in the Middle East there is a threat of living in gated communities – hard to imagine.

The dear family would probably be less enthusiastic about moving: the super-rich would have concerns about “family unrest”. And they fear being labeled as tax evaders. In their opinion, their career could also suffer. A “dynamic economic climate” with “room for innovation” only exists in London. In short: the British ultra-rich cannot imagine anything worse than moving to a tax haven. They love London!

Money goes to tax havens

The catch is: A physical move to the British Virgin Islands or the Cayman Islands is not necessary to save taxes. Billionaires and other super-rich people can do this without leaving their luxury London apartment. “There are many legal and illegal ways to move the money you want to avoid taxes into tax havens,” says John King, economist on the socio-economic panel at the German Institute for Economic Research in Berlin in the ntv podcast “Learned something again”. “If I open the famous account in the Cayman Islands or Switzerland, that doesn’t mean that I want to make a pilgrimage there every day to see if the money is still there.” The super-rich are significantly more mobile than the rest. “They also have the means to do so.”

Nevertheless, the super-rich are definitely right on one point: Hardly anyone lives in the offshore tax havens. This is shown by a DIW study that uses satellite data to examine economic activity on the Caribbean islands. Author Jakob Miethe was able to use night light data from NASA to evaluate how long the lights go out after bad storms. “Most of these tax havens are often quite black at night. Ergo: There is no one there,” explains König. Only the banking sector continued to operate as before without any disruption.

The bigger problem is that money is moving to these tax havens. “It is then mostly idle and cannot be taxed,” said the economist.

Taxes are set to fall in Great Britain

Overall, it is also becoming more difficult for rich individuals to hide their assets in tax havens. Individual tax evasion has fallen by around two thirds, according to the first “Global Tax Evasion Report” by researchers at the Paris School of Economics: International data exchange is taking effect.

In their report, the researchers instead point to another major problem: billionaires are generally hardly taxed. The effective tax rates are 0 to 0.5 percent of assets, although the top tax rate in the United Kingdom is currently 45 percent – slightly higher than in Germany at 42 percent. The British rate is set to fall in the future: British Finance Minister Jeremy Hunt has announced tax cuts for millions of people in order to stimulate the economy.

Wealth tax is not worth it

There is no wealth tax in Great Britain. König also thinks it makes little sense. Because it causes more effort than it brings in money. “Even in France, where there is a general wealth tax for particularly high assets, the revenue is significantly less than 10 percent of total tax revenue.” Many Western countries therefore do not see such a tax as worthwhile, emphasizes the expert in the “Learned something again” podcast. After all, the rich and super-rich would have the opportunity to avoid taxes particularly well, whether legal or illegal.

Some British multimillionaires surprise with another statement: They would like to pay more taxes, they have that in one open letter offered to Prime Minister Rishi Sunak. Your calculation: With one percent taxes for them, around 60 billion euros would flow into the tax coffers per year. Also Ultra-rich people worldwide suggest this every now and then.

So rich people wouldn’t turn their backs on Britain because of taxes. They would then have to rise to the extreme maximum rate of the 1970s. At that time this was 95 percent.