A quick reality check for those who argue that as a result of the non-dom legislation, London is about to lose its competitive edge as the location of choice for the exceedingly well-heeled to New York.
The top marginal income tax rate in the UK is 40%
The top marginal rate of Federal income tax in the US is 35%
The top marginal state income tax rate in New York State is 7.7%
The top marginal rate of New York City’s income tax is 3.64%
So, if a seriously well-paid person were to move from the UK to New York City, his/her marginal income tax rate would go up from 40% to 46.34%.
You could chose to live in some leafy Connecticut suburb instead. The highest marginal tax rate of the Connecticut state income tax is 5%.There is no local income tax. You move from London to Greenwich, CT, and you just break even on income taxes.
Or you could move to salubrious New Jersey. The highest marginal tax rate of the state income tax is 8.97 percent. There is no local income tax. You move from London to Newark, your marginal income tax goes up from 40% to 43.97%.
In addition, the US does not have anything resembling non-dom status. The US taxes residents on their world-wide income, regardless of whether they bring the money into the country or not. In addition, the US Federal authorities impose quite intrusive reporting obligations as regards beneficial interests in accounts held abroad.
It may be that other dimensions of life in and around New York City would more than compensate for what would be a continuing income tax advantage of the UK over the US, even after the full implementation of the Chancellor’s original proposals. If so, can someone tell me what they are?
