Magnus Linklater
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The man who dies rich dies disgraced, said Andrew Carnegie, voicing a thought that is about as unfashionable today as any I can think of. On the contrary, to accumulate wealth, avoid tax, secure it for the future, find ways of squirreling it away, far from the grasping fingers of government, is held to be a virtue, encouraged at almost every level of society. We do not give easily.
Not that we have any lack of swaggering entrepreneurs in the Carnegie mould. We see them, these Masters of the Universe (perhaps not quite so masterly in these credit crunch days) accumulating their bonuses, trousering their share options, collecting their golden handshakes after a career that may, or may not, have significantly benefited their companies. What we do not see is the badge of philanthropy that their Victorian ancestors wore as a matter of pride.
There is scarcely a town or city in the land that does not bear the mark of a great 19th-century industrial patron. Think of buildings such as the Walker Art Gallery in Liverpool, the John Rylands Library in Manchester, the Burrell Collection in Glasgow, the Laing Art Gallery in Newcastle, the Cartwright Hall in Bradford - the list is endless, the motive in each case a desire by the local boy made good to put back into his community something of what he had taken out.
That sense of local commitment seems largely to have gone. We have global philanthropists like Soros or Gates, UK patrons on the scale of a Sainsbury or a Getty, but no great tradition of charitable giving at a humbler, and sometimes more directly effective, level. Whereas in America it is as natural as mother's milk to endow a local university or orchestra, in this country the milk of human charity has run sadly dry.
So it was striking to hear an American philanthropist, resident in Britain these past 24 years, talking about how she had inherited “the giving gene”. Carol Høgel has used the wealth inherited from her father, a Chicago-based industrialist and notable patron of the arts, to establish a fund, known as the Dunard Fund - named after her Highland cottage. Over the years it has nurtured orchestras such as the London Philharmonic, rescued the Edinburgh Festival from a mountain of debt, brought great operas, such as Peter Stein's Parsifal to Britain, helped to rebuild the National Galleries of Scotland. In all, she has brought £20 million of funding into this country during the time she has been here.
One might imagine, therefore, that a rare species of this kind would be cherished - that governments and councils, mindful of the benefits that they have gained through the extra tickets sold, the extra kudos gained, the millions of extra visitors pouring into the country and the money they have saved in the course of it all by not having to do it themselves, would take care to foster good relations with such a valuable source of present and future generosity.
One might imagine wrong. When, last year, the Treasury began setting out its plans to tax foreigners who are not domiciled in the UK, no recognition was given to those who were embedded in British society and had made substantial contributions to it. Indeed, the reverse happened. Wealthy residents from abroad were portrayed routinely as tax dodgers, drawn to a country where their earnings from abroad escaped taxation. Stories about multi- millionaire hedge fund managers, paying less than £1,000 a year in the UK and salting away £10 million in the Cayman Islands, began to circulate. When friends of Ms Høgel wrote letters to the Prime Minister and the Chancellor of the Exchequer on her behalf, they received no reply.
The £30,000 that she and the 130,000 or so “non-doms” in Britain will now be required to pay, after Alistair Darling's March Budget, may not sound much, but to her it looks and feels like a fine imposed on her for having the temerity to bring her wealth to Britain. She sees it, rightly or wrongly, as “hostility” on the part of government, a symbol of a “destructively spiteful, philistine attitude”. And so she is off, uprooting from her home in Edinburgh, resigning from her many boards on orchestras and galleries, returning to America, where, she says, “an individual with involvement in, and charitable contributions to, visual arts and classical music is valued, not punished”.
You cannot, of course, implant that giving gene in a nation not notably blessed with it. But what you can do is to show that it is valued. Introducing a tax scheme that would encourage giving rather than penalising it is not a hard thing to do. Britain is about the only country in Europe, for instance, that has no incentive scheme for those who would like to donate works of art to museums or galleries during their lifetime.
There are tax incentives when we pass on shares or land or buildings, but not works of art. We have done nothing to encourage “lifetime legacies” - the idea, common in the United States, whereby those who want to leave their possessions to their local town or to the nation can derive tax advantages during their lifetime rather than after their death. As the art collector Anthony d'Offay commented recently: “We are good at rewarding the dead. We're not so good at encouraging the living.”
What seems to lie behind this is an almost ingrained suspicion of the rich - a sub-Calvinist belief that those who have accumulated wealth are to be punished not rewarded. We should begin to reverse this by remembering Carnegie's other famous saying - that “surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community”. And then we should give the rich a really good reason for doing something about it.
Magnus Linklater's journalistic career spans 40 years, taking him from editor of Londoner's Diary at the Evening Standard to editor of Spectrum and the Colour Magazine at The Sunday Times and editor of The Scotsman. He joined The Times in 1994 and writes a weekly column on Wednesdays. He was chairman of the Scottish Arts Council from 1996 to 2001, and often writes on Scottish issues
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Good point Richard.
According to the history of Income Tax page of HM Revenue, at the start of WW1 the rate of income tax was 6% !
Being generous back then was, shall we say, a bit easier.
Anthony Roberts , Shoreham-by-Sea , West Sussex
The vast majority of those who live in this country are not nearly as rich as Ms Hogel. Most - like myself - pay taxes and manage to give to charity regularly as well. The same rules ought to apply to all. You pay your taxes AND you try to make charitable donations. Since when has it been 'either-or'?
It has not been proposed to tax Ms Hogel because she gives to charity but because she derives financial benefit from living here as a non-dom. It is not possible nor would it be right to allow some people to negotiate which taxes they paid and which they were let off, for one reason or another. Such rules
as there are must apply to all.
So, either the state declares that charitable contributions over a certain amount may be offset against tax for all or we continue as we are - but special cases there cannot be.
W Pratt, London, UK
"Far from the grasping fingers of Government". I wonder why that is. Maybe because we don't want it spent on illegal wars, "updating" cold war weapons systems or bailing out incompetently-managed financial institutions and rewarding the incompenent management, perhaps?
Bill Peter, Kuala Lumpur, Malaysia
It is time for a new government to take charge. The amount of tax people have to pay in the UK makes me wonder why more people are not homeless, maybe its because the middleclass pay all of the taxes and everyone else manages to get away with it. If it was not for the middleclass who knows how the government would continue to 'steel' money from the public.
SMatt, UK,
I've stopped giving to charities, now that the government does it for me. I've also stopped working full time. why bother when half of it just goes in tax and ni? I just work until i reach the start of the higher rate tax limit.
andrew, swindon, uk
I don't mind giving, I just have to question where the tax money spent to support those less fortunate goes. Only those that actually are less fortunate and deserving don't receive it as they often don't want to look for it. The government hires consultants for all its projects. Would have made sense in the old days when people remained in jobs for a long time and didn't travel but now transfer of skills and practice renders these consultants worse that useless beyond providing management with the excuse to do what they thought of in the first place. Money has become an end ito a means, not a means to end. I blame the increased mobility of people and the increasingly fractured relationships that seems to result.
John, Knutsford, UK
I was under the impression that a Socialist Government did everything that was necessary for everyone; that no one should be dependent on charity. It seems that that concept has gone out of the window unless you happen to be an MP. Then of course you are on the pig's back; all provided!
Since we are now in the EU lets leave it to them to provide for us poor Brits.
M. Cawdery, Portadown, Co. UK, EU
Mr. Reader may wish to note that Bill Gates has publicly announced his intention to give away 90% of his fortune during his lifetime, and that during at least one recent year he has given more for HIV relief in Massachusetts than the U.S. government.
David Cole, Medway MA, USA
David Watson: I think you'll find that if you add up
- Income Tax
- NI
- VAT
- Council Tax
- Car tax
- Fuel Duty
- Insurance Premium Tax
- Stamp Duty
- Duty on Alcohol and Cigarettes
- Vehicle Excise
- 'Green' taxes on Airline Tickets
- etc. etc. etc.
you might find that the total tax take out of your gross salary, if you are an average earner, isn't too far from 70%.
You have fallen into Gordon Brown's trap of having your attention distracted by the rate of Income Tax while a myriad of additional stealth taxes have been brought in behind your back.
From the productive sector of the economy as a whole, the government now takes nearly 55% in tax - figures published by the OECD. If you consider how many people pay little or no tax, then it is easy to see how those of us fortunate enough to earn a reasonable amount are paying a lot more than 40% of our income to compensate.
Francis, London, UK
Charity has be nationalized by the govt, its called the welfare state.
40% of my income is taken before i get it, more of i dare to spend it, so please forgive if i feel like not giving anymore away.
Gavin, London, UK
Wow Mr Jones, you pay 70% tax? And have to live with your parents at 28? The county you live in must have crazy council tax. I earn considerably less than median wage, pay about 30% tax (including student loan payment) and live in a large flat in London.
And I give to charity.
David Watson, London, UK
I used to give to two charities via direct debit but now I can't even afford to go to the DENTIST or buy prescription glasses, I've become the charity case and have cancelled my direct debits.
My old Aunt has to pay £3,200 per month for her care, having payed taxes all her life there's nothing left to give to charity.
VJB, LONDON,
I wouldn't wish to impune anyone's charitable motives, but. Is it likely that a robber baron like Andrew Carnegie, or someone like Bill Gates who, according to a DOJ ruling last year, chaired a company that bullied its operating system onto PCs would give away what they fought so hard to acquire?
That they had a Damascene moment where that killer gene turned into a giving gene. This sounds like evolution to me. The environment changes whereby significant tax advantages can be obtained from charitable trusts so approaches 'evolve' to attain the same end - namly the retention of wealth.
Eddie Reader, birmingham, england
If I understand the situation correctly the problem may lie more with the fact that HMRC have managed to get into the new law that all money brought in from outside is to be treated as income. So if she brings in money from the US (even if it's old capital savings) for a UK museum (say) she will lose 40% of it to the taxman. And then of course it's £30,000 for each family member not just for her.
If she wants to avoid this she can surrender he non-dom status BUT she will have to open all her accounts to HMRC and they may not agree with US treatment of these and tax her extra again.
It's nasty; it's unpredictable and I don't blame her at all. She's just being prudent.
Chasseur, Church Stretton,
Magnus harks back to a fantasy golden age. The British have for ages generally been mean and self-centred apparently believing the world owes them a living. Margaret Thatcher tapped this spirit and made it socially acceptable. The pitiful per head contributions to telethons and the like that are trumpeted as examples of British generosity don't even match the money punted on the lottery each week in the hope of instant wealth for no effort. As for wealthy non doms (or well paid commenting doctors) who begrudge paying tax - further manifestations of the "I want something for nothing" brigade. Harrumph...
Brian Hughes, Cheltenham, UK
With an efective tax rate of over 70% in this country, we give enough it may not be to the right people and we may nto be giving it. But we are certainy living with out it, mabye if we where nto taxed to death people might give more.
but i doubt it as they would finaly be able to take tha holiday, or buy new clothes for their children, I am 28 in 3 weeks, and i still have to live with my pearents as i am priced out of this country, give to charity what a joke!
Mr W Jones, Liverpool, England
Ms. Hogel says she will go back to the US where her philanthropic work is more welcome, because she has to pay 30,000 pounds (about US-$60,000) in taxes now.
I am certainly not for high taxation. And maybe she is right in that her philanthropic work is more welcome in the States. And I am sure that Britain, especially London, has had a cultural and economic boost from all the foreigners who can spend their income in delightful ways that does not just profit them, but also the larger public.
But I'd be surprised if Ms. Hogel did not have to pay at least $60,000 in the US too -- unless her income is rather low (but why does she not choose to pay regular taxes in the UK in that case) or she has it all stashed away in offshore trusts, which the American authorities will certainly not appreciate, no matter how generous her charity work. Thus, I can't help to find her remark somewhat disingenuous.
But maybe Ms. Hogel found another way not to pay taxes. Then I'd like to know it too!
Wolfgang, Boulder, CO, USA
Become a Member of Parliament ! Then most of your living expenses are paid for by the taxpayer , leaving you pots of cash to send off to your favourite charities !
OZ, Perth, Western Australia
I'm not on a doctor's income even and work freelance as a translator with no regular income but even so I manage to have quarterly donations to two children's charities, sponsor two children in Africa and South America, sending them extra money, too, and I also managed to send an extra EUR 600 to the African school this year. If you want to give, you can give.
In the UK, however, people are all 'me, me, me'. If the people spent the amount of money they frittered away on alcohol every week and donated it to schemes that make a different to someone's life, then the world would be a much better place.
Tina, Dusseldorf, Germany
I'm not rich. I can't afford a house close to my job. As a Doctor I have no choice but to take the job I'm given.
But even so I pay over 30% of my earnings to the government. If I purchase certain goods another 17.5% goes.
Victorians never paid taxes like this, so they had spare money to donate. With the truely rich paying close to 40% on earnings, with more if they purchase other items perhaps they feel society is already takeing enough.
Richard, London, England
The lack of grand-scale giving these days is no surprise to me. In an age of manipulative radio and television adverts, charity muggers, a national lottery that gives "charity money" to some rather dubious enterprises and exposed fraud in public office, we extend only our contempt to those who claim to be rich and powerful. We see men and women doing jobs we don't understand, and call them of dubious value to their companies (you did see the profits that the big banks these guys work for pulled in?) In return, they will naturally reciprocate, and see general society as a dog that bites the hand that may feed...
Morgan Murray, Glasgow,
Good idea: let's introduce more loopholes for rich people to dodge tax, and get rid of the one trifling imposition we intend to place on super rich non-domiciled residents. I imagine that if we do that we will inevitably see a tidal wave of philanthropy the like of which we could never have imagined, as hordes of Russian oligarchs queue up to fund public art.
Laurence Davison, Sydney, Australia