One of Britain’s biggest taxpayers has left – who can replace Rokos?
Christopher Rokos was Britain’s third largest individual taxpayer last year, handing over an estimated £330m. Now he’s moved to Greece and no British government seems to have a plan to replace that revenue, says Damian Pudner
So, Chris Rokos is off to Greece.
For those who don’t know the name, Christopher Rokos is one of Britain’s most successful hedge fund managers. I first came across him in the early 2000s and then again during my time on the hedge fund rate sales desk at UBS between 2006 and 2012. I spoke to him on numerous occasions. He’s a very smart operator who made a lot of money for his investors, and himself in the process. Good for him!
More importantly for the Treasury, he was Britain’s third largest individual taxpayer last year, handing over an estimated £330m.
Now he’s moving his tax residency to Greece and opening an Athens office for Rokos Capital Management (RCM).
You can almost hear the response from parts of the left: good riddance, billionaire hedge fund manager, we don’t need you.
OK socialists. But who exactly is going to replace the potential hundreds of millions lost tax each year? Over successive decades Britain has developed a worrying attitude towards wealth. We increasingly treat success as a dirty word that must be taxed heavily, enterprise as something to regulate to death, and wealth as something the government must redistribute to the needy, the not so needy, and the downright lazy.
There’s one fairly obvious problem. Somebody has to create the bloody stuff first.
Atlas shrugged
It reminds me of Atlas Shrugged. Ayn Rand isn’t everyone’s cup of tea and the book certainly isn’t subtle. But underneath the philosophy is an important and continuing economic question: what happens when a society becomes so obsessed with punishing and redistributing wealth that it forgets about creating it in the first place? In the book, it leads to the collapse of the collectivist system.
Take Gary Stevenson. The former trader and self-described world’s best “inequality economist” has built a huge cult-like following arguing for a wealth tax. The proposition sounds seductively easy: the very wealthy have lots of money, let’s tax two per cent of it every year over £10m, and Bob’s your uncle, you raise billions for public services.
Except you won’t. It’s economic illiteracy.
You cannot change the return on owning, investing and creating capital and assume nobody changes their behaviour. Yet that’s effectively what these wealth-tax calculations do. Tot up the wealth, apply a tax rate and voila: billions for the Treasury.
Except the bloke you’re planning to tax has just bought a one-way ticket to Athens. That is where the politics and economics of envy becomes expensive.
Rokos paid an estimated £330m in UK taxes last year. Greece offers wealthy foreign residents a much more attractive flat-tax regime of €100,000 per year, plus a minimum €500,000 qualifying investment in Greece. Meanwhile Britain is discussing taxing wealth more heavily.
Meanwhile, he is moving to Greece. Which bit of this is difficult?
Those like Rokos, and others considerably less wealthy, don’t wait for new taxes to be announced. The discussion itself changes their behaviour. If you’re wealthy and listening to politicians and campaigners compete over how much more of your money government should take, why wait around?
That was Rand’s point. Her productive class eventually gets fed up with being exploited and treated simultaneously as society’s villains and its cash machine. In the novel they disappear – withdrawing their talent. In modern Britain they change tax residency.
There is a strain of politics that would apparently prefer fewer billionaires paying no British tax to more billionaires paying tens or hundreds of millions each. That may satisfy someone’s idea of equality. It doesn’t do much for the Exchequer.
Britain already taxes income, profits, dividends, capital gains, property and inheritances. The result? We currently have a tax burden of a magnitude not seen since the second world war.
So, here’s a novel idea, let’s just create more wealth. Attract capital rather than repel it. Make Britain somewhere entrepreneurs want to build businesses and investors want to put their money. Not for the first time, we need the adult’s back in charge.
Damian Pudner is an economist and director of the Great British Think Tank