The great march of the millionaires

Today’s top stories

• Russia said it had evacuated more than 133,000 people from border areas as Ukraine pressed on with its surprise incursion and President Vladimir Putin warned the conflict could spread. Here’s how Ukraine did it.

• FT research showed that 40 per cent of the biggest US manufacturing investments announced in the first year of Joe Biden’s flagship industrial and climate policies have been delayed or paused because of market conditions, slowing demand, and lack of policy certainty.

• Indian billionaire Sunil Bharti Mittal’s conglomerate has agreed to buy a 24.5 per cent stake in BT Group from Patrick Drahi’s Altice, saying the investment was a vote of confidence in the telecoms group and the UK.

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Good evening.

It has never been so easy for the super-rich to relocate. But what does the great millionaire migration mean for the countries they leave or adopt, and how should governments and international bodies respond?

As today’s Big Read details, low-tax countries are duking it out to lure Europe’s wealthy using sweeteners as well as citizenships or paths to residency. Meanwhile at global level, the G20 is discussing whether a worldwide minimum tax on billionaires should be introduced, similar to the OECD’s effort to set a global minimum corporate tax rate.

Relocation decisions are of course not just about tax rates. Security, education, business infrastructure, and community are also important, as is political stability. In France, the super-rich have started to make contingency plans should a leftwing government reinstate a wealth tax, while Italy last week doubled its annual flat tax on rich foreigners who have been blamed for rising property prices in cities such as Milan.

In the UK, the new Labour government is reforming the “non-dom” system — the world’s longest-lasting tax-privileged regime, dating back two centuries. Labour has also promised to close the “carried interest” loophole widely used by private equity partners, many of whom are also non-doms. (You can get a flavour of what FT readers think about the proposals here).

The migration of millionaires has also been accelerated by changes in the international financial landscape. The end of banking secrecy and improved information exchange have put limits on the ability of the super-rich to shelter their wealth abroad, meaning that if they don’t want to be taxed in a country, they have to leave it.

UBS forecasts the UK will lose more millionaires than any other country by 2028. Some will be replaced internally: new data today shows chief executives’ pay at FTSE 100 companies soaring as they push for similar payouts to their US counterparts.

Across the Atlantic meanwhile, the US Supreme Court has disappointed campaigners for and against a wealth tax on the mega-rich by sidestepping a question on whether such a levy would be constitutional.

The G20’s proposals for a global minimum tax on the world’s 3,000 billionaires could raise up to $250bn a year even if it was not adopted by every country, according to a report it commissioned, which says their current effective tax rate is equivalent to just 0.3 per cent of their wealth.

FT commentator Martin Sandbu says the current situation, where the ultra-rich are taxed less than normal citizens, is unacceptable.

The two basic principles of good taxation, he says, are that taxes, to be efficient, should be broad, uniform and without exceptions, and that, to be fair, those with the greatest ability to pay should shoulder the greatest burden. The ultra-rich should pay at least as much if not more than others in tax, as a share both of their wealth and of the income their wealth can reasonably be expected to be generating, he argues.

Need to know: UK and Europe economy

Bank of England policymaker Catherine Mann said UK wage growth was still a concern for inflation, despite the main rate remaining at the bank’s 2 per cent target in June.

Dozens of UK start-ups helped by taxpayer-funded loans in the pandemic face closure, adding to a growing pile of bad investments under the Future Fund scheme.

European gas traders are shunning Ukraine’s vast natural gas storage, following Russian attacks that drove up risks, depriving the war-torn country of scarce revenues. Kyiv has blamed delays in US aid for its widening $43bn deficit.

Need to know: Global economy

Democratic presidential contender Kamala Harris is leading rival Donald Trump on the economy, according to the latest FT Michigan Ross poll.

Rising US economic nationalism and in particular the possibility of protectionism “on steroids” under Donald Trump could undermine world trade, the head of the International Chamber of Shipping told the Financial Times. “When we last did this, it didn’t work . . . Trade wars lead to war.”

Pakistan’s military is backing Prime Minister Shehbaz Sharif’s painful reforms to try to secure a much-needed $7bn loan from the IMF to help avoid the country defaulting. The measures include strengthening tax collection and raising household energy tariffs by a fifth.

A fierce debate is brewing in Australia over a possible end to the 1988 ban on nuclear power. The government has targeted a 43 per cent in carbon emissions by 2030 and net zero emissions by 2050 but is currently very heavily dependent on coal for electricity.

Need to know: Business

Multinational groups have sounded the alarm about demand in China, as its economy slows, appetite diminishes for foreign brands and domestic competition intensifies.

Business travel spending is not set to return to pre-pandemic levels until 2027. One of the big changes in the “new normal” is a noticeable drop in one-day trips by bosses.

Read the story of how a multibillion-euro scandal brought Monte dei Paschi, the world’s oldest bank, and its home town of Siena in Italy, to their knees after more than 500 years of rich history.

Our series on the consequences of climate change on insurance continues with a look at how start-ups, legacy groups and policymakers are working out how to operate in areas of rising weather risks. Here’s how the City of London is preparing to adapt.

The World of Work

The summer outbreak of Covid has revived debates among HR departments about how sick an employee needs to be to take time off. Workers in the meantime have been left wondering if they should skip work, come in, or do something in between.

Co-working spaces have failed to engender the sense of community some of their founders intended. A new wave of services however allows like-minded businesses to “match” before they start sharing.

Some good news

US regulators have passed the first needle-free emergency treatment for allergic reactions such as anaphylaxis. The Neffy nasal spray from ARS Pharmaceuticals is seen as an alternative to injection devices such as EpiPen.