Treasury Secretary Janet Yellen says almost all tax-delinquent millionaires are paying their dues – while a widespread campaign related to beneficial ownership continues. What are the ramifications for the Asia Pacific region? 

The script is an entirely unfamiliar one. The wealthy get called out for the taxes in the US and not one of them threatens to leave for greener pastures abroad.

By contrast, as finews.com recently reported, a planned Swiss national referendum to impose a first-time inheritance and gift tax has prompted a cascade of indignation by bankers, and deep uncertainty among the UHNW set, particularly entrepreneurs.

London Exodus

Meanwhile, in the UK, the reform of the non-dom regime, among other factors, seems to be prompting an exodus of the wealthy from London, as Henley & Partners maintains.

The short of it. Governments aren’t generally able to tax the rich and have them go quietly into the night, as «Taxman», the 1966 Beatles song, more or less poignantly exemplifies.

Paying Up

The US, for some reason, appears to have managed just that feat, at least for now, according to comments by the Secretary of the Treasury Janet Yellen on Friday released on YouTube.

She maintained that nearly 80 percent of the 1,600 millionaires on record with delinquent tax debt had paid up and that more than $1.1 billion has now been recovered.

Not Same Thing

But maybe we are not comparing apples with apples, as the American Internal Revenue Service (IRS) was collecting tax the wealthy had already owed and not imposing a new progressive tax – or threatening an entirely different and unexpected levy in a place where many were happy to base their family offices, as in Switzerland.

Still, the silence is deafening for an initiative that, according to a more extensive statement by the Treasury, has pursued 125,000 «high income, high-wealth» taxpayers who had not filed taxes since 2017.

Going Further

But they did not stop there. The IRS has launched audits of the 76 largest partnerships in the US, stretching from hedge funds and law firms.

Moreover, it is closing a major tax loophole exploited by complex partnerships and cracking down on the abuse of corporate jets for personal travel while launching audits of the 60 largest corporate taxpayers.

Identifying Information

It is doing all this while continuing its extensive nationwide campaign on the new beneficial ownership requirements, as a FinCen announcement, also on Friday, indicates.

As part of that, it has conducted over 170 events that review the requirements and exemptions surrounding identifying information about individuals who own companies directly or indirectly. For the high net worth, much of their assets, wealth, real estate, and investments, are held in entities – so they won’t be able to entirely escape from this either.

Animal Spirits Redux

It is a real mystery why all this is not generating a larger outcry although it may have something to do with geopolitics - or the upcoming US elections, with many believing they will have to weather all this for a few months longer until a certain ex-President releases so-called «animal spirits» again.

Or this all might be due to the overhauled OECD tax regime, with many simply acquiescing to a new world of generally higher tax, as Bermuda has, something finews.asia recently discussed - although that seems rather unlikely.

Lofty Perch

The truth is that the high net worth have good reason to feel that the world is out to get them, particularly as many are not on as quite a lofty financial perch as the ultra-high net worth, who can hire the reams of accountants and tax advisors.

Many governments in the world are going to look at what the US is doing and try to figure out why there is so little noise around it all.

Example for China

A clear example of that would be China, which is leading the way internationally when it comes to millionaire outflows in 2024, something finews.asia also recently reported on.

Although they are clear geopolitical opponents of the US, the two countries are similar in that both consider their citizens liable for tax on their worldwide income. 

No Fuss

Like other countries, the state taxation ministry on the mainland is probably looking at all the goings on in the US and studying them closely to figure out how they are managing to turn what was once a familiar script into such an unfamiliar exercise in understated success and effectiveness.

Still, in the long-term, the influx and outflows of the affluent around the world are likely to indicate who has the last word on the matter.