Foreign News: The Rich Fiddlers

If declared annual income was a guide, Britain was down to 36 millionaires. Remnants of a body 6,560 strong in 1939, this dwindling band had lost 24 members in a year, the Inland Revenue Board reported last week. The estimate is based on the number who had incomes of more than £6,000 ($16,800) a year after taxes. In Britain that means a man must have £1,000,000 invested at roughly 5½—or earn more than £56,000 ($156,800) in salary.

The figure of 36 millionaires is a somewhat misleading statistic. Thousands of Britons still live in a style many a highly paid U.S. executive might envy. They maintain elegant town houses in London and comfortable country estates staffed with servants, drive Bentleys or have themselves driven in Rolls-Royces (price: up to $20,000), buy their cutaways in Savile Row ($140), dress their wives in Hartnell gowns ($550 each), bring their daughters out in sumptuous balls at the Dorchester during the London season ($3,000). Glossy magazines are stuffed with hunts in full cry, yachts in full sail, garden parties in full fig. How is it done on less than $16,800 a year?

Said an Inland Revenue man succinctly: "Capital gains and expense accounts." Capital gains, whether they come from stocks, real-estate deals, or bets on the Derby, are untaxed in heavily taxed Britain. One financier recently made £200,000 free and clear in three months in a foray into Savoy Hotel stock. The expense-account economy has been brought to a fine degree of urbane perfection. Firms buy their executives limousines with money that would otherwise go to the government. The country house is almost invariably a "farm" which regularly loses deductible money every year.

"Nowadays everybody fiddles," admitted an Inland Revenue man. It was about the only way to get one's supper at crowded places like Les Ambassadeurs (bill for two: $35), or to make one's appearance in the Royal Enclosure at Ascot (including a new dress each day, de rigueur for one's wife: $1,400 for the week).