What the queen will pay

February 16, 1993

During the Great Depression, when millions of people were homeless and despairing, the emotional problems of the very rich in fiction and fantasy entertained them. Not so in recession-plagued Britain today, where people are fed up with their real life fantasy, the royal family, its outlandish extravagance and its failed personal relationships. Polls suggest the British people do not want the Royal Family to vanish, they want it to shape up.

This led Queen Elizabeth not only to call 1992 a "horrible" year but to do something about it. She will pay taxes starting next year. This is not unprecedented. The most popular monarch in modern British history, Queen Victoria, did, too.

The heart of the agreement is the distinction between her personal wealth and the Crown's. The queen will pay income tax, capital gains tax and inheritance tax on her personal estate, the extent of which is not known. It includes two of her favorite homes, Balmoral Castle in Scotland and Sandringham in England. One can imagine her royal heir about two generations hence having to unload one or both under this burden.

For those American rich who quiver at paying a percent more, a look at the queen's tax rate is instructive. She will pay 25 percent on the first $28,400 of taxable income and 40 percent on everything above. Ouch. If this were on everything, the monarchy as Britons know it would die out. But the catch is what will not be taxed, what belongs to the Crown and not its wearer, what she needs to do her job.

Untaxed are six royal palaces, in three of which the queen lives and two of which her kin do. Untaxed are the royal yacht, jet, train, the Crown Jewels broadly defined and the royal art collection. Under these conditions, a pauper could inherit the throne and do the job. The Duchy of Lancaster (an investment trust) will not be taxed except any income that reaches the queen. The Prince of Wales will pay income tax on his upkeep from the Duchy of Cornwall, another investment trust.

Will all that do the trick? First reactions from the British press are that it will not. Some British tabloids bark like a dog that can smell human fear. Some are controlled by Rupert Murdoch, an Australian who lives in New York and brings republican and anti-English instincts to bear. But once the queen starts paying taxes, just like a commoner, sentiments could change.

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