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There are quite a lot of Wizarding families who, I assume, live in places inaccessible/invisible to Muggles. However, there are examples of families who live among the Muggles, so their neighbors know about their existence, they just think they are a bit eccentric. However, if they openly live in a house on a Muggle street, it means that their address is registered, their house is known to the Muggle government, and they have to pay property taxes. They would probably also require some kind of Muggle ID documents.

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I wonder why the downvote? I have often wondered this myself. –  Dave Johnson Apr 14 at 13:56
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@DaveJohnson I didn't downvote, but there is a point where the amount of thread pulling becomes ridiculous and the whole thing unravels. The whole "Wizards living in secret among Muggles" premise really doesn't stand up to close scrutiny, precisely because of issues like this. I can't imagine JKR considered these kind of issues at all (probably because she didn't expect people like us to obsess over the minor details of the books quite so much as we do). –  Anthony Grist Apr 14 at 14:09
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I'm sorry if I sounded too nitpicky, I actually enjoyed the books. It's just that I'm incurably interested in the in-universe explanations of possibly out-of-universe design choices of fictional universes. –  vsz Apr 14 at 14:55
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@Anthony Grist: By the time she wrote the 3rd or 4th book, I think JKR had a very good idea that a cadre of obsessive Potterverse fans existed (from her fan mail if nothing else). How much she cared is a separate question. ;-) –  Royal Canadian Bandit Apr 14 at 15:01
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When you say "property taxes" do you mean council tax? "Property taxes" made me think of some kind of inheritance tax. –  starsplusplus Apr 15 at 12:39

5 Answers 5

up vote 25 down vote accepted

Judging by the fact that said Muggle-meshing Wizard families aren't allowed to mind-control Muggles willy-nilly due to International Statute of Secrecy; AND would be carted off to jail if they avoided their taxes the same way Daywalking Vampires do; it stands to reason that the wizards who are known to Muggle world pay taxes because we never hear of Wizarding families going to jail.

Also, out of universe, JKR is very pro-taxation and anti-rich. So if anyone cheated on their taxes, it'd be the Evil Rich Malfoys and co... and we all know that Malfoys wouldn't be caught dead living in a Muggle world.

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This might be also a good answer to the question why there is a need for a Wizard-Muggle money exchange at Gringotts: scifi.stackexchange.com/questions/15518/… –  vsz Apr 15 at 6:07
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I think it's a stretch to suggest Rowling is "anti-rich" just because she supports taxation, social justice and income equality. –  Matt Thrower Apr 15 at 11:18
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@MattThrower - leaving aside her own writing; the whole "income inequality" is exactly "anti-rich". Nobody ever got a better life in a society that equalized income. You can make everyone equally poor. Easily. You can't make everyone equally rich. And social "justice" implies that those of us who have more money have somehow gotten it in "unjust" ways. Very Marxist thinking... but doesn't help your case of disavowing "anti-rich" thing. –  DVK Apr 15 at 12:56
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@DVK Predictably, I disagree wholeheartedly with your assertions. But this is not a political site so we better leave it there or take it elsewhere. However since it isn't a political site, I stand by my suggestion that in the spirit of impartial, fact-based answering, your otherwise excellent answer could be improved by removing "anti-rich". –  Matt Thrower Apr 15 at 13:25
    
Anyone thrown in jail could just apparate out anyway, right? –  DLeh Aug 13 at 15:30

Well, if they're living among the muggles, in a house that is plainly visible and accounted for, then it would make sense that they would have to pay property taxes. Also they would probably be a target of investigation by HRMC or something like that, as they would have no official income, yet they would still somehow have money to lead comfortable life.

But more importantly, this leads to a bigger question: Should wizards pay income taxes? And if so to which government? Consider a business owner in Diagon Alley. He's definitely a UK resident, but he's not really a part of UK economy, nor he gains much benefit from services offered by UK government, for the taxes he would pay. On the other hand there is the Ministry of Magic, that also needs money to operate (if nothing else, it has to pay it's employees). I would guess that wizards pay taxes to MoM, which would make sense. Ministry could then take care of the muggle taxes, using a portion of taxes collected from the wizards.

Good solution would be to register all wizards who live among muggles as employees of one fictitious company. The Minister of Magic could then agree with the muggle Prime Minister on the portion of taxes wizarding population owes to the muggle government (considering how much they benefit from the public infrastructure), and pay it through the fictitious income of the fictitious company. "Muggle known" wizards would be covered as tax payers; and as there is probably not a whole lot of them, the fraction of wizard taxes used to cover them would not be large (there is more "secret" wizards, that still have to pay wizard taxes).

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Diagon Alley is probably an exception, as it is completely hidden from the Muggle world. The problem is with Wizards living in houses plainly visible to Muggles. –  vsz Apr 15 at 6:05
    
They probably don't need to register a fictitious company. The Ministry of Magic probably has a tax branch, which collects all the taxes of magic users, and files their taxes with the traditional UK government on their behalf. It is known that the Prime Minster and the MoM have conversations and agreements, and a lot of it is probably about money. Someone like Hermione probably has a more difficult time - possibly having to pay both Magic tax and UK tax, and it probably involves at least three pieces of paperwork both muggle and magical. –  Foo Barrigno Apr 15 at 11:19
    
@vsz Diagon Alley isn't completely hidden, as muggle-borns will exchange muggle money there, at least while still living with their muggle parents. –  Xantec Apr 15 at 13:17

My guess is that they just wave a magic wand over a blank sheet of paper and mail it to the IRS. Or the British equivalent. It worked for Dumbledore in Book 6.

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I could see a couple options, depending on the interaction with the person or family in questions. We know that Wizards tend to squeeze their urban centers in between existing centers (platform 9 3/4, the The Blacks' residence in Order of the Phoenix in a town home in between other homes), so those may or may not "exist" on the books of Muggle census and real estate information. Are we looking at a Perception Filter/Someone-Elses-Problem field, where it actually exists but no one cares? Or are they literally creating space where there was not some? That is a question that is never really answered, other then the larger-on-inside aspects of Hermione's bag or the pup tent that shows up every so often in book 4 onward.

The only other option we see is in the Lovegoods, Weasleys & Malfoys, that have family estates of various sizes in what seems to be the middle of nowhere. They could be listed and owned privated estates, where the owners simply pay property taxes, or they could simply be in public land and fall into the Perception Filter category.

Assumably those that have some interaction with the Muggle world would pay taxes. But with the European wizards consisting a veil of secrecy and illusion for everyone other than the Prime Minister, we won't know unless there's supplemental information (as opposed to American Wizards, which are in the Yellow Pages under "Wizard")

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The one in the Yellow Pages under "Wizard" is an entirely different Harry. :) –  Martha Apr 14 at 21:59
    
Let's be honest - that's about as American as you would expect. In my headcanon, Harry Potter, Harry Dresden, and Anton Gorodetsky are all in the same universe. –  Vogie Apr 14 at 22:03

Non-muggles may well have paid muggle taxes, but then this might've been refunded to them, depending on their usage of muggle public services. After all the muggle government was both aware of, and had formal relations with the ministry of magic didn't they?

So what someone would've paid in pounds, they'd have got as tax refunds in sickles and galleons.

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-1 for not understanding real world. Since when does the government refund taxes on things you don't use? –  DVK Apr 15 at 12:52

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