Tax Freedom Day for some

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The Adam Smith Institute copies a US right wing think tank in publishing a ‘tax freedom day’ for the UK. They claim it is on 2nd June.

But that’s a very selective view of ‘tax freedom day’. That happens to be the day when, they say, a taxpayer on average income, including indirect taxes, local taxes and National Insurance contributions, has paid all their taxes for the year, their remaining earnings being theirs to spend as they then will.

But there’s a major problem in that calculation. Not everyone pays tax at the rate a person on average earnings pays. Far from it in fact.

One third of the UK’s largest companies do not pay tax. For them tax freedom day arrived on the stroke of midnight, this morning.

There are millions of offshore companies in the world, many of them used to fraudulently evade tax. They pay no tax on their profits. For them tax freedom day also arrived on the stroke of midnight, this morning.

In 2006 Grant Thornton calculated that the 54 billionaires in the UK paid tax at an average rate of 0.14%. For them tax freedom day arrives at about 12.15pm today.

The message is clear: tax freedom day for some arrives on the first day of the year. For the poorest in our society it arrives last. They have the highest tax burden of all – at almost 50% of their income. Their tax freedom day is at the end of June.

So let’s stop the nonsense of discussing tax freedom day, and let’s ask the real question, given that the wealthiest are now, without doubt, the greatest beneficiary of government largesse as the economic bail out proceeds. Let’s ask instead about the justice in the way tax liabilities are distributed, and make sure that 2009 is the year that progressive taxation is put firmly back on the agenda. Nothing else s acceptable in the current economic climate.