Inheritance and Entrepreneurship Fail ¬´ Left Outside.
More comment on why the Taxpayer’s Alliance have bizarrely linked Inheritance Tax rates and entrepreneurship.
Best line:
Anyone who knows any Entrepreneurs or the literature on Entrepreneurship in general, will know that analysis of future inheritance tax rates rarely figure in the list of reasons businesses are started. You don’t consider your death before you have even lived.
I know that’s true.
The Taxpayer’s Alliance has issued a report on Tax and Entrepreneurship. There’s a great analysis of it at The Other Taxpayer’s Alliance. As they point out, the TPA loves a dubious formula or two to help its case, in this case:
(1-t1){[1+r(1-t2)(1-t3)]^T}(1-t4)
The TPA claim this is used to calculate
the marginal tax rate on income that is earned, saved and invested in a company and then passed on as an inheritance", where "t1 is the income tax rate, t2 is the corporate tax rate and t3 is the capital gains tax rate and t4 is the inheritance tax rate and r is the pre-tax return on an investment in a company.
Maybe, but I’ll deal with that below. The Other Taxpayer’s Alliance has a much better summary of it:
tpa=bs2
I call this a modern classic, but let’s for a moment consider the TPA version. As they say, this calculates
The top marginal tax rate on income earned, saved, invested in a company and then passed on to children.
Oh dear guys: assuming that you really are creating an entrepreneurial trading company the rate of Inheritance Tax is not the 40% you claim (which is a massive assumption in its own right), but 0%. You see – there is no tax on the gift of shares in an unquoted entrepreneurial company. Which means that the top rate of tax is not the 90% + that the TPA claims – but a figure much lower – and lower still when other double counts such as credits for corporation tax paid against income tax are taken into account (as they fail to do)– which does make things look very different.
It really does seem the TPA need the services of a good accountant. Their so called experts would miserably fail any tax test if this is the level of their competence.
And they also, as Adam Lent points out at the TUC, need to consider their positioning:
There’s a logical error here, isn’t there?
- The Taxpayers’ Alliance claims it “is committed to forcing politicians to listen to ordinary taxpayers”.
- The Taxpayers’ Alliance released a pamphlet today claiming that the 50p tax rate for those earning over £150,000 introduced in the last Budget will seriously damage the economy and is grossly unfair to the wealthy.
- Polls consistently found (PDF) that a large majority of ordinary taxpayers support the 50p rate and only a small minority oppose it (57% for and only 22% against in a Populus poll, for example) even after the very negative reaction of the press to the measure.So which “ordinary taxpayers” do the TPA represent then who share their view that the 50p rate is a terrible error?
Clearly not the majority.
Maybe they actually represent the minority of taxpayers so blinded by their hatred of the ‚Äòevils’ of tax, they haven’t noticed that the biggest financial crisis in decades has slightly changed the imperatives we face? Or maybe it’s the even tinier minority who will actually be affected by the 50p tax rate. Whichever, today’s lamentable report from the TPA should finally put to bed any pretence that they speak for the majority of ordinary taxpayers.
Which does, I guess, bring us back to:
tpa=bs2
Which I couldn’t resist repeating.
I have had a great email from a person who reads this blog, who said:
i mentioned to you that I am concerned that the BBC frequently uses interviews with representatives of The Tax Payers Alliance without indicating whose views they represent. I am in favour of putting forward various viewpoints but I like to have some idea of who is funding organisations and what their purpose might be. When I see or hear such an interview, I often ring the BBC asking if they could indicate who funds The Tax Payers Alliance and who they represent. Listeners comments are logged and passed to the programme makers/editors. The number to ring is 03700 100 2222.
Alternatively (I have not done this) I understand it is possible to leave a message on the BBC message board which can be found at http://www.bbc.co.uk/messageboards/newguide/messageboards_a-z.shtml.
Give it a go! Let’s challenge them time and time again.
There is no doubt that the Taxpayer’s Alliance does not represent taxpayers – so why does the BBC give them airspace?
Accountancy Age comments on a price I saw in the Telegraph yesterday, saying:
HM Revenue and Customs has been criticised for guidance it has released to assist homosexual and transgender taxpayers.
The 20-page document has been labelled by critics an unnecessary use of taxpayers’ money. It advises people in civil partnerships about their tax allowance and inheritance tax thresholds, according to The Telegraph.
It also gives advice to transgender people about claiming pensions under their old or new gender.
All of which is pretty important to those involved, and is information they need. Except of course, no one who has ever read the Torygraph has ever, of course, met a gay or lesbian person, let alone someone who has undergone a sex change. Nor it seems have my old friends the so-called TaxPayer’s Alliance
Matthew Elliott, chief executive of the pressure group TaxPayers’ Alliance, said: ‘HMRC is meant to produce simple, clear guidance for everyone, not spend extra money going out of their way to target particular minorities.’
I guess the TPA have never seen the plethora of guides HMRC produce, many of them quite good (and of course, there are exceptions, I know). So what they show is this:
a) they don’t know what they’re talking about
b) they’re not interested in people paying the right amount of tax
c) they don’t like minorities.
I guess that sums up the state of play quite well as far as the TPA is concerned.
For the real story visit The Other Taxpayer’s Alliance – altogether better.
The Other TaxPayers’ Alliance | Transparency: the TaxPayers’ Alliance must practise what it preaches.
It’s simply not true that all political organisations are secretive about their funding. Most declare their income and expenditure, and some give a break-down of income sources, including donors. The TPA does neither. It publishes abbreviated accounts which means income and expenditure are withheld. The last time it published full accounts was in 2006, when it recorded an income of £130,000. But the current organisation has ten full-time staff across two offices, which suggests either its income has jumped substantially or it is loaded with debt.
The centre-left campaign group, Compass, by contrast, publishes a great deal in its annual report (which can be readily downloaded from its publications page) – and goes beyond that which is statutorily required. Thus you can learn how much was earned through members’ subscriptions, members’ donations, grants from various sources, etc, and how that money was spent. And – “in the interests of transparency” – all donors who gave £5,000 or more are listed, along with the amount donated.
If Compass can do it, then the TaxPayers’ Alliance – which claims to stand for transparency and probity- can do it too. No, it is not legally obliged to do so, but the TPA should practise what it preaches.
The Other TaxPayers’ Alliance | Quote generator.
I have a feeling many commentators on this blog use something like this.
I love it!
And it rings so true.
| © 2005 - 2011 Tax Research UK. Some rights reserved.  |
Suffusion theme by Sayontan Sinha |
