Amusing discussion with Charlie from Pimlico Plumbers on Daily Politics show on BBC2.
His claim was because he pays more tax there's less money in the business. That can only be because he is paying himself more gross pay to maintain his net pau despite the tax increase.
I am sure none of his staff are on that deal when tax changes take place. But what we do now know is that this camapaign is all about maintaining the take home pay of the very well off, and nothing else, as I predicted.
Oh, and note: if they are paying themselves more the tax take will be even higher!
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
But of course they have no problems in giving their employees pay rises that are less than the increases in prices they charge on the basis that improves efficiency – and their employees being a different sub species cannot be incentivised to perform better by being offered higher take home pay.
I wonder how many of them realise that many of their employees actaully experience marginal tax rates in excess of 50% when account is taken of the now increased withdrawal of tax credits which I daresay they think is a good thing.
All tax credits should be withdrawn and the minimum wage raised to a living wage, with laws put in place that calculate the living wage on a yearly and regional basis.
Sure some companies would go bump, hey thats the market, but new companies with different pay structures would come along to the benefit of their employees.
Then these directors can pay less tax as they no longer need to support others paying their employees wages for them so they can take home a big, fat, pay check.
I’d go further and say that no tax should be levied on income up to the living wage (which could also factor in things like extra costs arising from dependents and disabilities). Corporations are currently benefitiaries of a tax scheme that makes allowances for legitimate business expenses (i.e. they are taxed on gross profit, not revenue). Why shouldn’t workers be afforded similar privileges? The £10,000 threshold is an enfeebled half-measure, that barely begins to redress some of the worst imbalances between how we tax income/labour, and how we tax gains/capital.
Then these directors can pay less tax as they no longer need to support others paying their employees wages for them so they can take home a big, fat, pay check.
Such, and similar measures, may well lessen the need to redistribute wealth for a livable and sustainable social settlement. But expect the monied classes to fight these sorts of measures tooth and nail, and (short of a series of highly unlikely epiphanies within the ranks of the Cameronites and/or Cleggites) expect ‘our’ ‘elected’ representatives to cave almost immediately. 🙁
“Sure some companies would go bump, hey thats the market, but new companies with different pay structures would come along to the benefit of their employees.”
It is also their employees livelihood as well – you just cannot mess around with peoples’ lives by making such dramatic one off changes based on ideology.
I agree – It is why I always argue for transitional change
I would not say the change would be ideological, this is not about wealth distribution. Its about a proper days pay for a proper days work. A simple transaction.
A few years ago the company I worked for could no longer employ me, they got rid of me to save cash, I obviously was not producing for them anymore after that and they went bump. This was a small company and I was 50% of staff and probably 75% of income and a below nat average wage. My work pretty much payed for 3 full time people.
If you cannot afford to hire someone and pay them enough to live off ( at least ) then you should not be employing people. I would love to employ more but cannot afford to ( do need 1 extra member of staff, having no luck finding them )
Ideological is taking money from rich to give to poor.
Ideological is giving money to rich to employ poor.
Ideological is giving money to a person because the company they work for won’t pay them enough to live.
As an employer I understand having a happy staff, not worrying about income and who are focused on helping company succeed is the correct way. Pay rises and bonuses come from this dedication.
But I am afraid macro economics is not the same as micro economics
That is where your logic fails
I called that “entrepreneur” out a few months back when he did a spot on the BBC. I think some people just think that 1) I run a business, 2) businesses are good for the country, and 3) tax is bad for my back pocket. Therefore higher taxes is bad for the country, always, at all times. Genuine entrepreneurs pay themselves out of dividends – which are taxed at – what now?
You have consistently argued that entrepreneurs are not motivated by tax, which is something that Charlie the plumber has instantly highlighted as being wrong.
But, as you point out, more tax is taken overall by him increasing his salary to compensate so the 50% rate works.
I dont’t understand the fixation with the 50% rate from the Tories. Even if it is largely symbolic, it is surely a good thing to show that the rich are “doing their bit”.
Charlie was not motivated by tax when he began
Nor was he put off
He wanted to be his own boss
And a company offered him low tax rates
Now he’s wealthy and protecting that status
That’s a post entrepreneurial phase
Let’s not confuse them. When businesses move into that defensive mode they’ve ceased to be risk taking. Everything he says suggests he’s got to that point
And remember – I once advised hundreds of companies
JJ
I think that whilst showing that the “Rich are doing their bit” is good, when it comes to actually “doing their bit” , the view changes…
“I am sure none of his staff are on that deal when tax changes take place. But what we do now know is that this camapaign is all about maintaining the take home pay of the very well off, and nothing else, as I predicted.”
Well, it was always a very thinly vielded campaign. Anyone with an ounce of nouse saw through it from the get gp. If you’re prime gripe is that high taxes stifle economic growth and investment, you’d be focusing on taxes which effect low earners (who tend to spend extra cash, rather than save it or ‘invest’ it in ‘store of wealth’ assets) and corporation and capital gains taxes respectively. You’d have a hard time justifying attacks on the later two (which are already pretty low cf. income tax) especially if internal ‘investment’ is the mode of investment proposed (as I understand it, if a company expands through such internal investment, most such ‘investments’ in labour and assets would qualify for relief on corporation tax and VAT anyway. Or am I wrong here?).
It would be interesting to see if the Tories jump on this (I’ve avoided the MSM this morning/afternoon), as I suspect the back bench will, or whether the Liberal Democrats, Labour and wider society will reign them in.
As someone who will (probably) end up in the 50% bracket next year I have three things to say:
1) Im not against the 50% bracket, nor likely to work less hard because of it
2) I don’t mind paying taxes, but I’d like to feel more comfortable the money isnt being frittered away. The amount of wasted money is quite offensive.
3) Stop acting like self-righteous prigs, the more I read comments like those above the more inclined I am to move my position on 1) or 2). And Im young enough and in the right industry to move to Asia/Australasia where the tax rates are significantly less penal.
People acting in their own self interests is not a flaw of capitalism/democracy its a feature. Please stop whining about it.
Let me know when you go
Because candidly I don’t believe you will
But in case you do – please don’t think we’ll miss you – greed never built a successful economy
First, even if I did you clearly would not change your mind.
Second, you are patently wrong: greed/self-interest built every sucessful economy, Adam Smith and the inivisble had – etc. etc.
Now clearly there is a balance to be struck between the self-interests that drive capitalism, and the rest of society, As I stated from the outset, Im generally comfortable knowing that I am fortunate enough to fall into higher tax brackets. But I’m also tired of self-righteous prigs who are happy to take my money with one hand and slap me with the other.
Go and re- read Adam Smith – and his Moral Philosophy
Self righteous prigs? Oh dear. Why are insults so often thrown at a mirror?
Once again my maxim is proven: a little bit of economics is a dangerous thing.
“People acting in their own self interests is not a flaw of capitalism/democracy its a feature.”
Complete and utter bunkum – both are quite capable of handling those with altruistic motives and it is just such motivation that proably acts to their stability. Human beings are gifted with a thing called conscience and we are meant to use it. I think you will also find that quite a lot of the most sucessful capitalists in history often used their wealth for quite different purposes other than self interest.
Richard – did you see what Alastair Heath, the editor of the pro-City City Am freesheet said in his editorial today is support of cutting taxes for thr rich? A nice piece of distorted stats, I think from the Taxpayers Alliance.
“The next argument is that those on high incomes don’t pay their fair share. The evidence shows this to be untrue, except, of course, if you are a Marxist who believes in entirely eliminating inequality and seizing all of the top earners’ income. The top one per cent of taxpayers (who roughly coincide with 50p tax rate payers on £150k or more) are expected to have earned 12.6 per cent of total income in 2011-12, down from 13.4 per cent at the height of the bubble; they will have paid a massive 27.7 per cent of all income tax, a new record. Without the top one per cent’s tax payments, the welfare state would collapse and the UK would go bankrupt; they pay for a disproportionate chunk of public services.
It’s true they pay that
But then they have the capacity to pay
And the real question is – why do they command so much income and even more wealth?
Heath does not address that
Indeed, do the top 1% pay more AS A SHARE OF THEIR INCOME in tax than those at median levels of income especially as we know that much of their income does not come from work but from capital gains etc?
Overall, less.We know that
My knowledge of tax law is microscopic in comparison to contributors to this conversation. Illuminating though it has been, as an anti tax evasion / avoidance / cuts activist I can’t help feeling this issue attacks a group who happen to sit towards the top end of the 99% from those who deny the country upto £1.2bn through benefit fraud. Sure , £5bn is no trifling sum but it’s the big players , the Trans National Corporations , financial institutions and corporate elite who we need to concentrate on. Addressing their use of tax havens and their immoral “legal” avoidance schemes is where the big money is stashed. Eradicate these and we can , with much justification expect those liable to pay the 50p tax rate to fall into line. Wealth inequality affects us all, just in different ways and to varying degrees.
Agreed!
It would be nice if we could have a constructive debate and be a little less dogmatic about our views of the ‘other side’. That said, I regularly see Richard making assumptions then declaring them as facts.
As one of the campaigners against the 50p rate I’m happy to declare:
1) I don’t fall into the 50p bracket
2)I’ve always willingly declared and paid all the taxes that I owe
3)In my conversations with the campaigners against the tax I’ve never seen any indication that those are simply trying to protect their personal positions – the argument has always been:
a)whatever your ideology it makes no sense to disincentivise people from coming to Britain to create businesses / jobs by having one of the worlds highest marginal tax rates
b)it would be great if we could find ways of increasing the tax free rate for lower income earners
c)whilst we are in a period of austerity they are happy to contribute more (yes – that’s right!) but in order for this not to deter new business there should be a sunset clause on the 50p rate
Personally I’d love to see better tax collection and more tax collectors, country by country reporting, ways of stopping UK businesses from registering offshore etc etc
My advice to you Richard is actually engage in a proper dialogue with those in the campaign – I think you’ll be surprised by what you discover. Stop making assumptions about people’s motivations and more importantly come up with a few constructive ideas of your own.
Simply ramping up the tax to pay for a growing population of unemployed is a soolution with a finite and rather dismal end.
So I need to have a dialogue with those who won’t tell me who funds them? Why should I do that?
And a dialogue with those like Charlie Mullins whose argument showed that the only reason why there’s less in their company is because they’re paying themselves more – and incidentally must be paying more tax not less in the process? I’m meant to engage with logic of that poverty and greed of that magnitude?
And I’m meant to engage with you when you don’t even seem to realise that people coming to the UK have seven years at a minimum where they can avoid large amounts of UK tax liability – and can often do so just about for e ever? It’s called the domicile rule if you didn’t kn ow it – which you so obviously don’t, and in the process show how little you know about this issue?
And to engage with people who fabricate tax rates – no one pays at 58%?
Or who don’t realise the sunset clause for real entrepreneurs is massively generous CGT relief?
And who don’t acknowledge that they have all the tax breaks they need for their businesses through limited companies?
I am meant to engage with a campaign so ill informed it can’t even manage to spread a thin veneer of logic over the greed that drives it?
Oh, come on. Please pull the other one.
And as for the suggestion I should come up with a few ideas of my own, read the 2.5 million words on this blog. You’ll find more that has shaped the tax debate in the UK and worldwide in the last few years than just about anywhere else you could look.
So stop being patronising Tony. Because candidly you’re running a lousy campaign based on greed and not fact – and the world can see through you instantly.