Richard Exell of the TUC, writing for Left Foot Forward, has produced some interesting stats based on yesterday's income data. One grabbed my attention, which was this chart:
Part of the earnings spike in April was bonuses. Now we can see why: it is very obvious that bankers' bonuses were delayed into April from last tax year. The explanation is an easy one: the tax rate was cut from 50% to 45% on 6 April. Those bonuses have now fallen back to a more 'normal' level.
Now given that the 50% tax rate only impacted those earning over £150,000 a year its easy to appreciate that the individual sums deferred were significant. This can only have happened with the banks' active cooperation as employers, of course.
The result is very clear evidence that the banks remain as committed to tax avoidance as ever.
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This is the ‘forestalling’ issue again. It is beyond disgust and more vacuuming of wealth from our communities. people seem not to care because scamming has become a normalised part of our culture and a neo-liberal’s badge of honour.
Is this sort of thing allowed under the law?
I am afraid so
So what is the rub then?
Tax avoidance is always legal
It is not always ethical
That’s the rub
ho hum….
Looking at one year in isolation doesn’t prove much. April might be the usual month for bonuses.
I’m not saying it is, nor that some deferment won’t have occurred but if the banks were ‘committed to tax avoidance’* and tax saving was the sole motive for timing why pay any at all in Jan, Feb or March or indeed any at all in 2012-13 as the fall in the top rate of tax was given plenty of advanced notice?
I’m sure if you look hard enough you could allege a tax-avoidance motive into just about every business decision. Doesn’t make it so.
*talking of which, perhaps you could estimate how much tax you think the banks might have saved by paying their employees a month late.
The pattern has not been seen in that way before
“The pattern has not been seen in that way before” – What sources did you refer to to support that statement?
And you didn’t deal with my other points.
If the banks were committed to tax avoidance, why pay any bonuses at all in Jan, Feb, March in particular but in 2012-13 at all? Even if the graph looks only at bonuses to staff paid at the 50%/45% rate, The EXTRA tax paid by paying bonuses in even the last 3 months of 2012-13 which could have been deferred to 2013-14 EXCEEDS the tax saved by those bonuses that were deferred (if indeed they actually were).
Also, of course, the banks in fact avoid not a single penny in tax by deferring the bonuses paid to their satff. It is their staff that would save tax.
If you had an employee who asked to be paid a bonus a week later than you had planned are you saying you wouldn’t do it?
We’re talking of bonuses here of an average of £143 here, not £140,000. Richard Excell refers to people receiving such bonuses as “the mega-rich”. £143? “Mega-rich”? Saving £3.70 in tax and that only if they’re paying tax at 45%, which doesn’t sound likely on a £143 bonus!
More tilting at windmills.
I think you might just misunderstand averages
All the rest falls apart as a result
“JPMorgan”
http://dealbook.nytimes.com/2013/04/03/judges-dismisses-dexia-claims-against-jpmorgan-chase/
I’m sure there’s a term for your debating technique.
Faced with a series of points you have no answer to;
1 – If banks are committed to tax avoidance why pay any bonuses at all in Jan, Feb, March?
2 – The banks save nothing in tax at all by deferring bonuses so accusing them of being motivated by tax avoidance is disingenuous
3 – You have no proof whatsoever whether staff receving bonuses are even affecetd by the 50%/45% tax rate cut
4 – You’re asked to name your source for your statement that this pattern of bonus payment has not been seen before
You choose instead to pick up on one point – that the bonuses are ‘average’ figures – and declare that I might not understand averages and therefore you have no need to reply to the other points.
Really, it’s quite pathetic to suggest I might not understand that these are average figures, of course I know they are. But even if the average was arrived at with only 1 banker in a hundred receiving them it’s still only a bonus of £14,000. Hardly ‘mega-rich’.
And it’s illuminating that when I suggested elsewhere that quintiles of income were a poor statistical indicator of how much tax the ‘most well off’ paid, you defended your position by saying “That’s what the figures show” but here where the figures work against you you decide they can’t be relied on in argument.
That’s the sort of debating mess you can get yourself into when you start with your answer and then decide how the facts and figures need to be bent into shape to fit it.
There used to be a least a thread of proper analysis and debate running through your blogs but that seems to have departed. Faced with any facts that don’t fit your view, you simply ignore them.
Thuis is ONS data
Please feel free to say I am wrong to seek to explain it if you wish
But respectfully, I think it’s your technique that’s in question
How else do you explain the aberration? Shall we start from there? I have set out my explanation. The TUC share it. Now, what do you think? So far I see nothing bar my explanation – with banks seeking to help staff avoid tax – that explains this
So let’s ignore your claims and stick to logical explanations, shall we?