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:
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:
Tax Research UK Blog is written by Richard Murphy unless otherwise stated and published by Tax Research LLP under a Creative Commons Attribution-NonCommercial 3.0 Unported License.
Design by Andy Moyle
Oh dear…
The truth is so inconvenient to you, isn’t it?
You must have a very strange definition of economics (and politics) if you think that the former is a subset of the latter.
Or maybe you just don’t understand Venn diagrams….
Wrong again
Wholly correct on economics and politics
And Venn diagrams
“And Venn diagrams”
Which this is not.
Time and again I have said these diagrams are metaphors and do not follow the strict rules of Venn diagrams
You either aren’t following, don’t understand or wilfully ignore what I say
Probably all three
On the other hand if our politics today can be likened to the planet Saturn the economics is likely to be a large lump of dust and ice somewhere in the Outer Ring in a wandering group of satellite space tax havens.
Richard, I’m not sure I agree – this seems to imply that economics has been entirely enveloped by politics. Now, this may be true, insofar as the “dismal science of economics” has been entirely by political groupings. However, it strikes me that the OPPOSITE is also true, and that our politics has been entirely swallowed by a crude, and largely fallacious, economism which seeks to validate an entirely unjust political praxis. Might you consider re-drafting this, with a THIRD circle, enveloping the other two, entitled “Economism”, by which I mean e.g. the “tooth fairy” explanation that masquerades as “trickle down economics”, for example, or the equally “tooth fairy” nonsense (VERY convenient nonsense for the 1%) of the Washington Consensus?
Andrew
Interesting points.
I see all economics as a subset of economics – and always have. I think the tooth fairy is just politics too
What the diagram is aimed at is those who claim that what they prescribe in politics is value free. It isn’t. Every decision an economist makes reflects their political perspectives.
But there are can be political perspectives that are not economic – hence the way I drew it
But if you disagree – I’m entirely happy with that
Best
Richard
I assume, Andrew, that what you mean by ‘economism’ is a parallel to ‘scientism’ where dodgy science is used to define human nature to suit unstated ends.
I tend to agree.
Once again it seems your subjective opinions are at odds with the majority of informed commentators.
That does not trouble me
Have you noticed how succesful those informed economists have been?
And how most serve the 1%?
Ha-joon Chang is good on this topic.
in the 1930s the mainstream economic advice was for the state to cut spending. In the 1940s & ’50s the vast majority of economists said it was a mistake. The 1930s have now passed out of living memory (in terms of being adult at the time)and we have forgotten the lessons.
Surely we have to recognise that economics is not an exact science despite all the complicated algorithms? That was demonstrated by the failure by most economists to predict the crisis on 2007/9. The few who did forecast it tend to be sympathetic to Richard Murphy.
Indeed
In my experience there are 2 problems with most economists.
Firstly, they start from the premise that uncontrolled free markets will produce maximum efficiency & that that is what capitalism produces. It is very odd that they should do so, not merely because we have so much real-life evidence to the contrary, but because of their own, immediate, experience.
If economics think-tanks were to study the careers of the enormously wealthy benefactors whose grants allow them to continue they would surely note that very few of them have made money from the efficient working of the market & almost all have succeeded in making money by, in some way, rigging the market.
So why would any sentient human being START with the hypothesis of free, efficient, markets!
Secondly, most economists these days seem to love nothing more than crunching data. Some of Richard’s opponents on this board remind me of going over my boys’ maths homework & pointing out to them that there is no point charging ahead & doing the sums before you work out what you’re actually trying to measure.
I remember one, particular, half-wit on this board who claimed to have proven there was no tax avoidance/evasion by the rich because the tax they paid was exactly right for official figures of their earnings.
What he seemed to have failed to understand was that the official figure for the earnings of the super-rich came from their tax return details as submitted to HMRC. D’oh!!!!
As a Roman, I can only commend Richard for having the patience of a saint & hope his forbearance stands up to, I’m sad to say, many more trials ahead!
I do ever feel saintly
But I do feel determined
Thank you
“I remember one, particular, half-wit on this board who claimed to have proven there was no tax avoidance/evasion by the rich because the tax they paid was exactly right for official figures of their earnings.
What he seemed to have failed to understand was that the official figure for the earnings of the super-rich came from their tax return details as submitted to HMRC. D’oh!!!!”
Well, that wasn’t me as I certainly wouldn’t have made such a claim as there is certainly tax avoidance and tax evasion by the rich.
But I suspect you have failed to understand the point being made.
It’s perfectly possible to have a tax return which says:
Income £1,000,000
Relief by (dodgy) tax avoidance scheme £1,000,000
Tax due nil.
Here, quite clearly the tax paid is way off what you would expect on an income of £1m.
As it is, looked at across the whole of the returned income for the top 1%, the tax being paid doesn’t suggest a massive amount of activity such as in the example. The tax being paid is not dissimilar to what you’d expect with pensions and charitable giving being factored in.
I suspect that was the point the person was trying to make.
Am I saying there is no evasion – No.
Am I saying there are no schemes that convert taxable reportable income into other forms of income – No.
Am I saying you need to understand the tax system a little more before you accuse people of being half-wits – yes.
Richard – up to you if you want to post something aimed at giving some balance here.
You clearly do not have a clue what you are talking about
Data is not available with anything like sufficient granularity in the form you suggest
Unless of course you work for HMRC org a vid friends there who give you data not available on public record
As ever, you are in the wrong unless you are hiding something
@Chris ..
I can sort of understand the premis that the returned income doesn’t show massive ‘planning’ because the tax is round what you’d expect on the returned income.
But surely the returned income would be net of any avoidance measures and undeclared income (i.e. evasion)
In terms of your example I think the issue is that it may not be shown as:
Income £1,000,000
Relief by (dodgy) tax avoidance scheme £1,000,000
Tax due nil.
Because the ‘dodgy’ tax scheme could negate the need to declare the income, it could simply be shown as:
Income Nil
Tax Nil
Especially true with evasion of course.
Since the HMRC figures will include the scenario immediately above then the returned figures will inevitablly show the ‘right’ amount of tax on the declared income … Self fulfilling my friend.
Net result = I agree with Richard & eriugenus on this.
Your analysis is right
And shows a flaw in HMRC data
We need to know more about use of allowances, reliefs and schemes
But isn’t the same true of any taxpayer i.e. the tax paid relevant to the total income declared seems right, but by definition cannot include evasion?
Yes
Verth
I’m afraid your analysis is wrong.
If someone has earned £1m (from the football club they play for, from the firm they run, from dividends from their own company, from the profits of their own business) this has to be declared on the tax return.
The tax avoidance schemes of the type reported in the press would be a separate issue. Think about it, the (rightly) much maligned ‘working wheels’ scheme for example created a loss. That loss would be pointless if you weren’t declaring income to set it against. Both would be reported in a tax return.
Even those (frankly bonkers and doomed to fail) schemes which created employment losses invariably did so through a special purpose company, i.e. the employment loss in that company was set against genuine employment income from a real company. Again, both items require separate disclosure.
Evasion exists, for sure, and there are some tax avoidance schemes which acted to reduce declarable income (use of EBTs for example, tolerated by Labour but closed down by Osborne in October 2010) but the actions of Labour introducing the DOTAS scheme and the coalition government with accelerated payment notifications have to my mind scuppered tax avoidance as we knew it.
It’s easy to suggest that all the rich people must be ‘at it’ and not paying any tax, you don’t need much evidence and it fits with the public mind-set. But the extent of tax avoidance as some sort of endemic plague among the wealth which, if only a few more rules were passed, could be stopped is vastly over-blown. If it’s easy for the wealthy to pay no tax, they’re making an awfully bad job of avoiding it as (as is oft reported) the top 1% earn 11% of all income and pay 30% of all income tax.
I’ve dealt with HNW individuals both from working in HMRC and now acting for them.
Richard has not worked in HMRC and says he’s never been involved in tax avoidance so he has no practical experience of the situation. You and eriugenus are speaking as laymen. I’ve a total of 27 years in the profession and have done nothing but tax in that time.
Having put my case, I’ll leave it to Richard to counter all my points by saying “you’re wrong”.
First you seriously misrepresent my career, but from behind your anonymity you feel able to do that. I have sorted out a great deal of mess resulting from tax avoidance. That’s very different from getting people into it.
Second, as matter of fact you are wrong. We are discussing HMRC stats and only the net figure is shown there. You clearly do not know what you are talking about.
I’m sorry that facts don’t worry you.
@ RM ‘Yes’
So why does eriugenus pick on ‘the super rich’ as, apparently, everyone is the same?
I am not sure what your question implies
Well, it implies that he/she is applying different positions to the ‘rich’ and everyone else. It implies an underlying bias against those at the top of the declared income pile, as there is clearly a belief that only they evade tax.
No
The suggestion related to avoidance for a start
And the vast majority of that is by the richest. You need excess cash to do it
That is observed fact
If I had drawn a Venn diagram for this, I would have drawn a large circle entitled banks and corporations, and then drawn inside two intersecting circles, one being economics and the other politics. The intersection would be labelled delusion or self interest. To illustrate corporate dominance/capture.
Interesting perspective
Chris,
this really is like talking to a brick wall, but, to give it one last chance. The top 1%’s income isn’t 11% of the total. The proportion of the top 1%’s income which they disclose to HMRC is 11% of the total.
Even if you were right about the treatment of contrived loss schemes, which I strongly doubt, you must be aware that there are other schemes which require that their clients return their (typically city) bonuses as loans, gifts or capital gains. If they can claim to be Non-Dom (& many can) they can also ensure income arises offshore.
By definition, the income they return to HMRC doesn’t, CAN’T, include those amounts. Can it?
Please God give me strength
One needs strength here…..
Rolf,
much as I admire your piano playing on the muppet show, you seem to have joined this thread half-way through & completely missed the point.
Muppet