The Sunday Times has published a top UK taxpayers list today.
I have a simple question for them. How do they know?
My suggestion is that they do not. This list is pure speculation. And the framing appears to be ‘aren't they good?'
I don't buy this. That's for four reasons.
First, I can live with uncertainty, but I would like the workings published in that case. As far as I can see these are not available. That's problematic.
Second, apparently having a source of income does not guarantee tax is paid on it, which appears to be the Sunday Times' assumption. That's a big asumption that need not hold true.
Third, big does not mean better in this case. So what if these people pay lots of tax? If it's less than the tax that they might owe it's still not right. And they might pay less than those on lower incomes would do, proportionately. That's because the wealthy can reduce their proportioinate tax bills by leaving their income in companies; changing them into capital gains, or by having them taxed as dividends, which suffer overall lower rates of tax than do earnings from employment. So even if the sums might be big this still does not prove that they are sufficient.
And finally, there is the fact that the narrative that the rich pay for hospitals and so on is wrong. Government spending pays for hospitals, and so on. And government spending is not dependent upon tax receipts. This is a fact that has been known since 1694, when the nationals debt began, and which has been reinforced by quantitative easing in the last decade. It really is time that we realised spending has to come before taxation, as I have argued many, many times.
The reality is that the rich need to pay more a) because they are rich and the have the means to do so b) because they disproportionately benefit from government spending because it massively supports their business activities and c) we need to redistribute their earnings, for which they have no need, to those who do have need. This is a necessity: unless it happens concentrating income in the hands of the wealthy indevitably leads to economic stagnation.
But my big issue is that the Sunday Times does need to make all its workings public. That would assist discussion of this issue. Increased debate is what we need. I hope that they might do that.
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“And finally, there is the fact that the narrative that the rich pay for hospitals and so on is wrong. Government spending pays for hospitals, and so on. And government spending is not dependent upon tax receipts.”
If anything useful comes from this it will be that a few people may wonder how selling over priced trainers and sportswear on behalf of American corporations can possibly fund hospitals.
Can’t abide the arrogance of inherited wealth but good luck to those who have made it through endeavour . I know Peter Hargreaves from 25yrs ago..he started his business in his back bedroom and through vision and hard work created a market leader..must now be one of the largest employers in the South West..
So what?
You do realise that without the massive state subsidy for pensions he would not have made a penny?
HL business no doubt benefited from SIPP and ISAs but the ingenuity was creating a fund platform first. Anyway the point I make is to applaud success not berate it and I think the majority of people do also.
I do not berate success
I expect tax to be paid
And with respect, your argument is disingenuous
He would still have had a successful business though I agree not as big..people have savings outside of ISAs and people want to save for the future regardless of tax breaks on personal pensions..to say “he wouldn’t have made a penny” is plain wrong..
So you accept my point
In his market tax based saving is the market
His market is the savings market. HL created the first savings platform I.e you buy and could hold all investments on it..gilts, bonds, equities, unit trusts, investment trusts etc..previously investors were holding share certs and nominee accounts all over the place.. this platform made the business. The business got bigger through ISA & SIPPs but would have been successful regardless. To state “ he wouldn’t have made a penny without state subsidy’s” is either disingenuous or perhaps shows a lack of insight into HL’s business model.
Meantime he advocates Brexit secure in the knowledge that he and his family are well cushioned from the impact.
I assume that he worked hard, and saw an opportunity to make a lot of money. I’ve no idea what his personal tax scenario is, but given the size of his wealth has he given anything else back to society?
Mr Hargreaves and others pay lots of tax, but that’s because they have lots of income or wealth on which tax is due. And yes, many of them have come up with clever ideas to make money but are their (I would call them “excessive”) rewards – income & wealth – commensurate with the degree of cleverness, the risks they have taken, their initial investment and taking account of the input of others, such as their employees, State provision of infrastructure, education, health service, subsidies, tax breaks etc from which the business has profited, not forgetting to ask whether the customers and suppliers have received a fair deal.
I don’t think anyone, no matter how clever or hard working should be able to amass obscene amounts of wealth and income as revealed by this shameful list of those who according to a newspaper owned by a billionaire are ” coughing up their fair share in tax”.
has been reinforced by quantitative easing in the last decade
I think you should drop QE from your argument on point 4. If you leave it in, then someone will point out that QE broadly accounts for 6% of government expenditure in the last decade, and even less if you want to bring in the years since the UK last balanced a budget. Stating that 94% of UK government spending is raised from taxation and some borrowing leaves you with the position that around 90% of spending is financed from taxation. You may say that the spending financed by taxation was introduced into the system in prior decades by government commandment, but it doesn’t negate the fact that the speed with which previously spent money gets recycled is over 90% dependent on bringing in those tax receipts.
If you want to reduce the speed with which it is recycled you can lower taxes or you can raise the speed at which it is recycled. It still leaves a massively strong coupling between current expenditure and receipts.
If you want to deny that that coupling is massive ( over 90% in the case of the UK ) then all your work is ahead of you I’m afraid.
25% of the deficit in the worst years was covered by QE
I think the point highly relevant
Fair point. My view was that current expenditure is overwhelmingly funded from taxation ( even if the seed money for the cycle came from money creation ), that current taxation is coupled to current expenditure, and by inference that an increase in taxation would increase options to spend more or perhaps to cut taxes for the little guy.
The fact that 25% of the deficit above the spending=taxation level was funded by QE does rather undermine my view sadly.
And I would suggest uou’re Trying to run the economy backwards
And that’s never going to work, unless you want recession, which you would deliver
You both make the correct points..John re the coupling argument and you re QE in certain circumstances like we had tecently to prevent deflation. I think the spending comes before taxation is relevant at origin but not when coupling is 90%..,so basically when you have a functioning economy so John is right why deny it exists when we all know it does.
There is a coupling
But tax is the secondary and not the primary action
Why don’t you set an example and publish your own personal tax returns?
After all, you are a tax campaigner and you surely have nothing to hide?
I have never campaigned for tax returns in publuc record
Indeed, I actually oppose the idea for companies
So why would I do that?
I may have missed the point on this but my skim-read of the article indicated that the figures shown were the sum of (i) the individuals’ or families’ taxes paid and (ii) the corporate tax paid by the companies they owned. I don’t think it’s right to include item (ii) as this is not taxes paid by the individuals. If item (ii) is included then lots of foreign individuals with little or no connection to the UK other than owning a company that has subsidiaries here should be included.
The figures for tax paid by the individuals appears to have been calculate at effective UK tax rates on the sum of (a) directors’ remuneration disclosed in their companies’ accounts and (b) the dividends paid per those accounts multiplied by the individuals’ or families’ shareholdings in the companies. This would make perfect sense if none of these shares are owned though tax efficient arrangements – yeah, right!
In summary, the article tells us nothing and anyone citing it to try to make a point is being disingenuous and is not to be trusted.
I believe that these stories are used to perpetuate the myth that our services are paid for by the rich and we should be thankful. The whole emphasis in my life has been we must pay our way. This has meant that any argument has fallen at the point ‘we cannot afford it’ or the ‘tax and spend’ mantra. This has meant that we cannot discuss how to allocate resources from a political perspective. Imagine if a PM had to accept that austerity was a political decision to transfer debt to the public and reduce the services available because they did not think that ordinary people should have schools or a doctor. A family who remembers that before 1939 and she voted accordingly in 1945. This memory is fading and we are now in the thrall of view that we owe the rich…