This YouTube is a further discussion of 'Colin' and his threat to quit as a result of tax increases, already discussed in a different way, here this morning:
The transcript is:
I put out a TikTok yesterday in which I suggested that the wealthy should lose some of their pension tax relief.
On average, the wealthiest people in the UK - those who pay higher rate tax, and whether they like it or not, they are the wealthiest people in the UK because they are at least in the top 15 per cent of income earners and many of them much higher than that - those people get on average £8,000 a year or more of tax relief on the pension contributions that they make to their own savings. That figure is as big, near enough, as the state pension that most people over the age of 75 get. It's much bigger than most people on universal credit get. It is a system designed to subsidise the rich with benefits that I don't think they need.
But the reaction has been entirely predictable. Someone called Colin turned up on my blog. I am absolutely sure that's not his real name, by the way. But let's call him Colin because he wanted us to think that was his name. And he said,
“I think you need to split the difference between wealth and income. I'm a higher rate taxpayer who started with nothing and then worked up my way up the corporate ladder to a point where I'm comfortable, but not by any means wealthy.”
And then he goes on to say that if I take away this tax relief, he'll work less. It won't be worth his while to bother, and everything under the sun.
So he says I should be taxing wealth and not income.
Colin. is talking a load of nonsense. Colin is wealthy enough to decide that if his income falls, he'll let it fall even further by choice. In other words, he has all the money that he needs to literally provide for everything that he, and maybe his family, require to be able to live.
Now, if that isn't a definition of wealth, I don't know what is. Because he can actually afford to give up working.
People who are really in need, when their income falls, work harder. They get a second job. They get a third job. They do everything they can to put food on the table.
But Colin says, I'm being very unfair, so unfair he'll have to work less.
This is ridiculous.
It's just as ridiculous to claim that half of all income tax is paid by the top 5 percent of earners in the UK and therefore they'll leave. Look, who cares if they pay half of all income tax? That's because they're overpaid. Let's be blunt about it. They probably don't earn the money that they're paid. They've managed to secure it, maybe unfairly at cost to the rest of society.
We'd be better off if we had a more equal society.
But worse than that, Colin then goes on to say, “I will work much less, and if you don't like that, I'll leave the country.”
There's absolutely no evidence that people leave the country because of taxation. Their families don't want them to. Their in-laws don't want them to. Their parents don't want them to. Their children don't want them to. Their dogs don't want them to. They don't want to leave the golf club or whatever else it is that they spend their money on. They don't go. So, this claim is absolute nonsense.
All I've suggested is that Colin shouldn't get as much subsidy for his savings as he has. He'd still get, on average, more subsidy per year than the average Universal Credit claimant gets. And he thinks that's unfair.
Heaven help us when people like this are managing the companies, the organizations, and the government, even, of this country. Because that logic is so, so spitefully selfish.
Frankly, it staggers belief.
Rarely has a troll-like comment produced so much reaction from me, but that is why I share them on occasion.
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The old ones are the best, aren’t they.
Colin’s contribution was the sort of thing I heard and drafted as a bankster lobbyist, 2007 – 16 and since November of last year. It’s amazing to get relatively well paid to spout such things, especially when one doesn’t believe it.
Most people would like the chance to work up the corporate ladder to a point of financial comfort. But this option is not afforded to everyone, and it is not for want of trying.
I always think of our nurses, who are one of the country’s hardest workers, and instead of being able to earn enough for a mortgage and decent pension, were offered a hollow hand-clap, underfunded wage rise, one of the lowest pensions in Europe, and is some cases, a reliance on a food bank.
Until every worker has the same opportunities as a corporate worker, then the system must change. I can’t think of anyone who is valued more than a nurse, and this should be reflected in their long-term financial comfort.
Well said
“So he says I should be taxing wealth and not income.”
Poor colin is trying to complicate matters and play with words. Richard has said many times that a true “Wealth Tax” is virtually impossible for many reasons.
It is very simple and should be done in the USA as well as the UK: Tax Earned Income (wages) at the same rate as Non-Earned Income (non-wage income) with all the same taxes.
Should the rule that excludes gifts from inheritance tax if the gift has been made 7 or more years before your death also be abolished?
I have said it should be open to debate
You mentioned that there’s absolutely no evidence that people leave the country because of taxation.
I’m wondering if you saw the Guardian article from 4 or 5 days ago
“Poor, petrified, non-doms are terrified that they might have to pay some tax”
“People are jumping on planes right now and leaving,” said Nimesh Shah, the chief executive of Blick Rothenberg, an accountancy firm that specialises in advising very rich “non-doms” on their tax affairs. “I am not being dramatic, they are leaving right now.”
I did
Why didn’t you bother to read what I had to say about it before commenting?
Did you see who was providing the ‘evidence’?
There is actual research that wealth flight is a myth.
Sadly, I can’t find the source. I suspect it is a linked article from Simon Wren-Lewis’s blog.
For Scotland, where we have higher marginal rates, the report I read suggested under 5% of higher tax payers were possible movers, and actual movers less than that.
There is a level of inertia in having a settled home, family connections, friends and other social networks and the disruption and cost in moving to a low tax regime.
The single push factor of paying more tax does not outweigh the range of influences that connect a person, of whatever level of wealth or income, to a place, and acts to deter wealth flight.
Very few make the calculation that Ratcliffe has in relocating to Monaco from sunny Hants.
This has been researched many times, mainly in the US, where it was found people were rarely willing to move even quite limited distances over state borders to save tax.
It’s Andy Summers of the LSE whose work debunks wealth flight as a myth.
I added the link earlier
Here’s some actual research
https://taxfoundation.org/data/all/state/taxes-affect-state-migration-trends-2023/
Which concluded:
“it is clear from the 2020-2021 IRS migration data that there is a strong positive relationship between state tax competitiveness and net migration. Overall, states with lower taxes and sound tax structures experienced stronger inbound migration than states with higher taxes and more burdensome tax structures.”
And here
https://www.sciencedaily.com/releases/2024/04/240403224902.htm
Which concluded:
“Traviss Cassidy, assistant professor of economics at the University of Alabama, and Mark Dincecco, associate professor at the University of Michigan, found that wealthier Americans tended to move out of state when income taxes were too high, but remained when income tax increases were minimal.”
And did they control for other factors?
I think not….
I shared the taxing wealth report on Reddit a few weeks ago and I had a few commenters stating it was communism. I tried to engage with their points showing how it was attempting to level the playing field including the 60% tax trap for higher earners.
Still got shouted down as being “against ambition” At that point I didn’t bother to continue engaging as it was obvious they didn’t want a proper debate
With some people you can’t win
And I am no communist
Reddit is not about political debate. Unfortunately for us entrepreneurial entitlement is a thing and on the internet it has become a political identity. They see taxation as a threat to their identity. They don’t believe that they have a moral duty to consider those who live in their shared polity. They believe their duty is not to their country but to pay as little tax as possible. And by the means of magic this greed increases the wealth of society.
Heaven isn’t helping us with the Post Office. I will not comment on the excruciating evidence delivered in the Post Office IT Enquiry today, save to make one point only; probably, in my opinion at least, the most important point of all.
What we are observing in the Post Office Enquiry that is most striking of all, is not the problems with IT reliability or prosecutions in the Post Office; what we are actually seeing is the real nature of British culture, revealed in the unflattering light of close inspection; raw, unvetted, unseemly in all its degraded ugliness. Our culture, how we prepare people for the challenge of business fails the test of basic civility. Our culture remains hierarchical, riddled in prejudice, ignorant, snobbish. outdated, beset by a repressed, deferential NCO culture, lacking any capacity for independent thought; reducing basic human responsibility for action to an abject inability to look authority in the eye.
I had thought that this old, persistent and repellant culture should not (and hopefully could not) survive in the 21st century; but like a fast mutating virus, it indeed, clrealy survives by adapting to changes in technology, and particularly adroitly to changes in corporate language and business vocabulary, that allow it to cling on, and pass on unhindered, at least in propitious institutional environments. Or so it seems from the grotesque parody of Britain’s past we now see re-enacted before us.
It is ironic that this parody is being performed at the same time as the Rightist reactionaries crawl out of the woodwork to tell us how much better things were in the past they think they remember from their rose-tinted memories of youth; while ably forgetting this was a past of corporate predators like Lonrho; “the unacceptable face of capitalism” (Ted Heath, House of Commons), or the predation of so many institutions for the young or vulnerable, without let or hindrance for decades by the likes of Cyril Smith or Jimmy Saville; ah, yes that warm and fuzzily remembered past of the anti-woke’s youth; to take the only a few examples from a long, long list of failure. We could then turn to what the Rightists, who gave us Thatcher, or Boris Johnson have actually done for us, but we know the answer – for we are staring at the sewage, and the rest of the economic failure candidly in the malodorous face. but we know their ready anti-woke answer; Thatcher and Johnson were not Right enough.
Thanks, John
I appreciate this commentary you’re providing
Well said. I understand this ongoing social failure to be a result of a lack of imagination or emotional intelligence. Both of which are discouraged, even nowadays labelled as pathological, by dint of unquestioned historical economic and cultural structural iniquities. Questioning conventions, however unnecessarily cruel and counterproductive, remains the province of the social outcast. There was an article over in inews (sorry I subscribed before realising what a manipulative reactionary rag it is) however, this article was discussing why Generation Z, (working age but under 27), were considered to be work-shy and suffering from mentally illness. None of the various managerial criticisms took into account the fact that too many of these individuals have witnessed their parents being abused by the actions ultimate managers, the government, for their entire lives.
Oh – excellent indeed, Richard. A logical demolition of the usual nonsense spouted by those defending the privileges of those well able to handle a few modest steps towards a more stable and fair society. Their threats have always combined morally horrid special pleading with a complete absence of logic. They are not and – even under modest proposals (where did that phrase echo from?) for mild steps towards fairness – would never be disadvantaged/penalised. They’d just have to be a little less over-satisfied. And why not?
Thanks
I’m a real ‘Colin’. I’m retired and have pensions from University lecturing and private consultancies (economic statistics and development) and so am very comfortably off. And I think I am undertaxed, so I am with you, not him. To placate my feelings of guilt I give 10-15% of my income to charities and political causes (no longer the Labour Party!) I’d prefer to target it at direct promotion of some of your ideas, using my skills, rather than just buying you another coffee!
Colin
I have mailed you
Richard
Thanks Richard, for the information and the prompt to my blog post for today (with due acknowledgement of course):
https://disciplinemakesdaringpossible.com/2024/04/how-are-you-going-to-pay-for-it/
Thanks
Comparing tax relief (being allowed to keep your own money) to benefits (being given someone else’s money) is a bit is suspicious but no doubt you’ve heard it all before. My question is how would it be made equitable vis-a-vis defined benefit pensions. I make about £70K per year, which is a good wage no doubt, on a par with other “wealthy” workers like train drivers, senior teachers and mid-ranking doctors. The difference is I don’t get a defined benefit pension so I have to build it all myself for which the tax relief is very helpful. Would you be asking train drivers and doctors to pay a 20% tax surcharge on their personal and notional employer contributions, since this is essentially untaxed income? For a doctor on £70K this would amount to a £5K per year tax demand or put another way an 11% cut in net pay.
The tax treatment for the individuals is identical.
You are making up an issue that does not exist.
Thanks for responding Richard, but I was asking a question not making up an issue. Are you willing to elaborate? Would the doctor, under you plan, face a tax charge on the their and their employers contributions to their defined benefit pension or not?
I ask this question for two reasons:
1) Employer contributions, which make up the bulk of pension contributions into a defined benefit scheme, are currently untaxed, free of both income tax and national insurance. (Unlike the contributions to my SIPP which are relieved from income tax but still have national insurance deducted (and employer national insurance paid), which itself is an inequity albeit relatively minor.)
2) If your answer is NO I wonder how you can say this is fair, short of allowing a ‘salary sacrifice’ loop hole for private sector workers. If YES that is fair enough and I would agree it is equal treatment. (However, I think either answer is likely to create political problems in terms of implementation.)
Separate to my question, I would make an actual objection however, as I have no doubt you are already aware, when you take money out of my pension you not only deprive me of the nominal amount taken today but far more significantly deprive me of decades of compounded growth on that contribution. The tax is effectively on future income not today’s. Taking £3000 out of my pension today, is taking around £11,000 (in today’s money) out in 30 years. Over many years of lost compounded contributions you could reduce my future pension income by perhaps £10,000 per year which could be an effective future income tax rate of 20% to 30% and that is before the tax rates of the day are applied to the remaining income. I will not lie, if this were seriously proposed by a government I be very worried about my future. It may well be the difference between a comfortable retirement and a difficult one.
I think there are fairer reforms to the tax treatment of pensions such as removing the 25% tax free lump sum (pensions are for income not windfalls), the tax treatment of inherited pension pots, lower contribution limits (this by itself could raise much of the £12bn you are aiming for) and equalising tax treatment of pension income and earned income (abolish NI and increase income tax to compensate which also has the benefit of boosting pension pots for future pensioners).
From looking at your other blog post you will probably call me selfish for thinking this way. And of course you are right – nobody is looking out for me except me. But I would also counter: you have said that the £3,000 I lose today will be given to benefits claimants who will spend it. True. But in doing so you not only deprive me of £10K per year pension income in retirement but deprive future claimants of the say £2,000 from the income tax on that pension income in addition to the other £8,000 in spending lost from the future economy (most of which will be taxed in various ways).
No, in a word, because the employer gets relief in a different way and I am not suggesting a change as all get relief at the same rate currently.
Why is it fair? I suggest you stop trolling and actually read the Taxing Wealth Report. You might learn a lot – including that I am way ahead of you.