{"id":14629,"date":"2012-03-16T08:46:29","date_gmt":"2012-03-16T08:46:29","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=14629"},"modified":"2012-03-16T09:45:32","modified_gmt":"2012-03-16T09:45:32","slug":"could-the-treasury-be-falsifying-the-data-on-the-50p-tax-rate-it-certainly-looks-possible","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/03\/16\/could-the-treasury-be-falsifying-the-data-on-the-50p-tax-rate-it-certainly-looks-possible\/","title":{"rendered":"Could the Treasury be falsifying the data on the 50p tax rate? It certainly looks possible"},"content":{"rendered":"

I have been musing on how and why\u00a0H M Revenue & Customs\u00a0might\u00a0suggest<\/a> that the 50p tax rate does not work and has only raised a few hundred million, not the \u00a36.7 billion<\/a> data published by HMRC last year implied<\/a>.<\/p>\n

Let me offer a cynical explanation that might do just that, and which would imply fraudulent\u00a0manipulation\u00a0of data by the Treasury. My data source is table 2.5 of HMRC's stats. This shows the number of people whose top income falls into various income brackets, one of which\u00a0conveniently\u00a0starts at \u00a3150,000. The estimates (and admittedly most of this data is estimated - although why is hard to tell - and indicates an appalling lack of analysis by HMRC) are as follows:<\/p>\n <\/p>\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n
Tax year<\/td>\nPeople earning over \u00a3150,000<\/td>\nTotal income of those earning over \u00a3150,000<\/td>\nAverage<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\u00a3'm<\/td>\n\u00a3<\/td>\n<\/tr>\n
2007-08<\/td>\n319,000<\/td>\n115,900<\/td>\n363,323<\/td>\n<\/tr>\n
2008-09<\/td>\n320,000<\/td>\n116,500<\/td>\n364,063<\/td>\n<\/tr>\n
2009-10<\/td>\n314,000<\/td>\n113,200<\/td>\n360,510<\/td>\n<\/tr>\n
2010-11<\/td>\n328,000<\/td>\n112,200<\/td>\n342,073<\/td>\n<\/tr>\n
2011-12<\/td>\n358,000<\/td>\n122,800<\/td>\n343,017<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Notice that enormous jump in 2011\/12? Isn't that odd? It is assumed that 9.1% more people come into this bracket that year, and earn 9.6% more as a result.<\/p>\n

As I've shown, that data for 2011\/12 implies total 50p tax rake of some \u00a36.7 billion. The workings are here<\/a>\u00a0and in detail look like this:<\/p>\n

\"\"<\/p>\n

The number in the \u00a3150,000 bracket is smaller by the way\u00a0because\u00a0I've\u00a0allowed\u00a0for the fact that not all in this band actually pay tax at 50p etc due to\u00a0pension\u00a0contributions\u00a0and so on.<\/p>\n

But now let's\u00a0suppose\u00a0the Revenue's very odd\u00a0forecast\u00a0of significant growth in the number of very high earners - a\u00a0trend\u00a0that runs counter of course to experience across the economy as a whole - turns out to be wrong. Suppose that instead of this group growing by 30,000 in the year it hardly grew at all, as seems\u00a0plausible. And their income did not grow by \u00a310 billion in\u00a0total\u00a0as a result. What then?<\/p>\n

Suddenly HMRC have a basis for forecasting that the 50p tax rate has\u00a0resulted\u00a0in a massive fall in the number of taxpayers paying at the top\u00a0rate and that \u00a310 billion of income fell out of tax as a result so that whilst the rate collected over \u00a35 billion in all (as the 2010\/11 data\u00a0implies) the disincentive of the rate has cost about \u00a35 billion (50% of \u00a310 billi0on) and so as a\u00a0consequence\u00a0it net raised almost nothing at all.<\/p>\n

That wouldn't be true at all though. It\u00a0would\u00a0in fact be a\u00a0fabrication. It would not even be an\u00a0elaborate\u00a0fabrication. The\u00a0forecast\u00a0data for 2011\/12 looks wrong the more I think about it: I just don't believe there would ever have been that growth in the number of top rate tax payers. In fact it just looks like a\u00a0fabrication. And now we see its purpose.<\/p>\n

So was the number inflated for this reason? It's possible. But if it was then the argument that there's been a disincentive is also wrong. There would have been none. The true figure raised would simply have been \u00a35 billion or\u00a0thereabouts with no real disincentive effect, and not the \u00a36+ billion that the 2011\/12 data implies.<\/p>\n

To put it another way - we have to be\u00a0prepared\u00a0for a pack of\u00a0lies\u00a0over the\u00a0next\u00a0few days\u00a0because\u00a0that's what I'm\u00a0expecting\u00a0we'll get.<\/p>\n","protected":false},"excerpt":{"rendered":"

I have been musing on how and why\u00a0H M Revenue & Customs\u00a0might\u00a0suggest that the 50p tax rate does not work and has only raised a
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