You don’t have to be a non-dom to avoid paying income tax. Over the last 12 months, I’ve paid less than 10% tax and national insurance on my income. This isn’t because I’m a non-dom - I haven’t been abroad for 15 years - or because I have a fancy accountant. It’s simply because I made a big contribution to my pension fund, which attracted tax relief.
I could afford to make such a contribution because I sold my flat in London in 2008. But it’s possible that the profits from this were the result of policy-makers’ actions. I don’t just mean that the profits were tax-free, but that house prices rose at least in part in the 1990s and 00s because of easy monetary policy and loose regulation of the banking system that allowed massive mortgages.
There’s more. I put some of the proceeds of that flat sale into the stock market at various times in 2008 and 09. I’ve therefore benefited from the fact that policy support for the banking sector - loan guarantees, QE, low interest rates and government borrowing - has helped raise share prices.
In these ways, I have been a net beneficiary of government (and Bank of England) actions, not just in the last two years but possibly - depending on your view of how much policy contributed to rising house prices - in the preceding years as well. And this is not to mention the fact that the state gave me a good education; a degree in economics from Oxford in the 80s was pretty much a licence to print money.
I don’t say this to boast. Many people have profited from these measures by vastly more than I did. Instead, I say so for three reasons.
First, to show that the state is not necessarily a force for equality. Many quite wealthy people have been net beneficiaries of policy measures.
Secondly, the idea that it is only public sector workers who benefit from big government is just silly. I’ve worked in the private sector all my life.
Thirdly, this should put complaints about high taxes into perspective. It’s quite easy to dodge those taxes quite legally, if you arrange your affairs moderately well. Such complaints - at least if they come from someone around my age - tell us about how some people have an inflated sense of their entitlements, not about how onerous the tax system is.
I could afford to make such a contribution because I sold my flat in London in 2008. But it’s possible that the profits from this were the result of policy-makers’ actions. I don’t just mean that the profits were tax-free, but that house prices rose at least in part in the 1990s and 00s because of easy monetary policy and loose regulation of the banking system that allowed massive mortgages.
There’s more. I put some of the proceeds of that flat sale into the stock market at various times in 2008 and 09. I’ve therefore benefited from the fact that policy support for the banking sector - loan guarantees, QE, low interest rates and government borrowing - has helped raise share prices.
In these ways, I have been a net beneficiary of government (and Bank of England) actions, not just in the last two years but possibly - depending on your view of how much policy contributed to rising house prices - in the preceding years as well. And this is not to mention the fact that the state gave me a good education; a degree in economics from Oxford in the 80s was pretty much a licence to print money.
I don’t say this to boast. Many people have profited from these measures by vastly more than I did. Instead, I say so for three reasons.
First, to show that the state is not necessarily a force for equality. Many quite wealthy people have been net beneficiaries of policy measures.
Secondly, the idea that it is only public sector workers who benefit from big government is just silly. I’ve worked in the private sector all my life.
Thirdly, this should put complaints about high taxes into perspective. It’s quite easy to dodge those taxes quite legally, if you arrange your affairs moderately well. Such complaints - at least if they come from someone around my age - tell us about how some people have an inflated sense of their entitlements, not about how onerous the tax system is.
Odd that you list QE as a policy that has benefited you. Surely as an economist you understand that while it may have increased the number of pennies in your bank account, it also diminished the value of those pennies. The Gord giveth and the Gord taketh away.
Posted by: Neil | March 12, 2010 at 03:51 PM
Well your nice big pension should mean you are less reliant on public coffers in your old age, surely?
Plus the govt policy means v. low interest rates meaning you have to invest in stocks/funds - perhaps more risky?
Posted by: Glenn | March 12, 2010 at 04:30 PM
"it also diminished the value of those pennies"
No, it didn't. As an economist, I understand that. As an idiot, you don't.
Posted by: john b | March 12, 2010 at 05:05 PM
you haven't avoided paying tax by putting money in a pension, you have merely deferred paying tax. The tax rate when you eventually decide to take it as income is anyone's guess.
Posted by: Dipper | March 12, 2010 at 09:11 PM
Like Kent Brockman, I prefer to call it "tax avoision".
Posted by: www.facebook.com/profile.php?id=1333366645 | March 13, 2010 at 03:35 AM
I thought that Oxford didn't allow Economics to be studied as a single-honours subject, but insisted that it be diluted with other, more respectable subjects, at least at the undergraduate level.
Posted by: Steve Hemingway | March 14, 2010 at 06:49 PM
we're all winners then....surely not?
Posted by: Trevor Brown | March 15, 2010 at 05:25 PM