« Quantifying luck egalitarianism | Main | The Liz Taylor economic policy »

March 29, 2011

Comments

Theboynoodle

UKUncut's attempts to attribute the tax gap to the corporations and the 'super rich' are wholly misleading. Even if one accepts the gap figure they present (which is two or three times what HMRC believe the gap is, depending on which UKUncut supporter you talk to) it's without question that the gap is attributable to people at all levels of wealth. It includes the black economy, small business tax under-declaration, abuses by the self employed, 'cash in hand' payments, duty-avoided cigarettes and alcohol etc.

I support any move to close the tax gap so that it's a level playing field and every company or individual is taxed by the rules as they are intended, not just those who choose not to avoid or evade.. but people should be under no illusion that this would all be at a cost to the rich, as that's not the case - it's merely spin and posturing on behalf of UKUncut in an attempt to put the onus on a few easy hate-targets, rather than society as a whole.

Tom Freeman

"One extreme possibility is that they would do so simply by running down their savings, with no impact on economic activity."

It would hit economic activity, by hitting banks' capital ratios (and hence lending ability) and/or the price of the classes of asset that go into the firesale to raise the cash.

Nick Peters

Removing all allowances and tax breaks and cutting corp tax to, say 15%, would do the trick. Goodbye an entire wing of the civil service whose job is to outsmart highly-paid (and probably smarter) tax lawyers and accountants, goodbye to said professionals too and goodbye to whole floors of corporate admin who have to manage all this stuff.

Oh, and tax receipts would soar because the game of two-sided gotcha would end. Business owners would see the flat tax as unimpeachably fair and simple and would accordingly write their cheques with equanimity.

Of course, this no doubt appears shockingly pro-business to soak-the-rich types (like you, I suspect) but it would redress the balance in a clean and simple manner.

As for your more radical ideas around worker ownership etc...intriguing how trades union leaders command significant earnings is it not? They're not in the mega-silly range of bankers' pay, but you get the idea. Those who can squeeze a decent (indecent?) whack for themselves, of whatever stripe, usually do.

Overall though, you're right. Simply adding more taxation to an already grotesque and inefficient system would do little good and probably a deal of harm.

Mariana

It may be a good idea to make rich people pay a bit higher tax fee if they can afford it.

Different Nick

Re trade union leaders, sure they are paid fairly well (though they are also elected and accountable to their members) but then most trade union staff are also unsurprisingly paid fairly well. The ratio of top to bottom pay in most trade unions is going to be less than 10:1 and in many cases it's probably more like 5:1.

The average Gen Sec's salary would make you middle management in a lot of large private companies in Britain, especially in the financial sector.

Also - I don't think most tax avoidance is down to allowances and tax breaks these days, it's mainly around international flows of money and/or the level of profit. The question is more where and whether a profit has been made than how much of it is taxable.

Jackart

Trying to stop money flowing to power is like trying to stop water flowing downhill. Is it that the moneyed have power, or the powerful get money? I suspect it's the latter.

You use power to reduce the wealth/power of the existing rich/powerful, you simply create another, different lot of rich/powerful who may or may not be you & me.

All this does is make society poorer by the cost/violence of the above transaction.

Ben

To be fair to UK uncut they are in a media war with... virtually the entire British media. It is quite sad that they have adopted the same stratagems as the Daily Mail et al but they have proven that they work - applying pressure to peoples sense of fair play - at best - or bitterness - at worse.

This is essentially a media debate, not a debate on how British society can grow & prosper but a very complex popularity contest - PR war. I would argue that UK uncut are largely losing because they have been lumped in with the youngsters stepping up & looking for a fight (the obfuscation of 'anarchist'). But what may tip the balance in their favour is the anger and frustration felt by most working / unpaid Britons.

The disparity between rich and poor is devastating, many, many jobs manifest slave labour conditions. At the end of the month there is a pittance after the cost of renting / housing...

How do the dis-empowered step up and engage with financial interests? How can they (we) make the media present cogent & well structured arguments (where people will read them & democratically sanction them)? How do you deal with hegemony?

CharlieMcMenamin

On your first point ('how much') the non economists/non tax accountants amongst us will have to let you more informed types slug it out between you. I look forward to an engaging exchange of statistics...

But on your second point ('taxing this would be deflationary') I think there is a fairly simple answer: it would be deflationary only if the money was taken out of circulation entirely, or wasted, as opposed to re-invested in productive activity by the state or agencies funded by the state (which might include your worker controlled enterprises). And only an ingrained prejudice against state led economic measures would deny this possibility.(I accept it's not a certainty - but then neither is productive investment by the private sector)

On your third point: 'power', in the abstract, is notoriously difficult to pin down - is it the ability to get things done and/or stop things that have been proposed,or also the ability to stop things even being suggested or conceived of? Wealth, on the other hand, does tend to have a strong association with power, to put it mildly. So there is a surely a case for taxing it heavily to reduce power differentials.

Laura

The whole taxation system should be simplified so that ordinary people can understand it.

Tom Addison

This is all probably a bit out of my depth, but can't we just make it so that the directors and others "at the top" can't pay themselves these ridiculous wages (which I think is what you said). £500k bonuses for making redundancies as a way of cutting costs rather than cutting your own ridiculous wages, well done you. I hate public sector unions, the types who have a hissy fit if someone tries to cut their ridiculously generous pensions, but a little less greed by everyone would go a long way. Peace and love etc.

www.facebook.com/profile.php?id=1333366645

Chris, could you give this petition by Co-operatives UK a plug - http://uk.coop/yourstoshare/petition.

What I wonder is, would a greater preponderance of co-operative firms result in lower corporate surpluses and thus, a reduced public spending deficit?

Chris

I've got to point out that your figures don't make sense to me. You say that taxing 15% or corporate revenue would only raise £13 billion, where as I make it about £23 billion. The point is that revenue is not the same as profit, if I understand your chart correctly.

If your chart referred to profits, then it's saying that corporations only pay 11% of profits in tax, which is so far below the 28% headline rate that it doesn't make sense. If it were true, then it's saying we could more than double corporate tax income just by making them pay the headline rate. That's an easy £75 billion right there, but obviously too optimistic ... so, we must be looking at % of revenue, in which case a 5% uplift comes to £23 billion (on the back of my envelope).

But these calculations are all a bit beside the point. You seem to be suggesting that there just isn't any 'money in the kitty', which is nonsense: just look at the £7 billion paid by banks in bonuses alone, compared to the £5.5 billion they pay in corporation tax. The figures also obscure the fact that corporate profits have soared relative to wage income over the last 20 years. So, total corporate revenue is now a much larger % of GDP than it used to be in the 80s. It is taxed more lightly now, whilst the rest of us have to bear heavier taxes.

It's also total nonsense to suggest that workers end up paying corporation taxes. Big business loves us to believe this, but just think about it: If it were true, there's no way they would go to such extraordinary lengths to avoid tax. Why pay expensive lawyers and accountants to administer a network of offshore subsidiaries, just to avoid a tax which is supposedly paid mostly by their workers?!! What ridiculous sophistry.

Finally, why do you think it would be impossible for big business and the rich to find an extra £95 billion? That's only 14 times the bank bonus pot. OK, let's say £50 billion. It wouldn't mean dipping into their savings at all; it would just mean having to pay slightly smaller dividends, cut back on top executive pay, private school fees, a few less yachts in St Tropez harbour ...

Finally finally, raising tax on its own is fiscal tightening, but if you invest the money in good public works, then it's not. It's irrelevant to the question of tax justice. However, I agree with you about land tax, etc. :)

Luis Enrique

point 2. gets overlooked very often: supporters of the Robin Hood tax describe it as a "tiny tax" in one breath (because it's something like only 0.05% per transaction) and in the next breath talk about it generating £250bn of revenue (or similar), as if it is possible to extract gigantic sums of money out of the economy with nothing else happening (other than those greedy bankers paying more tax).

dirigible

"Business owners would see the flat tax as unimpeachably fair and simple and would accordingly write their cheques with equanimity. "

You're joking. They'll simply be emboldened to push for even greater reductions, whether in law or through the kind of avoidance schemes they'll have even more money to pay for.

Chris

@ Luis Enrique:

I think you're underestimating the mind-boggling size of the so-called 'shadow' banking system. I believe that £250 billion figure from a Tobin Tax is for worldwide revenue, and that's really a drop in the ocean comapred to the trillions upon trillions of £ of hot money sloshing around the globe.

Luis Enrique

Chris,

ah, if I used a worldwide figure, my mistake. Otherwise, no, it's not a matter of underestimating anything. The economy is not a collection of discrete buckets, some of which contain trillions of £ so billions of £ can be taken from them and not missed.

If you take one pound coin and pass it between hands a billion times in the finance sector, that's a billion pounds "sloshing around" - if you take £1 in tax, it's gone.

A better way to think about it is as a proportion of GDP - if a Robin Hood Tax raises a large sum of money, relative to GDP, then it is a large tax with large consequences, not a tiny tax that will hardly be noticed.

(It may be that government taxing-and-spending manages to increase GDP to some extent: that's a different argument)

ortega

Allow me to insist.

"...Singapore provides better schools and hospitals and safer streets than most Western countries—and all with a state that consumes only 19% of GDP"

http://www.economist.com/node/18359852

NomadUK

I bet they make the trains run on time, too.

Straus

@ CharlieMcMenamin

“But on your second point ('taxing this would be deflationary') I think there is a fairly simple answer: it would be deflationary only if the money was taken out of circulation entirely, or wasted, as opposed to re-invested in productive activity by the state or agencies funded by the state”

Are you seriously suggesting that the state is likely to invest the money more productively and efficiently than private companies? Do you have any evidence to support this extraordinary claim? If not, then the measure would certainly be counterproductive.

Mariana

The only way rich people should not be taxed is if they only lived on their earnings and revenues.

George Carty

Isn't taxing the rich personally via high rates of income tax better than high taxes on corporate profits, because the latter incentivizes corporate bosses to loot their own companies?

Chris

Hi Luis. You said:

"If you take one pound coin and pass it between hands a billion times in the finance sector, that's a billion pounds "sloshing around" - if you take £1 in tax, it's gone."

I must point out that every £1 taken in tax does not just disappear: it gets spent, generally on something pretty useful, like education, health care, housing etc. The money is not gone; it finds its way back into the private sector. It just gets temporarily re-routed, doing good work along the way. Hence public spending is good.

Laura

Tax should be fairer... but then tax loopholes should be done away with.

Eamon

Too much of the tax take is used on projects that are useless and contribute nothing to society. The government should make public a detailed account of where every penny is spent not a general summery.If you are in business you have to provide them with a full set of accounts that balance to the last penny.

Kids Timberland Boots

So cute! I already like you on FB and also get your posts on Google Reader. :)

The comments to this entry are closed.

blogs I like

Blog powered by Typepad