Friday 2 March 2012

The Whinging Rich

A group of those who pay the top rate of tax today said: 'Given the current state of the UK economy, we urge the Chancellor to urgently consider scrapping the top rate of tax in his forthcoming budget'.
They have described the 50% tax rate as 'damaging', 'unfair' and 'unjustified' and bleated that it was holding back the UK's recovery.
Obviously those who pay the top rate of tax don't particularly like paying the top rate of tax but the flip side of their argument is that if they don't want to pay to help keep our society going, who do they want to do it?
The fact that they are earning in excess of £150,000 per year to qualify to pay tax at 50% in the first place means that they are still better off then the vast majority of the people who work for them.
If you ask anyone who drives, they will say the huge petrol duties are unfair and if you ask anyone who owns a shop they will say that the VAT rise is damaging to the recovery.
Any public servant who is lucky enough to still be employed and have had their pay frozen for the past 3 years will say that is unjustified as will the disabled who have had their benefits cut, anyone who has recently joined the unemployment line and students who have had their £30 EMA grants snatched away from them.
Those paying the 50p tax rate do not have to choose between heating their house or eating, it does not mean they are having to sell their jewelery to pay the electric bill or face having their houses repossessed because they have fallen behind with their mortgage.
Those who are complaining about having to pay a bit more tax to make up the shortfall should take a long hard look at themselves and compare their situation with the real losers in this government's savage austerity drive.
We didn't hear such concern from the rich when the Government were slashing away at the pensions and benefits of the poorest in the country so they should keep their greedy, obnoxious mouths shut and realise that they are in a hugely privileged position and realise that paying a 50p tax rate is the least they can do to help cut the deficit because if it was up to the rest of us, they would be paying a damn sight more than 50p in the pound.

22 comments:

Cheezy said...

I'm afraid your analysis isn't really borne out by what's happened, Lucy. When you refer to "making up the shortfall", the 40p rate was actually more effective in doing this, as tax receipts generated from this group have fallen since the rate was raised.

It's hard to escape the conclusion that the 50p rate is good politics, rather than good economics. Osbourne would love to drop it, but he knows the political fallout would be severe, even as the effect on the economy would be positive. Such is life in a democracy.

My personal bug-bear isn't income tax, it's the big multinationals who are habitually avoiding (and frequently evading) corporate tax on a massive scale. And when they get caught, they 'negotiate' a settlement with HMRC. e.g. like Barclays have just done when they (finally) paid up £500 million the other day... If Joe Bloggs down the road tried the same trick he'd be in court without his feet hitting the ground. And Vodafone apparently owes us all £5 billion. I'm sure we'll settle for less! (although how many operations/ pensions/ schools could that pay for eh?.. and all the rest... pricks...)

For an example of what happens when nobody pays their taxes, let's have a look at Greece eh?... Ouch, that looks grisly... Let's do something concrete to stop the rot here, rather than pissing about with an ineffective adjustment to the top rate of income tax.

Falling on a bruise said...

Without looking at the figures i take at face value your analysis that the 40p tax rate is more effective at raising money but isn't that due to your second point that the top earners avoid paying it with evasive tactics? If that is the reason then HMRC should be swarming all over them.
What ticked me off was the rich and those who can most afford it, bleating about having to pay more tax than anyone else. I say if you earn over £150,000 to reach the 50% rate then you are in a far better place than the vast majority of the country.

Anonymous said...

I don’t see why “rich people” (subjective label even though you apply an income amount) are “whining” when they resist somebody using force to take their money (government or any other thief). What is really driving your thoughts? A view that “rich people” got their wealth unfairly or that they are “obligated” to provide for poorer people? Or is it something else?

I mean, if I agree to let you take 50% this time. What will it be next time? When will it be 100%? How much will it be before nobody wants to be an earner? Once again I say “the only way to make people equal is to make the equally poor” – seems you are in favor of this. Once again, you are making it sound as if “poor people” (subjective label even though you gave examples) are victims with no complicity in their condition. If I was a “rich person” in the UK I’d be thinking about moving to the USA or Canada. That way everybody in the UK would have equal wealthy (albeit poor compared to people in other nations)and everybody would be happy! :-) yea us!

q

Cheezy said...

"How much will it be before nobody wants to be an earner? "

Nobody? The answer to this question is: an incredibly high level. And we don't have to guess about things like this because it's happened. In the 1970s there was a top rate of 98% in the UK and yet, some people still fell into it.

You're speaking very hypothetically, Q, but we've actually got hundreds of examples from all around the world that give us clues about where to pitch tax rates in order to both maximise revenue, making it easier for us to pay for things that we want as a society, and to retain incentives for those at the top level to keep on creating and innovating. It's still not an exact science, but empirical observation and historical experience helps us out a great deal. Also, it's completely ridiculous to say that raising the top rate of income tax is any kind of way to make everyone 'equally wealthy'. Again, you just have to look around at the real world to see that while a certain degree of 'flattening out' can make income disparities less pronounced, this is a gazillion miles away from making everyone equally wealthy. That has never happened (in any society anywhere) because it cannot happen.

Lucy said...

What's driving my thoughts q is this whole austerity drive seems to be very lopsided. The only way to balance the books is to get more in and pay less put. So far the paying less out has hit everybody but as usual, it is the poorest that suffer the most. The richer part of society have been asked to pay another 10% on all their earnings over £150,000, upto this they pay 40%. Now the 'rich' are complaining that it's unfair that they have to pay an extra 10% while pensioners are complaining they they have to choose between eating or heating their homes so who are your sympathies with? We are all in this together we keep being told but the top seems very unwilling to do their share. That's what bugs me.

haveaniceday said...

When is it going to sink into the heads of all you marxist types that things are not fair, never have been and never will be, so get used to it, stop your constant whingeing and accept it. LIFE ISN'T FAIR!!!

Cheezy said...

haveaniceday is dead right in saying that life isn't fair and never will be... but if he's also somehow saying that basic fairness - in terms of how public policy impacts upon society, and in terms of opportunity - shouldn't be one of the goals of public policy, then he's dead wrong. And do you ever hear many politicians in democracies rallying against fairness? I can't remember an instance. It's one of the touchstones of democratic governance, or at least that's how it's frequently represented on the stump. Even people like Dubya, whose policies were quite blatantly skewed towards the richest few percent, had to pretend that he also, in the interests of this 'fairness', was also trying to help those who circumstances (from birth or otherwise) didn't have it quite so good.

It's hard to tell exactly what he meant from that little outburst though. Care to elucidate?

haveaniceday said...

I will be happy to elucidate. Good things happen to bad people and bad things happen to good people and nothing we can do about it. So you can either bellyache like the Marxist here and dream of a non-existent land where everything is equal or you can live in the real world and just accept it for what it is which is unfair and we are stuck with it. At some point even the most hardened Marxist must realise it and stop fighting the tide and decide they had better grab what they can.

Cheezy said...

You didn't explain why public policy that, wherever possible, aims to maximise fairness, particularly in terms of equality of opportunity (equality of outcome being both impossible and undesirable), is a bad thing.

We all know perfection in all human endeavours is unattainable. That much is too obvious for words. But what's wrong with making things better?

Anonymous said...

cheezy,

the problem is that the focus is on outcomes, not opportunity... the left has and will come up with every conceiveable reason why the opportunity was not fair...

marriage tax advantage, race, gender, sexual preference, hostile work environment, childcare cost, unequal education, cost of education, poor childhood, inferior teachers, unfair access to the web, crime rate, health issues, and more.

the left can't accept unequal outcomes.

q

Cheezy said...

So we're agreed that at least trying to achieve more equality opportunity is a good thing for public policy to strive for? (perfect equality of opportunity being an impossibility). I wonder if haveaniceday agrees too...

Anonymous said...

We don’t really agree. My position is that the FEDERAL government policy should not create imbalances, but I’m much more tolerant of state and local doing such. I’m against things like:
- create hiring quotas for minorities
- create university quotas for minorities
- allow lower test scores for graduation for minorities
- lower physical requirements for women (fire, police, military)

Also, don’t label FEDERAL welfare programs as if they are equal opportunity programs. The items below are at times justified as improving opportunity, when to me they are really outcome focused and are really welfare:
- subsidized housing
- subsidized child care
- subsidized pay
- subsidized meals
- and on and on and on

To me, these things just enable the same old behavior and does not change what got the needy in their position in the first place. They are mostly poor because of the choices they make. They rarely use the welfare programs to improve their ability to compete and instead use the programs to maintain their life style – subsidized by tax payers.


q

Anonymous said...

We don’t really agree. My position is that the FEDERAL government policy should not create imbalances, but I’m much more tolerant of state and local doing such. I’m against things like:
- create hiring quotas for minorities
- create university quotas for minorities
- allow lower test scores for graduation for minorities
- lower physical requirements for women (fire, police, military)

Also, don’t label FEDERAL welfare programs as if they are equal opportunity programs. The items below are at times justified as improving opportunity, when to me they are really outcome focused and are really welfare:
- subsidized housing
- subsidized child care
- subsidized pay
- subsidized meals
- and on and on and on

To me, these things just enable the same old behavior and does not change what got the needy in their position in the first place. They are mostly poor because of the choices they make. They rarely use the welfare programs to improve their ability to compete and instead use the programs to maintain their life style – subsidized by tax payers.


q

Cheezy said...

"They rarely use the welfare programs to improve their ability to compete"

We do disagree on some things but that’s a very good point right there. Certainly something isn’t working in the US, as the statistics show a very low (and declining) intergenerational socio-economic mobility.

This is the sort of thing that caused the great George Carlin to say: "You know why they call it the American dream? It’s cos you have to be asleep to believe it".

I’m not acting superior though, because socio-economic mobility in the UK is among the lowest in Europe. As measured by father/son earnings elasticities, there’s a much closer relationship between a father and son’s income in the UK & USA (low mobility) than in France, Germany and Sweden (medium mobility), and Canada, Finland, Norway and Denmark (high mobility).

This data isn’t the be-all and end-all of the ‘equality of opportunity’ but it’s a pretty strong indicator.

I’m sure we’d disagree about some of the solutions to our respective nation’s woes... (Like, I think the first thing I’d do would be legislate against the whiney cultural victimhood of people – usually white and comfortably middle-class – who actually have it pretty good... The best clue about how to spot these people is that they use the term "politically correct" like it’s some kind of fucking mantra... Lock 'em up! ;)...

But maybe a good first move would be to see how successful countries promote equality of opportunity... (Sadly though, this advice would fall of fairly deaf ears with our present government though, I’m sure).

Anonymous said...

Cheezy,

Also, the countries with high mobility are both relatively homogenous in population and are small. London almost has more people than Norway, Finland, and Denmark combined...

q

haveaniceday said...

What i am talking about Cheezy is the whole thing. In every aspect life is not fair and only God or the Prime Minister can do anything to make it fairer. It is human nature to look after your own interests first and we are not going to change human nature because we are selfish and greedy and always looking to get one over someone else. Yes that is a shit attitude but that is how it is and you are just wasting your breath calling for anything else like the Marxists do because humans won't share or will only share once they have filled their pockets first.

Lucy said...

So that's your answer haveaniceday, just give up and say it can't be done? Roll over and join the pack trampling on the little guys? If we all had your attitude we wouldn't have a minimum wage, pension credits, tax credits, free TV licenses or bus passes for the elderly. I agree that life isn't fair but it isn't going to get any fairer if we follow your defeatest and self-interested route.

Anonymous said...

i wouldnt argue that any of those things make life fairer. they do help people, especially those who had bad luck, or made poor choices, plus the people that did face discrimination/etc. but others pay a price...

q

Cheezy said...

@Q: I agree that it's more of a challenge to get these indicators looking positive when you have a large and diverse population. So yeah, it may be more instructive to look at intergenerational mobility within the same jurisdiction over a specified period of time... and if we look at it since, let's say 1980, then along with a bunch of other 'quality of living' indicators, it's been getting worse. In the UK and the USA.

"In every aspect life is not fair and only God or the Prime Minister can do anything to make it fairer."

@haveaniceday: Just to confirm, it's the Prime Minister we're asking! :)

Also, how many of these utopian 'Marxists' do you personally know? The ones who think that perfect equality and fairness is possible...?

I know loads of people who are... well, I'm not sure if they're 'Marxists' at such, but they're definitely left-wing... and they're as aware as everyone else (possibly more aware) that life is a bitch and then you die, and perfect fairness is totally unattainable. What they do believe in is the power of communitarian action, whether it's by government or another collective institution, to make life better for most people... not perfect, or 'everyone equal'... but better... (as indeed do I... to a certain carefully prescribed level).

Just wondering if you know these people, cos they sound like a bit of a 1950s stereotype to me.

Cheezy said...

Lucy... You know how I'm not the sort of person to say 'I told you so'...? Well... I hope you forgive me if I make a cheeky exception in this case! :-/

Looks like the 50p rate was all about politics, not economics.

Lucy said...

Not sure who Tax Research UK are but they put it down to forestalling:

http://www.taxresearch.org.uk/Blog/2012/11/28/the-telegraphs-claim-that-all-the-rich-have-run-away-because-of-50p-tax-is-completely-bogus/

Cheezy said...

That is interesting, and I'll have to do some reading around this to make up my mind properly...

However, I think the conclusion is quite notable:

"The right wing economists claiming this is some massive proof that tax drives people out of the country or discourages work need to think again. All it shows is that people tax avoid. And that is something I have said, for a long time."

Well, what I'd say to that is: Whether they've physically buggered off or just done cunning things with their money (and I'm more than willing to believe that the vast majority have done the latter), it makes no difference to our depleted tax base. The end result is still an increase in the upper rate causing a hole in the budget, no matter the whys or the wherefores.

But it's all food for thought anyway. I'll keep digging.