500 million reasons why they can’t afford NOT to cut our taxes: When the top rate of tax went up to 50%, the Inland Revenue’s coffers went down by half a billion pounds

I get really angry when Lefty governments the world over start shouting about the wealthy having to ‘pay their fair share’. This is just plain communist talk. Anytime you hear the words ‘fair share’ or ‘social justice’ then run for the hills. Just what do they mean by ‘fair share’? Well, in the UK, the millionaires – or the 1% – already pay 30% of the total tax income revenue. In the USA, the 1% pay 37% of the tax bill. How much more do governments want out of these people? How much deeper do they want to stick their slimy paws into their pockets? This is pure and simple class warfare. When Lefty governments have squandered their country’s riches, the easiest targets and the fall-back guy is the ‘millionaire’. The wealthy are targeted because governments think that if they deflect the attention to those who have wealth, the population will get behind them to demand these people pay more i.e. stigmatise this group. Well, I for one won’t have any of it. Growing up, we were taught not to covet they neighbour’s anything. We were taught that if you worked hard and with some luck, we too could be a millionaire. I’m still aiming to be there. No one got rich sitting on their backsides wishing it were so (apart from those who win the lotto that is). It takes hard work, worry and persistence to become rich and why shouldn’t these people enjoy the fruits of their labor? Heck, I wouldn’t mind being them either. Sure there are a few shonky rich people but so what? You get shonky poor people too. You can never make poor people richer by making your rich poorer – that’s been proven over and over. All  you do is make everyone poorer. The UK is only just realising that you can’t tax the rich disproportionately. Once your tax bracket reaches a certain level, then revenue drops dramatically. Why? Because people don’t mind paying their taxes, but they do mind being bent over a barrel and you can fill in the rest. The rich take their money elsewhere, or hide it. I would do the same. I’m all for a flat tax – where everyone pays the same percentage of their salary in taxes. Why should the less well off be taxed less than me? No matter how much you earn, you pay the same proportion in taxes. What could be more fairer? However, this is far too simple for the greedy politicians to understand and so this will never happen…..

Should anyone be in any doubt how crucial it is for the Chancellor to keep the wealthy paying tax, let them consider this sobering statistic revealed last week; that the highest-earning one per cent of Britons pay £47 billion in income tax – almost 30 per cent of the total and an amount equivalent to half the annual running costs of the NHS. 

Since 2000, the share contributed by this top-earning group has increased from 22.2 to 27.7 per cent, largely because there are now so many more millionaires. But the paradox facing George Osborne is that although the very rich are vital to our economic wellbeing, if they are squeezed too hard, they are also the most likely to find ways to avoid paying taxes or leave the country altogether. 
For most of the past 12 years, the top rate of tax was 40 per cent – not the current 50 per cent, which 500 small and medium-sized business owners warned last week was stifling the economic recovery.

And although the Treasury has yet to release its formal study on the impact of a 50 per cent tax rate on growth, the early indicators are  worrying; latest tax receipts from self-assessment forms – those used by the country’s richest – are down by half a billion pounds. 
The total revenue from income tax payments came to £10.35 billion –  £509 million lower than the previous year. Senior Treasury figures  quietly let it be known that there had been ‘manoeuvring’ by well-off taxpayers to avoid the 50p top rate of income tax.
It is an example of what economists call the Laffer Curve, after the American economist Arthur Laffer, who discovered this simple truth: high tax rates actually bring in less money for the Treasury than lower ones, because they result in greater tax avoidance. 
This, of course, is all perfectly legal – though the Revenue would love to ban it. Tax avoidance means organising your affairs, within the rules, so as to pay less tax. What is  illegal is tax evasion – such as under-reporting your income or dodging VAT.
Most of us don’t have the option to organise our tax affairs in this way. But many of the highest earners have a foot in several tax jurisdictions – which allows them to choose where to pay their tax. Business people, too, can pick and choose to a  certain extent – dividing their income into salary and dividends, for example, in order to minimise their tax liability.
That is why there was such a furore over revelations that many senior civil servants –including several at Her Majesty’s Revenue & Customs – were paid in a ‘tax-efficient’ manner through private companies. 
If you run a business with many clients, it is perfectly fine to be paid through your company rather than a salary. What raises judicial eyebrows is when you have only one big client and get paid through your company – or make your spouse a shareholder and shift earnings between the two of you and avoid higher tax rates.
The reason why tax avoidance is rife among our highest earners is because our taxes are too high and too complex. The Government takes £460 billion a year in taxes – two-fifths of everything we earn, which is twice as much as communist China. We each work five months of the year solely to pay taxes. Only then do we start earning for ourselves.
Britain’s tax code is the biggest in the world. The current edition of Tolley’s, the accountants’ tax guide, runs to 14,500 pages – twice as big as when Gordon Brown became Chancellor in 1997. There are plenty of hiding places in that jungle.
And people resent tax because so much is wasted. Bhs boss  Sir Philip Green’s 2010 spending review found Whitehall could save £600 million on phone bills alone. ‘No business could survive that level of waste,’ he concluded.
Our high taxes make avoidance more profitable. Britain’s top rate is 50 per cent; America’s is just  35 per cent. Our capital gains tax is 28 per cent; theirs is just 15 per cent. In the EU, only Scandinavia has higher top rates; outside the  EU, nobody does.
Worldwide evidence shows plainly: set taxes too high and people will avoid them. They set up avoidance schemes, take themselves or their money abroad or simply retire. 
For example, in April 2008, Chancellor Alistair Darling imposed a £30,000 tax on ‘non-doms’ – high-flyers who work in the UK but are domiciled abroad. More than 16,000 of them simply moved their affairs overseas, resulting in a net loss for the Treasury.
You see the same in America. A 2008 study found that 80,000 people migrated to the nine US states with no local income taxes, while the ten states with the highest taxes lost 129,000 residents and $10 billion (£6.31 billion) of income.
And if you want the rich to pay more, cut taxes! In 1979, Chancellor Geoffrey Howe chopped the top tax rate from 83 per cent (yes, really) to 60 per cent. Before the cut, the top one per cent of taxpayers paid only  11 per cent of the total tax revenue. By 1988, the same 250,000 people were paying 14 per cent of it.
When Nigel Lawson sliced the rate further to 40 per cent, receipts from the top earners rose to 21 per cent of the total. By halving the top rate, Howe and Lawson doubled the share paid by the highest earners.
In America, after George W. Bush’s 2003 tax cuts, the taxes paid by $1 million-plus earners more than doubled in just three years. 
It is the same everywhere. When India cut taxes in 1997, ‘experts’ predicted a loss of  revenue but they were proved wrong. 
When Canada cut top tax rates in 1981, receipts from high earners went up. When Russia replaced its complex system with a flat-rate tax of 13 per cent in 2001, receipts rose by  a quarter. 
Former Cabinet Minister Liam Fox says that if we are to get growth moving again, we need lower taxes on business. Spot on. 
The World Economic Forum reckons tax is the key factor in doing business with a country, but a 2010 study by accountants KPMG ranked Britain only 83rd out of 86 countries for tax competitiveness. 
A 2004 survey showed that the 20 fastest-growing countries all had low marginal tax rates. And the dozen or more of those countries (including several ex-Soviet bloc nations) that have adopted low, flat taxes have no plans to change.
The flat tax, which is gaining traction across the world, makes tax both low and simple. There are no top rates, just a single tax rate for everyone. The poorest – on less than about £12,000 a year – pay nothing. Loopholes are scrapped.
Because there is only one rate – it would be about 22 per cent in the UK – a flat tax is easy to calculate and difficult to avoid. The tax form can fit on to a single side of paper. There are fewer distortions and disincentives. And more transparency about what people – senior civil servants, say – should pay.
Some people say that a government running huge deficits cannot afford to cut taxes. In reality, it cannot afford not to.


About limelite001

This is my tribute to highlighting the hyposcrisy in the left and racial world...

Posted on 5 March 2012, in Uncategorized. Bookmark the permalink. Leave a comment.

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