Wednesday, 22 February 2012

The Left's Tax Problem They Dare Not Mention

I have a friend. He was a non-dom. When NuLab started taxing non-doms, he simply moved abroard. He now lives in Italy and is enjoying the sun. That policy worked well then.

I have another friend who’s a Top 1% type. When the 50% tax rate came in, he believed that it was unreasonable for him to be forced to hand over so much of his very hard-earned income (a marginal rate of 61%, ie he got to keep only 39%) so he re-structured. And now he’s only paying 32.5% tax. So, in fact, less than the 40% he was paying before NuLab’s 50% tax rate was introduced. Yup, that policy’s really helping things.

And therein lies the problem with taxing the rich. They either just fuck off abroad or they restructure themselves so they pay less, whatever the rules. That is just reality and nothing’s going to change it, a fact that our Lefty social engineers in Parliament can never seem to get their heads around.

So what is the Left’s tax problem then?

The problem is not that the rich are paying too little. As demonstrated in my post on Sunday, they are paying considerably more than perhaps they really ought to.

Nor is the problem that the rich are evading tax. HMRC are onto that 24/7.

No, the real problem is that there is a huge, national tax evasion operation in progress. And who is carrying out this enormous scam on honest law abiding taxpayers?

Those who work in cash.

A massive number of people at the lower end of the tax pile ‘do it for cash’. Taxi drivers, hairdressers, cleaners, plumbers, electricians, decorators, garage mechanics, builders - you name it. They all ‘do it for cash’. And many of us merrily help them. As we saw from HMRC’s data in my Sunday post, there’s many, many millions of these people and thus a large chunk of HMRC’s potential revenue never actually makes it into the tax system in the first place.

Now I’m not suggesting that we, as a nation, are evading tax on anything like the scale that Greece or other tax basket cases do. But millions of Brits are at it. And the amount they don’t declare utterly dwarfs the amount not making it to HMRC by that very small number of rich people who are legally minimising their tax bill or illegally evading it. Those HMRC stats just put things into perspective.

Now you never hear the Left moaning on about that, do you? Nope. All they want to talk about is how the rich need to pay more tax.

I say again: the main problem I have with the Left is that so much of its rhetoric is anchored in populist, mythical ideology rather than cold, hard and rather inconvenient facts.

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