Sunday, 19 February 2012

Tax Facts for Lefties

I am so bored of the Left’s endless rhetoric on taxing the rich. The latest incarnation of what used to be called ‘class war’ has now morphed into a ‘war on bankers’. It’s always the same thing: they want the rich to pay more, pay for all their well-intentioned but distorting social engineering, pay more for ‘their’ voters. And all this is often dressed up as ‘the rich need to pay their fair share’. So, my Lefty friends, a few inconvenient facts:

First, let’s define rich.

Remember the Millipede’s rambling statements about the ‘squeezed middle’ some time ago on Radio 4’s Today programme which, when challenged, he couldn’t actually define. Well, it’s actually pretty simple. According to HMRC, the median income in the UK right now is £26k. Thus the ‘squeezed middle’ must be either side of that line, no? Let’s say, for sake of argument, £5k either side of that line ie £21-31k. Seems reasonable, no?

Well ‘rich’ in relation to our now newly defined ‘squeezed middle’ is probably a little less rich than many of you were thinking. So let’s subdivide all those earning more than £31k into three groups: the ‘affluent’, the ‘very rich’ and the intergalatically, global ‘super rich’. Turns out, the bean counters at HMRC have already sort of done this for us through the income tax personal allowance system. The ‘affluent’ pay Higher Rate above £35k and the ‘very rich’ pay Additional Rate above £150k. Let’s not really worry about the ‘super rich’ who buy houses for tens of millions, all have yachts and float from tax regime to tax regime. In the big picture, there’s
an absolutely insignificant number of these guys, they are highly mobile and stay well ahead of any tax system in any case and so are simply uncatchable. Waste of time trying really.

Why did the Millipede have such a problem then? Ah, well, it’s because all the NuLab Islington set straddle that ‘very rich’ line. It’s a bit embarrassing for them. (The High Priestess of this set, Polly Tithead, is of course off the fucking ‘very rich’ scale!)

Second, how many ‘affluent’ and ‘very rich’ are there?

Very easy this one, because the Government tells us every year. The latest stats are here. In summary:

Total population - 62.3 million
All income taxpayers - 29.9 million - 47.9%
Basic Rate taxpayers (ie average) - 24.9 million - 39.9%
Higher Rate taxpayers (ie ‘affluent’) - 3.7 million - 5.9%
Additional Rate taxpayers (ie ‘very rich’) - 0.3 million - 0.5%

Hmmm. Awkward facts for you Lefties there, no? The reality is that the ‘affluent’ earn as little as £35k (ie they are teachers and policemen, not oligarchs) and that we in fact have a really teeny tiny number of ‘very rich’ whom, even if you taxed at 99%, would generate nothing more than a small rounding error in HMRC’s annual tax collection numbers because the tax pyramid has this large base of Basic Rate taxpayers and a tiny pinnacle of Higher and Additional Rate taxpayers.

Third, so how much do the ‘affluent’ and ‘very rich’ currently pay for?

Fact - The top 25% of earners pay almost 75% of all income tax.
Fact - The top 1% of earners pay over 25% of all income tax.

HMRC’s 2011 numbers are here.

Ooops. More awkward facts for you, Lefties. Seems the ‘affluent’ and the ‘very rich’ are actually paying way more than their fair share already. So, the facts rather get in the way of that ‘tax the rich more’ rhetoric.

And this is the problem I have with so many of the Left's arguments: much of its rhetoric is anchored in populist, mythical ideology rather than cold, hard fact.

1 comment:

Chris said...

I am glad you are addressing tge myth that the rich does does not pay a lot of taxes.

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