Bridge for sale, apply within
If you're finding all the polarised ideological debate about the Budget tax changes a bit hard to follow, Wings over Scotland is here to help. Simply put, what the Chancellor is apparently expecting us all to believe is essentially this:
"Dear Rich McWealthy,
We note that last year you had £40,000 of higher-rate taxable income. Well done you! We asked you to pay tax on that amount at 50% – sending you an invoice for £20,000 – but you employed a clever accountant (who you paid £1000) in order to reduce your tax bill to just £6,000.
This year, however, we see that you again have £40,000 of higher-rate taxable income. As we do not wish to see you flee the country and thereby damage the prospects of economic growth and wealth creation, we have decided to reduce the upper tax rate to 45%, so you'll only have to pay us £18,000 rather than the £20,000 we (with hindsight quite unreasonably) demanded last year.
We are sure that in the light of this new lower rate, you will be happy to send the Treasury a cheque for £18,000 rather than the £6,000 you paid last year, and that since the new rate is so much more agreeable you won't feel the need to procure the services of the clever accountant again (even though he'd still be saving you a whopping £11,000).
Thanks very much in advance for the extra money! We'll be spending it on keeping your local library open, so that all the OAPs and disabled people who can't afford their fuel bills any more will have somewhere to sleep next winter.
Love,
HMRC"
If you're swallowing that one, please get in touch immediately. We have an investment opportunity you're going to be keen to get involved with.
Where do I sign? Sounds like a great deal.
Oh, by the way, do you have any public services I could buy while I'm at it?
Okay, what I take from this is that the 50p/45p band does raise money, so it's not aimed at Rich McWealthy unless he was bizarrely not avoiding income tax until 50p came along (what did he light his cigars with back then, if it wasnt 100 quid notes?)
Instead, it's aimed at Dick McCareless who was paying the full 40p whack on his PAYE earnings.
Some Dick McCarelesses saw the 50p rate and decided to do something about it. Result: supposedly at least – loss of tax income.
Other Dick McCarelesses did not do anything (the 50p tax raised some money), indicating that in fact The Rich are not a homogeneous mass of top-hat wearing fatcats with identical sensitivity to tax levels.
Given that we've proved the existence of this continuum of non-identical Rich people, it's not completely mental to think that different tax rates might present different trade offs in terms of tax raised wrt tax dodged. There'll be some inertia of course – since they've gone out of their way to dodge the 50p rate, a lot of the effort is behind them.
Coming back to Mr McWealthy – since he was unaffected by the 50p rate, why the f*** are we talking about him in the context of the 50p rate? Some other remedy is needed to gain access to more of his cash.
Cheers.
Dear Rev Stu
I phoned my accountant to ask if he and his colleagues were concerned about the potential loss of income as people like myself opted to forego their services in favour of taking up George Osborne's very tempting offer. Unfortunately, he was unable to talk to me due to a fit of uncontrollable laughter.
Rich McWealthy
“Coming back to Mr McWealthy – since he was unaffected by the 50p rate”
Where are you getting that from, given that the piece explicitly states he has £40,000 of income in the 50p bracket?
£12,000 not £11,000 saving?
£11,000 if you factor in the £1000 cost of the accountant…
Ooh, damn, did I miss that or did you edit that? (I vote the former since I'm tired.)
As a relative pauper amongst you august people, could I pay an accountant a thousand pounds and save oodles of money too? It seems that my employers took their responsibilities to the Inland Revenue, as was, more seriously than they took their duty to care for me! Why are EBTs and tax dodges only available to footballers and the rich? We need to democratise this whole tax scam process for the sake of parity. There must be millions of folk out there that would like to share in their convoluted arguements and get loads of extra wonga.
The short answer is that if you're on PAYE you're basically screwed. If you're not, an accountant will almost certainly be able to save you more money than it costs to hire them.
"Ooh, damn, did I miss that or did you edit that? (I vote the former since I'm tired.)"
It was indeed the former, I'm afraid.