The Lib-Con, or should that be Con-Lib coalition and the Treasury are set to crackdown on tax avoidance by the UK’s wealthiest people by recruiting 2,250 more tax inspectors.
In 2011/2012, most will start paying 20% tax at £7,475 and 40% tax at £42,475 and 50% on earnings above £150,000, regardless of whether you earn £151,000 , £1,000,000 or £50,000,000.
Ok so we all resent paying taxes, especially when we see how badly this as all previous governments manage to waste it, but that’s a whole different conversation.
This tax regime, allows the super-rich to work with the best tax advisors and planners to find loop holes to avoid taxes (look at Phillip Green).
Now, instead of addressing the problem at the source and re-working the tax system, the Government is wasting more time and money trying to catch the avoiders rather than encourage them to pay their fair share of.
There is an astronomical difference in how 50% tax affects those earning £150,000, in comparison to say, those who earn £1 million plus. And therefore what I would like to propose, even though he got accused of starting a class war because of it recently, is something which President Obama seems to advocate – a ‘Buffett tax’ on the ultra wealthy and easing of rates for the middle band.
A very fat cat indeed: Philip Green
By offering a top rate tax bracket of 35% on salaries up to £240,000, and ensuring those earning more than $1 million a year paid at least the same percentage of their earnings as middle-income taxpayers – the U.S might have just about cracked it.
Widen the band in the ‘middle’ for those who are rich enough to reinvest and create wealth; get it circulating back in the economy, instead of hiding it, and just watch what happens. A fine case in point is, before Thatcher came to power, the top tax was an astounding 82.5%, with an additional 15% surcharge for “unearned” income (i.e interest). This left little incentive to create wealth. The top tax was slashed overnight to 40% and the well documented result was an increase in tax collection within a few years.
Why do the UK Government continually attack those in the middle – why not those at the top? Is it because of all the back handed deals? Is it because those earning millions are more important to the Government than the rest of the country?
Mr Buffett (who the proposed U.S tax is named after), the world’s most successful business investor and an informal advisor to Mr Obama, wrote earlier this year that the mega-rich were ‘coddled’ by a ‘billionaire-friendly Congress’. He also said that he was taxed at 17.7% on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000 was taxed at 30%.
He is one of the few who have seen the light and understood that it the mega-rich themselves who should be volunteering to do this. As the third richest man in the world, he understands if the mega-rich were taxed just marginally more, it would not make the slightest bit off difference to them, yet it would make a whole world of difference to the state of their (and our) economy. France’s mega-rich are saying ‘tax us more’ too, with 16 of the richest people in France having signed a petition asking the French government to increase their taxes. So why are the UK so reluctant?
Hiring 2,250 more tax inspectors at a cost of* roughly £101,250,000** could be completely avoided by simply raising the tax for people earning a million plus by a small fraction.
Where do you stand on this?
*Complete Guess **(£45,000 X 2,250)
