Polly on Taxing the Rich

She\’s still not quite got it, has she?

Those registered as a non-domiciliary, absolved from British tax although they live here, would pay a flat rate of £25,000 a year.

Err, no. Income made in hte UK is taxed exactly the same as that of any other resident\’s. It\’s the taxation of overseas income that is at issue here. If you want to think of it in moral terms (which no doubt Polly would), well, what right does the UK State have to income made in, say, Russia? By a Russian?

It\’s not just the non-doms and non-residents, but the private equity tax avoiders and all the mega-rich.

Non-residents now? What, you mean that people who don\’t even live in the UK should be paying UK taxes?

The UK has one of the lowest top rates in the OECD 30 nations, yet the rich use the same roads, services, police and national security to conduct their business in a well-regulated environment, with the NHS to save them when their Porsches crash.

Now that is interesting. The implication of course is that the rich should be paying more because they use the same services. That there might be some fixed amount that people should pay for services does not, of couse, cross Polly\’s mind. However, let\’s look a little more closely. How much of all of the tax take do the rich contribute? And how does that compare to other countries? This is the top 30% of the people (just because that\’s the stat I found) but it doesn\’t actually show what Polly would like it to show.

In the UK, the top 30% of the people, the richest 30%, pay 62% of th total tax take. This is lower than the US for example, at 65% or so. But what about the Nordics? Those perfect social democracies, which Polly would so dearly love us all to be like? Hmm. Finland 56.8%, Norway, 53.8%, Sweden 53.3% and Denmark 48.7%.

So, err, for us to become the sort of society which Polly would like we should be lowering the tax take on the richest 30%.

As house prices rise, more people fear that their estate will creep into the £350,000 level most recently set by Gordon Brown; 37% of estates are now worth over £350,000 (homes, pensions, cash), so if everyone died today then 37% of estates would be liable. But everyone is not dying today. According to Carl Emmerson of the Institute for Fiscal Studies (IFS), by the time people grow old and die they have divested themselves of money, giving it away when children and grandchildren need it, downsizing their homes to spend on cruising, enhancing their pensions or going into long-term care.

Didn\’t Polly recently call for al lifetime gifts to be taxed as inheritances? I\’m sure she did you know.

Good grief!

People think IHT is an unfair "double taxation" out of already taxed income. But no one pays it from income: it is only paid after death by inheritors.

No it isn\’t! it\’s paid by the estate! If £5 million is left to one person or the same £5 million is left to 100 different people the tax paid is the same. If inheritances were taxed at the level of the recipient then there\’d be a great deal less fuss about the whole subject.

Is it worth asking, you know, pleading almost,  that journalists know what they\’re writing about?

8 comments on “Polly on Taxing the Rich

  1. Tim, love the new blog and everything, but it seems to chop off the first few letters in each line, for example, above here it say “AVE A COMMENT”. Is it just me or does everybody else get this?

    Tim adds: Several have nothed similar things. The Devil is still playing with layout, once that’s done we’ll move on to checking out such complaints.

  2. And your Nordic example is not really fair is it? It is possible that the richest 30% in Sweden earn £60,000 and the poorest 70% earn £20,000, which would explain why the richest 30% pay less of the total tax take than in Blighty.

  3. This is the first of your posts today (scrolling from the top) that loses its left margin. I’m using IE 6. If this comment doesn’t make sense, that may be because I’m losing its left margin too.

  4. In the UK, the top 30% of the people, the richest 30%, pay 62% of the total tax take. This is lower than the US for example, at 65% or so. But what about the Nordics? Those perfect social democracies, which Polly would so dearly love us all to be like? Hmm. Finland 56.8%, Norway, 53.8%, Sweden 53.3% and Denmark 48.7%.

    Yes, she would want that. It would indicate a more egalitarian distribution.

    Tim adds: “Could” indicate a more egalitarian distribution. It could also indicate a more regressive taxation system (not that I’m suggesting that the Nordic income tax system is such). Personally, I’d prefer a greatly more progressive tax system than the one we have now. No one on less than median income paying income tax. That would raise the percentage of th total take paid by the top 30% as well: but would be more redistributionist and more progressive than at present.

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