The Treasury select committee will consider asking the banks to extract payroll taxes from the wider tax bill, the Telegraph has reported. This followed reports over the weekend about Barclays paying £113m in corporation tax out of a total tax bill of £2bn in 2009. The bank made £11.bn profits that year.
Mr. Umunna (for it is he, our hero): Thank you for coming back to speak to us again Mr. Diamond.
Mr. Diamond (for it is he, the devil): Nice to be here again.
U: Could you please tell us exactly how much tax Barclays actually paid?
D: As I\’ve said, the total tax contribution was of the order of £2 billion.
U: Yes, but that\’s not really what the bank paid, is it?
D: I\’m sorry, what do you mean?
U: Come along now, you\’ve lumped in all of the income tax paid by your employees.
D: Well, yes…
U: And that\’s really not being paid by the bank, is it?
D: Well, no, perhaps not….
U: And those payroll taxes, they really come out of the workers\’ wages as well.
D: Do they? My, I had no idea. You mean employers\’ national insurance as well, this is really paid by the workers, not the company?
U: Yes, come along now, everyone knows this, even Richard Murphy agrees.
D: So you agree then that the marginal tax rate faced by those on minimum wage is 45.8% then?
U: I don\’t think….
D: Do I really have to lay this out for a most distinguished member of the Treasury Select Committee? Basic rate income tax is 20%. Then there\’s 12% employee national insurance and 13.8 % employers, NI. And you\’ve just said that all of that NI is paid by the workers, not the company. So, for those making the pittance of minimum wage, the government is currently charging them a 45.8% marginal tax rate.
U: But we\’re not here to talk about personal taxes but about corporate ones.
D: But this is about corporate taxes. We can go further. When people hit the upper band they stop paying employees\’ NI but keep paying employer. So actually the upper rate tax rate is 53.8%. And the tippy top one becomes 63.8%.
U: But this is still nothing to do with corporate….
D: Dear Lord Almighty, how did anyone as thick as you get into this building? Even on a guided tour. Look, what you\’re complaining about is the amount of money that the government gets. And you\’re also complaining about the bonuses that we bankers get.
U: Of course and there\’s no need to be rude…
D: But what am I supposed to be to a thicko like yourself? Can\’t you see it? If the bank makes a profit then the government gets 28% of it. If instead we pay the money out as bonuses then the government gets 63.8% of it. If you were coherent enough to actually argue for what you want, higher tax revenues, then you would be begging all of the banks to pay every single penny they earn out in bonuses.
U: Oh, well, since you\’ve put it that way, yes, you\’ve convinced me.*
* Excised on the grounds of being entirely unbelievable.