Polly on tax

Sigh:

Tax campaigner Richard Murphy has just published his latest assessment of the Treasury’s missing taxes – a gap he sets at £100bn. The difference between this and the Treasury’s £35bn estimate comes partly from Murphy’s recent uncovering of some 360,000 companies not declaring income, never checked by the staff-starved HMRC, with a sample of 40% of declarations found to be fraudulent. But most of all, he would change the law to assert a general avoidance principle, to stop rules being wriggled around, but let HMRC strike down any activity whose purpose is plainly to avoid tax.

The major difference between the two estimates is that Murphy classes as tax avoidance things that the Treasury does not class as tax avoidance. And on this matter the Treasury is correct for they are following the law and the Murph his own delusions.

Ask Murphy where money is to be had and he has large sums to offer. Start by bringing back the level playing field, abolished in the Thatcher era, between tax on earnings and investments. If the same 13% national insurance was charged on earned and unearned income, that would stop people setting up artificial companies just to avoid it – and it would bring in £40bn.

And that’s just sodding stupid. It’s a well known result of optimal taxation theory (you know, that economics that MonsterMurph insists is all wrong because he disagrees with it) that capital income should be taxed at lower rates than labour income. On the grounds that the deadweight costs of capital taxation are higher than of labour taxation.

Hodge would confront Amazon and the rest right away. “Don’t wait for international negotiations. It will take forever; just close the loopholes now.”

But Amazon isn’t exploiting any fucking loopholes you terminally dim cow. Haven’t you noticed? The entire company as a whole makes losses! There ain’t no profits to tax!

14 comments on “Polly on tax

  1. The difference between this and the Treasury’s £35bn estimate comes partly from Murphy’s recent uncovering of some 360,000 companies not declaring income, never checked by the staff-starved HMRC, with a sample of 40% of declarations found to be fraudulent.

    So the LHTD performed a detailed audit of 90,000 sets of accounts? And he still managed to find the time to feed a daily dose of bullshit to his acolytes? What a guy!

  2. The major difference between the two estimates is that Murphy classes as tax avoidance things that the Treasury does not class as tax avoidance.

    No, it really is what Polly says it is, except that she paints a pretty picture of a great investigator ‘recently uncovering’ hidden shenanigans.. rather than an idiot getting hold of official published data and making wild assumptions.

  3. Is he still including tax that is due , but hasn’t been paid yet and will be, and also tax due from bankruptcy in his list ?

    One we’ll get so doesn’t count, and the other one is pretty much a write off …..

  4. I have decided that I shall supplant Murphy as the economic tax expert choice of the left forthwith.

    As any fule know, the tax gap is £200bn.

  5. The government should seize holiday villas in Umbria and other well-heeled holiday destinations, and flog ’em at auction.

    Illiberal I know, but Polly’s lot started it.

  6. “Murphy’s recent uncovering of some 360,000 companies not declaring income”.

    The man is a certifiable loon. There are 3,290,913 companies registered at Companies House of which 3,008,594 are listed as active. This ‘detailed’ research took a minute as it’s listed on the Companies House website. But as anyone working in business knows, many companies are dormant or exist only to protect names or are projects waiting to happen. But no, Murphy concludes that these companies are all trading and just not filing accounts at Companies House. The idea that someone goes to the trouble of setting up a company in order to hide trading is so stupid I thought only Murphy could buy into it but clearly Polly is just as stupid. Do you hear that Polly? You’re stupid. Dim, dumb, daft. These days, when a company is set up, Companies House automatically notify HMRC of its existence so as strategies for hiding your trading from HMRC go, it’s not that clever.

    What’s worrying is that because it’s what people like Polly WANT to hear, any old shyte that Murphy comes out with that suggests vast amounts of uncollected tax is just out there waiting to be collected is lapped up like a hungry dog licking up sick.

  7. “It’s a well known result of optimal taxation theory […] that capital income should be taxed at lower rates than labour income”

    The distinction between capital income and labour income isn’t always clear though. Look at personal service companies where a sole director takes profits as dividends rather than as income, and thus avoids NI. He hasn’t put up much capital, if any, since it’s a service company. Yes there’s some poorly drafted legislation, IR35, which tries to remedy the situation; but it fails miserably. How does this fit in with optimal taxation theory?

  8. Andrew M:
    Yes, that’s exactly what I do under advice of my accountants, it enables me to actually keep some of the money I earn, despite my having to pay employee and employers NI.
    I think this is perfectly fine as I still pay the useless buggers a goodly screw of MY earnings; but possibly you think of my wages as the Governments money of which they very kindly allow me a small portion to exist on.

  9. Andrew, above, saved me the trouble of pointing out the dormant company phenomenon, and of course some companies make losses.

    A century or two ago, I was an Inspector. Yes, about 40% of the Accounts I examined, some from very respectable firms of Accountants, contained errors, some in the Revenue’s favour.

    As to fraudulent Accounts, perhaps 1%.

  10. Robert the Biker:
    Tim’s original point was that capital income should be taxed at lower rates than labour income.
    You and your accountant (one R. Murphy, presumably?) think that the fruits of your labour should be taxed as if they were capital. You’re directly contradicting Tim’s point.

    It follows from Tim’s point that there is scope to increase tax revenue by preventing one-man band service companies from paying their directors in NI-free dividends. The exact wording of the legislation is left as an exercise for the reader.

  11. “It follows from Tim’s point that there is scope to increase tax revenue by preventing one-man band service companies from paying their directors in NI-free dividends. The exact wording of the legislation is left as an exercise for the reader.”
    So, you do indeed think that my earnings are ‘owed’ to someone else, that I am in short a cash cow with no more rights to what I have earned by the sweat of my brow (alright, the wiggling of my mouse) than the meanest feudal serf.
    You want more tax revenue? How about wasting less of what you take! Cut out my right to dividends on MY earnings, and I will set up the company in Luxembourg, just like Starbucks and Amazon, see how THAT helps your revenue.
    PS: No, it’s not Murphy, but a firm who specialise in one man limited companies, very much a British phenomenon.

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