Treasury officials argued the revelation underlined the need for action to prevent the super-rich exploiting loopholes to reduce their tax bill below that of low-paid workers.
The figures, released by the Government, show 6 per cent of £10 million-plus earners pay less than 10 per cent in tax and another three per cent pay below the basic 20 per cent rate. Fewer than three quarters pay more than 40 per cent.
Anyone reading that is going to think that people are somehow able to tick the box \”I\’m rich, don\’t tax me\” and that\’s just not what is happening. Everyone is subject to the same income tax rates on their income, no exceptions.
The changes come in what is defined as income subject to income tax. For example, if you make capital gains you pay capital gains tax: 18% in previous years, with hte entrepreneur\’s exemption at 10%.
So, one of those mega millionaires with a below 20% tax rate could simply have been someone who had spent years building up a business and then selling it.
Or one that was mentioned by Osborne, people deducting the interest paid on business mortgages (could be commercial or residential). The interest is a cost of business so it\’s not even true that the people have high incomes. They have high gross incomes and high expenses so that their net incomes, the part which is actually taxed, are low. To say that this is tax dodging, even to compare their tax rate with their gross income, is absurd: it\’s like taxing a company on turnover not profits.
And running around telling everyone that there should be some sort of Buffett Rule is simply absurd. People already will be paying 30% tax on their incomes. Because income is defined as that money which is subject to income tax which is, for high earners, above 30%. It\’s all in the definitions of what is income, so demanding a specific tax rate on income is near irrelevant.
What in buggery is Osborne doing? Is this all bait and switch? He knows all this and is playing with the public? I\’ll clamp down knowing that he\’ll not end up changing much?