In which I agree with Richard Murphy

Align income tax and capital gains tax rates

Tax avoidance happens when someone sees an opportunity to reduce their tax bill in ways not anticipated by the law. That requires two things. The first is a loophole, and the second is a reduced tax rate. Closing loopholes is obviously a way to tackle tax avoidance, but so too is closing tax rate differentials.

One obvious area where significant tax differentials are being created is between income tax and capital gains tax, where much lower rates are applied to capital gains than are to income, giving a massive incentive for people to try to misrepresent their income as capital gains.

There is an obvious way to tackle this abuse, which was adopted by Nigel Lawson when he was Conservative Chancellor of the Exchequer, and that is to require that any taxpayer pays their capital gains tax bill at the same rate that would have been used if the gain have been subject to income tax.

These rates should now be aligned.

Yep, fine with that. Top income tax rate at 28% sounds just great to me.

25 thoughts on “In which I agree with Richard Murphy”

  1. Timmy

    Naughty, naughty or did you think we wouldn’t notice that YOU chose the lower rate?

    Somehow, I think Mr. Murphy’s conclusion would be percentagely (can I say that?) different.

  2. Sadly he makes it clear in the comments that he wants to raise CGT to 40-45%, rather than drop income tax to 28%.

    By Murphy standards some of these aren’t bad suggestions:

    Point 5: Abolishing domicile just puts Britain in line with most of the rest of the world.
    Point 6: Capping pension tax relief has already been proposed by Milliboy.
    Point 7: Fixing IR35 is long over-due. His proposed solution sounds like more tinkering, but he’s aiming in the right general direction.

    I maintain my opinion that he suffered a stroke a few years ago. Based on the above his brain function is starting to recover, but there’s still quite a way to go yet.

  3. Posted without comment:

    “There is a role for the public intellectual, which is what some say I am, although I am not sure it is quite the term I would use, although I cannot think of another”

  4. By Murphy standards some of these aren’t bad suggestions:
    Point 5: Abolishing domicile just puts Britain in line with most of the rest of the world.
    Point 6: Capping pension tax relief has already been proposed by Milliboy.
    Point 7: Fixing IR35 is long over-due. His proposed solution sounds like more tinkering, but he’s aiming in the right general direction.

    I thought these were all stinkers, even by his dismal standards.

    Re point 5, the problem with non-doms is the way doms are taxed, not the way non-doms are taxed. Taxing everyone like we do non-doms is a much better solution than trying to grab the overseas, non UK-earned income from foreigners who just happen to live here.

    Re point 6, you have to allow pension tax relief at the marginal rate, otherwise you stack the deck in favour of defined benefit schemes over defined contribution schemes. As DB schemes are already massively unfair, this just makes a bad situation worse.

    Re point 7, I just don’t see the problem with having everyone working through limited companies. The only issue people seem to have with it is it brings in less tax today. Well, cry me a river.

    As an aside, the funniest point is point 1. He demands Country by Country Reporting for all companies because only transparency allows us to hold tax cheats to account. But he steadfastly refuses to provide details of his own will. You’ll just have to take his word that he isn’t actively seeking to avoid IHT.

    (Oh, and CBCR doesn’t work anyway).

  5. Sure, let’s tax nonexistent capital gains which are wholly inflationary.

    Why should an elderly couple be able to sell their home for 20 times what they paid for it without tax, just because money is worth 20 times less than when they bought their home?

  6. So, for example, a person paying basic rate tax gets 20% tax relief on a pension contribution they make, whereas a person paying 40% tax gets double the amount of relief for every pound that they contribute to their pension fund. We should not be subsidising the tax reliefs and allowances of the better off in the UK more than we are those of the 90% of people in the UK who only pay tax at basic rate.

    What a tosser! Nobody paying 20% tax is subsidising someone who pays 40% tax. Those paying 20% tax will be net benefit receivers, subsidised by those paying more tax. The only way one can believe his assertion is if one believes that all income belongs to the state and that the money the state let’s you keep is a benefit.

  7. DocBud

    The last sentence is exactly what he does believe. For Murphy and his acolytes the state is the giver of everything. It generates (according to Mariana Mazzacuto) ‘everything good in modern society’, and is the principal means of ensuring equality. He sees no irony in these statements (Painful humourlessness seems to be a prerequisite of this mode of thinking) and assumes anyone who does not think this way unworthy of consideration, both in terms of political representation or even freedom of speech.

    As Ironman said after his defense of Child abuse in Islington, and in the wake of the revelation of his main backers links with ISIS – pure. f&%^ing. evil

  8. Christie

    Could have been called ‘Seven deadly ideas’ – Every single one, even 2 on abuse was a corker in the way he expounds it – I am just praying that there is a Tory/UKIP coalition which can ensure there is a mandate for people like him to be hit hard with specific levies along the lines of those Brown levied on the Privatized utilities in the 90s. A ‘socialist tax’ has much to commend it.

  9. Van_Patten has it.

    Murphy honestly believes that having differential rates of tax is a subsidy from the more lowly taxed than the highly taxed.

    The fact that pension tax relief is a transfer of taxation from the current known to a future unknown income and tax level doesn’t just escape him, he actively ignores the appropriate complexity (and the risk you are taking substituting current expenditure for future income) because it makes a good dog whistle for the much-stupider than even greyhounds scum that he attracts to his troll-polluted blog-waters.

  10. Can people help me:
    A wonderful recent Budget Day tradition has been Richard Murphy’s rolling budget commentaries on Radio 2, a little like Red Rum’s parade at the Grand National.
    Is it still happening this year?
    If not, why not?

  11. Why should an elderly couple be able to sell their home for 20 times what they paid for it without tax, just because money is worth 20 times less than when they bought their home?

    Why should they not?

  12. @Ironman,

    As I’m sure you well know it’s one of…

    a) he’s not been invited because he said Jeremy Vine was a tax avoiding cunt

    b) he didn’t get invited this year, so called Jeremy Vine a tax avoiding cunt

    c) if he does appear, please email [email protected] and ask him what he thinks of Ritchie calling him a tax avoiding cunt

  13. Christie,

    His first three points are rehashing his existing wishy-washy ideals; but points 4-7 are within the realm of possibility. I’m impressed to see Ritchie clear that (admittedly low) hurdle. He’s moved on from his previous Venezuela / Zimbabwe level of policy-making.

    These are realistic political options: you might not agree with them, you might kick and scream that you’re already taxed too much, but they are feasible.

  14. “Painful humourlessness seems to be a prerequisite of this mode of thinking”

    He is a Quaker, isn’t he?

  15. ..and with classic Ritchie timing, right when wind generation is 0.19GW (from >11GW installed) he suggests keeping all fossil fuels in the ground.

    As I’ve often said, the first people for smart meters are lefties and greenies who will be turned off when there’s not enough wind and light to power their homes. Let those fuckers suffer first what they intend to inflict on us all.

  16. Call him out on the pension tax relief – let’s have one single flat rate of income tax. Put him on the spot and make him decide between:

    A) a single rate equal to the current top rate (somewhat unpopular I expect)
    B) a single rate equal to the lowest rate (evil rich people make money)
    C) a single rate in between (evil rich people make money, and also unpopular).

  17. Is it just me or is it the case that every time someone points out a coach and horses sized hole in his logic he calls it ‘nit picking’.

  18. He’s already stated he doesn’t believe in pension tax relief.

    He thinks it should be taxed as income on the way in, and taxed again as income on the way out.

    Which goes some way to explaining why he thinks higher rate tax relief is some bizarro kind of subsidy.

  19. @ Ian Bennett
    It was a rhetorical question.
    You have supplied the correct answer and earned a small gold-painted star.

  20. I thought Murphy used to pop over here to read the posts – and even occasionally learn a little, about things like tax etc?

    If he does, how the hell is he still consistently and repeatedly coming up with such utter crap on his blog? It beggars belief.

    “offsetting is upsetting” – Mark, whoever you are on here, I remain in awe..:)

  21. “Someone called it Murphyism”

    Love it :-)))

    Murphyism being the state of Murphys Law being fulfilled everywhere, all the time!

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