Jolyon and the LHTD Speak!

Whatever our differences we share the view that the next Labour leader must look afresh at Labour’s current position on the Personal Allowance and Corporation Tax. These hugely expensive tax breaks disproportionately benefit those at the top of the income distribution and the wealthy.

Yes, that’s right. The idea that the lowly paid do not contribute, from their lowly incomes, to the costs of running the nation is a hugely expensive tax break.

All your money are belong to us really, isn’t it?

There is no evidence that they are politically necessary.

I would love, just love, to see them try that. Can you imagine the political reaction to income tax starting at £1 of income?

And nor can it seriously be suggested that they further the aims of the Labour Party:

The Labour Party thinks that the poor should pay income tax? Srsly?

We know that the Labour Party in opposition lacks the technical resource at the disposal of a sitting government. This affects profoundly its ability to make the right interventions and develop sound policy. It also has, to our knowledge, no Parliamentarians with a detailed technical knowledge or who communicate confidently in the field. Vitally, it has no retained advisers who are expert in tax. But this has not just been a problem for the Party when in opposition: in Government the quality of its decision-making has also at times reflected a cultural insecurity. It has too often been timid when it could and should have been bold.

In that case we make a simple, but we think essential request: we call on all the Labour leadership candidates to commit to increasing the tax expertise in and of the Labour Party. In or out of office its voice on this key issue is vital to its role in our parliamentary democracy. It has a duty to be competent, coherent, consistent and calculated about tax as a result whilst placing this issue firmly in the consciousness of left of centre political debate, where it belongs.

Gissa job.

56 thoughts on “Jolyon and the LHTD Speak!”

  1. “Vitally, it has no retained advisers who are expert in tax. ”
    Somewhat of a dampener on Ritchie’s peerage, what?

  2. “I would love, just love, to see them try that. Can you imagine the political reaction to income tax starting at £1 of income?”

    Well, Owen Jones did say to Douglas Carswell that he wanted *everybody* to pay more tax…..

    These twerps really do blind themselves by staring at “The Rich” all the time. It’s like they’ve burned the rich into their retinas so can’t see that the overwhelming beneficiaries of the personal allowance are the low-paid working people who they at least pretend to claim to represent.

  3. Murphy has opinions on tax. But he has no expertise.

    And his opinions boil down to ‘raise more tax on the rich’

    Surely people can see that?

  4. “It has a duty to be competent, coherent, consistent and calculated about tax”

    So no job for Murphy then.

  5. Everyone has their own definition of “the rich” ; it means “anyone with more money than I am likely to have”,

    Taxing the rich is a great idea apart from laffer effects, them being taxed a lot already, and there aren’t being that many of them, which is why tax falls on the majority of the population.

  6. PREDICTION: They’ll run with this. Once they’re intellectually in too deep to back out, they’ll finally spot the effect this will have on the working poor. They’ll then propose to replace it with in-work benefits, having conveniently forgotton having criticised the government for needing to pay in-work benefits to the low-paid.

  7. A weak but at least coherent policy would abolish the personal allowance for people earning above a certain income – however, I have a horrible sinking feeling that what the Corbyn agenda will involve the argument, Tim, that I know you really loathe ( and I think that hatred is shared amongst most sane commentators on here – sorry, Lawrence, you are out, my old stool pigeon) – that is, to say, ‘in order to feel a part of society, the poor should pay tax’ – a truly depressing mindset but one in line with Corbyn (and his ‘chief economic advisor”s )idea that ‘L’etat, c’est tout’

  8. “Van_Patten

    A weak but at least coherent policy would abolish the personal allowance for people earning above a certain income ”

    That’s been done, of course.

    It creates the anomaly of a 60% tax band above £100k.

  9. if you’re so concerned about ensuring the poor don’t pay income tax, get rid of the allowance and adjust tax credits accordingly, like that old pinko Milton Friedman advocated

  10. PREDICTION: They’ll run with this. Once they’re intellectually in too deep to back out, they’ll finally spot the effect this will have on the working poor. They’ll then propose to replace it with in-work benefits, having conveniently forgotton having criticised the government for needing to pay in-work benefits to the low-paid.

    Luis Enrique
    August 17, 2015 at 10:05 am
    if you’re so concerned about ensuring the poor don’t pay income tax, get rid of the allowance and adjust tax credits accordingly, like that old pinko Milton Friedman advocated

    Well, that took all of 6 minutes. Sorry for lumping you in with them, Luis, but there you go.

  11. “A weak but at least coherent policy would abolish the personal allowance for people earning above a certain income…”

    You could call it section 35(2) of the Income Tax Act 2007, that says the allowance goes down as income exceeds £100,000… 😉

  12. AndrewC/Pellinor

    Thanks for pointing that out – I would think they will pitch it at a lower level than 100K, though – given the median income in the UK…….

    The effect on marginal tax rates is a second order consequence that they are wholly ignorant of so they ignore it…..

  13. @Pellinor

    And perversely, as the personal allowance gets bigger, the (effective) 60% tax band gets wider….

  14. AndrewC – True, but this is just implementing the withdrawal of the PA.

    Although… I have just realised that:

    – There is an effective 60% band above £100k
    – The personal allowance exactly counteracts the tax impact of this band
    – The personal allowance therefore gives rich people tax relief at 60%

    Murphy is right, the personal allowance is iniquitous! 😉

  15. You could start withdrawing the personal allowance at the income where you start paying income tax. Count £100 of personal allowance out for every £1000 in income.

    You then also reduce the lower rate of tax (up to full withdrawal of PA) by 10%, which you can sell as a 10% cut in income tax for the modestly paid!!! Could be straight out of “Yes Minister”.

  16. Yes, how the f*ck can he claim the “Personal Allowance” benefits the wealthy, when it disappears completely when annual income reaches £150,000? Is he claiming that the wealthy aren’t paying income tax, or income tax to this level?

    Who benefits more from the first £10,600 of their income not being subject to income tax? Someone on £20k a year, or someone on £150k?

    It simply isn’t possible to answer with “the latter” and do it honestly. The fact that this man cloaks himself as a “Quaker” is completely revolting.

  17. I’ve made the point elsewhere (including to La Toynbee” that because tax is proportional to income, any tax cut can be condemned by the left as “a tax cut for the rich”, whereas any tax raise can be praised as “making the rich pay their fair share”. Because the absolute (and often proportional) effect on “the rich” is always going to be higher than that on “the not rich”, irrespective of where your personal rich/not rich threshold is.

  18. “It has too often been timid when it could and should have been bold.”

    Be bold. Abolish the “Personal Allowance”. Get massacred even more comprehensively than your bearded nutter was planning on anyway.

    Go on. DO IT!!

  19. How is “Corporation Tax” a tax break? There’s no link, so I cannot see the context in which this non sequitur was used.

    Is he calling actual taxes tax breaks now?

  20. “Be bold. Abolish the “Personal Allowance”. Get massacred even more comprehensively than your bearded nutter was planning on anyway.

    Go on. DO IT!!”

    I second that motion, Comrade. In for a penny, in for a pound of someone else’s money!

    Just think of the politics of it, it’s fantastic. “We’ll withdraw the PA, cos of those richy mc richsters who don’t get it anymore anyway. But don’t worry, we’ll replace it with more in-work benefits which will be superbly managed, and not leave anyone out of pocket, ever, and won’t be delayed or screwed up or anything. And then we’ll scream that the living wage has to be raised”.

    I am so looking forward to the Comrades running the show in the Opposition, I really am.

  21. Rob

    Having attended several Meetings of Quakers in the past I cannot believe he is one – my guess is they are simply too nice to point out his misrepresentation – he certainly shares (at least based on his written output) none of the tolerance or respect that seemed to me Quaker hallmarks – and the thuggish undercurrent of much of his diatribes against the OCBT or during the recent attack on Maya Forstater don’t seem very Quaker-like to me…..

  22. Rob – I think the point is that Corporation Tax is at 20% whereas Income Tax is at 45%.

    Of course if CT were up that high then dividends would have to be tax-free to make any logical sense… I’m not sure on the theory, but I suspect that this is probably regarded as a Bad Thing, as you’d end up with lots of non-UK companies not paying CT, and lots of UK individuals not being taxed on the dividends from them – unless you shifted the entire basis of corporate taxation, of course.

  23. Pellinor,

    I’m sure the Corbynistas would be thrilled to have both Corporation Tax at 45% and income/dividend tax at 45% too. It’s not your money, it’s theirs, and they’re just deciding how much to pay you.

  24. If you look at Ritchie’s blog he states that the PA disproportionally benefits those at “the top of the income distribution”. However in the IFS piece
    http://www.ifs.org.uk/publications/7735
    it says the “middle and upper middle” part of the distribution. These guys have changed the IFS wording to make it look as if the PA only helps the rich. What a bunch of liars. Check Jolyon’s twitter. There is a guy asking him about this.

  25. Murphy is a hireling of the tax collector’s union.
    If Corbyn abolishes the personal allowance and everyone has to pay income tax, then they will all have to fill in a tax return if they aren’t on PAYE (and most poor people aren’t on PAYE as they are unemployed or pensioners or “non-working” housewives), so HMRC will have to hire a lot more tax collectors.

  26. john77 – Unemployed people and pensioners are on PAYE. I got a P45 from the Jobcentre when I got a job… 🙂

  27. @John77

    Endorsing Pellinor’s comments.

    Pensions (except the state pension) are paid through the PAYE system. It would be simple enough rule change to change the system so that the state pension also fell under PAYE

    I don’t see any need for additional tax returns.

  28. So long as the state pension is smaller than the personal allowance, it can just be taken into account when issuing PAYE codes.

    The problem with PAYE codes is that the system kind of assumes that you’re only on one payroll, or at least that you have one main payroll and perhaps some minor ones. That’s not always true, especially for pensioners.

    The driver for tax returns is to do away with them by having information collated centrally so all you have to do is tick the box to say yes, HMRC already have all the pertinent information. It’ll be nice if it works 🙂

  29. “Pellinor

    So long as the state pension is smaller than the personal allowance, it can just be taken into account when issuing PAYE codes.”

    True but we’re talking here of doing away with the personal allowance.

  30. Luis

    Yes, you, Uncle Milt, the SJWs AND Tim Worstall (and me for that matter)

    But some on that little list haven’t spent the last 5 years screaming that in-work benefits are a subsidy to employers. (BTW The empirical evidence indicates the incidence is for the most part NOT on employers)

  31. I have challenged the self-prclaime Drax expert to support the claim that increase PAs disproportionately benefit the wealthy; I was deleted.

    Quelle surprise.

  32. Playing devil’s advocate?

    One advantage of trying to introduce a concept of no PA’s, no NI, no tax codes, flat rate tax, etc – is a massive simplification; for payroll departments (ie just deduct 20% or 25% on everything, job done), HMRC, tax avoidance, etc.

    Impossible to elaborate on in a blog – but, simplification is possible if there is a will.

    Richard of course doesn’t want simplification (when challenged, he pretends it can’t be done, and I don’t believe he’s that stupid), and it would appear that for all the earlier rhetoric (from Osborne etc), nor do our political class.

  33. You know, the logical conclusion of removing the PA entirely would be to tax benefits 🙂

    Not that I’m advocating such, but if we’re to accept the LHTD’s logic on the PA, why should unearned benefits income be treated differently from income from work?

  34. @ Pellinor and Andew C
    *I was talking about the poor who are below the tax threshold* – in case you didn’t notice.
    Those with occupational pensions are on PAYE. Virtually no-one with an occupoational pension as well as a state pension is below the tax threshold.
    Those who gain employment are on PAYE. Incidentally getting a P45 does not prove you are on PAYE – I signed on after I was made redundant and got a P45 when I signed off after I found some work on a self-employed basis so I had a P45 without being on PAYE. Those on unemployment benefit and below the tax threshold are not on PAYE because no tax is deducted.
    Once you abolish the personal allowance the poor man/woman has to pay tax not only on the unemployment benefit but also on the tiny casual earnings that are disregarded. So *I* can see why there is a need for tax returns which would be required if only to state that the individual’s disregarded casual earnings were zero.

  35. So, Murphy’s Big Idea will be a £2120 tax increase for everyone who earns £10600 or more, and a lower increase for anyone below that figure.

  36. Ritchie is on fire in the comments

    Richard Murphy says:
    August 17 2015 at 1:46 pm
    Sorry if it seemed I was slighting Pimetty
    Definitely not
    But his solutions are not realistic (I generalise)

    He means Pikettywitch of course.

  37. @John77

    But if capturing currently ‘disregarded casual earnings’ would be required if PAs were abolished, why aren’t tax returns needed now to capture ‘disregarded casual earnings’? Your logic suggests that everyone, even now, should be required to fill in a tax return in order to state that their ‘disregarded casual earnings’ are zero.

    Unless you believe that only people whose total income is below the PA are currently receiving such earnings.

  38. PF: “…and I don’t believe he’s that stupid”. That’s where you’ve made your mistake. Right there.

  39. @ Andrew C
    Are you trying to wind me up or are you just not thinking?
    OF COURSE I am talking tax. Someone on JSA with an extra £5 to £15 a week is getting less than the Personal Allowance of £10,600 pa.
    How difficult is that to calculate?

  40. @John77

    Where does it say that the ‘disregarded earnings’ for JSA purposes are not taxable?

    I still can’t work out what point you are trying to make,. You seem to be saying that if PAs are abolished everyone currently below the PA level of income will have to submit a tax return in order to be able to demonstrate that they have no casual earnings but if that logic held true, why isn’t it required now? ANYONE could have a little bit of casual earning at the moment yet not everyone is currently required to submit tax returns to demonstrate that they don’t have casual earnings.

    Half way through our conversation you suddenly bring JSA into things.

    Abolishing PAs would not require that everyone would have to submit a tax return.

  41. @John77

    “Someone on JSA with an extra £5 to £15 a week is getting less than the Personal Allowance of £10,600 pa.
    How difficult is that to calculate?”

    Really? I earn £25k from April 6 to August 31. Then I am made redundant and start claiming JSA.

    Still want to claim that anyone receiving JSA and an extra £15 a week MUST be getting less than the PA of £10,600 p.a?

    I personally didn’t find it THAT difficult to calculate.

  42. Picking up on abacab’s point re increasing benefits, this is exactly what Gordon the Moron did.

    Not one single Labour MP and only a few Tories realised that abolishing the lower tax band of 10% would hit the poor hardest. It was only some 9 months later that bells started to ring. Then Gord did the normal NuLab thing and lied that he’d increased the benefits for lower earners.

    The moral being that Labour don’t give a flying fuck at a rolling donut about the poor, except as a stick with which to beat the Tories. Far more important to GB was that he went down in history as the first Labour Chancellor to reduce he basic rate of income tax.

    So Jessie’s and Dicks disregard for lower income groups is entirely symptomatic of lefty attitudes.

  43. “Yes, that’s right. The idea that the lowly paid do not contribute, from their lowly incomes, to the costs of running the nation is a hugely expensive tax break.”

    Yes, that is right. It is a tax break.

    “A tax break is a savings on a taxpayer’s liability. A tax break provides a savings through tax deductions, tax credits, tax exemptions and other incentives.”

    http://www.investopedia.com/terms/t/tax-break.asp

    Exempting the low paid from contributing to the cost of the general welfare may be hugely desirable, but it is a tax break nevertheless.

    “Can you imagine the political reaction to income tax starting at £1 of income?”

    Hard code it into a written constitution that if there is an income tax then all pay the income tax on all income at the same rate. Watch the income tax disappear or be tiny. See the introduction of a land value tax.

    Let’s go!

  44. Pellinor>

    Your comment at 1027 reminded me of an old Communist-era Jewish joke:

    The baker has announced that bread is going on sale, so a queue forms round the block.

    After a long wait the baker comes out and says there’s less than he thought, and he won’t be selling it to any Jews, so the Jews go home.

    After another long wait he comes out again and says he’s re-checked it and found there’s less than he thought, again, so any Chechens will have to go home too, and off they go.

    After yet another wait of several hours, it happens a third time, and this time he says he won’t be selling to any non-Russians at all, so another group slinks home.

    A few more hours later, it’s no bread for non-members of the Communist party, and then, with just a few stragglers left, he says it’s war veterans only. This leaves two old men, the first one-legged, the second blind. Finally the baker comes out and says there’s been a big mistake and in fact there’s no bread at all. ‘Same old story’, says the one-legged man, ‘the Jews always get the best deal.’

  45. Maugham and Murphy on tax has the makings of a great double act.
    Like Morecambe and Large, or Peter Cook and Bobby Ball.

  46. @ Andrew C aka “Troll”
    There are more than a million people who have no or zilch occupational pension and around a million who have been unemployed for more than a year.
    They do not pay tax because their JSA plus disregarded earnings are far less than the Personal Allowance.
    None of them need to submit a tax return under current rules.

  47. In a world without Murphy and Maugham, whose interests are in tax complexity, things could be so different. Tax only needs to be complex if your income depends on it…. Cue the 2Ms

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