Ah, Tax Justice are being economical with the actualite again, aren’t they?

The report released on Monday suggested any action by the government to close loopholes at the budget would be positively received. That includes remedying the situation where someone who lives purely off dividends from shares pays a lower rate of income tax than someone who is working.

The tax rate on dividends is the income tax rate plus the corporation tax already charged at the level of the company.

But then Tax Justice is run by Alex Cobham who has been known to get complicated matters like adding up wildly wrong.

Amazingly, the report doesn’t actually mention the idea nor question.

And now here’s what’s vile:

In our next report, we will explore what ways
of communicating on tax and wealth resonate
the most with the public and how to shift
people’s views.

This is a propaganda project. How do we get people to agree to higher taxes?

This report was prepared with funding from the
Friends Provident Foundation and the ESRC Impact
Acceleration Awards via The University of Sheffield’s
Internal Knowledge Exchange Scheme.

Yep, via the ESRC we’re paying tax to be persuaded to pay higher tax.

Fuck ’em, eh?

10 thoughts on “Ah, Tax Justice are being economical with the actualite again, aren’t they?”

  1. For those interested;

    Corporation tax rate is 19% and dividends are paid out of post corporation tax profits, so using an example of £10,000 company profits, corporation tax is £1,900 and then £8,100 in dividends which would be taxed at;

    Basic rate 7.5% = £607.50 + £1,900 CT = 25.075%

    Higher rate 32.5% = £2,632.5 + £1,900 CT = 45.325%

    Additional rate 38.1% = £3,086.10 + £1,900 CT = 49.861%

    Savings arise because of NIC not because of corporation/income tax.

    Interestingly, although this is being pushed by TJN as some sort of tax outrage, you can be a company that partakes in dividend planning and still get a Fair Tax Mark. FTM backed down from including it as a negative marker because “everyone does it” which I guess meant no small company would be interested in getting a FTM if it meant they had to abandon an important tax/NIC mitigation strategy to get one.

  2. Income shifting to a spouse is a big saving too.

    £100,000 gross is £66,539 net.
    £50,000 x2 is £75,075 net.
    That’s a gain of £8,536, plus you get to keep your child benefit (£1,788/yr for two kids).

    Swap those two incomes for two dividends and the savings are even greater.

  3. Diogenes

    I know Murphy wants the complete abolition of ISAs and tax relief for pensions. Because he’s so stupid I don’t think he’s ever thought of retrospective taxation (other than to include it in his ‘Phase 2 plan’ to confiscate 99% of wealth for the state) of them but my guess is someone in the coalition that is the grotesquely named ‘Tax Justice network’ (A truly Orwellian name for such a malign body) has that in mind certainly.

  4. The “report” talks about those who live off their wealth being lightly taxed relative to those who work for their living. Pensioners are not taxed enough! [Actually that is true to a certain extent because Gordon Brown disguised a tax increase as a rise in NICs that are not paid by those over State Pension Age, but Murphy isn’t going to admit that, and that’s only 2% on Income tax and off NICs.]
    Its “conclusions” are a mixture of what the survey found and what TJN would like them to mean/imply: several of the latter are disconnected from the former by a gap in reality.

  5. @Andrew C, quite right re the FTM and dividends, although remember Ritchie outlined the trick in those famous Observer articles and used it himself (as exposed on here by Tim) so he’d find it hard to exclude them.

    Mind you, as SSE shows, you can still get the FTM if you have high value litigation against HMRC which is by definition high risk behaviour. This only shows that the only test for getting a FTM is giving them the money!

  6. we will explore what ways
    of communicating on tax and wealth resonate
    the most with the public

    BUT (gasps) that’s…populism!! (Faints)

  7. @john77 February 17, 2020 at 1:21 pm

    Brown told us the NIC rises would fix NHS funding ‘deficit’ for ever – or until Tories back in power when it would change to underfunded overnight

  8. @ Pcar
    Thanks for the reminder.
    Yes, NICs do just pay for the NHS, as each accounts for 19% of income/expenditure – provided that Pensions and Unemployment benefits are paid for from thin air!

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