And now for an interesting example of economic analysis

The first is that in the period 2011 – 18 the national income of the UK was £13.1
trillion, and in that same period the increase in net wealth was £5.1 trillion. It is
stressed, that this figure is not for total wealth, but the increase in the value of that
net wealth in that period.
Second, the overall effective tax rates on income during this period were unlikely to
have averaged more than 29.4% in this period, but those on wealth increases did not
exceed 3.4%.
Third, if these rates had been equalised it would, at least in principle, have been
possible to raise an additional £174 billion in tax revenue per annum from the owners
of wealth.

So, our starting point is that we could get lots of munnies by taxing the increase in wealth.


Then we’re told this:


Now do you see what is wrong with his starting point? He’s claiming that its viable to even think about imposing income tax rates on increases in house prices and the capital value of pensions funds.

For that is what he’s suggesting if those tax rates should be equal – which is what he is suggesting for he’s directly comparing that 3% or so with the 29% or so.

So, yes, he is suggesting that his nul hypothesis is that if your pension pot rises in value then you should be paying income tax upon that rise in value.


This before we even get to the point that we’ve tried this with doctors and they’re all retiring instead of being willing to pay marginal income tax rates of over 100%.

In addition, the fact that increases in the value of homes and pensions may not result
in immediate cash benefits to those who own them does not mean that such increases
do not contribute to the overall increase in the financial wellbeing of those who gain:
both the sense of security that such increases in wealth provide, and the means that
they afford to live in greater comfort at some time in the future have direct impact on
the manner in which those enjoying them both feel in the present, and on their actual
behaviour with regard to consumption and lifestyle choices. As such they cannot be
discounted in any discussion on current taxation, not least because they do provide
greater capacity tax at present in the vast majority of cases


17 thoughts on “And now for an interesting example of economic analysis”

  1. So, yes, he is suggesting that his nul hypothesis is that if your pension pot rises in value then you should be paying income tax upon that rise in value.

    Do you get a rebate when it falls in value?

  2. The increase in the value of our house helps us buy our next house – if it is less valuable. If it’s more valuable then the general increase in house prices has simply increased the gap we’ll have to fill. So we’ll feel poorer. Can we have compensation for that, please, from “the government”?

    Of course a chunk of the increase in the value of our current house will eventually be taxed at 40%, won’t it?

  3. Say you have a pension pot of £300,000 – sounds enormous but with current annuity rates the annual pension probably wouldn’t feed a guinea pig. Anyway, say your portfolio has a crazy year and it rises 20% in value – he would present you with a tax build of 29% on that ‘windfall’ – about £18,000.

  4. So where does MMT come into play?and the govt can spend what it wants with no ill effects? Oh sorry I forgot MOAARRR! TAX. Everything ends up with this with the tuberous halfwit. He thinks that the Beatles song taxman is a manifesto not just a witty song.

  5. Hey, here’s a crazy idea. Why not tax the flows from pension pots when they actually flow out, when they’re being drawn down. I invented that idea, ME, ME, ME! but I’ll let you use it in return for acknowledgement in vermin.

  6. @ Arthur the Cat
    But in this case it cannot. He knows that a change in house prices does not put loose change into his pocket (he’s had to borrow money from his LLP several times in the past) and he is demanding that home-owners pay cash each year in line with the increase in house prices due to “inflation” (i.e. the shrinking in the value of the £ in which they are measured) – cash that they do not have. That is evil.

  7. He’ll get frowns if he says, “Kill the rich; take their stuff.” But that has always been his tax plan. So we get perpetual euphemisms.

  8. So where does MMT come into play?

    Yes indeed. It must be a Thursday; I think Wednesdays are MMT.

    Makes you think – what sort of government would impose wealth taxes like this on people whose incomes could not pay them, when that same government “can create all the money it needs anyway”. I’d say that was a malicious, evil one, wouldn’t you?

    Straight from Murphy’s mind.

  9. So if I understand this correctly
    – you pay tax on the capital elements of your mortgage as it increases your net wealth
    – If you save into a savings account from taxed income you pay income tax first on the income and then on the savings. If you spend it on say gold jewellery its not
    – private sector pensions are taxed but public sector ones aren’t

  10. Wack

    Not quite. It’s more akin to: If you have it, he wants it.

    It’s the tax equivalent of the shell game (pea and 3 cups). Whenever you think you’re getting warm, there is usually a sleight of hand (moar tax), and you end up losing.

    Safer never to engage, and simply nuke the fraudster, from orbit – and regularly just to be sure…

  11. It must be hell inside Spud’s head. Like some bear pit in which his preposterous jargon engages in mortal combat with his ridiculous drivel for control of his mouth and typing finger.

    He appears to be saying we should tax the sense of wellbeing one gets from owning a home. OK, should we tax the sense of wellbeing for other things? Perhaps a tax on ego, smugness and professorships. That’ll do for a start.

  12. His constant ranting and contradictions over the recent few weeks are confirmation that:

    1) He hates everyone that is not Professor Professor Professor Richard Murphy Esq ACA.
    2) He fails to understand and accept or have even heard of fundamental economics principles.
    3) He needs to be struck off the list of Chartered Accountants for bringing their profession into disrepute.
    4) His ideas are not just half-baked they are uncooked and putrid.
    5) He is in need of mode stabilisers and/or a comfy jacket with long wrap-around sleeves..

  13. He has the madness of Howard Hughes, Ivan the Terrible, and Stalin.

    Unlike them, he never amounted to anything. History dissects the madness of the greats. Of Murphy’s madness, history asks, “Richard Murphy? Who was he?”

  14. This before we even get to the point that we’ve tried this with doctors and they’re all retiring instead of being willing to pay marginal income tax rates of over 100%.

    How does Gov respond? NHS pays Docs extra tax while Gov writes ‘Pension Cap Exemption Law for NHS Staff & GPs’

    One law for all? Equality?

Leave a Reply

Your email address will not be published. Required fields are marked *