Skip to content

Peridermal, lenticel, economics

I suggest that there is no logic to this in a tax system where horizontal tax equity is sought and the only relevant capital maintenance concept is financial. Indexation was simply a ruse to maintain capital and the advantages of wealth by way of undertaxing it, in my opinion.

Sigh.

I think – maybe – there’s still some Vibroplant shares in my Mum’s porfolio. The one slowly being liquidated to pay for home help and so on for a little old lady of 90 years of age. That’s fine of course, that’s what the savings were and are for.

But back in 1958 (??About!) a mate turned up at Grandpops and said he’s a great idea for a business. Whip round through the contacts of whom GPop was one. £100? £250 ? That sort of sum. More than a week’s wages and less than a quarters’, to give an idea back then. A founding shareholder of Vibroplant then. Assume those shares are still in the portfolio. Spud’s talk is that if those are sold then not only would the highest income tax rate have to be paid on that – for CGT would be that now. Also the purely inflationary gains of those 65 years would also be taxed at that 40% rate. Possibly even with an NI surcharge knowing Murph.

The inflation of £250 gives about £6k today. So Smurf wants £2,300 purely because the government printed lots of money over those years.

An equitable tax system, eh?

7 thoughts on “Peridermal, lenticel, economics”

  1. the potato’s not interested in an equitable tax system, unless equitable means MOAR! tax. I take it from his recent pronouncements where he’s gone all in one taxing everything , that MMT is no longer flavour of the month in spudland or could it be that he still believes in MMT and that he’s suggesting all these tax rises out of spite and jealously? he’s so thick and nasty that option b seems likely.

  2. The gibberish in Spud’s rational as to why indexation shouldn’t apply to Capital Gains is as clear evidence as could be needed that he starts with his answer then smashes logic and facts with his little hammer until they fit his required conclusion.

  3. Having read through the entire post I am none the wiser – you could argue that’s par for the course but this seems an exceptional word salad. It seems to be a roundabout way of saying, as Tim does that any capital gains real or illusory (i.e as a result of hyperinflation) should accrue to the state. I have often said he’s have been at home as economics minister under Mugabe – certainly he jumps the shark with sufficient frequency that his opinion is worth as much as that of my dog – deceased for 25 years.

  4. CGT with Indexation was intended to tax the *increase in wealth*
    Murphy wants to tax wealth, both overtlyand covertly
    Sorry, he wants to tax *other people’s* wealth

  5. He really does seem to think that £100 now is worth £100 ten years ago, or in 10 years’ time.

    I wonder how he would calculate tax on a change of currency. Say we’d joined the Euro in 1999, at £1 = €1.40. Everything that was bought in 1998 for £100 would immediately become worth €140.

    Given that he would be looking to tax the 40, I wonder how he’d justify it. By saying ‘This is your last comment here’, I suppose…

  6. This logic is based upon standard microeconomic theory. Based upon that theory, which in this case appears to accord closely to observed reality, there is no reason to think that a person should, or does, value their increase in financial well-being differently as a consequence of it source. What matters to them is the fact that their well-being has been enhanced. As a consequence, tax differentials that discriminate between the origins of increase in financial well-being are contrary to the principles of horizontal tax equity.

    So conventional economic theory is just dandy when it suits his hobby horse. And who came up with this principle? ‘Horizontal tax equity’ – when we have ‘horizontal pension equity’ between public and private sectors, then we’ll discuss it from the tax side.

    This concept of indifference as to source is also implicit in modern accounting theory and in the accounting standards used to record the income of companies both in the UK and internationally. The primary method of computing the income of any entity using these standards is to compare the net worth of a company at the end of a period (£A) with the net worth of that same company at the beginning of the period (£B) having allowed for sums withdrawn from the entity during the period by its owners, whether by way of dividend, share buyback or other means (£C), and the issue of new shares or other equity (£D).

    In other words, profit or income (£Y) is calculated as:

    £Y = £A – £B + £C – £D

    I think it was possible TMB or Noel Scoper who pointed out that reading Murphy’s output could be recommended by students in philosophy (Logic specifically) in that he uses almost every conceivable logical fallacy on a regular basis. So in this case an ‘appeal to authority’ – the accounting standards he regularly berates when it suits him to do so. It could also be considered a ‘false appeal to authority’ as he has no understanding or knowledge of those standards, having paid a ‘ringer’ to sit his accountancy exams all those years ago,

Leave a Reply

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