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Ragging on Ritchie

To answer Ritchie’s question

According to The Telegraph, a Taxpayers’ Alliance campaign to have national insurance renamed Eranings Tax is likely to be successful.

A number if, inevitable thoughts follow on. The first is that this is, despite all the claims, not a tax. There is still a contributory principle in national insurance, for example, in pension rights. Given how keen the government is on that idea I wonder how this renaming helps them.

Second, if this is to be called an Earnings Tax the obvious question to ask us why then only earnings are taxed. Why should unearned income such as rents, dividends and interest not be taxed?

Because an earnings tax won’t be charged upon things that aren’t earnings. Like, say, “unearned” income.

And third, the question as to why such large scale avoidance of the tax is permitted in the case of small limited companies.

Because that’s the way the law is: as a retired accountant from Wandsworth pointed out to us some years ago. And used the technique in managing his own tax affairs as well.

Ritchie is “accountants” now is he?

Financial advisers who helped figures such as Chris Moyles, the former BBC DJ, in attempts to avoid tax should face criminal charges, ministers have been warned.

Accountants called for the introduction of new laws to criminalise firms involved in complex tax avoidance schemes.

Their intervention followed the disclosure that Moyles, 40, claimed to be a second-hand car dealer in a failed attempt to avoid paying tax on £1 million. The former Radio 1 presenter had his “highly artificial” bid to escape an estimated £400,000 income tax bill rejected by a tribunal on Friday.

On Saturday Richard Murray of Tax Research LLP said Moyles would suffer “considerable embarrassment” as a result of his involvement in the scheme “and so he should”.

But he added: “The truth is that it is the advisers who are most at fault here. A now notorious firm of advisers created these schemes and others sold them.

“Moyles was foolish but these advisers knowingly created and sold tax risk with the intention of undermining the tax revenues of the UK. I believe that this should be a crime.”

One retired accountant from Wandsworth is now “accountants” is he?

And I’ll bet this hurt:

Richard Murray of Tax Research LLP

But after all that, look at what Ritchie is actually trying to argue. That it should be a crime to aid someone in obeying the law of this country. and who wants to live in that Curajus State?

@RichardJMurphy is being vilely discriminatory here

markoffairtax

I think we can guess who that is aimed at, can’t we?

Yup, Starbucks.

But wait!

The purpose of the Fair Tax Mark Criteria 2013-14 for Solely UK-based Companies is to provide organisations with a widely accepted and freely available set of criteria to guide them to achieving maximum transparency and fairness in their taxation policies, especially when it comes to the preparation of material for publication.

The solely UK-based version of the assessment tool has been designed for use by (all must apply):

UK limited companies, co-operatives and plcs. It is not suitable for sole traders and partnerships not putting accounts on public record. Nor is it suitable for limited liability partnerships where the owners pay the tax for the business and so no tax declaration is made by the organisation
Companies that are small or medium sized as defined by the Companies Act 2006
Companies that only trade from the UK
Companies that do not use tax havens (including for employee benefit trusts etc.)

Starbucks is a multinational and therefore cannot even be considered for eligibility for this Mark of Fair Tax. The stupid bastards have set the system up so that the specific companies they’re complaining about couldn’t even pay them to get the Mark if they wanted to.

The Mark of Fair Tax

How excellent, Murphy Richards has launched the Mark of Fair Tax.

On this page I shall be listing the businesses that have succumbed to the media furore created by me and sought a sign of warding for baying mobs. UK Uncut shall not be laying siege to these businesses’ premises.

This is because all the businesses listed below have agreed to pay the sums of money to me that I have determined are due in order for me to certify them.

So without further ado, here are the certifiable businesses*:

Stemcor
Guardian Media Group

I look forward to receiving your business.

The whole site is a joy. And do not accept cheap imitations…..

Apple would pass Ritchie’s Fair Tax Mark

Ritchie’s new fantasy is now online. With this great bit in it:

7. Numerical reconciliation
Purpose
This criterion assesses whether it is possible to understand a company’s tax
liability using its numerical explanation.
It is rare that a company pays an amount in corporation tax equivalent to the
current headline tax rate multiplied by its declared profits before tax. There are
many and varied reasons for the differences that arise, from tax allowances for
capital investment and research and development due to the expenses that
may be disallowed for tax purposes e.g. those relating to business entertaining
expenditure.
If a company’s tax liability is to be properly understood the difference between
the tax that might be expected to be paid in a period and the tax actually due
for that period must be explained in a clear and transparent manner.
Information required
A numerical tax reconciliation note should be included in the accounts, which
explains in sufficient detail the difference between the current reported
accounting profits and the current tax rate. The reconciliation should be
specific in the matters it refers to and not rely on vague descriptions. To this
end, at least 75% of the reconciling items should be precisely described e.g.
using such phrases as ‘The impact of capital allowance claims’ or ‘Reduced tax
owing on capital gains arising’. Terms such as ‘Other’ or ‘Losses’ (without
explanation being given) do not qualify in this respect.

In it’s 10k Apple is very clear about how its tax rate is calculated. They pay around 2% on their foreign profits simply because they do not bring them into the US as US law clearly and specifically allows. They pay full rate, minus the usual capital allowances, R&D etc on their North American income.

So, Apple would pass the Fair Tax Mark then: which isn’t quite what I think Ritchie means, is it?

This tells me then

I think the implication is that Tim Worstall may not be familiar with what actually happens in the UK

I think that a generous suggestion

I do not think he is familiar with reality or the human condition let alone the nature of human relationships or he could not write the revolting blog for which he is responsible

Guess who?

Taxation and human rights

More Ritchie. Arguing that not paying taxes is a breach of the human rights of the state:

The right of a State to determine its will shall not be constrained by the actions of another State; (28, 29)

Excellent, that means that the UK cannot tell Ireland how to run its tax system, the EU cannot tell the Caymans etc. Failure of Ritchie’s entire scheme to impose his favoured tax system on everyone else.

Ritchie and the cappucino economy

My God the man has no shame:

This week has provided telling evidence that when all else fails people expect government to work.

I’ve not noted the presence of the private sector in dealing with flood problems.

Nor, come to that, have I yet heard mention of its role in any solution (though I suspect it will, very soon, be a good time to be a plasterer).

The fact is that when it comes down to it this suggests that my theory of the Cappuccino economy has much going for it.

The foundation of a cappuccino is strong black coffee. That, in my metaphor, is the state. It is the foundation on which the private sector economy – the hot frothy milk – can be built. And right on the top, whether chocolate or nutmeg, is the topping that is used to persuade us that all the exciting things in life come from the frippery only the private sector delivers, and which does, therefore, apparently justify the view that only it adds value.

Actually, as the cappuccino proves, to be successful this lot have to be found in combination, but that’s a fact that we often ignore until crisis arrives. And then we resort to a black Americano, or even a double espresso, as we are right now.

The Somerset Levels problem started back in the 1990s when the Environment Agency started to take over management of the rivers from the local drainage boards. That central organisation of the Curajus State has then entirely fucked up the management of the area. To argue that central government, that caused the problem, is therefore the solution is simply outrageous.

On the idea that you only own something if you’ve paid tax on it

This is Ritchie’s latest idea about how the State really owns everything. That you only actually gain property rights if you’ve paid the correct tax on it.

It’s piffle, of course, but the aim is always to work out why he’s spouting piffle.

So, imagine that you own the most expensive house in Downham Market. You fail to pay the tax due. Perhaps the Land Registry fee, maybe council tax. Some tax that applies to that property. Does HMRC then confiscate the property? No, they don’t actually.

They might, possibly, pursue you so far that you end up having to sell the house. Or push you into bankruptcy for not paying your tax bill so that the administrator sells your house to pay the tax bill.

Let’s say the bill is £1,000 and the house sells for £200,000.

What happens to the £199,000?

Well, actually, it goes to you. Minus the costs of the whole process presumably. But the balance after you’ve paid that tax debt is indeed still your property. And the courts, HMRC, the government, everyone, is very clear indeed upon this point. Even if you are being dunned for the tax due your property is still your property: that is, the system expressly insists that property rights are independent of your tax status.

You can indeed be forced to sell “property” in order to pay a tax bill. But you will never have your right to that property confiscated for non-payment of tax. Therefore property rights do not depend upon having paid tax.

QED.

An interesting comments policy

Secondly, the comment offered must be intended to develop the themes I am discussing. There are ample opportunities in a wide range of media for opposing the opinion I offer and you are welcome to use them. This blog is not one of those places. This blog is focussed on providing creative solutions to the tax and economic issues we face in the interests of all rather than a few. If your comment is not a constructive contribution to that process it may well be deleted.

ie, don’t tell me that I’m wrong.

The Murphmonster on the taxation of rents

I had a discussion yesterday afternoon with a friend on where we saw capitalism going. The answer was neither of us saw it going very far at all. maybe we’re getting older, and maybe we’re just wrong, but we could not see what it was that capitalism could currently invest in that would create better outcomes for humankind than we could imagine might be available from public use of the same funds.

Everything’s already been invented so we should just close the patent office, eh?

And this at a time when we’re going through the fastest technological revolution ever. The smartphone is indeed the fastest adopted technology ever. From a standing start to a billion pieces a year in under a decade. But this is even better:

Martin Wolf ….. But most of all he says, by implication, that in the future we must tax rents, and of all these rents he suggests that intellectual property rights might be the one that will require most attention.

This is fascinating, because this is at the forefront of the current battle on international taxation. Google shifts the ‘rent’ it can earn from its (state funded) technology from the states where it should be taxed through Ireland into Bermuda. We all know other technology, pharmaceutical and similar rent earning companies (and most multinational corporations are now of this sort, for varying reasons) do similar things. And they are fighting very hard to defend their right to do so at the OECD, which has already backed off from making changes to tackle tax abuse in the digital economy.

So, the argument appears to be that because Google’s technology was state funded then the state should have some of that cash. Very similar to Mazzucato’s argument.

But, erm, it was the US government that funded Google’s technology, if any funding there was. So it should obviously be the US govt that gets to tax that cash: not the governments of Europe which is what Ritchie is arguing for.

Ritchie’s great idea about health care

In that case cash is needed. This is not the moment to suggest a detailed programme for raising that moeny, but one idea I put forward to the meeting I was at on health and tax justice yesterday was simple. We could charge VAT on private health care. If we did HMRC says we’d raise just over £2 billion in extra funding.

I call that a no brainer. It’s affordable by those who would pay. It’s an exemption that is not needed. It’s a tax that could redirect resources to meet need. Let’s start debate there.

Blimey. We’re going to increase demand for NHS services by making the private sector alternative more expensive.

And this is how we’re going to deal with a shortage of money for the NHS?

Why doesn’t Ritchie actually read the stuff he posts?

Ritchie’s all excited over the polling result that 59% of CEOs asked supported country by country reporting.

There was another question asked:

“Government tax policy and the competitiveness of local tax regimes are key factors in any organisation’s decisions about where to operate.”

This was supported by some 62% of those CEOs polled.

Something of a problem for Ritchie as he vehemently denies that corporate taxation makes any difference at all to where companies do their business. So, either the CEOs are sadly deluded on such matters because they disagree with the Lord High Tax Denouncer or they’re remarkably perceptive types because they support Ritchie’s pet project.

Tough question really. I suspect that the solution that will be found is that Ritchie will clip this little image so that the dissonance isn’t quite so noticeable.

Screen-shot-2014-02-10-at-13.37.44

On Mr. Murphy’s pension plan

You know the one. Everyone’s pension should be put into nice safe bonds to build lovely green infrastructure n’stuff? After all, what could go wrong?

The fact that they weren’t successful is, according to Rodbertus, the fault of the company’s investors, who backed the firm to the tune of €1.4 billion ($1.9 billion). Currently, many of them are demanding the returns that they were once promised: at least 6 percent interest per year or a refund of their principle if they wished to back out. Last week, the mounting claims led Prokon to declare bankruptcy — 75,000 stakeholders could be left out in the cold.

Oh, you mean there is no such thing as a risk free return?

Much of the concern is focused on the large number of projects that are financed by the investment model known as closed-end funds. As a rule, they run for a 20-year period and are open to a limited number of investors. They promise annual dividend payments.

But newly released numbers, collected and analyzed over a several-year period, show what disappointed investors have long surmised: Around half of these commercial wind park enterprises are doing so poorly that investors can count themselves lucky if they even get their initial investment back after the 20 year duration.

Perhaps it will all work in the Curajus State though.

Or perhaps it won’t. There is, after all, a reason why we like to have a mix of equity and debt in a financing package.

Compare and contrast

Ritchie:

Now I have nothing against participatory democracy. Or localisation. Or patient involvement. All can be of benefit. But this is a speech by a man who yearns for power and who thinks it is all that matters in life. And he’s wrong. My own experience tells me that most people are more than willing to forego decision making on many issues to others, most of whom they will consider to be experts on issues where they need advice. And others – very many others – simply don’t want power. …….It’s not just that not everyone wants power, but that some are wise enough to realise it is not for them to have. They don’t want to, and maybe can’t, make the decisions that power demands of them. Which is absolutely fine. They can manages the consequences of power, implement the decisions taken with considerable ability and prepare information that informs the decision making process. But to pretend all want power is absurd. Some (in fact, I’ll be candid, experience suggests that this is many) don’t want to be in charge on a whole wide range of issues. I think none the less of them for that. I just think it’s absurd to pretend they have a quality they don’t possess when they have plenty of others to celebrate instead.

Deirdre McCloskey:

One suspects that the conservatives of left and right don’t much like the “mass” and its badly informed preferences. Let us take care of you, they cry. Let tradition celebrated by wise elders, or planning implemented by wise experts, guide you, oh you sadly misled mass. (The ruling lords and the monopolists view the clerisy’s conservative theorizing with delight, resting assured that the elders and the planners will inadvertently shield their rents.)

So, which form of liberalism would you prefer?