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The ignorance of Daniel Garvin

Ho hum, another campaign from the UK Uncut jobbies. This time about a living wage for all.

It\’s the usual nonsensical mishmash of barely understood figures. The big chart on their website is this familiar one:



The point being made is obvious: wages as a share of national income are down so it must all be going to the bastard capitalists!

Except, of course, as Britmouse charts for us, this isn\’t quite exactly true.




Corporate operating surplus is, by eyeballing, pretty much bang on long term trend. Employers\’ NI has risen substantially, taxes less subsidies has risen substantially (most of that being VAT I think?) and so has other income.

That money just hasn\’t moved from wages to profits. By and large, it\’s moved from wages into employers NI, VAT and a rise in self employed income.

They\’re simply wrong. Again.

There are other errors. For a start, real wages have not fallen they have risen. But the really big one is in this:

Instead of pay rises, we have helped pay our own wages through the £20bn of in-work tax credits spent each year. While tax credits are a lifeline to the 5 million households in the UK that rely on them, they have allowed private companies to shirk responsibility for wage bills, shifting it to the public instead and creating a subsidy for private sector profit.

It\’s a failure of logic.

Assume that the market pure and unadorned does not produce the incomes that we think people should have. Absolutely all of us think this to be so of some portion of the population (none of us think that those in a near vegetative state should sim[ply be left to die in the gutter. The arguments come over where and by what means the resources needed for their sustenance are going to come from, not whether they should come from somewhere or other. At the other end, not all of us are sure that someone straight out of school should be able to afford a 60 inch plasma…at others\’ expense that is).

OK, so, by what mechanism should those too low market incomes be raised?

We\’ve essentially two sources. We can insist that, through a higher minimum wage for example (what is now called a living wage), employers pay more in wages.

This has its downsides. The costs of such higher wages will fall on three groups. Those who employer lower paid workers, those who are customers of lower paid workers and lower paid workers in the form of unemployment. That last will come mostly from changing the capital/labour costs calculation, ensuring technological replacement of that very low cost labour. The first is what is trying to be achieved and the middle one, well, as it turns out, the major consumers of the products of low cost labour tend to be other low waged people.

Just not a good idea.

Or, given that we as a society say that these wages are too low then we as a society get to pay to raise them. All of us: that means the tax system. Meaning that the moral answer is indeed tax credits, or a cbi, or benefits.

Assuming that you buy the original idea: that the market unadorned does not provide sufficient incomes, then we should all pay to top up those incomes. Not dump the costs on employers of low waged workers or those low waged workers themselves.



@Ukuncut and the Facebook pages

When even The Guardian says you\’ve been numpties then yes, you\’ve been numpties:

It is not yet known how many groups have been affected in total. A Facebook spokeswoman explained that the profiles were suspended because they had not been registered correctly and denied that the removal of pages was politically motivated or instigated by law enforcement concerns before the royal wedding.

Facebook accounts that claim to represent individual people but are in fact groups or organisations contravene the company\’s \”statement of rights and responsibilities\”.

The company said a number accounts were suspended at the same time.

Facebook uses technology to track relationships between groups and when one \”fake\” profile is found, pages that have links to it are also checked. This is done to maintain safety and security on the site and the removal of everything from fake celebrities to pages representing pets is a regular occurrence.

A useful piece of advice for you: RTFM.

It means \”read the fucking manual\” and it\’s useful advice because it means more than just trying to do so when software or computers are involved. It\’s generally good advice about Life the Universe and Everything really.

Note to Barclays PR

This is how you do it:

A spokesman for Standard Chartered told The Daily Telegraph: \”The bank will pay approximately $200m in UK corporation tax even though over 95pc of its profits are earned overseas, principally in Asia. Standard Chartered will pay over $1.7bn of tax on its profits of $6.12bn. Standard Chartered also pays substantial indirect taxes in the UK.\”

Explain the numbers. And as you can see, the total corporation tax bill is 27.7% of the profits. As close as makes no difference to the headline rate of 28%.

It\’s just that, as most of their operations are outside the UK, so are most of their profits and thus so is most of their tax bill.

They\’re paying tax, just not to HMRC.

USuncut on Bank of America

Apparently, Bank of America made for an irresistible first target. It received $45bn taxpayer bailout funds in 2008 and 2009 – and paid zero federal income tax in 2009.

So, err, lessee.

Why did Bank of America need a big bailout?

Because it lost a lot of money.

What do you pay the federal income tax on (actually, the corporate profits tax)?


If you\’ve lost a lot of money what are your profits?


So what is your corporate profits tax bill?


What if you made a profit this year but losses last year?

You are taxed on your cumulative profits so you can offset the losses in one year against the profits in another.

So if you lost lots of money last year and made some profits this year, what is your tax bill?


This accounting and finance thing is really tough, isn\’t it?

USUncut: even more stupid than UKUncut

\”Bank of America paid no federal tax and we gave it $45bn in the bailout,\” said Alisa Harris, one of US Uncut\’s New York organisers. \”People are tired of sitting at their computers and seething, they want to get out there and do something, It\’s not enough just to talk about it on Facebook.\”

Bank of America said it had made a loss of $4.5bn in 2010 and had therefore has not owed federal taxes….

And, of course, the federal tax on corporations is the corporate profit tax. Don\’t make a profit and don\’t pay tax.

Pretty simple really, but seems beyond the understanding of some.

However, Harris said the focus on Bank of America was just the start for US Uncut activists. \”This movement appeals to people because it\’s focused on something a diverse group of people can agree on – corporations should pay taxes. It\’s a very commonsense, basic, non-partisan cause.\”

Well, apart from the fact that corporations cannot pay taxes and therefore do not, that\’s just fine.

But taxes on what? On profits? Sorta necessary for a company to make a profit first, isn\’t it?

According to US Uncut, nearly two-thirds of US corporations and 68% of foreign firms operating in the US pay no income tax.

And I do hope that USUncut hasn\’t made the most glaring of errors there.

There are two types of corporation in the US: S corporations and C corporations. These correspond, roughly, to our LLP and LTD/PLC. Thus an S corporation:

An S corporation, for United States federal income tax purposes, is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.

In general, S corporations do not pay any federal income taxes. Instead, the corporation\’s income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.

Just like an LLP: no corporation tax, no corporate profits tax, is payable because those profits are taxed as income to the shareholders.

I really do hope, for their sakes, that they\’ve not made this mistake. Wouldn\’t surprise me if they had though…..