More Macro

More Macro

In this article, “Britain’s tax delusion”, the ‘Statesman identifies that the UK is not overtaxed, that taxing non-doms and imposing VAT on school fees will raise trivial amounts of money and that the clawback of child benefit has a disincentive on the supply of effort. It is silent on the clawback of the personal allowance which does the same, and fails to substantiate its arguments on income and wealth equality by not quoting the gini coefficient or any altenrative statistics, or facts as I like to call them.

… creates a system that is not just dysfunctional but profoundly inequitable, in which the average effective tax rate paid by those earning more than £10m a year is lower than that of most nurses. In 1845, Benjamin Disraeli wrote of England’s division into “two nations”: the rich and the poor. Today, the gulf between Asset Britain and Austerity Britain is as wide.

Since both major parties identify growth as the answer, we need to ask how they think it’ll happen, the three sources of growth are investment (private or public), government expenditures (i.e. the deficit), or exports (and we know why they’re fucked).

The challenge for Western democracies is to provide for that spending while encouraging investment and job creation. It is a challenge that Britain is failing. Instead, the UK’s tax system is quietly managing our ­economy towards disaster.

Business taxation does not encourage investment; the UK’s investment rate is low by international comparison.

Growth strategies must only be pursued in the context of combatting climate change. So a new coal mine is not a good idea.

Modern economists argue that investment in human capital is a priority as an incubator of growth. Even those politicians who agree are silent in the face of monetarist orthodoxy which requires continued austerity. After 13 years you’d think they’d have learnt, but it seems not.

Image Credit: from , cropped. Fair use as it has no economic impact on the original publisher. …

Govt money

Govt money

I was considering the EU’s NextGenerationEU and the idea that this was the tipping point into a fiscal union. I am not sure because the EU’s tax raising powers are as pre 16th Amendment United States; it cannot tax people or companies. This led me to consider the proportion of Govt. income rasied through income tax and other sources. This is a blog in two part, the first on the EU & the 16th amendment, the second on UK income tax and income equality. I comment on direct taxes and and the 16th by writing the following,

While looking at EU common tax policy, I thought about the need of the US to pass a constitutional amendment to allow federal direct taxation since previously the US required direct taxes to be apportioned to the States. The amendment is the 16th, and was designed to permit Income Tax an overcome a Supreme Court ruling which prohibited it; which came in two years later and has never been repealed. The Constitution Center has a review of the amendment arguing that the 16th only authorises income tax and the court has for instance constrained capital gains taxes. The Atlantic, also comments although the latter is more a history.

Dave Levy

The obvious development of income tax within the US led me to have a look at just how much of the UK Govt’s income is raised through income tax, the most progressive tax we have. The House of Commons Library has described the 2020/21 tax revenue sources, it seems that they’re no longer posting it out to everyone.

from the HoC Library Report : Open Parliament Licence v3.0.

The report landing page also has a chart showing the proportion by source over time, and its remarkably consistent. I also note that Income Tax is separated from NI and while some NI is paid by the employer most is paid by the employee. The Govt gets 43% of its income from these two sources and on top of this charges 20% of what one spends. There is also a compulsory private sector pensions levy on workers too, which does not appear in this chart. No wonder the low paid are struggling.

made by Dave Levy, from the HoC Library Report : Open Parliament Licence v3.0.

The separation of NI from Income Tax also permits them to claim that “The 10% of income taxpayers with the largest incomes contribute over 60% of income tax receipts”.

If you want to look at income inequality, Statista have the Gini Coefficient over time.

Statista UK Gini Coefficient over time , used under Statista Terms of Use

We need more income tax, less NI & VAT

This article contains Parliamentary information licensed under the Open Parliament Licence v3.0. The featured image is from Images of Money, on flickr, via and used under the Creative Commons Attribution 2.0 Generic licence.  …

Tax Fairness

Tax Fairness

Over the weekend, John McDonnell promised that Income Tax would not rise for most of the country but that a higher rate would be levied on those earning more than £80,000. Tax reform can be pretty technical; and so one needs to look at one or two things without losing sight of the idea that the richer should pay their share. Each tax payer has a personal allowance of £11,500 i.e. the first £11,500 of earnings is not taxed; this is clawed back if one’s income is £100,00 or more by levying a 60% marginal rate on those earning between £100,000 and £121,200. There is probably enough room for a new additional rate between the 40% levied at £42,000 and 60% levied at £100,000 and £80,000 p.a. is a lot of money; only 3% of income earners get that much. It will remain necessary to increase the amount paid by those earning more than £145,000 and redress the regressive nature of National Insurance, which negates much of the 20% band, converting it into a 32% tax burden. Labour’s promise is also that there will be no increase in employee NICs nor in VAT, although again that’s not enough … VAT has to come down from 20%. …

It’s not just Google

It’s not just Google

Over the last week, Google's transnational profit shielding has come into focus with HMRC agreeing that they can settle up and agreed a sweetheart deal. It's not popular, nor is it probably the most important. Amazon is probably a bigger problem for the real economy. I made a story on storify which I copied over in Jul 2020 and back dated to the date of it's original publication. See overleaf/below for the story.

We are all in this together

Oh Non Dom we’re not! Miliband announces that a Labour Government will abolish so called #non-dom #taxrelief and the Tories defend the rights of ultra rich to avoid paying their fair tax share. #ge2015. The story spirals out of the Tory’s control, becomes more about tax avoidance by the rich.

This is a storify I made at the time and have transferred it to this blog and published as at the date created. …

Professionally published again

Professionally published again

I have finally been published on my employer’s web site blog. The article, Conflicting Data Requirements: Privacy versus Transparency looks at the countervailing tendencies by governments legislating for citizen privacy and tax transparency. The article concludes with a series of technical challenges to meet the needs of both political initiatives. The article was syndicated on the Tabb Forum, and you can read that here. The article was originally provoked by a Gartner Press Release which suggests that location and the need for specific jurisdictional compliance will reduce as costs and …  …