Of rich people, tax and hyprocrisy

I'm going to do something rare, and say a few words in defence of Lord Peter Mandelson.

The most frequently used and misleading out-of-context quote in modern politics has to be Margaret Thatcher's words "No such thing as society" which when ripped from the proper context that people should look after their neighbours rather than leave it to "society" to help them sounds like the exact opposite of what she was actually saying.

But a contender for the second-most-frequently used and misleading out-of-context quote is Peter Mandelson's words that the New Labour government was "intensely relaxed about people getting filthy rich" if the person quoting omits that he continued "as long as they pay their taxes."

Let me make this clear - I don't believe in the ridiculous version of "trickle-down theory" that much of the left is wrongly convinced people on the right believe, e.g. that making the rich richer will always also make the poor richer with no further action needed, and I've never met anyone who does.

I believe that taxes should be low enough to ensure that everyone always has an incentive to succeed - confiscatory taxation is not just unreasonable but self defeating - but high enough on all income above a certain level to ensure that a proportion of that income is used to support the needs of society such as schools and hospitals, and have as few loopholes as possible.

If you set tax rates at a sensible level, and enforce them properly, you can get a lot of tax revenue from very rich people to pay for things like schools and hospitals. If you try to take everything, you will find that you have killed the golden goose.

This is not the same as the "trickle down" theory but its' exact opposite because I am explaining how you extract the maximum amount of tax revenue from the rich.

There are of course some very wealthy people who make a big fuss about supporting the Labour party or people even more left wing. Some people on the right or in the press call them hypocrites. I don't see any need to be personally offensive about this.

If a rich socialist reduces tax through legal means, then it is as wrong for the right to criticise them for something we would do ourselves in the same position, as it is for a rich socialist whose own family has carefully reduced their own tax liability - such as Ed Miliband, for instance - to criticise Conservatives or business leaders for doing the same.

I don't smoke or drink. If I did either, I would have to pay tax on that activity. Does the fact that I don't smoke or drink therefore make me a tax avoider?

What IS entirely legitimate, however, when a rich socialist is campaigning for the Labour party or  even further left, and if that person has done something different in their own lives to what they urge on everyone else, is to point it out and remind everyone that actions speak louder than words.

And the actions of people like Charlotte Church and Martin Freeman are a much stronger argument showing why socialist policies are unworkable than any number of words or marches can make in the other direction.

Let's consider a few of those actions

Charlotte Church

Guido's article in the Sun on Charlotte Church's directorships.

Ms Church is a member of the "People’s Assembly against Austerity" – whose aims include ‘increasing taxes on the super-rich’ and ‘closing tax loopholes’

As Paul Staines (Guido Fawkes) points out in the Sun in the link above, that is difficult to reconcile with how this particular millionaire runs her own financial affairs.

Church is the director of five companies that are all registered to the London address of Thomas Harris Accountants.

“Lowering and deferring tax is, of course, a key aim” boasts the firm’s website, by “taking advantage of allowances and reliefs of which many people are unaware.”


Martin Freeman

Link to Daily Mail article on Martin Freeman's financial affairs,

The Daily Mail alleges that in 2008, the actor set up a company called Geoffrey Joseph Limited, which has been trading ever since. Freeman is its only director and shareholder.

This company was incorporated by an accountancy firm called Hogbens Dunphy, which claims to have expertise in helping wealthy entertainment figures deal with ‘income tax, capital gains tax, trusts and estates, and non-domiciliary tax issues’.
 
On its website, Hogbens Dunphy advertises for clients by claiming: ‘Every pound of income tax you save means more income at your disposal. Every well planned disposal of assets means minimal loss of capital gains, and every inheritance tax saving means more benefit for your beneficiaries.
 
The Daily Mail also alleges that he and his partner decided to let her go bankrupt in December 2012 to avoid paying a £120,000 tax bill, at a time when he reportedly had assets worth £10 million. (they add that the bill was subsequently paid in May 2013 after details of the bankruptcy were revealed by the press.)


Is there any precedent for a politician or campaigner paying more to the exchequer than they had to?

As a matter of fact, there is. At a time in the last century when the country was struggling with crippling debts, a prominent and wealthy politician wrote anonymous letters to The Times signed "FST" explaining that he thought the rich should voluntarily help pay off the country's debts. He tried to set an example by giving a fifth of his own considerable wealth.

So it is not quite unknown for a wealthy person to pay the government more than they have to, although it is not a very common occurrence.

So was it a member of the Labour party? Not in that case, no.

Was it any other left-winger? Again, in that particular case, no.

Many years later, I think after his death, it came out that "FST" was the Financial Secretary to Treasury - Stanley Baldwin, a Conservative who was later prime minister.

https://en.wikipedia.org/?title=Stanley_Baldwin

Comments

Jim said…
No one wants higher taxes, even the most left wing of left wing socialists don't want to raise their taxes.

When people who campaign for higher taxes do so, what they are always saying is "we need to increase the tax paid by other people."

"The rich" are always a target, but the rich are generally defined as "everyone who earns more than me"

As to your question about tax avoidance on tobacco and alcohol, well the simple answer is yes you are avoiding those taxes. That's not a bad thing at all, tax avoidance is perfectly moral and is 100% legal. There is a big difference between Tax Avoidance and Tax evasion. By choosing not to buy ciggys and beer then you are avoiding the tax on those products, its like there is nothing wrong with not having two or more cars as you dont want to pay road tax on them, sure you are deliberately avoiding the tax, the fact you may not need or even want another car is neither here nor there, you are still avoiding paying the tax on it. So what?

I will do everything I can to avoid VAT, (I hate VAT) i have even been known to book a holiday in the states, 1 because i wanted a holiday but 2. I choose the states as I wanted a new telescope VAT free, so I went for it so i did not have to pay import duty (and I bought it from New Hampshire to avoid US sales taxes).

People these days talk about tax avoidance as if its a bad thing, its not at all. It is a very sensible thing to do. Choosing not to buy some thing means I am avoiding all tax on it (does not matter if that was my main intention or not) the fact is I am avoiding paying that tax.

Tax evasion is different, that would be something like having a car and not paying the road tax on it and using it on public roads, that is not right. Sure I think the tax rates should be set by the tax payers, but if you are using the road with your car you should pay your fair share of upkeep on the roads.

You see there is a whole world of difference between evasion and avoidance, Tax evasion is illegal, tax avoidance is a moral duty. I also think it would help if all taxes were ring fenced. This simply means road tax is used to fund road upkeep. Income tax is used to fund things like the NHS and Schools. National insurance (another pet hate tax) is used to fund welfare.

this way we could see what we are getting for our money, and is a better system than everything going into a single black hole that is public spending.

See I love tax avoidance, its great, raise my tax rate higher and you give me more of an incentive to do it, that's why the laffer curve is as it is. If its lower I have less incentive to avoid, and 9 times out of 10 cant be bothered, raise it higher and before you know it I have the accountant in and am avoiding more and more in tax and you actually take much less. - unless of course its VAT then i will avoid that for fun.






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