Tag Archives: “top rate”

The poor pay more tax than the rich – and Tories want to cut the highest rate

tax

The UK’s poorest families give more money to the government in tax than any other income group – and almost half of Tory MPs want to increase the inequality by cutting the top rate of tax yet again.

According to the Office of National Statistics (ONS), the poorest fifth of households paid 37.8 per cent of their income in taxes last year, while the richest fifth paid 34.8 per cent.

That’s not the whole story, of course – if you’re poor and you pay nearly two-fifths of your income in tax, that leaves very little for necessities like food, water, heat, light and rent/mortgage whereas, if you’re rich and you pay nearly 7/20 of your income in tax, you’re unlikely to be feeling any kind of pinch.

Say a poor family receives £12,000 per year. Tax would account for £2,400, leaving £9,600 for everything else. What’s the earnings threshold for the top tax bracket – £150,000? A family receiving that amount would pay… actually they’d pay 40 per cent of it, according to the law, but that would still leave £90,000 – nearly 10 times as much as a poor family and no problems at all in making ends meet.

It should be stressed that these are only representative figures. To be honest, the statistics are up for question: How many of the top fifth of earners avoid paying tax via legal schemes, designed for this purpose? How much do we all pay in indirect, or hidden, taxation? How many variations have been included in the ONS figures?

George Osborne is said to be considering a cut in tax credits in his July budget, meaning the poorest would lose part of a vital support system propping up their earnings. David Cameron has said he expects employers to increase pay, but he is offering neither carrot nor stick to encourage this, therefore they won’t. So the poor would pay more.

Meanwhile, 160 Tory MPs have demanded that the top rate of tax be cut from 45 per cent to 40, meaning the rich would pay less.

Not only would the poor be plunged further into poverty and debt if these measures were enacted next week, but public services would also take a hammering as income to the Treasury plummeted.

Perhaps the worst indictment of the situation, though, is the fact that – under the last Labour government – the inequality was worse. The poor paid more than 38 per cent of their income while the rich contributed less than 34 per cent.

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A quick thought about the Conservative ‘tax lock’ silliness

Anyone who thinks David Cameron’s promise of a five-year ‘tax lock’ is a good idea must need psychiatric help.

Cameron promised to introduce a law banning income tax, VAT or national insurance increases in the next parliament if the Conservative Party is elected back into office, clearly in the belief that anybody on average wages or less is too stupid to know what this means.

We know better, don’t we?

We know that taxes are set according to each income group’s ability to pay. This means that people in the lowest taxable bracket pay the lowest amount, as they need most of the money they earn in order to pay their way. The amount of tax then increases by increments up to the highest earners – who take home considerably more than they need to survive, and who can therefore afford to contribute a much larger amount with no impact on their quality of life.

We also know that a five-year ‘tax lock’ will not affect the lowest-earning people at all. Nobody earning up to £10,600 pays any tax at the moment, so a freeze on nothing is still nothing.

What will it do to the people in the highest tax bracket? Well, it depends what they earn and how fast their pay increases, doesn’t it? Let’s have a look at the handy guide to average UK pay rises, created by fellow blogger Tom Pride last November:

141112average-uk-pay-risesTomPride

So the director of a FTSE 100 company, paid the average amount of a mere £2.4 million, would have contributed 45 per cent in tax, or £1.08 million in the 2014-15 tax year. Over a five-year period, if that person’s income continued to rise at 14 per cent, then by 2020 – at a 45 per cent tax rate – they would pay a total of £8,138,360 in tax over the years until 2020. That’s certainly a respectable figure.

But Labour has proposed an increase in the top rate of tax, back to 50 per cent. Under the same conditions, this would mean FTSE 100 directors earning £2.4 million in the tax year 2014-15 would pay £9,042,623.

That’s a difference of £904,263; nearly a million pounds each.

This writer doesn’t have current figures for banker salaries and cannot, therefore, work out how much tax they would pay – but you can see for yourself that the difference between the two scenarios is likely to come to several million pounds per top banker.

Those people don’t need that amount of money in order to survive. The cost of living in the UK is less than 1/50 of what the FTSE directors take home, let alone the bankers. But David Cameron wants them to keep that money.

Meanwhile the UK Treasury goes without millions of pounds that could be used to help balance the national deficit, pay off the national debt, and boost the economy.

We’re back to ‘Starve the Beast’ economics again. The nation’s finances can go to Hell, as far as Cameron is concerned. He wants to starve the Treasury with tax cuts for the rich – either actual cuts or de facto cuts like his ‘tax lock’ – and then claim that public services cost too much and will have to be scrapped or sold off to rich corporations in return for donations to the Conservative Party – as we have seen in the years of the Coalition Government (most obviously in the case of the NHS).

Unless you are a banker, an FTSE100 director, or a member of Parliament, you would be mad to support such a wasteful and selfish plan.

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Bank bailout was the greatest theft of wealth in history. Will Miliband reverse it?

150113bankrepayments

The money given to UK banks and the amount paid back by October last year – nothing but interest [Image: claritynews.co.uk].

There’s a passage in Russell Brand’s Revolution in which he quotes a chap called Dave Graeber as follows: “During the bailout of Wall Street, $30 trillion in support and subsidies went to the most powerful players… That was the greatest theft of wealth in history.”

Here in the UK, we were part of that. The Brown (Labour) administration paid a fortune into our own banks to keep them solvent because they were also participants in the global economic crisis – it had to, otherwise all of our savings would have disappeared.

We all thought this was reasonable, at the time. Shore up the banks, sure – they’ll pay us back in the long run. Have they paid us back?

Have they heck as like!

(That’s a colloquialism meaning, emphatically, no.)

The Conservative – sorry, Coalition – government has even been helping them steal some more. Look at this RealFare image:

150113camerontaxcuts

The bankers involved in the bailout were all on the top rate of tax – bank on it! – so there’s a double tax cut for them, and their employers enjoyed the Corporation Tax cut too. That’s a huge amount of money that the Treasury has given away to people who already owe the nation a huge amount of money!

Meanwhile George Osborne announces more billions of pounds worth of spending cuts, taking money from the poor.

You see – and perhaps this has been obscured lately – government spending involves the redistribution of wealth, and on the face of it this is to make society more equal. What the poorest can’t afford, the state will provide, to ensure a reasonable standard of living for everybody.

But George Osborne, David Cameron and their government have pig-headedly used the financial crisis and the debts created by it to punish the poor and increase inequality.

The bankers have not been asked to give back the money they were given to bail themselves out – that money has been stolen.

The government has withdrawn spending from people who need it and given the money to people who don’t in tax cuts – that money has also been stolen.

Just because it doesn’t appear in the statute books as an act of theft doesn’t make it any less so.

And now it seems another banking crisis is on its way – because the people who caused the last one are still in charge, haven’t learned their lesson (why should they? They were rewarded for the last crisis), and are hell-bent on repeating the calamity because the only people it hurt were too poor to do anything about it – people like yourself.

Look at this, by Michael Meacher MP: “Six years after the financial breakdown in 2008-9 it is therefore disturbing to see the UK’s Financial Conduct Authority seeking public acclaim for the large increase in financial penalties it has imposed on miscreant banks, as though this has changed the culture of hubris that has infected the major banks over the last decade or more.

“The FCA has certainly imposed fines of £1.4bn on the UK banks in this last year, but that is… too modest by comparison with the enormity of their regular annual profits to change the City’s amoral mindset, and above all focused on the banking institutions themselves (the shareholders) rather than on the real perpetrators (the top executives and traders).

“Not a single top executive in the UK financial sector has been convicted and sent to prison, even for such egregious offences as rigging the Libor and forex markets.”

Ed Miliband has promised to reform the banks, “so they support small businesses” – is that enough?

In September 2012, he promised that, if banks did not separate their retail and investment arms, a future Labour government would break them up (with the aim of protecting personal account holders from debts created by the gambling of the so-called ‘casino’ bankers) – is that enough?

What will be enough?

From where this writer is sitting, the banks and financial institutions are sitting on billions – if not trillions – of pounds of money that doesn’t belong to them, while millions suffer and starve.

Going back to Revolution, Russell points out that this kind of money could cancel the debts of everyone, not just an elite; it could create employment and ‘ease’ life for ordinary people, not just an elite.

Ed Miliband could win an election on this. If he said “A Labour government will take your money back from the banks and use it to improve the lives of everyone,” he’d have a landslide on his hands.

How about it, Ed?

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Betrayed Nation: the speech, the lies, the threat

One suspects the on-screen caption was more apt than the BBC intended.

David Cameron’s speech to the Conservative Party Conference may go down in history as the worst drivel ever coughed up over the public by a British national leader.

I was going to write a serious article about it but, on reflection, I have decided to mock and insult him pitilessly, interspersing my disdain with some medicinal doses of cold hard truth – and a few tasty pics from Facebook and Twitter.

Where to begin? Let’s go for the biggest groaner. Yet again with your disabled son, Mr Cameron? “When I used to push my son Ivan around in his wheelchair, I always thought that some people saw the wheelchair not the boy. Today, more people would see the boy and not the wheelchair – and that’s because of what happened here this summer.” He was referring to the Paralympics but what people saw was an overprivileged toff who took disability benefits for his son when he didn’t need them and is now cravenly using the deceased child’s memory to score points, while depriving the sick and disabled of the money they desperately need in order to survive. Did he really think anyone watching that, with an ounce of sense, would not be sickened to the pit of their stomach by his bare-faced, self-satisfied hypocrisy?

It’s the sort of line that forces me to agree with the Tweeter who typed: “I’ve got a great ‘Cameron’s speech’ drinking game. As soon as he starts to speak, drink bleach.”

There was a big lie about the NHS: “We made a big decision to protect the NHS from spending cuts.” In fact, in the current financial year, his government cut NHS spending by something like £25 million, and I believe he is also rationing access to treatment. He recently announced £140 million of new funding – but neglected to trumpet to the rooftops the fact that it’s in LOANS, so any organisation taking it would have to pay it back, presumably with interest.

He said the number of doctors, dentists, and midwives has increased – and this is true. But if you factor in the number of nursing staff that have been cut (there are now fewer than in 2010) then the number of full-time equivalent, professionally qualified staff in the NHS has risen by just a fraction of one per cent since the coalition took office. Hardly a ringing endorsement of his policies, is it?

Cameron: “So be in no doubt: this is the party of the NHS and that’s the way it’s going to stay.”

Twitter: “There isn’t a god or Cameron would’ve been struck down.”

Even the BBC’s Stephanie Flanders was looking askance at this: “Cameron talks about the NHS but can they tell us how many of the Cabinet have private health insurance?!”

Cameron: “Aspiration is the engine of progress… That’s why the mission for this government is to build an aspiration nation.”

Twitter: “‘Aspiration Nation’ sounds like the title of one of Grant Shapps’ motivational courses!”

Cameron: “Line one, rule one of being a Conservative is that it’s not where you’ve come from that counts, it’s where you’re going.”

How many Conservative Prime Ministers came from Eton, then, ‘Call-Me-Dave’?

Cameron: “We don’t preach about one nation but practise class war…”

Twitter: “…says head of government of private-school-educated millionaires making big cuts to public services for the poor.”

Could this possibly be the conference pass that Andrew Mitchell famously hasn’t used this year?

He said we need businesses investing and taking people on. To do that, they need low interest rates so they can afford to take out a loan, and confidence that it’s worth investing.

Big explanation follows, courtesy of Ramesh Patel in the Huffington Post: “The real reason why our borrowing costs have fallen and remained low since 2008 is because the demand for bonds has risen and there is a an expectation that it will remain high because the markets expect the UK economy will remain stagnant.” That’s STAGNANT. Not “on the rise”, as Cam would have us believe.

“Consumers and businesses are not spending. As result, saving levels have risen, which has increased the demand for bonds [loans made for a fixed period of time at a fixed interest rate] and increased their price. There is an inverse relationship between the price of bonds and their yield-return or interest rates. Hence, if a £1,000, 20-year, bond is at an interest rate of 5 per cent, you would receive a return of £50 per annum. Now suppose the demand for bonds rises because more people are saving. Lets assume it rises from £1,000 to £1,500. With the interest rate remaining the same, the return will also remain the same at £50. Hence, the new effective interest rate falls because £50/£1,500 = 3.33 per cent.” So interest rates have dropped because the price of bonds has risen – but that won’t help anyone take out a business loan – and if you don’t believe me (as Dave repeated several times during his oration), just you go out and try it!

He said it was essential to get the deficit down, and the Tories’ deficit reduction plan is “the very foundation” of their growth plan.

This is nonsense. Back to Ramesh Patel: “A government that attempts to reduce its spending during a recession engages in a self-defeating activity. Rather than increasing its income, it increases its deficit and debt. Quite simply, cutting spending results in increased unemployment, which increases its benefit spending. As a consequence, consumption spending is reduced, which results in lower income or GDP. Austerity has never worked.”

Just so. Austerity has never worked. It isn’t like a household reducing its spending to increase the amount of money it holds; the opposite holds true in national economics. Cameron (and his chancellor, Gideon Gordon George Osborne) knew this before they got anywhere near Downing Street and have been stringing you along for two and a half years.

Do you need more convincing? Here we go – he said “The damage was worse than we thought, and it’s taking longer than we hoped.” It wasn’t. He inherited a growing economy, with falling unemployment. It is his government that dragged the UK back into recession. Borrowing is up by 22 per cent so far, in this year alone, because of his policies. His claim that he has cut the deficit by a quarter in the past two years is nothing more than a lie.

It certainly isn’t why interest rates are at record low levels. Mortgages might be low as a result but how many people really benefit from that? Businesses don’t have the confidence to invest – or the wherewithal, since the banks are stubbornly refusing to pay out, no matter what Cam the Sham’s government does. Sadly, more than 33,000 businesses have gone bust since the 2010 general election.

On employment, he said more than a million new jobs have been created in the private sector. What he FAILS to say is that they are mostly part-time. Those people will be topping up their income with government benefits – creating more government borrowing. And what about the unemployment figures – especially among young people? More than a million are out of work. We’ve got 1.49 million men out of work and 1.1 million women unemployed as well. These are atrocious figures – the worst since, well, the last Conservative government.

His attack on Labour was a child’s argument. He called Labour the party of “one notion” (see what he did there, mocking Ed Miliband’s “One Nation” statesmanship?) – borrowing.

But wait. His government is currently borrowing £802 every second. And I repeat: Government borrowing has increased by 22 per cent since the beginning of this financial year alone.

“We’re here because [Labour] spent too much and borrowed too much.” If Labour’s record was so bad (its borrowing record is in fact better than that of the Tories), why was Osborne promising to match Labour’s spending plans, right up until 2007? I think the only conclusion we can form is that Mr Cameron will say anything if he thinks it will appeal to the masses. Truth or fact have nothing to do with it.

The vacuousness of the argument he picked with Ed Miliband, over tax, defies belief! He took issue with Mr Miliband for saying a tax cut was like the government writing people a cheque, saying “If we cut taxes, we’re not giving them money – we’re taking less of it away”. What’s the difference? They’ve still got more of it than they would have had otherwise! Arguing over semantics is not an election-winning strategy.

This was Cameron’s defence of the cut in the top rate of tax, from 50 per cent to 45 per cent. He said: “It’s their money.” Was he saying the super-rich should not pay any tax at all, because it’s “their money”, not the state’s? In that case, what about the rest of us? Is the money we earn “our money” and should we then, also, be exempt from tax?

If so, then good luck paying off that huge deficit you’re building up, Dave – not to mention the benefits bill you’ve been steadily increasing over the past two and a half years!

I sometimes wonder if he knows anything about the real economy at all.

Oh look! I just unintentionally echoed something Mr Cameron said! About Labour?!? Deluded isn’t the word. If it weren’t for the deadpan, funereal seriousness of his delivery, this could be a comedy skit.

He talked about the threat of wealthy businesspeople moving to other countries, which – guess what, Dave? – they never, ever do.

He said the rich will pay a greater share of tax in every year of this Parliament than in any one of the 13 years under Labour – but has never produced any figures to back up this claim. How are we supposed to believe him?

He went on and on about the need to build more homes but declared no new policy.

On welfare, he referred to individual families in receipt of up to £60,000 in housing benefit. Who are these people and where in the country can they possibly live? Has anyone EVER received that much? I want to see Conservative Central Headquarters produce the evidence RIGHT NOW!

He said it’s an outrage, conveniently ignoring the fact that NOBODY RECEIVING HOUSING BENEFIT ACTUALLY SEES A PENNY OF IT. It obviously goes to the landlords. But his plan to cap housing benefit won’t harm landlords – they’ll just evict the tenants for being unable to pay the rent.

Why not cap RENTS instead? That is the real solution. But then, as somebody mentioned on Twitter, this isn’t about helping people in need – it’s about turning central London into a poor-person-free zone.

Oh yes, and somebody should really make it clear to Mr Cameron that 93 per cent – the overwhelming majority – of new housing benefit claimants are in work. What does this say about the kind of work available in Cameron’s Britain? To me, it says that it doesn’t pay enough for people to survive. He should be asking why the government is effectively subsidising these employers when they should be paying a proper living wage! (A living wage? Isn’t that a… Labour idea?)

On his state-sponsored slavery Work Programme, he said, “Work isn’t slavery; it’s poverty that is slavery.” Firstly, when it’s compulsory, unpaid work, I think Mr Cameron will find it IS slavery. Especially when it’s the kind of work that helps the firm but not the worker, who can be slung back on the dole after a few weeks, and another slave – sorry, worker – pulled out of the line to do the same ‘training’. Secondly, the Child Poverty Action Group tells us that, thanks to Mr Cameron’s policies, child poverty in the UK is set to rise by 800,000 by 2020; this is the biggest increase in generations and Cameron’s comment on that was “it’s us, the modern compassionate Conservative party, who are the real champions of fighting poverty in Britain today.”

There was more – much more – of this tosh but I can’t be bothered any more. You get the idea. If you want to see what someone from Eton has to say about the state education system, go to the Tory website and read it yourself – if you can stomach it. Let’s just say the point at which Cameron started attacking teachers who choose to work in the toughest schools was the moment when one man, whose girlfriend is a teacher, gave up all attempt at calmness and started screaming swearwords in response.

There was no mention of the police at all. We know he’s cutting the force nationally by 15,000, though – let’s face it, the billboard with his face on it made his intentions perfectly clear!

The verdict? One Tweeter typed: “What an absolutely vacuous, empty tokenist deluded speech riddled with lies, mistruths and divisive barrel-scraping spin.”

My favourite is this. It’s short, pithy, and to the point: “One of the worst dictator speeches since 1945.”

But I’ll leave the last word to Ed Miliband, who delivered his critique of Mr Cameron and his party in advance, during last week’s Labour conference: