Pity the Poor Rich

This week in a story that if I had made up, you wouldn't have believed, a collection of highly rewarded and well off people signed a request to pay less tax.

This week in a story that if I had made up, you wouldn't have believed, a collection of highly rewarded and well off people signed a request to pay less tax.

They did this not for themselves, you understand, paying less tax would not be for their benefit, they did it for completely altruistic reasons. You see, paying 50% tax on their substantial earnings over the £150,000 threshold means that they have less money left to give to charity.

They actually said that. Small children with flies in their eyes are dying because we greedy poor are making it politically unacceptable to lighten the tax load on the rich. We should be ashamed of ourselves. How could we?

They also said that it is only because the tax rate for the rich is so high that they are forced to avoid paying tax by hiring armies of bespectacled accountants who have at their disposal all manner of shrouds and smokescreens with which to obscure their earnings and nimbly sidestep the leaden footed tax man. How about that for logic.

They are saying that if the tax rate was lower, they would less inclined to avoid paying it. At least I think that is what they are saying,. It is possible that I am having an acid flashback and I imagined the whole thing. If only the top tax rate was lower, they would pay more tax! If that makes sense, I am a banana.

The rich are, of course, the only people that can avoid tax, the poor evade it - small change in words, big difference in the law. If you avoid paying tax to a massive extent, you will be given a knighthood and a place in Her Majesty's government; if you evade paying tax, will be given a bucket to pee in and a place in Her Majesty's prison.

So, charities suffer, and we suffer from their avoidance but what they are really concerned about is that they will all have to up sticks and go and live somewhere else, where the rich are treated with more consideration. Except that such a place does not exist. Great Britain is a tax haven already. It is one of the few places on earth, and the only one you'd actually want to live in, that allows all foreign earnings to go tax free. America wouldn't allow that. Try to pay no tax on your foreign earnings in America and you'll be bunking with a man called Bubba who will claim you as his sex toy. The City of London practically exists to ensure that the wealthy stay that way - it's an off shore tax haven that you can get a cab to.

It's not the rate at which the tax is levied that is the problem, it is the amount in pounds that it causes the rich to owe. If it was only 10% in the pound, 10% of a million pounds is a very great deal of money indeed and it seems unlikely that, if they could, the rich would not avoid paying it. Its not the amount of the percentage that's the key, its the amount that you take the percentage of that affects the behaviour. Besides, almost no-one at all earns over £200,00 a year. If you pulled in £200,000 last year, the extra tax that the 50% rate would cause you to owe is a piddling five grand. Are we really expected to believe that our entrepreneurs would take their children out of school, pull their spouses away from their careers, shut down their businesses and leave all their friends behind for an amount that would not pay for one week in a five star shed on stilts in the Maldives?

It is the logic that is what's really odd. The high tax rate is bringing in less money to the Exchequer because more people are avoiding paying it, they say - ask us to pay less and we'll actually pay more. If you can figure that one out, then you are probably not being paid enough. And if you are earning over £150,000 a year and you own a business, with all the opportunities that provides to get creative with your affairs, and you are still paying the full amount that, in theory, you owe to Revenue and Customs, then sack your accountant. He might be a little too honest for your own good.

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