Wednesday, 29 August 2012

Oh Nick. Nick Nick Nick

It's almost comical how Nick Clegg gets it wrong even when he gets it right. This time, he's proposed a 'time-limited wealth tax' on the mega-rich (which includes him of course: he's a multi-millionaire, while the median wage in this country is £26,000).

Obviously everybody other than the Tories have made one simple point: Clegg voted to cut the top rate of income tax from 50p to 45p on earnings above £150,000, so proposing a new wealth tax seems a bit odd.

However, despite this stupid and regressive tax cut, Nicky's on to something here. The reason hedge fund traders, Mitt Romney (apparently it's OK to run for President of the US while keeping your millions in various other countries) and every rich bastard you've ever heard of avoids paying most of their taxes is quite simple: they don't pay income tax like you or I. I have a salary and savings account and an ISA. I pay tax via PAYE, so no chance to avoid it there even if I wanted to. My savings account is taxed each year automatically (I think the government took £12 last year) and my almost empty ISA is tax-free.

Up in the realms of serious money, there's none of this nonsense. Rather than take salaries, these people acquire cash through 'capital gains' (taxed much lower), investment income, dividends and various other mechanisms. They don't buy houses: opaque offshore trusts and companies buy their houses for them. They are 'non-doms', like the owner of the Daily Mail, who built a (predictably) appallingly reactionary £20m mansion in Wiltshire yet is officially domiciled in France, and therefore avoids all taxes on it and all his other financial dealings. There are entire streets and blocks in central London worth £billions which have no individual owners, just Cayman Island companies

So the Lib Dem idea of a wealth tax is actually a good one. It doesn't discriminate between income and gains, but taxes the lot. It's easy to hide a salary behind a 'service company' (as lots of civil servants and BBC executives have been doing - it avoids income tax and national insurance) but it's harder to hide a mansion, and if extended slightly, taxes the offshore companies used to hide ownership. No cheque in the post? Send in the bailiffs.

I'd forget the 'time-limited' aspect of his plan, reinstate the 50p rate (even Thatcher had a 65p upper band) and tax all financial transactions, particularly the speculative kinds which bankrupted the world. I'd also abolish all benefits for people with jobs. I know that sounds a little rightwing, but hear me out: it's actually a progressive socialist policy. Providing benefits for the working poor isn't good for them: it's a subsidy for the greedy and evil corporations which employ them on such low wages. It raises their profits, which go to shareholders who hide the money away from the taxman. So we pay for the benefits while those who profit don't share the burden. If we stopped paying benefits but massively increased the minimum wage, the employees would still be needed to do the work, but some of the profits would be diverted to their salaries. They'd spend the money on necessities and the economy would improve, while the state's expenditure would drop. All it needs is for us to decide that profit margins can and should be lower. The executives and shareholders have fed off us like leeches for a hundred years: time for them to adapt to changed circumstances.

Poor old Nick. Even when he comes up with a good idea, it's laughed out of court.


Emma said...

Guardian are reporting good old George is pouring cold water on the idea. Funny that!!

The Plashing Vole said...

Well, well, well. No doubt it's a pure coincidence that his family's money is in a tax-avoiding trust fund. He could probably claim non-dom status too, as he's going to inherit an Irish Baronetcy!