More Left-Wing Tax Hypocrisy from Richard Murphy

In what is a bid to soothe ruffled LibDem feathers, rather than in response to the looter’s protest, the government has just announced a new clamp down on tax avoidance. Guido mentioned at the weekend how quiet the left were about the Guardian’s tax avoidance in contrast to their attitude to Philip Green. There hasn’t been a squeak from the likes of left-wing millionaire Richard Murphy, a Rowntree and TUC funded, self-styled “fair tax” expert. But then he did give the Guardian Media Group accounts his seal of approval, after GMG made a £302 million profit in 2008 and paid not a penny in corporation tax.

Murphy, of the Toynbee school of hypocrisy, seemingly wears his principles on his sleeve and argues for anti-avoidance measures and crucially that the philosophy behind tax collection should be judged by the spirit not the letter of the law. However has Murphy  always practised what he preached?

Before he discovered the cause of “Tax Justice” between 2001 and 2003 he wrote technical articles for The Guardian advising how to minimise tax on employing a nanny, how to minimise tax for the self employedmaximise your tax allowance through taking out a stakeholder pension and attacking legislation which requires accountants to report tax evasion. On second reading Murphy’s recent line that he was just highlighting the holes doesn’t really wash, especially when his own tax practises are examined.  Although Murphy puts his home address on all his business literature – it is the registered address for all his companies – he does not pay business rates on the property. Not quite within the spirit of the law now is it…

Polly Missed Guardian Tax Justice Demo

In February 2009 Guido’s co-conspirators held a tax justice demo outside the Guardian’s spanking new HQ. Shouting “Scott Was a Tax Evader” and “GMG Fat Cats Pay No Tax”. We didn’t manage to get any support from multi-millionaire, three home-owning, anti-poverty campaigner Polly Toynbee. We would have dragged her out if we could…

The Guardian Media Group is one of the shrewdest corporate avoiders of tax in Britain, in 2008 it made a £300 million profit and yet managed to pay no corporation tax, the following year in 2009 it still paid no corporation tax, it uses the offshore Caymans tax haven to own assets, it uses tax efficient trusts and deploys all manner of perfectly legal tax shelter strategies to avoid paying tax. Polly seems silent about this tax dodging…

See also: Guardian’s Tax Hypocrisy is RidiculousTax Justice Protest Against Guardian Tax Dodging

Defending Philip Green Against the Looters

Philip Green is a sharp businessman who turned round the Arcadia chain when they were closing shops and made them profitable. He turned Top Shop from a fading also ran into an international brand with cheap chic credibility. In doing all that he secured thousands of high street jobs, boosted profitability and made a billion.

He bought Arcadia via an offshore company, perfectly legally and paid that famous billion pound dividend perfectly legally. He did it the way he did it because this country punishes entrepreneurs and risk takers with capital gains taxes on top of income taxes. Double taxing those who create and produce.

Arcadia pays hundreds of millions in taxes every year, VAT, carbon taxes, stamp duty, business rates, National Insurance, employee’s income taxes and the myriad of other taxes that penalise enterprise and entrepreneurs. That isn’t enough for the type of parasites and political activists the great novelist Ayn Rand correctly identified as “looters”.

The looters are killing this country because, in their humanitarian noble-minded, public-spirited contempt for entrepreneurs, they forget how much they rely on entrepreneurs. With each new restrictive regulation designed to enhance equality and “justice” they make it harder for the remaining entrepreneurs to create the Vodafone-supplied iPhones from which they tweet their bleatings about “fighting the cuts”. Self-styled Anarchists” calling for higher taxes to fund a bigger state are no anarchists.

Philip Green deserves his billions, he is a self made man who left school at fifteen, worked hard, took risks, clearly enjoys himself and defends his just rewards from the rapacious grasp of the tax man.  If only we had one hundred more Philip Greens…

Iceland Shows the Way Forward for Ireland:Decouple, Default, Devalue and Develop

Iceland’s President, Olafur R. Grimsson, told Bloomberg TV on Friday that his country is better off than Ireland because they allowed the banks to fail two years ago and devalued the krona:

“The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

The Irish bank bail-out is being foisted on them by the EU and the IMF whereas sovereign Iceland let the banks go bust and restructured the financial sector to keep the commercial sector serviced. As a consequence, “Iceland is faring much better than anybody expected” says Grimsson:

“How far can we ask ordinary people – farmers and fishermen and teachers and doctors and nurses – to shoulder the responsibility of failed private banks… That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”

Under this plan 20 cents of every euro of Irish taxes will go to pay the interest on the bank bail-out debts. The Irish bail-out plan will cost €54,800 per Irish household. Ireland’s future thus looks a lot more bleak than Iceland’s path of debt default and a devaluation of 60% two years ago which has the country rebounding: exports and manufacturing are growing by 20%, tourism is back near all-time highs, real wages are rising, unemployment is declining sharply, interest rates fell from 18% to 5.5% and the stock market has rebounded 50% from its lows. In contrast this euro-banker’s bail-out will only burden the next generation of Irish who don’t flee with crushing debts not of their making…

Britain and europe should keep their bail-out billions rather than foist them on Irish taxpayers to cover the responsibility for bad investments made by their own private banks. They can use the billions to bail-out their own banks directly if they want, without involving the Irish taxpayers…

How Liam Byrne Could Help the "Squeezed Middle"

Liam Byrne says that the “squeezed middle” are those on between £16,000 to £50,000 and Labour’s task in reviewing policy is to help them. Guido is glad to hear it. Presumably he would therefore support those struggling on middle incomes being taken out of the higher-rate tax bracket, which kicks in at a ridiculously low £37,401? That is smack bang in the middle of the range he defines, surely it should kick in at £50,001, above the income levels of those hard squeezed middle classes. C’mon Liam, review that policy…

Poll: 76% Say Scrap the Beeb

Guido’s poll yesterday sampled more people than most polling companies manage for their political polls splashed across national newspapers. He likes to think his readers give a fair and balanced view too. The results are in and show an overwhelming desire for the BBC to be scrapped:

These one IP address, one vote polls might be a regular thing…

Guido's Advice to Alan Johnson

Alan Johnson has been very self deprecating about his economic knowledge, promising to get a text-book to brush up. He faces George Osborne at the Dispatch box for the first time today.

In truth to be Shadow Chancellor does not require a knowledge of neo-classical endogenous growth theory. He needs to just pick a few issues with which to harry the government. Guido checked Alan Johnson’s website to discover a flavour of his approach to economics. Unfortunately he doesn’t appear to have one. All Guido could find under the “business and economy” heading was a press release about the PBR dating back to December 2009.

Since Alan seems devoid of his own ideas, perhaps he could borrow some ideas from his fellow progressive Barack Obama? Obama is giving individuals a progressive tax break this year of 6.2% of earned income up to $400 for individuals and up to $800 for couples, phased out at an income of $75,000. Obama is also giving parents a $1,000 tax break per child (in France it is €5,000) that would please the squeezed middle-classes.

Barack Obama says that the the one thing you don’t do in a recession is raise personal taxes, taking money out of the economy. Alan Johnson should stand foursquare against Osborne’s VAT hike. The Coalition has no mandate for it, in fact half of them campaigned against it. If the economy double dips next year as a result of consumer spending being crushed, Johnson needs to position himself to be able to pin the blame on Osborne’s VAT hike…

Maggie's Children

A Comres poll for Newsround has shown just how sound the latest generation of 18-24 year olds are. They overwhelmingly accept the need for spending cuts and would much rather slash the state than have their already burdened wallets hit by more taxation. Like a graduate tax.

Come on Balls, if the kids can get it, so can you.

Getting the Middle-Classes Off Welfare

The Mumsnet crowd are livid. It must be doubly annoying for them after they had nice Nick and dishy Dave over for biscuits during the election without any webchat about child benefit cuts. Nevertheless, was it ever sensible to tax people nearly half their income and then give them little welfare transfers back?

Frankly welfare universalism is a political con, it makes no sense economically and the logic of it is entirely cynical. The left wants to get the middle-classes to buy in to the welfare state, to do that they have to bind the middle-classes in. The left argues – quite openly – that if the middle-classes don’t see any benefits from the welfare state they’ll vote against it. It would be far more efficient to tax people less rather than hand them a little back after their taxes have passed through the hands of bureaucrats.

Leaderless Labour and Tea Parties Prosper at Polls

Guido is intrigued at how the U.S. Tea Party and the Labour Party can prosper at the polls without a leader. Arguably the lack of a Labour leader for the coalition to attack makes them less vunerable to the likely onslaught that is to come – the next leader of the Labour party will have his record in government thrown in his face – hard.

The Tea Party in the U.S. is consciously leaderless, they talk about being a “Starfish organisation”, drawing on some of the ideas in the bestselling book The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations.

Some on the left see the Tea Party as a right-wing version of MoveOn.Org, the Soros-funded grassroots mobilisation campaign to support left-wing Democrats. Having met a few Tea Partiers, Guido thinks they are more about changing the political culture back from “Republicrat tax and spend”, to the limited government imagined by the founding fathers of the U.S. constitution. Jonathan Rauch has filmed this snippet on the organisational structure for the National Journal:

[vodpod id=Video.4461581&w=480&h=350&fv=videoId%3D605835628001%26amp%3BplayerId%3D1460906593%26amp%3BviewerSecureGatewayURL%3Dhttps%3A%2F%2Fconsole.brightcove.com%2Fservices%2Famfgateway%26amp%3BservicesURL%3Dhttp%3A%2F%2Fservices.brightcove.com%2Fservices%26amp%3BcdnURL%3Dhttp%3A%2F%2Fadmin.brightcove.com%26amp%3Bdomain%3Dembed%26amp%3BautoStart%3Dfalse%26amp%3B]

Rauch has done a serious investigation into the Tea Party that goes beyond the hysteria (“they’re rednecks!”) and looks at how they organise – the Monday night conference calls, the Ning online social network and the federated sister organisations. The Tea Partiers have very quickly put the fear of voters into the Republican Party.

Could it happen here? If the Coalition fails on the economy, if the VAT hike hits the consumer hard, the economy double dips, inflation and middle-class unemployment rises, you never know.  The Coalition is offering no prospect of tax cuts, people may not be willing to accept a permanently high-tax culture…

Do We Really Need the VAT Hike?

Osborne’s budget has convinced the bond markets that this coalition is serious about tackling the deficit. The rally in gilts since the election and budget has been strong, taking 10-year yields down from 4% to 3% in three months, bringing down long term borrowing rates for mortgage holders and capital hungry growth businesses alike.

There has at the same time been a slew of negative-to-soft data on the economic front, given that the deficit cutting credibility of the government is firmly established, to the nigh on elation of the bond markets, Osborne has now earned a bit of leeway. Having already achieved fiscal credibility, if we do get more soft numbers on the economic front, he could afford to suspend the VAT hike due in January. If he goes ahead with the VAT hike and we do see a double-dip, Ed Balls will be well justified in blaming him for adding to the woes of the consumer. The VAT hike will take £13 billion of spending out of the economy.

David Smith, chairman of the Shadow Monetary Policy Committee group of independent economists, says his budget model calculates the move could increase unemployment by 235,000 over the next decade and reduce GDP by 1.4% over the same period. Do we really need to be reducing GDP at this time? The fiscal flagellation is no longer required to appease the gilt market…

Sir Phil's Top Chop Know How

It seems that new government appointee Sir Philip Green is enjoying the pressures of the new job. He apparently phoned up City AM to tell them their political editor was “a f***king tosser” for asking about his tax status. Surely a legitimate question given his new elevation to being the the Top Chopper of Whitehall costs. Green made the once failing Arcadia retail chain a huge success not just because of his eye for fashion. He did it by overseeing the removal of a huge amount of non-essential costs and he undoubtedly knows how to save on taxes.

Perhaps he will recommend the government move financial interests offshore and transfer it into Mrs Government’s name.

The Fable Digs In

In a first since the formation of the coalition, Vince Cable has had what could be described as a good day. Well he seems to have got his own way for once at least. Despite the idea being “Miltoned” previously by Downing Street, it now looks as if Cable’s plans for taxing successful graduates have been given the nod. Apparently taxing aspiration is making Britain “fairer”. No wonder he had some nice things to say about his bosses today:

But the big surprise, which in some ways is a pleasant surprise, is that the coalition does actually work. Personal relationships are very good, very businesslike. Having worked with the Tories, at close quarters, I’ve been pleasantly surprised that they’re not as I’d envisaged them.”

You could have fooled Guido. Cable has been walking around looking physically pained by his predicament. Rumours are circulating that he threatened to resign if his tax plan was rejected – perhaps he would have ended up back in Labour. It would not have been a fatal blow to the government though. Is placating this increasingly doddery old crypto-socialist really worth burdening the next generation with even more crippling debt?

The Danish Domiciled Dodger

Scandal has been brewing for a couple of days in Denmark over the fact that the opposition leader’s husband has mysteriously chosen to pay 15% income tax in Switzerland over the 63% rate in Denmark. Today things are coming to a head as Helle Thorning-Schmidt, leader of the Social Democratic party, has been forced to cut her family holiday short and return to the capital to defend herself.

The problem lies in the fact that the amount of time Thorning-Schmidt told the greedy Danish taxman that her husband spends in the country does not add up to the amount of times he has been seen going in and out of the family home. While many could understand a successful business man wanting to avoid surrendering nearly two thirds of his pay-packet, Guido can’t imagine Thorming-Schmidt’s in-laws would be too proud. What would the Hon. Stephen Kinnock’s father have to say about such blatant tax evasion?

Ouch

The VAT rise and freezing child benefit across the board will be the headlines tomorrow morning. It’s a painful budget but a million people out of income tax is pretty “progressive”. The Corporation Tax cut will probably bring in more money than the current rate does now, something Harman clearly could not grasp. While VAT is irritating, booze and fags are protected, not that they could have gone up much more. A council tax freeze was long overdue. However the hike in Capital Gains Taxation to 28% is Cable’s fiscal spanner in the works, unlikely to reap more revenue and hits the prudent.

+ + + Capital Gains Up To 28% + + +

Hearing CGT up, Corporation Tax down. No news yet on VAT.

UPDATE: Clearly the no smiles memo was circulated:

Go for Growth George

Government spending is approaching 50% of GDP, taxation is almost 40% of GDP and the consequent budget deficit is unsustainable. The choice is either taxes rise to finance government spending or government spending is reduced to balance the budget in line with tax revenues.

The British economy can not support a level of taxation above 40% of GDP, investment and enterprise would be driven away. To pay down the government’s debts we need a growing economy, creating wealth and tax revenues. We are already over-taxed, the productive sector of the economy is intolerably burdened by taxation to pay for the unproductive. If we want to grow the economy and balance the budget we can’t risk further increasing the overall tax burden.

Increasing VAT will reduce consumption, punish the High Street and burden the poor more than the rich. Before the election the Coalition’s leading political figures were asked time and time again: would they raise VAT? Time and time again they said they had no such plans. Trust in politicians is at a low, if George Osborne raises VAT or widens the scope of the tax he will be doing so without a mandate and it will betray what little trust was placed in his oft repeated claim that he did not plan to raise VAT.

Worst of all, it will take money out of the economy which could undermine the recovery. The City is not asking for tax hikes, the gilt market only wants spending control and the polls say the public favour spending cuts. George, the choice is clear, bring the economy into balance by controlling spending, reducing the tax burden and going for economic growth…

We're All Against This Together

It’s a strange day when the TaxPayers’ Alliance and the TUC are singing from the same hymn street. It’s even stranger when Guido and Ed Balls find themselves in agreement. The TPA have finally engaged in the battle this morning with a video attacking a prospective VAT rise. Guido can’t understand the morality of instigating a regressive tax rise that will mean more, not less, state dependency, leaving those who already suffer the most being even more broke. A hike in VAT to 20% would cost someone on average earnings £150 a year, that may not be much to millionaires like Dave, George or Nick, but those on lower incomes will definitely feel the pain.

The Coalition simply has no mandate to raise VAT, they were all asked repeatedly during the election campaign and replied they had “no intention” of raising VAT. Clegg actually campaigned against a VAT hike.

A 2.5% rise in VAT to continental levels is not worth the hassle, not when there are far more effective ways of saving money rather than further taxation. Why not start with the disastrous outsourcing of I.T. contracts? A study of government I.T. contracts made over the past 5 years shows that the taxpayer has ended up paying 40% or more above the market rates for outsourced services.  This means the public sector could save up to £6 billion on its annual I.T. spend of around £14 billion without affecting front line services. Overspending on government I.T. contracts alone is equal to 1% of GDP…

UPDATE: The TPA’s video:

Is David Running Scared?

If ever there was a true “heir to Blair” it would be David Miliband. Mentored and politically raised by Tony and Cherie, his old boss is staying out of the race publicly, though he has apparently loaned David some of the Blair Foundation’s staffers for the duration of the campaign. Of all the candidates running David Miliband is meant to be the furthest to the right, but his piece in this morning’s Guardian is quite the eye-opener. Finally a leadership candidate is talking about the economy and the deficit. It doesn’t make for good reading though:

“If the Tories stick to their proposed formula of £4 of cuts for every £1 of tax rises this will see departmental spending slashed by a third outside of the NHS and international development. The balance should be 2:1.”

He goes on to call for an end to the charitable status for independent schools, extending the City bonus tax rather than raising VAT, a mansion tax and with faux naiveté he backs the “Robin Hood Tax“. Anyone would think Miliband was a little worried about his brother’s gaining popularity and is steering quite hard to the left. All good mood music to his party, but is an unconvincing shift in the direction of whacking up taxes really going to give him the keys to No. 10?

Vince Is Coming For Savers

The businessmen-funded Policy Diffusion group is drawing their battle lines over the proposed rise in Capital Gains Tax. This followed Cable around yesterday:

“This LibDem policy fails on every conceivable account. It discriminates against elderly savers, reduces economic growth, prevents the build-up of capital, discourages entrepreneurs and will even reduce government revenue rather than increase it, widening the deficit.” Policy Diffusion fought viciously against a hung parliament in April and despite the resulting coalition, they are back.[…] Read the rest

+ READ MORE +



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Quote of the Day

Alan Sugar on Jeremy Corbyn:

“It’s clear you alluded to students refunds to get votes from young impressionable people. You are a cheat and should resign.”

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