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The mansion tax debate is being drowned out by shrill half-truths The mansion tax debate is being drowned out by shrill half-truths
(7 months later)
From the moment Ed Miliband announced his support for a tax on properties worth over £2m, commentators have been scrambling to point out that, looking at the figures, the move was just tokenism and would have little or no effect on the economy. Yet we are also told that the tax's adoption would be catastrophic for the economy. This is not dissimilar to the debate over the top rate of tax which, apparently, raised no money and was simultaneously grossly unfair on those who were made to pay it.From the moment Ed Miliband announced his support for a tax on properties worth over £2m, commentators have been scrambling to point out that, looking at the figures, the move was just tokenism and would have little or no effect on the economy. Yet we are also told that the tax's adoption would be catastrophic for the economy. This is not dissimilar to the debate over the top rate of tax which, apparently, raised no money and was simultaneously grossly unfair on those who were made to pay it.
Toby Young has added his familiarly shrill voice to this chorus of discontent in the Telegraph. His scattergun approach has predictably included the warning that thousands of our brightest and most hard-working millionaires' fingers are hovering over speed-dial button 4, in which is stored the telephone number of their favourite international removals company. In attacking the policy proposal, Young invoked strange fictional characters worthy of Brecht, like a mother on a £20k annual income who cannot afford to feed her family or heat her home – yes, her £2m home.Toby Young has added his familiarly shrill voice to this chorus of discontent in the Telegraph. His scattergun approach has predictably included the warning that thousands of our brightest and most hard-working millionaires' fingers are hovering over speed-dial button 4, in which is stored the telephone number of their favourite international removals company. In attacking the policy proposal, Young invoked strange fictional characters worthy of Brecht, like a mother on a £20k annual income who cannot afford to feed her family or heat her home – yes, her £2m home.
Boris Johnson went a step further. His gallery of innocents includes penniless elderly widows who will have to live with damp patches, yawning floorboards and the smell of urine – in their £2m home – thanks to this tax based on "envy and nihilistic class war". Not only that, but this "un-British" tax may even lead to "deliberate vandalism". That's right folks: introduce this tax, and droves of penniless elderly widows will take to their home with a claw hammer. His gallery of rogues, on the other hand, includes people who own "several houses, all of them worth £1.9m", "someone who lives in a home worth a million, but happens to have a load of Van Goghs and Cézannes on his kitchen wall" and a man with "gold bars under his bed".Boris Johnson went a step further. His gallery of innocents includes penniless elderly widows who will have to live with damp patches, yawning floorboards and the smell of urine – in their £2m home – thanks to this tax based on "envy and nihilistic class war". Not only that, but this "un-British" tax may even lead to "deliberate vandalism". That's right folks: introduce this tax, and droves of penniless elderly widows will take to their home with a claw hammer. His gallery of rogues, on the other hand, includes people who own "several houses, all of them worth £1.9m", "someone who lives in a home worth a million, but happens to have a load of Van Goghs and Cézannes on his kitchen wall" and a man with "gold bars under his bed".
However, the most annoying and deliberately misleading suggestion – made by many, and repeated by Young – is that the rich already pay much more than their fair share. Young says that the top 1% of earners pay "25.7% of the country's total income tax bill. This is in contrast to 1978, when the top 1% paid 11% of all tax revenues" – a statement that would leave most fact-checkers crimson with shame. Using a percentage of the country's income tax bill in direct comparison with a 35-year-old percentage of all tax revenue is a supremely eloquent illustration of rhetoric over substance.However, the most annoying and deliberately misleading suggestion – made by many, and repeated by Young – is that the rich already pay much more than their fair share. Young says that the top 1% of earners pay "25.7% of the country's total income tax bill. This is in contrast to 1978, when the top 1% paid 11% of all tax revenues" – a statement that would leave most fact-checkers crimson with shame. Using a percentage of the country's income tax bill in direct comparison with a 35-year-old percentage of all tax revenue is a supremely eloquent illustration of rhetoric over substance.
Had Young's free school been obliged to adopt the finance classes recently added to the national curriculum, I would advise he spend quite some time in one of them. As it is not, I will explain the fallacy of his argument as concisely and clearly as I can.Had Young's free school been obliged to adopt the finance classes recently added to the national curriculum, I would advise he spend quite some time in one of them. As it is not, I will explain the fallacy of his argument as concisely and clearly as I can.
First, Young ignores the reality that, as income inequality grows (and since income tax is based on income), of course the percentage contribution of the very rich will grow compared to the rest. This is because they are making increasingly more money than the rest. His position also conveniently assumes that these members of the haute monde do not have access to talented accountants, umbrella companies, offshore trusts, wives in Monaco, creative avoidance schemes or any income that comes from dividends.First, Young ignores the reality that, as income inequality grows (and since income tax is based on income), of course the percentage contribution of the very rich will grow compared to the rest. This is because they are making increasingly more money than the rest. His position also conveniently assumes that these members of the haute monde do not have access to talented accountants, umbrella companies, offshore trusts, wives in Monaco, creative avoidance schemes or any income that comes from dividends.
Importantly, he also ignores the fact that income tax only accounts for 27% of total UK revenue. The rest is made up of national insurance contributions, VAT, fuel duty, customs and excise, corporation tax, council tax and other largely non-progressive measures. For Young's comparison to hold, the 245k top earners to whom he refers would have to pay a quarter of the total national insurance, VAT, fuel duty, council tax etc paid by the rest of the 63 million people in the UK.Importantly, he also ignores the fact that income tax only accounts for 27% of total UK revenue. The rest is made up of national insurance contributions, VAT, fuel duty, customs and excise, corporation tax, council tax and other largely non-progressive measures. For Young's comparison to hold, the 245k top earners to whom he refers would have to pay a quarter of the total national insurance, VAT, fuel duty, council tax etc paid by the rest of the 63 million people in the UK.
They do no such thing. In fact, comparative figures published by the ONS which take into account the effect of all taxes and benefits show that, as a proportion of their income, the richest decile pay just under a third of their income in tax, compared to the average which is just over a third.They do no such thing. In fact, comparative figures published by the ONS which take into account the effect of all taxes and benefits show that, as a proportion of their income, the richest decile pay just under a third of their income in tax, compared to the average which is just over a third.
Young responds to anyone advocating higher taxation with "two words: Laffer curve". He points to it like some Doctor Who tear in the fabric of reality, threatening us all with extinction. He ignores the fact that Laffer was speaking of income taxation – not all taxation. Well, I have two words for Young. Admittedly they are not the first two that sprung to mind – they could not be printed – but as a response to fictional examples of freezing mothers, hapless widows and Bond villains with gold bars under their beds, they will do just as well: Philip Green.Young responds to anyone advocating higher taxation with "two words: Laffer curve". He points to it like some Doctor Who tear in the fabric of reality, threatening us all with extinction. He ignores the fact that Laffer was speaking of income taxation – not all taxation. Well, I have two words for Young. Admittedly they are not the first two that sprung to mind – they could not be printed – but as a response to fictional examples of freezing mothers, hapless widows and Bond villains with gold bars under their beds, they will do just as well: Philip Green.
There is an intelligent debate on the optimal levels of taxation to be had. We can never have it while prominent commentators continue to poison the discussion with selective half-truth. Let them propose some alternatives if they don't like a particular measure, instead of opposing any and all taxation with invented counterfactuals. Otherwise they risk becoming what comedian Marcus Brigstocke splendidly described to me the other day: "The toddlers of politics – I want, I want, I want."There is an intelligent debate on the optimal levels of taxation to be had. We can never have it while prominent commentators continue to poison the discussion with selective half-truth. Let them propose some alternatives if they don't like a particular measure, instead of opposing any and all taxation with invented counterfactuals. Otherwise they risk becoming what comedian Marcus Brigstocke splendidly described to me the other day: "The toddlers of politics – I want, I want, I want."
And if that is not what they are doing, then let the likes of Young and Johnson finally tell us: where is this utopia, waiting to accept us all with open arms, which has the infrastructure necessary to make millions while sustaining our health service, our standard of living, our high salaries and zero taxation? My Van Goghs and Cézannes are packed. My one-bedroom flat, bubble-wrapped and ready to be air-lifted. I await eagerly.And if that is not what they are doing, then let the likes of Young and Johnson finally tell us: where is this utopia, waiting to accept us all with open arms, which has the infrastructure necessary to make millions while sustaining our health service, our standard of living, our high salaries and zero taxation? My Van Goghs and Cézannes are packed. My one-bedroom flat, bubble-wrapped and ready to be air-lifted. I await eagerly.
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