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Monday, April 16, 2012

Keeping their money

Today's Guardian publishes figures which underline why Nick Clegg insisted that the budget include a tycoon tax so as to ensure the rich pay their share of the money needed to reduce the deficit and provide public services.

They say that Treasury figures show that almost a thousand UK taxpayers earning more than £1m a year have a tax rate of less than 30% of their income. The Treasury also revealed that of the 200 taxpayers earning more than £10m a year, 12 are paying less than 10% in tax:

The new Treasury figures show 10,000 UK taxpayers earn between £1m and £5m, and, of those, 10% pay between 30% and 40% in tax, 5% pay between 20% and 30% tax, and 3% pay less than 10%.

The Treasury estimates that 400 taxpayers earn between £5m and £10m, and 5% of these taxpayers, or 20 individuals, pay less than 20% in tax.

Of those earning between £250,000 and £500,000, 27% were paying tax of less than 40%. All the figures cover the financial year 2010-11.

A Treasury spokesman said: "At the moment there are millionaires paying a lower tax rate than ordinary taxpayers. This is the system we have at the moment, but the government is committed to making it fairer. We're capping benefits and these figures clearly show why it's fair to cap tax reliefs for the wealthy as well."

Treasury sources pointed out the figures reflected a tax system inherited from Labour.

Clearly, there are major issues that still need to be resolved so that charitable giving is not hit, but the principle that the rich should pay more has to be the right one for the government to pursue.
What is a 'charity'? It's a term which conjures up an image of starving children or dogs in distress. The reality is that many 'charities' are just cash repositories for the benefit of the wealthy. Eton college, which Cameron attended, is a registered charity. Why should millionaires avoid tax by funding a public school for their kids? The very concept of charity donations to avoid tax was created by the National Trust. It was a mechanism for the landed gentry to 'donate' their country piles in lieu of a tax bill to pay for WW2. There is an answer, that is for any donation to charity to be taxed as the relevant rate and for the charity to claim the amount taxed back from the taxman, in the same way as a standing order to a charity us mortals on PAYE. As charities they have to declare this income, we could then see how much 'tax' is being donated, and to what charity is claiming this 'tax' portion from the exchequer.
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