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Saturday 29 June 2013

Guido Fawked – Can’t Do Salary Sums

[Update at end of post]

Sometimes the right-leaning part of the blogosphere can be a little too keen to pile in behind its pals in the Astroturf lobby groups, and one particularly clueless part of it today has fouled up in right Royal fashion in a particularly lame attempt to support the Centre for Policy Studies (CPS): step forward the perpetually thirsty Paul Staines and his rabble at the Guido Fawkes blog.
Yeah, of course I can do my sums, especially when I'm on the piss, shit no, working, yeah, to work up a thirst for a good skinful, sod it no, cup of coffee. With a slug of JD in it. Oh bollocks

The CPS has put out a post entitled “Tax simplifier 6: Our marginal tax rate structure has no logic”, possibly in support of the idea of flatter taxes, which will, by sheer coincidence you understand, benefit, among others, wealthy people who bung a little of their disposable income to, er, Astroturf lobby groups like the CPS. But the description of marginal tax rates is accurate.

These vary as income increases: for instance, for the first £7,748 of income, no Income Tax or Employee’s National Insurance (NI) contribution is due. This changes as NI comes in, followed by Income Tax, then higher rate Income Tax but reduced NI. From these figures, the amount of total tax paid can be calculated. But the Fawkes folks have not grasped this simple concept.
Of course I can do my sums, cos I'm on telly!

This assumes that there is no personal tax-free allowance, which there is for someone earning £50k. It also assumes that there is no benefit to them from the 20% Income Tax band, which there also is: it is only when total income exceeds £41, 450 that the 40% band kicks in (and NI reduces at that point from 12% to 2%). So let’s “Do The Math”, and see what the numbers are.
Oh dear

For someone earning £50k and no other allowances, the Income Tax and NI is 12% on the £1992 between £7448 and £9440, then 32% on the £32010 between £9440 and £41450, then 42% on the £8550 between £41450 and £50000. Those tax amounts are, respectively, £239.04, £10243.20, and £3591, and they total £14073.24. Deduct that from £50000, and you get £35926.76.

So the example used by the Fawkes rabble “begins to provide for his wife and children” before lunchtime on Tuesday. Yes, The Great Guido has misunderstood the nature of progressive taxation and gone completely wrong. By so doing, Staines and his rabble demonstrate that they are, yet again, full value for their positive trust rating of 4%. And I didn’t forget the 40.5p on the 50001st pound of income, thanks.

Don’t give up the day job, lads. Another fine mess, once again.

[UPDATE 30 June 1030 hours: to no surprise at all, The Great Guido has edited the post in the hope that no-one will notice the howler, but as can be seen above, I took a screenshot. Now here's another screenshot, this time of the edited post.
Note that "That means he works to provide for the state Monday, Tuesday and Wednesday and only begins to provide for his wife and children on Thursday and Friday" has been edited out. This, though, came after Ryan Bourne of the CPS happily Retweeted the item, which at the time he pressed the button, was in its original form (in other words, with the howler still there).
Bourne states in his Twitter bio that he is "Head of Economic Research" at the CPS. Looks like he missed one item of economic research there, then.

And one final item for those who might be wondering who wrote the offending Fawkes blog post - it was written, not by either of his gofers, but by Paul Staines himself. That would be the Paul Staines who styles himself an "entrepreneur", a supposed business-savvy individual who one might have expected to be able to work out his, or indeed anyone else's, Income Tax and NI.

So either he's wilfully inept, or wilfully dishonest. Either way, anyone thinking of buying a used car from him would be wise to reconsider their prospective purchase. Another fine mess]


rob said...

"an "entrepreneur", a supposed business-savvy individual who one might have expected to be able to work out his, or indeed anyone else's, Income Tax and NI."

Actually most entrepreneurs have no idea of tax NI and the like. They employ accountants to deal with it. Like an employer of mine once confided, businessmen get their ideas of what tax they should or should not be paying from what they hear down the pub from their associates.

Probably where he got the idea from and even more reason for him to have had the figures checked out.

Anonymous said...

Most of the loudest voices on tax don't have a clue about what they're talking about. This is true regardless of political persuasion.


If you check out this post you can see that Richard Murphy, the director of Tax Research UK, had absolutely no idea of how to correctly calculate an income tax liability, despite gloating at another accountant for not being able to do basic calculations.

Worse still, he didn't even realise there was a different effective rate of tax on dividends and salary at the higher and additional rate of tax. This is despite the fact that he had just written a report on the effects of the 50p additional rate of tax.