Carnival Of The Polly-Kicking #2

Ah, it's Tuesday and so it is time for the second of our twice-weekly punts at dear Polly. And today's column is, in terms of hypocrisy, looking like a cracker.

Cameron's set has no clue what middle England earns

Tory outrage at a modest tax on trusts for the rich shows how urgent it is to make the case for a cap on ballooning inequality

Now, given that Polly apparently earns £140,000 a year, I would say that she is on very dodgy ground to start off with here, wouldn't you? Do "Cameron's set" earn so much more than she; have their lives been that much more privileged than hers?

The pips will be squeaking in the Commons today as Dawn Primarolo, the paymaster general, takes on the rich over the trusts designed to avoid inheritance tax. This is only one more tax loophole closed, as she and the chancellor stalk the avoiders, the state forever destined to plod several steps behind the sharpest tax lawyers. But from the shrieks of fury in the Mail, Telegraph and Express, you might think this was indeed revolution from Gordon Robespierre and Dawn Defarge. But it only brings in a modest £15m in year one, and £100m a year in a decade.

Which is interesting, because we know that Mapely Steps—the company to which the Inland Revenue and Customs buildings were sold in a pFI deal under "Red" Dawn's aegis—have been bailed out by a minimum of £100 million (Private Eyes passim ad nauseam); actually, it is almost certainly substantially more than this, but all other figures have been kept secret under the "commercial confidentiality" clause. I just thought that I'd throw that interesting little tidbit in there for you all.

The thing is that people were not objecting to the tax on the trusts per se: what they were objecting to was the fact that the tax was made retrospective. This is clearly wrong; how can one possibly plan for the future when the government can suddenly turn around and change the rules, whenever they want, to penalise you for provisions that you have made in the past? (Ken Clarke tried this some years ago with School Fees Insurance and had to, eventually, retract the retrospective part of the tax.) Lest we forget, tax avoidance is not the same as tax evasion: the former is entirely legal, whilst the latter is not.

Before plunging into the detail, step back a moment and look at the big picture. What is happening to wealth? First the good news: nearly 70% own their own homes, able to remortgage to give their own children that vital first step up on the property ladder, and many now inherit their own parents' homes in a midlife windfall.

Well, this is good, isn't it? We all like to own our own homes, or at least have the chance to do so. And, given the price of housing at present—especially in the south east—this kind of windfall is exactly the kind of thing that people need. After all, not everyone is on £140,000 a year...

Yet even the average homeowner still doesn't share much of the national wealth - and certainly isn't touched by this new trust-fund tax. The median property value (where half are worth more, and half less) is £157,500. The average in the south-east is £192,000. But no one starts to pay any inheritance tax until the estate tops £285,000 - soon to be £325,000. How many people is that? Just 6% of all estates. What's more, this change to ensure that all trusts worth more than £285,000 should now pay a fairer share of tax will touch nothing like even that 6%, but the far smaller proportion of those rich enough to gift away more than £285,000 to a trust in their lifetime.

Mmmm. You mean the people that save rather than fritter? Yes, I can see that that is a sensible thing to do; penalise the sensible and reward the feckless.

The other point is that the inheritance tax threshold has not moved up in line with property prices; more people are now caught over the line. And, remember, inheritance tax catches your entire estate and that does not mean simply your house: probate values every single thing that you own or have in the bank. Everything. Cars, computers, antiques, cutlery, carpets, savings, etc. You'd be amazed at how it all adds up.

So when George Osborne astonishingly claims that this modest tax change is "a wake-up call to middle England", frankly it takes your breath away. Middle England? It shows just how wildly out of touch the Cameron set can be with what is ordinary. Notting Hill is a stratosphere away. Do they know the median (middle England) salary is just £21,000?

Those earning £21,000 are hardly "Middle England", Pol, you're right. Those earning £30,000 with a relatively nice house bought some time ago when prices were lower and with a couple of kids: there's your "Middle England".

Besides, you are, as usual, coming from the position of assuming that government has a right to any of anyone's money; they don't.

In personal property and liquid assets, the top 10% owns half of everything. The bottom 50% of the population owns just 6%. Count liquid assets alone, and the top 1% owns 63% while the bottom half owns just 1%. And this wealth inequality is growing fast, year on year. Money is not trickling down but gushing upwards.

And what does that suggest to you, Polly? Come on, make the connection... Yes, Polly, well done: after 9 years of your uni-ocular fuck-buddy's attempts to bring in wealth equality, his policies have actually had the very opposite effect! This is brilliant, isn't it?

Because, what Gordo has done is to put an increasing burden on the working poor, as I have pointed out before.

Brown professes to be a champion of the working poor. His introduction of the minimum wage was, up to a point, a good thing; however, having raised people's wages, he has then cynically kept the Personal Tax Allowance at almost the same level for the last nine years: someone on the minimum wage, working for a mere 20 hours a week, is now liable for income tax.

Brown has forced employers to raise the wages of the poorest in order that he may collect more tax. The more he raises the minimum wage, the more tax he gets that he otherwise would not have had.

His benefits have created appalling levels of marginal taxation disincentives for poorer people.

Here’s a question: Take a married couple with two children under 11 and pre-tax earnings of £200 a week. If they get a better job, raising their earnings to £300 a week, by how much does their net income rise?

£60? £50? £40?

Nope. £8.52.

Yes. £8.52. That’s a marginal deduction rate of 91.5 per cent.

What a fucking triumph, and I haven't even mentioned the ever-wonderful Tax Credits yet. Or the rise in unemployment, the huge public sector borrowing, the record numbers of bankruptcies, fraud or the raid on the pension funds.

But, basically, Polly, what you are saying is that your big, Norse warrior has not delivered on his promises: he has been a failure.

Julian Le Grand, economist and recent Downing Street adviser, looking at revenue for 1999-2000 found that total marketable personal wealth (not counting pensions) stood at £2,594bn - while what he calls the "pitiful" yield from inheritance tax was just £2bn. "Wealth passes almost untaxed between generations through lifetime gifts, through exempt items such as agricultural land and forestry, and through devices such as discretionary trusts," he writes.

Good, because if you tax it massively it stops being "wealth" and simply becomes a "small bonus".

Since then, Gordon Brown has been tracking the cash, recouping many billions. He has obliged tax lawyers to register any clever tax-avoidance scheme being marketed so that new loopholes can be speedily closed.

Of course, if you made the tax system far simpler in the first place, it would be very difficult to avoid the tax in the first place. And, in the end, it hasn't helped, has it, Pol? Money is still rushing upward, according to you.

(A wheeze called dividend stripping was a new legal way to declare dividends as notional losses: it would have lost the treasury £1bn a year, but was quickly outlawed.)

Uh huh, well that's good; that's about half the Tax Credit overpayments this year, or rather less than pne sixth of our net loss for the pleasure of being part of the EU. Excuse me while I am less than impressed.

But tracing money is hard. The rich can pass on a private business 100% free of tax, ditto agricultural land.

Um, it's not just the rich that can do that, is it, Pol? Eh? No, anyone can do that whether they are rich or poor. Surely this is a good thing?

Plenty of fiddling goes on with offshore funds which the Revenue has little chance of tracking, despite new powers to snoop into suspect offshore accounts.

Then simplify the fucking tax system, you fucking moron!

But the main loophole is the extraordinary rule that you can give away any amount free of tax if you stay alive for seven years thereafter. It's like something out of a fairy story, that magical number seven. When will I die? Can I keep Granny's body in the airing cupboard and pretend she lasted the mystic seven years? It can intimidate the elderly into giving away their money before they want to: what if one of the children turns greedy and won't help out if I live long and need help? Gambling on how long you will live is a kind of tontine. It's time to tax all lifetime gifts, above a set allowance.

Oh, sorry, Pol, would you suggest that it doesn't matter how long ago you gave someone a gift, it should still be taxable upon your death?

The row today is over taxing interest in possession trusts, so they end up paying the same as inheritance tax - a fair plan.

No, it isn't; the row is about doing so retrospectively.

(Remember we are only talking about a tiny proportion of the rich.)

Oh, well that makes it perfectly alright then. As long as it is only the rich then that is absolutely fine.

The only oddity is that if they tie up money until a child is grown up, they will pay the tax but if they gift it outright and survive the magic seven, then they pay nothing. But it's the seven-year rule that is out of kilter. Time to kill it off. There are scores of good ideas for fairer property and riches distribution - another subject for another day - but some could be very popular plans, if only Labour would start an open discussion about the danger of infinite inequality escalation.

Sorry, infinite escalation? You can see until the end of time, can you? There is no such thing as infinite escalation: someone always loses all the money at some point along the line.

But if you, dear Guardian reader, need the occasional reminder of the real difference between Labour and Tories, observe the full might of the Tory world and its press on the rampage to protect the very rich.

As opposed to just giving them peerages or government contracts in return for donations loans, like wot NuLabour do.

Just think how rich you have to be to create a trust worth more than the tax threshold of £285,000 in your own lifetime with money you don't need.

Erm, but divided amongst how many beneficiaries? Is it intended as a trust for providing income?—in which case the capital sum needs to be very large (much like a pension, in fact).

You would have to be in the top 0.5%, which Cameron and Osborne certainly are. No wonder they don't know what "middle" is when Osborne storms: "This is the single most iniquitous and damaging of all the tax measures ... This is ordinary taxpayers who have saved and built up assets and want to leave them to their children in a responsible way."

Now, Polly, with all due respect: go fuck yourself. You reportedly earn £140,000 a year: how dare you imply that you have any conception of "middle" either.

When you spell out the trajectory of future wealth gushing up to the top, almost everyone is alarmed.

What the fuck are you talking about?

Whatever people might set as their own idea of fairness, most think that there must be some cap on inequality.

No, most lefties think there should be a cap; I see no reason for it at all.

Polly, this isn't a closed system, you know; just because the people at the top are getting richer does not mean that everyone else is getting poorer: everybody in this country is demonstrably richer than they were, say, 50 years ago, let alone 100 or 1,000 years ago. Why not look at the period of our swiftest growth and innovation: there was a massive amount of inequality.

But the fact that some people were so rich that they didn't need to work was what drove our innovation: they had both the time and money to invest in searching for things themselves, or they had the capital to back otherwise poor people or institutions (this, surely, is the premise behind venture capitalists). I suggest that you read Bill Bryson's A Brief History Of Everything in which you will find this trend starkly spelt out. Your so-called "equality" simply makes everybody poorer; look at the Soviet Union: everyone was poor and miserable and there was almost no technical innovation (they simply stole from others). Destroying capital makes us all poorer, Polly, you idiot.

Yet you don't hear the government argue the case.

Of course not: he thinks that it will affect a substantial number of people (otherwise why go to the expense of implementing it) and didn't want to lose votes. And there is, of course, no case to argue: it is petty jealousy, pure and simple.

Brown didn't mention the tax on trusts in his budget speech, let alone explain why it is right and fair.

Which is a little more than dishonest, wouldn't you say? Hoping to slip it under the radar was he?

No wonder the right can frighten the living daylights out of middle England so easily, when the left says nothing about excess.

So, remind me, Polly, what would you consider excessive?

£140,000 for writing two sack-of-shit columns a week: is that excessive? These columns must take you all of—what?—three hours each (that's being generous, you understand)? I make that about £450 an hour: do you consider that excessive?

Either you are a self-deluding idiot or a mendacious hypocrite: so which one is it, Polly?

Redistribution by stealth wins no arguments.

For anyone who has realised that socialism doesn't work—which is an ever-increasing number—redistribution doesn't win any arguments, whether by stealth or no.

But back to the real question, Pol, which is it? Self-deluding idiot or a mendacious hypocrite?

You silly bitch.

As always, we now go to Fact-checking Pollyanna, wherein her figures are ripped to pieces with commendable accuracy. Firstly, she gets her asset figures wrong:

So, if overall wealth inequality is unchanged (and not infinitely escalating) but the inequality of ownership of assets less housing is getting more unequal, this must mean that inequality of housing wealth must be decreasing.

Then she claims that "nearly 70% own their own homes" which is, inevitably, also wrong:

According to the national statistics website:

70% of GB dwellings are owner-occupied

Which is quite a different proposition, given that there are about 2.4 people per household

Finally, she cannot even get the median salary correct:

According to the Annual Survey of Hours and Earnings:

Median annual earnings for full-time employees for the 2004-05 tax year stood at £22,900

This means, of course, that her own reported pay is only about 6 times the median. What was that about "excess", Polly?

More to come as people write it...

UPDATE: The poor little Greek boy is on fine form as he takes Polly to task with all of his usual aplomb; a few choice quotes for you.

OK, we get it: this new tax will only affect the very well-off. In Polly’s world, it is therefore, and without any further discussion, justified. It’s rather like saying that I should be allowed to shoplift joints of beef from Tesco simply because it is big and has lots of money. And note the way, throughout this piece, that Polly refers to “the rich”; depersonalised and pigeonholed, you can almost hear her spitting out the words. This is not intellectual argument: it is a strange muddle of envy and hypocrisy.
...

Perhaps someone can explain to me by what right the state awards itself the right to steal money being given from a parent to a child. If my Mum bakes me a pie, it is my pie. (I like pies.) All the slices of the pie are mine. The capital for the ingredients and the labour involved in baking it came from my mother; and she chose, of her own free will, to transfer the proceeds of that work to me as a gift. At no point was the government involved. It is not Polly Toynbee’s pie (steady), and it is certainly not Gordon fucking Brown’s pie.
...

When I was a kid, like many kids, when I saw that another kid had something I wanted, be it a toy, or a sweetie, or anything else, as often as not I just grabbed it, because I was a selfish wee bastard. Then one day an irate father explained the notion of private property to me, and after that I didn’t grab any more, because I understood that it was theirs and not mine. Polly obviously never learnt this lesson as a child (her father was a Communist, after all); so wherever she goes, the reaction to seeing shiny toys or tasty treats is always the same; “I want that one”.

Well, you can’t have it. Keep your fucking hands to yourself.

As always, go and read the whole thing, because it's a joy.

A more sober but no less damning post from Timmy:

Clearly, overturning a basic principle of law, that one can leave money in trust for the lame, the halt, the disabled, the under age, weighs as nothing as long as we can stick it to the rich. And for a poxy 100 million a year? That is, less than one tenth of what is currently extracted in parking fines?
...

"Recouping" d’ye see. It isn’t yours, or theirs, it is his, the State’s. It all naturally belongs to him and we are allowed only to keep what dregs he permits.
...

Interesting fact: Sweden has no inheritance tax.
...

Would it not be fascinating to find out whether there were any family trusts in [Polly's blue-blood] lineage? Literary trusts, to deal with royalties? Did the estate of her (sadly deceased) husband, Peter Jenkins, pay full inheritance tax? What arrangements has she made to pass on part of her wealth to her children?

As usual, spot on with the facts.

Next up is the ever wonderful Ranting Guttersnipe, of whom I expect vicious things...

Let’s really look at the big picture shall we? “First the good news: nearly 70% of people own their own home” NO THEY FECKING DON’T!!!! Your supposed £140,000pa salary might mean you own your fecking ivory tower in Tellytubbyland outright but the rest of us effectively rent our homes for 25 years from a bank. The bank has first charge on our property not us. The bank owns our homes. It’s called a fecking mortgage!

Able to remortgage? So what you’re saying really Polly is something more akin to “70% of people are now in debt up to their eyes and can only get their children on the property ladder by taking the extreme financial risk of doubling that debt simply because house prices are too high for recent graduates to come remotely close to affording the payments” I think that’s a little closer to the mark don’t you?
...

Let’s start with a simple definitions of these facts, you remember facts Polly? They’re the things you wave to as they completely pass you by.

Property (in your context) = House value
Estate = Everything you fecking own from your house, car, business, shares, savings, life insurance policies, house contents, jewellery, land, rental incomes and so forth down the line.

It soon adds up to more than £285,000. 6% of the population may own (or rent from banks) a house that’s worth more than £285K but that’s not 6% of all estates is it? Ask your tax lawyer… I’m sure you’ve got one.

It's all really good stuff, but the really interesting bit is The Snipe's revelation that he used to work in estate-planning and he illustrates exactly how the trusts might be affected (and not simply for the super-rich).

Conclusion: Polly is a complete fool. But we knew that anyway.

That's everyone that I expected in today; if you have good links to another blogger putting the boot into Polly, please add it in the comments and we shall add the post to the twice-weekly Carnival Of The Polly-Kicking...

UPDATE 2: Stunner of a comment by Master Worstall on Polly's post:

A small thought just occured. How amusing that this article, on the validity, indeed necessity, of swingeing inheritance taxes to stop privilege cascading down the generations should appear in a newspaper owned by a charitable trust, The Scott Trust, one deliberately set up so that, err, left-wing privilege could cascade down the generations of the well connected.

Brilliant!

UPDATE 3: The Remittance Man weighs in with a typically thoughtful post (I'm so glad that this man is finally blogging).

Classic liberals and conservatives see taxation simply as a means to generate cash so that the state can do what it has to do. It's a necessary evil to ensure the functioning of the state. That is why we are forever looking for "value" and "lower cost". We view taxation as a simple transaction: We pay the state and we expect certain things in return. And when we don't get those things or they are of lesser quality than we had been led to expect, we feel we have the right to complain or even demand our money back.

Socialists, on the other hand, see taxation as a means in itself.Oh they acknowledge the need to raise money for the rather sordid business of actually running the government, but for them taxation is far more. They see it as their messianic mission to be to reduce everyone to the same level by penalising the "rich" and industrious and rewarding the feckless and idle.

Quite. Now, I would like to make this absolutely clear for all of you socialists out there: I do not view you as simply being wrong, I view you as the scum of the earth motivated entirely by jealousy and bitterness. I actually find you repulsive; I would rather fuck a child than subscribe to your evil creed (and let's face it, socialism has fucked so many more children over the last century than I could with the world's biggest libido). I find you morally disgusting.

Fuck off.

UPDATE 4: Strange Stuff's Tales From The Polly-verse...

So, unless there are any more out there, see you all on Friday...