Tuesday, July 04, 2006

Polly, Why Not Just Hang The Rich And Have Done With It?

Today’s Pollocks is about yet more taxing the rich because they have had the sheer gall to be successful despite all the stops Brown puts in their way…

"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. "

She’s kicked off with the standard leftie statist view that anyone seeking to mitigate their tax must be a dirty tax avoider who should be sharing a cell with Lester Piggott and Al Capone. This is bollocks. Just for once Polly could you possibly think like the rest of us…

People aren’t avoiding paying tax on their estates because they have already spent their entire lifetime paying tax on their estates. We call it income tax. The tiny amount of disposable income that your one eyed sexual fantasy leaves us with we convert to assets. Why the fuck should we then get taxed on it again Polly? Especially when the only thing we have done differently is to die.

Secondly this isn’t an attack just on the rich, I guarantee you that the rich can afford the tax advisers to get around anything that your perfect pict puts in their way. Maybe if he kept the resultant tax down to a lower level than the accountants’ fees he might win but he’s not going to do that is he?

"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."

No Polly, again I guarantee you it will bring in much less than that in year one and continue to bring in much less than that in a decade. We want to keep our money, especially when we are repeatedly seeing it being pissed up the wall. We will find a way.

"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. "

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?

"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. "

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.

"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. "

Currently.. anyone with a £140K mortgage has a £140K house and £140K life assurance policy = £280K assets… getting awfully close to that £285K target aren’t we?

"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? "

Oh for fuck’s sake…. Since you like to play with stats and figures so much Polly let me show you a few examples from my previous work in finance and tax planning. Have you worked in finance and tax planning? Have you passed your Financial Planning Certificate? Your AFPC? Your 11+?

Example (not to be taken as a family history of your good Guttersnipe here):

Guttersnipe earns £48,000 pa and Lady Guttersnipe stays at home to mind Baby Gutternsipe. With this they can obtain a 4x income mortgage (risky but banks will do it now that the house prices are so high). With that they can get a £192,000 mortgage. With 10% deposit on a house from savings they can now buy a £213,000 house. The house is held in Guttersnipe’s name only. Guttersnipe’s life is insured to the tune of the mortgage. Guttersnipe has £30k in other assets. He also has a Life Assurance Policy to payout £8K per year until Baby Guttersnipe is 18 (Baby G is now 1) to cover school fees and the like in the event of his death. This is written into trust to Lady Guttersnipe.

But Guttersnipe and Lady Guttersnipe are not married (something I know you approve of Polly) so anything that Lady Guttersnipe inherits from her other half she has to pay tax on. Lady Guttersnipe does not have Life Insurance as there is no Insurable Interest. Insurable Interest is automatic between spouses, but they are not married.

Guttersnipe is killed. Heroically saving the world from left-wing conspiracies.

Lady Guttersnipe has just inherited a £213K house and a £192K life insurance payout, and a total over time of £136,000 (17 x £8K for Baby G) a total of £543,000. Fortunately the trust has meant that the life payout was legally hers already. She hasn’t really inherited it as such and the rest of the estate therefore amounts to £243K, below the tax threshold (the £192 life payout went straight to the bank to pay the mortgage). She’s done rather well.

However if the trust were not an issue in this, as the one-eyed twat would have it. The following could happen:

Guttersnipe is killed. Heroically saving the world from left-wing conspiracies.

Lady Guttersnipe has just inherited a £213K house and a £192K life insurance payout, and a total over time of £136,000 (17 x £8K for Baby G) a total of £543,000. After the £192 goes to the bank the rest of the estate therefore amounts to £379K. She’s done rather well but this is above the threshold.

The first thing that will happen is that the Revenue will get their mits in. It’s called probate.
With an inheritance of £379K they present her with a bill for £37,600. Where is she going to get this money? She has two choices in the short term:

- She sells the house and buys a smaller house at £170,000 and spends the change on her tax bill.
- She sacrifices Baby Guttersnipe’s private education, pays the tax bill and Baby Guttersnipe has to go into state education and the SureStart scheme where in
Polly’s own words ‘That may not create a super vocabulary or IQ score, but it can protect them from the worst.’

But never mind eh Pol? I’m sure Gordon can spend that £37K on taking you for a holiday in Sweden since you love the fecking place so much!

"Since then [1999-2000], 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."

Tracking the cash so well that £2bn (apparently the amount generated by Inheritance Tax) has been overpaid on tax credits and he doesn’t know how to get it back. Why not sort your fecking payments out and you could do the decent thing and get rid of the Inheritance Tax? Twat!

"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."

Er…. The real difference between the Tories and Labour on this is that the last time Labour got its hands on Inheritance Tax it was 83% under Callaghan. It was reduced to 40% under Thatcher.

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

Because it is not right and it is not fair… tax has been paid in huge amounts on these estates already. You are taxed twice for having the temerity to die. How is that right? How is that fair?

You say in your header that Cameron has no idea what middle England earns… well you earn more than he does supposedly do you know?