Monday, 9 January 2012

The goose is 52% plucked

Who wants the rich to be paid so much? The standard answer in the past few days has been: if they don't deserve it, they shouldn't get it.

Another point to remember in this debate, though, is: if they're paid so much, what's the best way for the state to get it off them?

"The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing," said Louis XIV's finance minister, Jean-Baptist Colbert.

And he tried pretty hard, back in the 17th Century, to impose taxes on undeserving nobles who avoided tax. The poor paid tax while the rich got off scot-free.

So, before you consider how best to pluck the goose, think how different forms of pay to high-fliers might be taxed.

1. At zero per cent, if they scarper overseas.

2. At 26% corporation tax, if the employer doesn't pay a salary directly and declares the money as company profit.

3. At 28% capital gains tax, if the high-flier arranges to get share options instead of pay - and cashes them in later.

4. At 52% income tax and National Insurance for pay and bonuses over £150,000.

Leaving aside, for a moment, the argument over who deserves what - it's clear which of these options the goose-plucker would go for.

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