Next month’s Budget tax raids on capital have provoked a festival of creative doom-mongering on the fringes of Labour’s conference as well as in the columns of the business press. Most frequently voiced is the prediction that the 2,000 or so denizens of London’s private equity community who benefit from the ‘carried interest’ tax wheeze will pack their Louis Vuitton bags into their Chelsea tractors and form a convoy down the M20 towards continental tax havens.
First, the good news. The Irish government is about to receive a €13 billion windfall in the form of back taxes from tech giant Apple, after the European Court of Justice (ECJ) ruled against the company. That should pay for a good few social homes in a country that has an even bigger housing crisis than Britain’s. It could even go some way to providing universal free public healthcare (at the moment most adults have to pay something, even at public hospitals). Why should countries which have been successful at managing their finances be forced to jack up tax rates? Now the bad news. Ireland doesn’t actually want to receive the money any more than Apple wants to pay it. It has spent millions of euros fighting the European Commission (EC), which initiated the case.
My friend Tim Leunig is a cerebral thinker of the best kind. Though not party-political, he has worked for Tory chancellors and would give the same advice to governments of any stripe. Wikipedia calls him a prize-winning economist and that’s right, but he has a gadfly instinct and a remorselessly rational intellect that takes him into the deeps: into first principles, logical consequences and the reductiones ad absurdum of some of our trains of argument. He writes a substack (timleunig.substack.com) and it was his recent summary there of proposals he wrote as chief economist for the Onward thinktank that caught my eye. ‘I bought this house from savings that were taxed as I earned. Now you want to tax me because I have it. No!
Rishi Sunak and Jeremy Hunt entered Downing Street with one mission: to clean up the public finances after Liz Truss’s mini-Budget debacle. They posed as the fiscally credible option. All bills would need to be covered, even if the tax burden had to rise. If the Tories were to lose power for being disciplined and truthful, then so be it. Reeves would like to pin any rise on the Conservatives: an extension of ‘Tory austerity’ rather than her own Rachel Reeves has sought to demolish their responsible reputation in her first weeks as Chancellor by announcing that she has discovered a £21.9 billion ‘black hole’ in the public finances this year.
Another day closer to the general election and I’m at my daughter’s prep school in Oxfordshire. As has come to be the norm, I’m having a ‘VAT chat’ with a fellow mother. Of course, we’ve known about Labour’s plan for months. It will lead to a likely 20 per cent rise in private-school fees. Recently, however, these VAT chats have intensified and become louder. ‘To think that other parents would vote Labour given what’s coming enrages me,’ a friend says I begin with my usual opening gambit. ‘Isn’t it awful?’ I say, trying to convey my real sense of desperation that I will have to take my daughter out of the school that she loves, that our way of life is for the chopping block.
From our US edition
As the level of US debt zooms past the $34 trillion mark, it has become increasingly clear that the American left has no intention of trying to help control government spending. To the extent that annual deficits must be trimmed to protect the integrity of the nation’s currency, Democrats and their allies are instead planning to go beyond the current progressive tax on income and institute a new levy on citizens’ assets. Some such as Senator Elizabeth Warren openly advocate taking the conventional idea of a property tax and applying it to everything a person owns — cash, savings accounts, stocks, jewelry and even art.
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Bristow, Virginia Virginia governor Glenn Youngkin responded to recent accusations from Democrats that he is attempting to buy votes by sending out tax rebates ahead of the 2023 statewide elections. “Had [Democrats] not delayed the budget for seven months, then the tax checks would have gone out a long time ago,” Youngkin told The Spectator during a press gaggle at Piney Branch Elementary School. The governor dropped by multiple polling locations on Tuesday to speak to election volunteers and voters. NBC News reported last week that “the state of Virginia is sending out tax rebate checks to qualified residents, just days before the state’s 2023 General Assembly elections.
No. 10 quickly asserted that the meltdown at National Air Traffic Services was a technical issue rather than a cyber attack. This was presumably meant to be reassuring. It is anything but. It speaks, once more, of a Britain with creaking infrastructure, where national paralysis has become a regular occurrence. The highest tax revenues in peacetime history have not created a properly functioning country. The breakdown was caused by a single mis-filed flight plan. That such havoc can result from one trivial event does little credit to the organisation entrusted with our airspace. This week’s event may not be a cyber attack, but hostile states and organisations will be taking note.
Last summer, all the Tory party could talk about was tax. It was at the heart of the leadership contest and the dividing line between Liz Truss and Rishi Sunak. The then foreign secretary promised to move fast and bring in deficit-financed tax cuts; the former chancellor said this would end in tears and instead pledged fully funded cuts over six years. Neither plan saw the light of day. All talk of tax cuts was suspended after Truss’s mini-Budget, when the premise of her borrow-and-spend agenda was tested to destruction. Since then, tax has become a difficult topic to bring up. Even within Tory circles, calls to cut tax are usually met with a pointed question: did you forget what happened last time?
It is a tenet of neo-liberal economics that there is no such thing as a free lunch. This is obvious baloney. There are free lunches everywhere. The problem is that those free lunches are no longer served to people doing useful work. They are instead handed out to the owners of a few favoured asset classes through untaxed gains. We have created far more tax breaks for rent-seeking than for productive work… and then we wonder why Britain has a productivity crisis. Under a future Sutherland regime, there would be no tax paid on beer drunk in a pub I must admit I enjoy a few free lunches myself – literally.
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A federal judge called a second recess in Hunter Biden’s hearing Wednesday as the plea agreement between Hunter Biden and the US attorney in Delaware appeared on the verge of collapsing. Biden was expected to plead guilty to two tax misdemeanors after making a deal in June that would allow him to avoid prosecution on a gun charge. A disagreement between prosecutors and defense lawyers about immunity from other charges threatened to kill the deal. Biden's attorneys came to a limited agreement with prosecutors that stipulated the deal covered specific charges within a time period/ US District Judge Maryellen Noreika asked Leo Wise, a member of the prosecution, if the deal meant Biden would be immune from prosecution for other crimes, to which he responded no.
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The Department of Justice denied agents investigating Hunter Biden’s taxes and foreign business deals access to evidence and witnesses, according to two IRS whistleblowers. The House Oversight Committee heard testimony from Special Agent Joseph Ziegler and his supervisor Gary Shapley of the IRS during a six-hour hearing Wednesday. The two agents involved in Biden’s criminal probe expressed frustration at how US attorney for Delaware David Weiss and prosecutors within the DoJ handled the investigation.
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In his texts, Hunter Biden depicts himself as Atlas, carrying his entire family on his back — their financial and emotional burdens taken unto himself, turning his life into a black hole of drugs, debts and duplicity. You have to be a certain kind of troubled to carry on an affair with your brother’s widow while sexting her married sister, corresponding with them in disturbing messages in between wiring them money. The threats of self-harm and the mournful late-night desperation, alternating with chest-thumping declarations that he’s the only one earning money for the family, are all recognizable as aspects of someone with serious substance addiction. If he wasn’t so clearly an awful person, you’d almost feel sorry for the guy. Almost.
‘Why is there water all over the bathroom floor?’ asked my husband, without doing anything about it. It was my fault. During a bank holiday soak, I heard the Radio 4 book serialisation of Hands of Time by Rebecca Struthers say that ‘the origin of the modern word hour’ is the Egyptian god Horus. I rocketed up a few inches, like a surprised killer whale, then flopped back down, displacing a few cubic inches of water each side. It’s funny how ordinary words attract erroneous stories. Hour does not, of course, come from Horus. Few English words come from ancient Egyptian; pharaoh and oasis are exceptions. Hour derives from Norman French houre, from Latin hora, itself from Greek hōra, going back to an Indo-European root signifying ‘season’, giving us year and the Germans Jahr.
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The Office of Congressional Ethics referred Congresswoman Alexandria Ocasio-Cortez to the House Ethics Committee Thursday to investigate “impermissible gifts associated with her attendance at the Met Gala in 2021.” This is no surprise for Cockburn — any committed socialist should be causing trouble and smashing the system from within! Ocasio-Cortez caused a stir when she appeared at the gala in a dress saying “Tax the Rich”. For months, AOC’s campaign was receiving emails from providers seeking remuneration for clothing, lodging, transport and hair styling, among other services given to the congresswoman. After repeated attempts to get a response from the congresswoman’s staffer, one email said “This invoice is still outstanding and EXTREMELY overdue.
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The NFL’s regular season has come and gone: the playoffs are upon us. Fantasy football players everywhere must wait until the summer to draft their next winning teams. And the anti-fun freaks at the IRS see all of this as an opportunity to tax the hell out of Americans who just want to enjoy some football. Soon, fantasy football commissioners will be under massive scrutiny by the feds, who are set to crack down on Venmo payments that go to the winners. These commissioners, the unheralded heroes who make their seasons happen, volunteer their time so they can spend an entire season trash-talking their best friends. Thanks to the Democrats, they're now left to wonder if they need to hire a CPA to oversee future draft days.
I’ve chosen to write about corporate tax rates this week not because they’re the sexiest subject available but because – unlike the government’s frontbench, the value of the pound and the scale of winter fuel bills – they’re unlikely to change dramatically during the shelf-life of this column. An increase in corporation tax from 19 per cent to 25 per cent, originally announced by Rishi Sunak, will go ahead in April, despite new Chancellor Jeremy Hunt’s own leadership campaign pledge to cut the rate to 15 per cent, which would have placed the UK between Ireland and Singapore in competitive tax tables. The uplift will, we’re told, tip £19 billion (based on HMRC’s reckoner of £3.
There is no hole deep enough that a Conservative minister cannot muster the spadework to excavate it to even greater depths. No sooner had Kwasi Kwarteng announced that he was dropping his proposed reduction in the upper rate of income tax, than Andrew Griffith, one of his ministers at the Treasury, declared that he would like to see inheritance tax abolished. ‘I have lots of my fantastic local association [members] with me here and they will know because they asked me at my selection meeting 27 months ago which tax, if I had the choice, I would most like to see eliminated. History will record it was inheritance tax, ’he told Conservative party conference.
George Osborne dreamed about it and Rishi Sunak told friends that he’d like to do it if everything went well and he was feeling brave. But this morning Kwasi Kwarteng has gone ahead and done it. The ‘additional rate of tax’ – set up by Gordon Brown as a trap for the Tories in 2009 – has just been abolished. Right now, those earning more than £150,000 per year will pay 48.25 per cent on every pound they earn (45 per cent income tax plus 3.25 per cent National Insurance). From April next year, it will fall to 42 per cent (40 per cent income tax plus 2 per cent NI). A double tax cut: the additional rate goes and NI is also cut. So the biggest tax cut of Kwarteng’s ‘mini-Budget’ has gone to the very richest.
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For a profession more hated than telemarketers and meter maids, last week the Internal Revenue Service put up a job ad that sounded so cool it even made Cockburn consider it. The IRS is in the market for a Special Agent, specifically one that can fire a gun and is “willing to use deadly force if necessary,” for its law enforcement division, Criminal Investigation (CI). The agency is set to double in size and is recruiting more staff following the passage of the Inflation Reduction Act, a Democratic spending bill which President Biden is set to sign today.
