Douglas Mcwilliams

Sunday

Douglas Mcwilliams

Fact check: are Britain’s wealthiest really paying just 20 per cent tax?

Since the turn of the century the share of income tax paid by the 1 per cent with the highest incomes has risen from 21 per cent to 30 per cent. Despite this, some academics claim that the rich avoid tax. A study released last week is a case in point. ‘Wealthiest in Britain paying just 20 per cent tax rate,’ said the Independent. A fair summary: the London School of Economics and Warwick University did indeed argue that the ‘average person with total remuneration of £10 million had an effective tax rate of just 21 per cent: less than the rate that would be paid by someone on median earnings of £30,000.’ Since they’re supposed to be paying 47 per cent, it’s surprising. So how was this figure arrived at?

Monday

Douglas Mcwilliams

Changing lifestyles, not zombie companies, are the reason for low productivity

The zombie company concept was developed in Japan, to suggest that persistent low interest rates allowed heavily indebted companies (who might, at more normal rates of interest, have been liquidated) to stay in business, thus preventing the Schumpeterian creative destruction that allows the business sector to innovate and improve. It has since been applied to the UK as a possible explanation of low productivity, most recently by Liam Halligan in the Sunday Telegraph. There are three problems with the claim. The first is that in the UK stagnant low productivity companies tend not to be heavily indebted but instead sit on cash. So low interest rates hinder, not help, them.