Oh dear oh dear
"How Brown's burden is crushing middle England", screams the Telegraph. The Mail and Express lead their front pages with the same story.Which is, courtesy of accountacy firm, Smith and Williamson, that the average higher-rate taxpayer now pays 50% of their income in tax, rather than the 35% they did in 1997.
This should immediately set off some warning bells in your head. We know that taxation as a % of GDP is not a great deal higher today than it was in 1997, and we know that this Labour government has not been particularly redistributive. So why the huge change?
It's pretty simple really. This useful table shows how the calculation was made. Basically 71% of the reported increase in tax is due to stamp duty. This assumes that the average higher rate taxpayer moves house every year!
Spread this over 7 years (which is what the Halifax say is average number of years between house moves) and the increase in tax bill falls to about 2%, from 35% to about 37%.
If you're going to include stamp duty, you should perhaps really point out that the average middle income taxpayer is probably about £100-200,000 better off in terms of assets than they were in 1997. Incidentally the rest of the analysis is pretty debatable too.
This really is lamentable analysis. The accountacy firm, Smith and Williamson should be ashamed, and the Conservative Party, which as you might expect has latched on to it, should issue a retraction.
Update: This kind of thing really irritates me. Assuming Smith and Williamson weren't deliberately trying to be misleading, it really shouldn't have been published. Surely accountants should have some idea about tax as a % of GDP, what an average means (on their logic, as the average higher rate taxpayer paid £8,000 in stamp duty last year, stamp duty must have raised about £30bn last year), etc.
Update2 - I'm so annoyed I'm going to keep it on the homepage.
posted by Matthew @ 9/07/2004 01:50:00 PM
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