I take it that you trade through a limited company and are caught by IR35 or your claim does not make sense anyway

Assuming your company is not VAT registered and it invoices £100 gross, the most it can pay you is in fact £52.30, a marginal tax rate of 47.7%, not 63.9%.

Quite frankly, I wouldn’t let figure out the tip for a good meal.

“Most definitely the employee”

ah but you don’t: you raise your rates to compensate, so it is actually your customers that pay.

Not that this disproves the point…

Most definitely the employee. I work as a freelancer, and pay 63.9% in Tax, NI and ENI.

That leaves me with a paultry 36.1% of earnings, or 1/3rd of what I earn, so yes, I increase my rates to cover this sorry state of affairs..

Tim,
Appreciate your exceptionally well informed amateur status.

Interim Economist, Stata, SPSS, Excel, Security Clearance Exciting opportunity to join a high profile public sector client, based in London. The Interim Economist will be responsible for contributions to economic analysis of labour market data using Stata, SPSS and Excel to identify labour shortage in skilled occupations and to draft report and present results of the analysis to the committee and to discuss results for specific occupations at meetings with employers, trade unions and sector representatives.

If you want the link, let me know.

Tim adds: Ah, well, but you see I’m not an economist either…..only an interested amateur

Perhaps a little more anger and less amusement is called for since it is Murphy and his academic sidekick Prem Sikka who are making the running.

It is they who are more likely influence, disastrously, government policy in this area than you and your more sensible colleagues who remain silent.

It may also have something to do with the fact that only one of you is trying to create a cottage industry out of this stuff.

Murphy wants to make a living out of peddling crap to the TUC and Guardianistas, so he is going to have to be the one forwarding theories. I suspect most of us just read them for a laugh in between doing a real job. Which, in my case , involves dealing on a day to day basis with international tax structuring experts in the accounting profession and I can confirm the following.

- Many wouldn’t know the theory of tax incidence if it bit them on the arse. They are accountants , not economists.

-I haven’t yet met one who is familiar with the theory who doesn’t think it is obviously true.

- In the profession, Richard Murphy is read with more amusement than anger.

The myths that VAT is a ‘tax on consumption’ or that ‘tax breaks for pensions encourage savings’ for example, are widely accepted as true.

Where you are both way off piste is just looking at corporation tax. UK receipts £40 billion odd, of which £10 billion from North Sea companies (who pay at a higher rate). Even if we restrict ourselves to the taxes paid in £-s-d by UK businesses (ignoring incidence) we find that PAYE/Employer’s NIC is about £140 billion and VAT is about £80 billion, Business Rates is £20 billion.

So corporation tax (the second least bad tax, per Uncle Milt) is a drop in the ocean anyway.