Dear God Almighty, such ignorance on display.
So, the banks pay out £7 billion in bonuses.
What happens next?
Well, there’s income tax and employers’ national insurance to pay on that, isn’t there? Assume, just to make the maths easy, that they’re all paying top whack income tax. That’s 50%, add the 13% NI.
So that’s £4.41 billion paid in tax, right into the Treasury coffers.
Now, think what would happen if the banks didn’t pay bonuses. Well, that money would be profits for the bank then, wouldn’t it? Which they would pay Corporation Tax on. Which is 28%.
£1.96 billion to The Treasury.
So you’re now going to go and protest about the fact that the Treasury is getting *more* tax because bonuses are being paid?
In the name of protesting tax dodging?
Are you actually innumerate or is this some special sort of logic only available to those suffused with self-righteousness?
10 responses so far ↓
1 Bilbao boy // Feb 11, 2011 at 11:48 am
This is the emotive lefty, ‘I’m a goodie, you’re a baddie’ thing taken to extremes.
Highly detailed analysis:
“They shouldn’t have so much!” “It must be bad”
“They must be doing something illegal” “We musn’t let them get away with it”
On top of everything else there is no tax evasion in there anyway.
The truth is given the shareholder returns I am surprised that the AGMs don’t turn out a rougher ride for the bonus receivers.
Funnily, the capitalists (me included as I have shares in a company and bank or two) are letting our employees (also usually shareholders) hit us with a double whammy. They take ‘gross’ (and I agree they are gross) gross salaries and pay us less. Still that is our problem.
The simple maths Tim points out here seems to be very complex for some. Is this another failing of your education system?
Hypothetical unfairness is not a system I want written into rule of law.
There are a lot of highly paid people out there (and not only bankers), that is what we have progressive income tax for. Their employers pay a good whack to be able to pay the high salaries and bonuses and then we whip off another good whack.
There is another ‘what happens next with the money in there too’.
All that tax visible cash doesn’t just disappear out of the economy. It is:
deposited in banks
invested in shares
spent on consumption (probably also on better champagne than I can afford)
used to set up new companies
spent on assets (housing)
etc etc
2 dearieme // Feb 11, 2011 at 1:18 pm
“suffused with self-righteousness”: nice turn of phrase, Mr Tim.
3 Steve // Feb 11, 2011 at 1:55 pm
Don’t think the rich pay 13% national insurance, do they? Not sure about the employer side, but I think employees only pay 2% above the 40% tax threshold, and 12 below.
Tim adds: That is just employers’ side. 13%. No cap on it.
4 Neil // Feb 11, 2011 at 4:48 pm
not forgetting that they all have huge losses to carry forward for corporate tax purposes so your £1.98bn is more likely zero.
5 RV // Feb 11, 2011 at 5:48 pm
Everyone pays 11% on the first 44,000. And 1% on the earnings over that.
So Bankers would pay 1% NI on their bonuses this year. Next year it will be 2%.
6 paul ilc // Feb 11, 2011 at 7:06 pm
Bilbao Boy:
“There are a lot of highly paid people out there (and not only bankers), that is what we have progressive income tax for”
Slightly OT, I know. But “progressive” taxation of income? Why? I favour a flat rate income tax — ideally less than 20%. I’m interested in maximising the minimum, not minimising the maximum.
7 me // Feb 12, 2011 at 12:11 am
Whats your yearly income Timmy?
8 Gerontius // Feb 12, 2011 at 7:41 am
The Guardian’s guardian censored young Tim.
I think he should repeat here what he said there – I’m not easily shocked(dunno about the rest of you).
9 Is Ed Miliband planning a François Hollande-style tax grab? – Telegraph Blogs // Jul 16, 2012 at 12:24 pm
[...] in National Insurance. So almost £2 in every £3 of bankers’ bonuses are paid in taxes. As Tim Worstall has pointed out, last year’s total banking bonus pot of £7 billion saw £4.41 billion go straight to the [...]
10 Radio Nowhere » Red Ed and the waffly speech // Jul 16, 2012 at 8:33 pm
[...] think that bankers’ bonuses are not already taxed. They are. Quite heavily, in fact, as Tim Worstall points out. So, the banks pay out £7 billion in [...]
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