Tax and Grow

Aside from IQ, what do Fred ‘The Shred’ Goodwin, the Duke of Westminster, the Prince of Wales and dear old Bob Diamond have in common? Well, it’s not absolutely certain, but there’s a strong probability that they pay a lower rate of tax than you do. The interesting thing is ‘why?’ There are two reasons.

There is an elaborate theoretical structure which seeks to justify not taxing the rich. It operates at many different levels. There’s the Tea Partyish argument that tax is Bad. This is because government is Bad. Because government can only stop things happening, get in the way and generally inhibit the entrepreneurial dynamism of people like Fred, the Duke, the Prince, and Bob. Government and all its works should be minimised.
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Talent for being in the Right Place at the Right Time

During the past week the much derided Bob Diamond, CEO of Barclays Bank, has graced the world with both a lecture and an interview with the BBC. Asked about his remuneration, modesty forbad him to admit precise figures, though figures are available. £5.4 million is the number widely quoted for the last year. That’s down from the £15.2m reported in 2007 along with the then accumulated total of £80m (see http://www.gordonpearson.co.uk/11/what-are-they-laughing-about/). Anyway, it’s nothing to do with Bob – his remuneration is decided by a board committee on behalf of shareholders!

Perhaps he is right: precise figures are unimportant. What matters is simply that the mass of people regard such remuneration as an obscenity even in the good times, let alone when so many are finding it impossible to make ends meet. Peter Drucker regarded top remuneration being 20 times the lowest, as the most that could be got away with, if the ‘hatred’, ‘anger’ and ‘contempt’ of ordinary people was to be avoided. Diamond pays himself 600 or 700 times the lowest paid, and appears to completely overlook the fact that the problems confronting the least well off, are in large part, the direct result of the gross incompetence, if not dishonesty, of bankers not unlike himself. Hatred, anger and contempt gets nowhere near it.
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