...a blog by Richard Flowers

Saturday, October 13, 2007

Day 2475: The Language of Luntz

Thursday (again):

But obviously there was also the ODIOUS Mr Minus 273 Centigrade (or ABSOLUTE ZERO Kelvin) McKenzie on Questionable Time as well.

I was reminded of this when Mr Humpy was giving Mr Andy Crashand-Burnham a toasting on the The Today Programme in the morning. Not that it wasn't a THOROUGHLY DESERVED toasting – Mr Crashand-Burnham is the Chief Secretary for Keeping Mr Frown's Desk Tidy Straight and the nearest thing to a Government spokesperkin in a week when the Government's changes to Capital Gains Tax have hit small businesses and workers' share option schemes. Although simplifying the system, Chancellor Dialling-Tone threw out the idea of REWARDING people for investing LONG-TERM (and this is on top of the increase in small company tax that Mr Frown introduced in his last budget).

But the big complaint was that abolishing taper relief means that for long-term investors their tax rate is increased from 10% to the new flat rate of 18%.

And what Mr Humpy kept saying was "you've given them an 80% tax rise!"

Now it is MATHEMATICALLY true that 18% is an 80% increase from 10% - but putting it like that is DECEPTIVE in TWO ways.

The FIRST is that, of course, people do not JUST pay Capital Gains Tax. It's usually quite a SMALL part of their taxation. Shrieking about "80% tax rises" sounds like you've nearly DOUBLED what some poor schmoes have to pay to Mr Frown's Revenue Men. You haven't. And in fact since the taper relief is quite difficult to get, you've cut the tax paid by a lot of other people too. Nevertheless, some people – and really, Mr Crashand-Burnham should have challenged Mr Humpy to say how many – some people will be worse off.

But the SECOND deception comes from the way that we use the English language. It would be QUITE NORMAL to refer to that increase as an eight point increase or an increase of eight pence in the pound, or even just an 8p rise. And what often happens is that people call it an EIGHT PERCENT increase.

(It is the same with opinion polls – people talk about the Labour going down by 2% when the ACTUALLY meant that their percentage has gone down by two POINTS, nearer to 2/40 or 5%.)

The Liberal Democrats are proposing to cut the Basic Rate of tax from 20% to 16%, but I bet you won't hear Mr Humpy going on about THAT as the "Liberal Democrats' twenty-percent tax cut"!

Talking about an eighty-percent increase could make the casual listener – even if only for a moment – think that the Capital Gains Tax has gone from ten percent to NINETY percent, not eighteen.

It makes the rise sound BAD; it makes it sound WORSE than bad, it makes it sound PUNITIVE and UNFAIR and MEAN.

Of course, all tax rises are a BIT bad, because someone will have to pay. But Capital Gains Tax is really quite a fair tax – it is a tax on the GAIN that you make by owning something even if you do nothing with it.

The people that it is HARSHEST on are – as above – small businesspeople who buy shares in their OWN companies and see the value of those shares increase as a result of their own hard work. But it's ALSO a tax on people who just use their huge wealth to buy shares off the stock market and let other people do the hard work while they sit back and cream off the profits. (Mr Balloon's family made their money this way, apparently. I mention for no reason.) And it is a tax on people who buy SECOND homes – not the one you live in; THAT's exempt – SECOND homes as investments and let the housing shortage push up prices enormously. They haven't done any work for that profit either.

So it's not like CGT is a VERY unfair tax.

It is a BAD TAX for a small number of small businesspeople, and this is a QUITE BIG increase in what for most people is a quite small part of their tax and it IS a SLAP in the FACE for people who have invested long term rather than smash and grab city raiders…

So why was Mr Humpy shrieking about it like it was a crime against humanity?

Well he COULD have just thought it all up by himself… or he COULD have just read it in the Daily Torygraph who don't have ANY kind of agenda at all, noooooo.

. I guess we shall just never know.

Because the OTHER people hit by this tax are the RICH traders who could take advantage of loopholes to make profits on their wheeler-dealing share deals at only 10% tax.

But – and you will be shocked to learn this – headlines saying "Rich People Stung by Tax on their Ill-Gotten Gains!" attract LITTLE SYMPATHY.

For many years, though, the rich and the right-wing did not realise this.

But then along came… guess who? None other than my old fluffy chum, Mr Frank Luntz of the Republican Party (back in them days) who realised that there WAS a way to sell tax cuts for the GIGA-RICH.

This was about changing LANGUAGE so that instead of – bluntly – making people think "hey, you deserve it!", many otherwise sensible people would start to think that taxes on the plutocrats were BAD.

The idea was to convince the everyday folks back home that (a) this was somehow GROSSLY UNFAIR or (b) there was some angle that hit the LITTLE GUY or (c) while there was no way in a million years this tax could affect them, in their DREAMS it just might.

(And it's not just taxes – it works on all sorts of things. In a NASTY BUSINESS? Change your mission statement from "oil exploitation" to "energy development" or from "logging" to "sustainable forest management". Got a FAILING BRAND? Make the switch from "The Labour" to "New Labour" or "The Nasty Party" to "Dave Balloon's Conservatories". Just SEE how the benefits roll in. Except in Ealing.)

So when I hear a… shall we call it a MODIFICATION OF LANGUAGE that makes a rich person's tax sound worse than it is… well, I can only say that I get SUSPICIOUS!

Of course, the DADDY of them all – and this brings us back to Mr Minus 273 Centigrade – the real KILLER was Mr Luntz's idea to change the name of ESTATE TAX (what we call INHERITANCE TAX) to the DEATH tax.

Taxing DEATH, golly just how monstrous and evil does THAT sound?

A "tax on aspiration" Master Gideon calls it. Well, Mr Oboe might aspire to DIE – that's probably why he's after Mr Balloon's job – but I think the rest of us can aim a little higher.

I know that MY Daddies are looking forward to a LONG and HAPPY life WITHOUT getting an inheritance; because that means that their parents are STILL IN IT WITH THEM!

Mr Minus 273 Centigrade, though, calls Mr Oboe's tax cut: "letting us keep more of our hard-earned money". How exactly, I wonder, does THAT work? Because – and I have to be BLUNT again – you can't keep ANY of that money, hard-earned or otherwise… because you are DEAD.

If this is about giving MORE of your money to your children or loved ones or the DONKEY SANCTUARY from which Mr Oboe escaped… well, do it while you are still ALIVE. Because if you give money away while you are still alive it DOESN'T GET TAXED.

(Daddy makes me point out: so long as you live another seven years, which is apparently to stop you dodging the duties on your deathbed.)

Or, if you want, go out and SPEND IT. It is your money, and you have – well, unless you stand to inherit a mint like Mr Balloon – earned it. You've even paid your taxes. So go and have fun!

But if, on the other fluffy foot, this is REALLY about hanging on to every last penny until your dying gasp… well then, it's a bit late to complain when the Government turns out to be even more MISERLY than you were!

I have said this before and I will say it again: Inheritance Tax is NOT a tax on "death" it is a tax on "MONEY FOR NOTHING"!

Anyone inheriting – for NO work – more than one million pounds would, from Mr Oboe, be getting an extra two-hundred and eighty grand free gratis and for nothing, not even any more "NO work".

The vast majority of people, ninety-six percent of us, do not inherit enough to pay ANY inheritance tax. From Mr Oboe they would get NOTHING, NADA, NIL. Whether they are hard-working families or not.

The argument that it is "double taxation" – because that money has already had Income Tax deducted – is just NONSENSE. If anyone says that to you, ask them if they will also abolish the VAT – because that's a SALES TAX on everything we buy, everything we buy with money that has ALREADY HAD INCOME TAX DEDUCTED.

Of course, if they say "yes" then you can ask them how they're going to fill the gap left by abolishing a THIRD of the tax take!

There has NEVER been a principle of "No Double Taxation" – that is a FICTION invented by, well, by people who usually try to pay NO taxation at all.

The family home is a RED HERRING too. (Not literally, unless you are Mr Jonah and live in a Whale.) Lots of people SELL their big expensive house once they are getting on a bit. Not because they have to, but because they want somewhere more cosy. Especially if they have been unlucky enough to lose their partner. And even if they don't (and why should they) the average house price is LESS than the tax threshold anyway.

But if that's a REAL worry, then make like Capital Gains Tax and give people a tax exemption for their family home – yes, even if it is also a STATELY home. That way, no one would "lose their home" over inheritance tax and you could make it fiscally neutral by lowering the threshold again – after all, it's only so high because of the value of houses: it's not about the money, right?

The right wing are now AGGRESSIVELY and DELIBERATELY pushing the meme that "Taxes are too high". You hear it in lots of places – newspaper columns, questions on Questionable Time, even round the office – a viral marketing strand of the greedy. "They're wasting our money," is another. The image of the profligate incompetent NuLabour minister is now as everyday as the sleazy corrupt Conservatory used to be.

(And be fair: the Labour pushed the "sleaze" meme just as hard and as far as the Conservatories are trying today.)

They tell us that under the Labour this is a "high tax country". This isn't TRUE. This isn't a high tax country. This isn't a low tax country either. We are somewhere in the middle. And that's probably about right.

But that doesn't suit the right-wingers.

They want the public to soak up these ideas like a sponge soaking up vinegar until we're all pickled enough to vote for them because they seem like a nice bunch, promise a few tax cuts (not sure about the details, we'll probably be better off), and they're better than the other lot, never mind that they don't really have any policies (still, in spite of what they tried to spin at that Conference).

Language is the BEST TOOL that people have for expressing their hopes and plans and aspirations and truths.

There's a word for it when language is used to do the opposite of all that too.

Are YOU thinking what I'M thinking?

1 comment:

Alix said...

Another splendidly fluffy post, Millennium. How excellent that there are such WELL INFORMED tax-elephants in the world.

One caveat, and it only reinforces your fluffy argument: not everyone who stands to lose by the abolition of taper relief is so deserving. Half the time, I used to find that when clients had hung on to assets for years it was only because they had such massive income as to not need to realise the cash value. This was typically North London landlords with ten or so properties, and we used to actually advise them to hang on to the three-storey houses in Notting Hill Gate so as to get more taper relief.

PS there is a sticky bun on Facebook with your name on it...