Quite the congratulations are due to the Labour Party north of the border. They’ve managed to egregiously manipulate a political statistic. Well, obviously, press offices do that, that’s what they’re for. And I’ll cop to the fact that I’ve worked as a political press officer too (for Ukip) so I know what I’m talking about. There is though, and therefore, this thought about how much attention we should pay to any political statistic given this egregious manipulation that they’re all subject to.
I will say this one is pretty good though:
The income of Scotland’s richest 1% has rocketed by 89% since the Conservatives came to power, according to a new analysis.
Labour has highlighted data from HM Revenue & Customs that shows the total income of those earning more than £150,000 jumped from £3.7bn in 2010-11 to £7bn in 2015-16, the most recent year for which statistics are available.
The total income of those earning less than £20,000 a year rose by 1.8% during the same period.
Labour is now urging the Scottish government to make bold moves to tax the rich.
Well, yes,OK. It’s just that “total” in there, as in total income, which sparks the worry. Why aren’t they talking about things on a per capita level? The incomes of already rich people rose more and faster than those of poorer people?
So, I asked Scottish Labour. Yes, as part of that privileged caste of journalists I am allowed to ask questions so as to speak truth to power. So, I did. And I got the original of the press release back – no Sundays off for political spinmeisters!
INCOME OF SCOTLAND’S SUPER RICH SOARS
The income of Scotland’s top 1 per cent has soared by 89 per cent since the Tories came to power, new analysis from Scottish Labour reveals.
Analysis of HM Revenue & Customs data shows the total income in Scotland of people earning over £150,000 year has increased from £3.7 billion in 2010/11 to £7billion in 2015/16.
Labour said the figures revealed the need to be bolder on tax for the richest few, rather than continue the ‘timid tinkering’ of the SNP.
The party revealed the figures as part of its ‘summer of socialism’ campaign, which this week turns to the cost of living and income inequality in Scotland.
Hmm. And the reference is to this series of tables from HMRC.
When you look at the tables (2010/11 and 2015/6 are the ones) you can see what has been done.
In the first period there are some 13,000 people earning over that £150,000 mark. And there are 1,434,000 earning below the £20,000 (it’s not entirely clear whether they mean including those listed as making 20k plus a bit, or only those making less). In the second period there are some 21,000 people making more than £150,000 and some 1,036,000 making less than £20,000.
That is, there are fewer poor people, more rich people, this is an injustice crying out to the very heavens for higher taxes, is it?
Further, note that if the total income flowing to those lower paid has risen by only 1.8%, but there are 25% or so fewer of them, then the average income has risen strongly within this group, hasn’t it? Something which again cries out for higher taxation no doubt.
We might also observe that the incomes are broken out into labour earnings, capital, self employment and so on. The standard GDP classifications in fact. And in that first period there are 10,000 people gaining a total of £400 million in capital income in that higher income grouping. And there are 16,000 gaining £1,690 million in the second. All of which rather accords with how recessions work. Capital – profits especially but therefore also dividends and so on – fall more and faster than any other form of income within the economy. The story of a recovery from recession is, in large part, the bounce back of these incomes.
Yes, 2010 was still recession, of course capital incomes were low, they’ve come back to something like normal now.
But, you know, normality is the reason for much higher taxes, isn’t it?
A fun thing to note about this method of recording incomes and the justifications for very much higher taxation. We’ve ewer people making less than £20k, more making over £150k. That calls for, in this story, higher taxation. Now, imagine that Scotland got really rich. Imagine that no one in the country, at all, made less than £20k. Just think how high a tax rate we could justify now! The incomes of those making less than £20k have fallen to zero!
A further fun thing to note about these numbers. HMRC doesn’t adjust for inflation and nor do these numbers.
And a final fun thing to note about these numbers. The call is for higher taxation as a result of them. But we’ve already got higher taxation as a result of them, don’t we? Because income tax is progressive, meaning that as incomes rise – recall, our actual finding here, that incomes have risen – people move into higher tax bands, greater portions of their incomes are subject to tax and at higher rates, they pay more tax.
Or, as we might put it, the fact that Scots are paying more income tax is a justification to increase tax rates and levels.
Never mind though, let us just luxuriate in the award to Scottish Labour of today’s “Egregiously Misleading Political Statistic Award.” No doubt there will be strong competition to come with the new week.
And I don’t suppose Scottish Labour advanced any theory under which all this surprise new wealthiness was harming other Scots. If not, I’d be careful not to move a new tax bill until being sure it would not curtail the prosperity itself.
Do remember that the Scots have just raised the income tax level—by 1p in the £1—for those earning over £24k.
So, Labour have to justify keeping this higher level somehow, no…?—else they’ll not get elected if they want to keep the increased cash take (and they are Labour, so they do wish to keep it).
DK