Goldman Sachs avoiding the 50p rate proves the folly of cutting it too soon

The 45p rate gets an artificial boost while 50p is made worse in comparison.

Goldman Sachs is considering whether to defer bonuses for its employees into the new tax year, starting 6 April, in order to avoid the 50p tax rate.

The Guardian's Jill Treanor reports:

A number of banks are known to have considered whether to make the move, which would save their top employees thousands of pounds. But City sources believe many of them have rejected the idea to avoid any negative publicity in the wake of the row surrounding corporation tax paid by Starbucks in the UK.

The Wall Street firm – which publishes its full year results on Wednesday and tells staff their bonuses for 2012 shortly afterwards – is not thought to be considering changing the way the bonuses for 2012 are handed out. The proposal being considered would benefit parts of bonuses deferred from the years 2009, 2010 and 2011, which are due to be handed to staff this year in the form of shares.

The move underlines the lack of evidence available that the 50p rate actually hurt revenues. HMRC's analysis in March last year determined that the optimal tax rate was 48 per cent, a figure which 1) didn't justify cutting the rate to 45 per cent and 2) was only derived due to a specific statistic – TIE, taxable income elasticity – being given a value of 0.45. Given studies cited by HMRC for TIE showed it being anywhere from -0.6 to 2.75, there's rather a lot of uncertainty in that analysis.

But the bigger problem for evidence of the tax cut's effects is that, in cutting the 50p rate so rapidly, the Chancellor destroyed the possibility that we might actually get some useful data. The most effective way to avoid the tax is to shift income forward or backward. As a result, the first year it was in operation revealed that £6.6bn of taxable income had been shifted forward by a year; and we now know that this year, the last it will be in operation, a significant chink of income will be shifted back to the 2013/14 tax year.

Add in the fact that even HMRC assumed that some income in 2011/12 will have been declared in 2009/10, and some more will have been coincidentally forestalled to 2012/13 (when it could be forestalled further to 2013/14), and it is clear: there has not been a single year when a "normal" amount of tax was paid at the 50p rate. Every year it was in operation will have resulted in an artificially depressed take.

Similarly, the 45p rate will, for the first few years of its operation, have an artificially boosted take. It will look far more effective at discouraging tax avoidance than it actually is.

Consider this a warning, then: 2014 will see a lot of attempts to misuse data to prove a point. Don't take it at face value.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Appearing in a book is strange – being an actual character must be stranger

Much as it jolts me to come across a reference to my music in something I'm reading, at least it's not me.

I was happily immersed in the world of a novel the other day, Rachel Elliott’s Whispers Through a Megaphone, when suddenly I was jolted back into reality by my own appearance in the book. One of the characters hears someone singing and is told, “‘It’s Leonora. She sings with her window open.’ ‘She’s good – sounds like Tracey Thorn.’ ‘She does, doesn’t she.’”

It was as if I’d walked on stage while still being in the audience. It’s happened to me before, and is always startling, a kind of breaking of the fourth wall. From being the reader, addressed equally and anonymously, you become, even momentarily, a minor character or a representative of something. In this instance it was flattering, but the thing is, you have no control over what the writer uses you to mean.

In David Nicholls’s Starter for Ten, set in the mid-Eighties, the lead character, Brian – a hapless student, failing in both love and University Challenge – hopes that he is about to have sex with a girl. “We stay up for an hour or so, drinking whisky, sitting on the bed next to each other and talking and listening to Tapestry and the new Everything But the Girl album.” Ah, I realised, here I represent the kind of singer people listen to when they’re trying, though possibly failing, to get laid.

Fast-forward a few years, to the mid-Nineties of Bret Easton Ellis’s Glamorama, a book constructed from lists of people and things, clothes and music, which apparently indicate the vacuousness of modern life. “I dash into the Paul Smith store on Bond Street, where I purchase a smart-looking navy-gray raincoat. Everything But the Girl’s ‘Missing’ plays over everything” and later, “In the limo heading toward Charing Cross Road Everything But the Girl’s ‘Wrong’ plays while I’m studying the small white envelope . . .” Here I’m being used to represent the way bands become briefly ubiquitous: our songs are a soundtrack to the sleazy glamour of the novel.

These mentions are all fine; it’s only the music that features, not me. Spotting yourself as an actual character in someone’s novel must be more shocking: one of the perils of, for instance, being married to a novelist. I think of Claire Bloom and Philip Roth. First she wrote a memoir about how ghastly it was being married to him, then he wrote a novel about how ghastly it was to be married to someone very like her. Books as revenge: that’s very different indeed.

Few people who had ever met Morrissey emerged from his memoir unscathed (me included), but particularly Geoff Travis of Rough Trade. He was hung, drawn and quartered in the book, yet seems to have maintained a dignified silence. But it’s hard knowing how to deal with real people in memoirs. In mine, I chose not to name one character, a boy who broke my 18-year-old heart. Feverish speculation among old friends, all of whom guessed wrong, proved how much attention they’d been paying to me at the time. I also wrote about my teenage band, the Marine Girls, and then sent the chapter to the other members for approval. Which led to a fresh outbreak of hostilities and not-speaking, 25 years after we’d broken up. Don’t you just love bands?

Worrying about any of this would stop anyone ever writing anything. Luckily it didn’t deter John Niven, whose scabrous music-biz novel, Kill Your Friends, mixes larger-than-life monsters such as the fictional A&R man Steven Stelfox with real people: and not just celebs (Goldie, the Spice Girls), but record company executives (Ferdy Unger-Hamilton, Rob Stringer) known best to those of us in the biz, and presumably thrilled to have made it into a book. John confirmed to me recently: “In the end I got more grief from people I left out of the book than those I put in. Such is the ego of the music industry. I heard of one executive who bought about 30 copies and would sign them for bands, saying, ‘This was based on me.’ You create the Devil and people are lining up to say, ‘Yep. I’m that guy.’”

In other words, as I suspected, there’s only one thing worse than being written about. 

Tracey Thorn is a musician and writer, best known as one half of Everything but the Girl. She writes the fortnightly “Off the Record” column for the New Statesman. Her latest book is Naked at the Albert Hall.

This article first appeared in the 06 April 2016 issue of the New Statesman, The longest hatred