Chart of the day: Fair share?

Following the Staggers posting the source data, we've charted up the HMRC release on tax rates so you can see at a glance the proportions paid by each income group.

Several interesting points can be drawn from this. First thing to notice is the high number of wealthy individuals who pay precisely what they are supposed to. When the chancellor announced that he was scrapping the 50p rate due to the high rates of tax avoidance, one wouldn't have guessed that actually, at least three quarters of those eligible to pay the rate were indeed doing so. What this means is that for thousands of people earning above £150,000 a year, the cut in the top rate of tax was purely extra money in their pockets. It couldn't have reduced tax avoidance from them, since they didn't avoid any in the first place.

Secondly, the actual numbers involved are really quite low. The richest category, those earning over £10m, contains just 200 people. Of those, just 12 are paying under 10 per cent average tax. Admittedly, if all of them paid 40 per cent instead, that would be at least an extra £36m in the Treasury's coffers; but generally speaking, it is not a good idea to create government policy which affects just double-digits of people.

Thirdly, the genuinely shocking finding is what happens to that darkest blue bar as you go right: it grows. For incomes above £100,000 a year, the richer you are, the more likely you are to pay less than 10 per cent average tax. That really is an upsetting finding.

Finally, this actually represents a significant ceding of ground on the part of HMRC, as shown by Tim Worstall's angry response at Forbes. By reporting tax rates as a proportion of total income, not as a proportion of taxable income, HMRC is accepting the point made by campaigners like Richard Murphy that exceptions should be regarded as just that: exceptional. Although one can perfectly legally pay 10 per cent tax on an income of £10m, by publishing the information in this way, HMRC are adding to the growing belief that it is socially unacceptable to do so.

Some of those in the bottom right of the chart will be philanthropists, entrepreneurs and investors, using tax deductions in the way they are intended. Others will be shuttling money between shell companies, paying themselves income as dividends, and using loopholes to avoid tax where it is due. The problem will be to seperate the former from the latter.