You can have your paycheck when we’re done with it

Posted by: Phineas on September 20, 2010 at 7:31 pm

It’s annoying enough to have the government force employers to withhold money from one’s paycheck, but the new government in the UK wants to take it one step further. Under a new proposal, employers will send employees’ paychecks to the government, first. Then, when they’re done with it, the government will give what’s left to the employee:

The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

The proposal by Her Majesty’s Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.

Currently employers withhold tax and pay the government, providing information at the end of the year, a system know as Pay as You Earn (PAYE). There is no option for those employees to refuse withholding and individually file a tax return at the end of the year.

If the real-time information plan works, it further proposes that employers hand over employee salaries to the government first.

And this from a Conservative government? Obviously the word means something different on the other side of the Atlantic than it does here.

Fausta points that this is how foreign employers pay their workers in … Cuba. The company gives the government the check, and Havana gives the campesino what’s left. Some may wonder what the substantive difference is between this and normal withholding. In my opinion, the difference is huge: while the government takes a cut under the withholding system, the check is still a matter between the employer and the worker. Under the Cuban-British model, the worker becomes dependent on the central government for his money, no matter where he works – or if he works at all, given welfare. It’s another way of turning a free citizen with his own property -in this case, a paycheck- into a ward of the state.

I can sympathize with the desire to make tax collection more efficient in order to get the money the government is owed, but maybe HMRC should consider something radical, such as a low-rate flat tax that will leave more money in the hands of the citizen, who will then use it to generate economic activity and, in turn, increased revenue for the government. That pesky little Laffer Curve in action, again:

But that kind of logic is alien to the statist, whose answer to every problem is the expansion of government power and its further intrusion into every aspect of one’s life, inevitably hobbling individual liberty. What next? Simply declaring everyone to be an employee of the State Crown?

LINKS: Ed Morrissey points out the many practical problems of this proposal, such as giving government access to everyone’s bank accounts. Power Line asks “Whose money is it?

(Crossposted at Public Secrets)

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10 Responses to “You can have your paycheck when we’re done with it”

Comments

  1. Carlos says:

    On the flip side, Phineus, people like Timmy Geithner and Charlie Rangle (and a whole host of other guvmint employees, czars, etc.) couldn’t be accused of not paying their taxes under a system like that.

    Unless, of course, the system was weighted in favor of federal employees (and unions?). But under this administration, who would ever believe that?

  2. this is what all politicans are working for in this country. when the people who have all the political power also have all the economic power then and only then will the people be able to control the government. this is what liberal america tells us.

  3. Cue the expansion of the underground British economy in 5…4…3…2…

  4. Jo says:

    Coming to a governemnt near you: We’ll take your check, extract what is currently needed by all of those who mooch off the system, both government employees and welfare recipients and then if anything is left, you may spend that as you so deem (within environmentally, socially and governmentally approved regulatory constricts).

  5. Dana says:

    This scheme has a few obvious purposes, none of which are mentioned:

    1 – The scheme would require that the government get the money before it goes to the wage earners. Holding the wages of the workers for just one day would provide a significant additional amount of revenue to the government from interest. And an error on the part of the government, even if caught and eventually paid back to the wage earner, still leaves money in the hands of the government for some period of time, again, providing extra revenue to the government via interest.

    2 – This scheme would force everyone in the United Kingdom who earns a paycheck to go to a direct deposit system; there’d be no such thing as cashing your check. The idea is to reduce the amount of cash transactions, and thus reduce the amount of economic activity hidden from the government and avoiding taxes.

    3 – A google search failed to tell me how many wage earners there are in the UK, but the population is roughly 62,000,000 people. If one-third of them are employed and receive paychecks, you’re talking about 20,000,000 paychecks; what would happen if the government decided to set the payroll computers to hold back just 10p (ten pence) from each paycheck? Most people would never notice the difference, and how many of those who did would go to the effort required to get their 10p back? Yet, if that were done, the government would receive a windfall of £2,000,000 every payday.

    Such might not be a legal tax increase, but if Brits were paid every other week, on average, that’s an additional £52,000,000 to the government, and a wholly unmissable £2.60 per year out of the pockets of the working men. In the US, we call these things payday loans.

    We’d just better hope that President Obama and the Democratic Party never hear about this idea!

  6. Carlos says:

    “…both government employees and welfare recipients…”

    Jo, you’re repeating yourself.

    And the biggest mooch is Duh-1 himself, even more than Timmy “I’ll pay my taxes to get appointed” Geithner.