Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
... 20 top economists are saying what everyone who have some knowledge of the tax system knows, that the high rate of tax is damaging our recovery and is making life harder for Inland Revenue by reducing the overall tax-take. What is interesting is that these economist are a mixed bag and are not all 'from the right' - many have a 'left' viewpoint and it included Keyseyan and Monetarist acolytes. It is because it is such a mixed bag that they can be taken more seriously than most similar economist 'round robins' we have seen.
This tax rate was never done for economic purposes anyway, it was just a political trap set by Gordon Brown before the election. Deluded as Brown was he too did not expect to get in any extra tax revenue from this high rate either. It was imposed as an act of sheer spite and cynicism.
The evidence is building of the damage it is doing to the economy and to the deficit reduction programme.
There is one and only one reason to keep it and that is political and for appearances sake. If Osborne were to remove it we will have all the rubbish about 'give aways' to the rich totally ignoring the more important point that having this tax levy means there will have to be bigger spending cuts. In other words the less well off get punished just so it can appear that the 'rich' are being taxed more. The truth is that the tax-take from the top 1% of earners is falling because of this tax. If you want them to pay more tax then you reduce the tax rate. Simple really. Then there are the other knock on effects that also reduce the tax HMRC is receiving, due to the damage it does to economic growth.
I doubt that Osborne will drop the 50p rate though, not yet at least. He is too much the political strategist and less the hard headed chancellor who would do what is right.
Yes, but......politics isn't all about doing the right thing, it is mainly, sadly, about being seen to be doing the right thing. Appearance has taken the place of substance steadily over the past few years, and that makes it harder for people who know about things to make appealing yet appropriate decisions. We have only ourselves to blame, elevating people to icon status, expecting slebs and politicians to somehow be perfect and above any human follies and failings. I prefer a good old fashioned flawed human being like me to represent me!!!!!!
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
i was listening to an economist from cambridge university yesterday and he said that the issue was not clear cut.
the scandinavian countries have the highest top tax rate but are thriving more than countries with a much lower top tax rate.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
'Thriving countries' is not the same as the proportion of 'tax-take' from the top earners being generated. The Speccie published some tables a while back using KPMG figures and I have just looked them up.
In the first one you can see a comparison of the top rates of tax and how they have changed.
Interesting as you mention Skandinavia to see that Sweden has slightly reduced their top rates while Norway has increased them though not as much as the UK.
Here below is a chart showing the impact that changes to the top rates of tax have had over the years in the UK.
There is current evidence that the impact now of the 50p rate is even greater and more immediate. The reason being that those hit most by this are much more 'mobile' now than ever before and can very easily transfer to lower tax regimes.
As I say the choice is between a cosmetic political top rate of tax to satisfy the masses or a lower top rate that will help provide a high tax take gain for HMRC to help deal with the deficit.
I do agree that it is difficult to reduce the rate. Going along with the lowest common denominator argument and keep the 50p rate is the easy route but is that also the most sensible? We have a deficit that needs dealing with and it is important to get more growth and increase the levels of tax revenue received by HMRC and that means reducing the top tax rate.
Personally I prefer them to do the right thing and to go out and make the argument for it. I am sure most people will be bright enough to see the sense. A few masochists may choose not to do so and there will always be the class warriors of course, but by arguing the case these can be marginalised.
Keith Sansum1
- Location: london
- Registered: 25 Aug 2010
- Posts: 23,942
not sure it can be justified
not on those barryw
but im interested in listerning
ALL POSTS ARE MY OWN PERSONAL VIEWS
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Not sure Keith? - surely the impact as demonstrated by the figure do justify it.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
there is also the argument that raising the threshold of income tax to £.10000 would mean that lot more money would be available in peoples pockets to spend in the high street and kick start the economy.
Guest 698- Registered: 28 May 2010
- Posts: 8,664
So 20 pct of what they spend will go to the Treasury in VAT instead of less than 20pct of what they earn. Plus the shops make a profit therefore pay tax too. The more the money goes round the more the tax take increases.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Howard - Yes, I too would like the tax threshold to rise. It is happening, it rose from £6475 last year to £7475 this year with further rises in excess of inflation planned.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
i know what you are saying about the top tax rate barry, but the tax take will simply come from their earnings.
there is unlikely to be a big increase in their out of pocket spending, whilst at the bottom end the money goes straight back into the system then much as peter says in post 8.
Jan Higgins
- Location: Dover
- Registered: 5 Jul 2010
- Posts: 13,895
I doubt if there is anybody who would not appreciate the tax threshold rising it would definitely help those in low paid jobs as well as us tax paying pensioners.
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I try to be neutral and polite but it is hard and getting even more difficult at times.
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Guest 653- Registered: 13 Mar 2008
- Posts: 10,540
I would definitely support a £10,000 start for tax-payers.
Roger
Ross Miller
- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,707
My personal preference would be to abolish the existing tax system and replace it with
Personal Allowance £20000 pa
Income from all sources (including dividends, gains on assets, interest on savings and investments etc) taxed at a flat rate of 20%
No other allowances dispensations etc.
I would be inclined to set VAT and Income tax at the same rate of 20%
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
I agree 100% with that Ross. The personal allowance might be a bit on the high side, Personally I would have it at around £12,000 (say around where the min wage is at a 40 hour week).
Simple is best.
Ross Miller- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,707
I worked on the basis of the so called living wage which is about £15.5k pa and added a bit
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 675- Registered: 30 Jun 2008
- Posts: 1,610
While I do agree with Ross, to a point, I would still have reservations on the top rate. What the figures do show is that those who could afford to pay it, demonstrated by their being able to comfortably bugger off elsewhere to hoard their cash, will never be contributing to the economy if they can help it. For the economy to improve money needs to be in circulation buying stuff that then needs to be made or grown by people being paid to do so. Recovery does not come from people hiding their cash under the mattress, whether that mattress is in the Cayman Islands or Switzerland.
Times are better when the person on the street has cash in their pocket and is out there spending it. Now we have the money locked up by people intent on trying to convince us all that we will all be happier with them sitting on it.
Politics, it seems to me, for years, or all too long, has been concerned with right or left instead of right or wrong.
Richard Armour
Guest 645- Registered: 12 Mar 2008
- Posts: 4,463
Twenty leading economists, who pay the 50p tax rate, have written to the Financial Times saying the 50p tax rate paid by high earners is doing "lasting damage" to high earners who pay the 50p tax rate.
Middle income and low income families have been sympathetic to the plight of those earning in excess of £150k a year. "It must become harder and harder to find loopholes that allow them to avoid paying tax," said Lorry driver Graham Hennessey.
"I'm sure George Osborne will be the first to tell you that the tax advisers and accountants that helped him avoid £1.5m in tax didn't come cheap." "Maybe the government could increase fuel duty or cut some more benefits for the disabled instead.?
"I'm sure I speak for everyone when I say we'd be happy to help improve the lives of people struggling by on barely more than £150k."
The letter, that includes two former members of the Bank of England's Monetary Policy Committee amongst its 20 signatories, has called for the coalition to drop the 50p tax at the earliest opportunity as part of a package of measures to ensure they have more money than they can actually spend. "The 50p tax is disastrous for people who can definitely afford to pay it," said Bridget Rosewell, chairwoman of Volterra Consulting.
"It sends a message to entrepreneurs that if you can afford to pay more tax, then you will be expected to pay more tax." "And people wonder why they put all their money offshore."
Marek
I think therefore I am (not a Tory supporter)
Ross Miller- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,707
The benefit of a simple flat rate tax system with a high tax free threshold is that it
a) eliminates all loopholes and therefore prevents the whole issue of legal avoidance
b) treats all income the same irrespective of source therefore bringing a greater range of wealth into scope
c) is at a low enough rate that it will not encourage any form of capital flight
d) if corporation tax is set at the same level it will act as an incentive for inwards investment and therefore job creation
e) most importantly means those earning £9.60 per hour or less pay no tax on their income
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
High rates of tax are simply counter-productive. It seems that there are some who do not care about the amount of tax collected by HMRC as long as the higher earners suffer a higher rate.
This is simply idiotic.
A high rate of tax is not the same as paying more tax.
It is not just that such people can 'bugger off' as Chris puts it. I is far more complex than that. These people can have far more control over what they earn than the rest of us.
After all, why bother to take the risk of employing that additional person or buying that piece of machinery for your business when you will have more than half of what extra you earn stolen in tax? Why bother to go out and win that extra contract?
Why not take a couple of days off a week to keep under the threshold?
On the latter point I know several people who do that with the 40p rate now. They make sure that they just earn up to that. If it wasn't for that threshold they would certainly earn more, spend more and very likely expand their business to do so, employing more people.
The higher rates of tax are damaging to the economy and suppress growth. Frankly it is plain mad, utterly bonkers, taxing people at 50p (or even 40p) when you need to generate more tax revenue and want economic growth.
This is about dealing with life as it actually is and not how some people think it should be.
It is not as if the extra tax you do pay is worthwhile? We see generations dossers and scroungers making a lifestyle choice to live on benefits, an inefficient NHS providing a second rate service, schools failing to educate our children, local authority planners screwing up our neighbourhoods, £billions being spent on interest because we had a government that could not be bothered to run its finances responsibly and the government cutting spending on the most important budget of all, defence. THIS is exactly how such people view this and there is far more truth in that last sentence for comfort.
Guest 675- Registered: 30 Jun 2008
- Posts: 1,610
Still not feeling sorry for them. Control their earnings? Not bothering unless there is a maximum of profit?
Who will they be selling their stuff to if the lower paid are squeezed out of all their spendable income in the hopes of keeping those who could afford it from finding ever more inventive ways of stashing their cash out of sight, and away from the economy they depend on as much as everyone else.
Politics, it seems to me, for years, or all too long, has been concerned with right or left instead of right or wrong.
Richard Armour
