Top 50p tax rate damages UK, say economists

[Johnny Bognor]

This caught my eye

http://www.bbc.co.uk/news/business-14810323

 

Only the Netherlands have a higher top rate....

 

Top UK trading partners

Netherlands - 52%

Belgium - 50%

Germany - 45%

Italy - 43%

Ireland - 41%

France - 40%

USA - 35%

Spain - 27.13%

Other

Australia - 45%

Japan - 40%

Switzerland - 11.5%

Source: HM Revenue & Customs 2009/OECD 2010

Even the spanish socialists only have 27.13%

 

Maybe dune was right afterall.........

[Joesaint]

It does do damage, people with money just wont want to work here, we need to convince them to stay and invest there money on employing staff in the UK. They have much lower Tax in Ireland (like many places) to try and take business away.

 

I would rater be taxed less and get less from the government (minus all the waste administering it). Tax is a joke in this country just like all the public jobs on stupid money!!!

[Fuengirola Saint]

Dune would never be right, he's a ****in loon! I imagine the 20 people bleating about it are paying 50% above 150,000, the government in Spain are not Socialists they are just called that!

[Johnny Bognor]

....the government in Spain are not Socialists they are just called that!

 

No doubt you are trying to show them the error of their ways :lol:

[StDunko]

As I mentioned on the footballers wages fred....

 

If we drop the rate to 40%, that will be £420,000.00 per year taken away from taxes for hospitals and schools and into Joey Barton's pocket.

 

This tax rate does not seem to be putting of the world's highest earning football talent wanting to work here, where is the evidence that it is putting off other high earners from other sectors?

[Verbal]

The weirdest thing about those who argue that 'entrepreneurs' are being deterred in some way by the 50p tax on income is the assumption that these same entrepreneurs are salary slaves. They're not - the idea is ridiculous. They own companies, and are rewarded through corporate status in a number of ways - being paid dividends, paying corporation tax at MUCH lower levels, etc., etc.

[Clapham Saint]

Although does the Netherlands have a national insurance scheme?

 

If you add e'ees NI the UK tax rate is 52% and so would be equal to the Netherlands.

 

How about e'ers NI and the fact that the higher rate tax payer also loses their 0% band?

 

Whether it be right or wrong, the top rate of tax is above the headline of 50%.

[Johnny Bognor]

The weirdest thing about those who argue that 'entrepreneurs' are being deterred in some way by the 50p tax on income is the assumption that these same entrepreneurs are salary slaves. They're not - the idea is ridiculous. They own companies, and are rewarded through corporate status in a number of ways - being paid dividends, paying corporation tax at MUCH lower levels, etc., etc.

 

You are right in that entrepreneurs of smaller buinesses are not deterred by top rate tax. Corporation tax or the tax on jobs (employers NI) is far more relevant to them. However, there are many high earners that aren't entrepreneurs.

 

I pers onally am not bothered about the top rate. The jobs tax bothers me more.

 

If you hire 10 people on £30k pa, the govt will charge you £33k pa for the privilege, so you could in fact hire 11 people instead of 10. We are in the mire and more could be done to help job creation, which will in turn generate more tax revenue.

 

 

Although does the Netherlands have a national insurance scheme?

 

If you add e'ees NI the UK tax rate is 52% and so would be equal to the Netherlands.

 

 

If you also take account of the loss of the personal tax allowance above 100k, then this adds another 3%, so it is effectively 55%

Edited 8 September, 2011 by Johnny Bognor

[trousers]

As I mentioned on the footballers wages fred....

 

If we drop the rate to 40%, that will be £420,000.00 per year taken away from taxes for hospitals and schools and into Joey Barton's pocket.

 

 

And not raising it to 60% has the same effect...

 

I know "tax cut" is more emotive terminology for those who oppose the move to remove the 'temporary' 50% tax rate but "normalising" or "levelling" are less inflamatory and realistic descriptions.

 

I'm amazed at the number of people who trust politicians (of all colours) and civil servants to spend our money more wisely and efficiently than we can do ourselves.

[Lord Duckhunter]

Claiming that cutting the top rate of tax takes money out of the public purse is too simplistic. When Thatcher reduced it from 83% to 60%, more money was collected in tax.

 

Tax rates should be set at a level that generates the most income, not as some sort of punishment for earning too much money.

[Special K]

Not convinced. If you earn over 150k and don't employ the services of a specialist tax avoidance accountant, then you are a bit of a fool anyway. I suspect this is being overplayed somewhat, but then again so are the forecasts for collection in that piece.

 

Sounds to me like a load of old pony.

[badgerx16]

Hasn't this already been "debated" here ?

 

http://www.saintsweb.co.uk/showthread.php?32301-Tax-us-more-say-wealthy-Europeans

[Clapham Saint]

Not convinced. If you earn over 150k and don't employ the services of a specialist tax avoidance accountant, then you are a bit of a fool anyway. I suspect this is being overplayed somewhat, but then again so are the forecasts for collection in that piece.Sounds to me like a load of old pony.

That's way too simplistic.The majority earning 150k will do so from a straight salary on which the ability to utilise the type of tax planning that you are talking about is very limited

[eurosaint]

When I worked in Brussels I had colleagues from most European countries and we regularly compared notes on salaries, tax, bonuses etc..

The top rate was often the most emotive topic but everything depended on the thresholds and also other factors such as mandatory church tax, separate rubbish tax, child allowances, stamp duties, mortgage relief, company car tax, etc, etc...)

My conclusion after most of these discussions was that it was 'swings and roundabouts' and generally speaking people at the same executive level had a very similar standard of living, regardless of what their highest rate of personal income tax actually was !!

[shurlock]

Now wait for the letter from economists saying that the 50p tax rate has little or no impact or outweighed by other benefits - the idea that there are settled truths in economics is bollo*ks. In reality, its no different from a football forum.

 

TBH, the evidence cited by the letter is patchy or nonexistent - like the banks crying wolf that higher taxes would lead to an exodus, a point demolished by the Independent Commision on Banking.

 

The letter contains a few generic, emotive references to UK competitiveness; but competitiveness is a complex and fuzzy concept determined by lots of things in which income tax plays only a small role. Tax-wise, increases in corporation tax -not income tax- tend to be the most distortionary (and consumption taxes the least) -and the UK already provides all kinds of relief to entrepreneurs. Just as important, taxes are not the only reason that firms or entrepreneurs choose a location, especially not when locating real activity as opposed to income. Indeed, many of the things that make the UK competitive and an attractive place to do business -say a high quality research and skills base, modern public infrastructure etc- are provided from tax revenue.

 

Finally, the letter would have been persuasive if it was signed by a wide cross-section of economists -not those who are generally seen as leaning to the right- and ones which have higher reputations. Its hardly a stellar who's who.

[Special K]

That's way too simplistic.The majority earning 150k will do so from a straight salary on which the ability to utilise the type of tax planning that you are talking about is very limited

 

Don't fully agree. High earners i've encountered are less likely to be PAYE, instead performing roles as consultants via self employed status/contractor route. That is my experience which obviously may differ in other industries.

[Wadge]

Don't fully agree. High earners i've encountered are less likely to be PAYE, instead performing roles as consultants via self employed status/contractor route. That is my experience which obviously may differ in other industries.

 

I agree Special K, alot of the high earners use SBT's & contractor schemes to reduce their tax to virtually nothing. Its all out there, even for people who earn over 50K a year and they will all talk amongst themselves and join aboard the tax avoidance bus.

[badgerx16]

There is another view on this :

 

http://www.taxresearch.org.uk/Blog/2011/09/07/fisking-the-demand-to-cut-the-50p-tax-and-showing-it-for-what-it-is/

[Verbal]

There is another view on this :

 

http://www.taxresearch.org.uk/Blog/2011/09/07/fisking-the-demand-to-cut-the-50p-tax-and-showing-it-for-what-it-is/

 

I heard the author of this, Richard Murphy, on Radio 4 yesterday, making a property 'entrepreneur' look silly. Murphy talks a lot of sense.

[iansums]

Time to combine income Tax and NI. The whole tax system needs to be simplified, this would save money if nothing else. Also child benefit should be scrapped, if you can't afford to have kids don't have them. And yes, I am a parent by the way.

[Clapham Saint]

I agree Special K, alot of the high earners use SBT's & contractor schemes to reduce their tax to virtually nothing. Its all out there, even for people who earn over 50K a year and they will all talk amongst themselves and join aboard the tax avoidance bus.

This isn't a high earner issue. This is the same (as you say) for somebody earning 10k 50k or 150k+.SP's comment was (as i read it) that the 50% band was justified on the bais that people earning this amount avoid loads of tax anyway. following your argument that people on 50k do the same, would it be 'fair' to increase the basic rate by 10% to cover these people?I would agree that this is more of an issue the higher the earnings but somebody on a salary plus bonus of over 150k is not going to be able to reduce their tax bill by much. They would have access to better advice on investment income though.

[Verbal]

You are right in that entrepreneurs of smaller buinesses are not deterred by top rate tax. Corporation tax or the tax on jobs (employers NI) is far more relevant to them. However, there are many high earners that aren't entrepreneurs.

 

Of course, there are many 'high earners' who are not entrepreneurs. But the flannel over the last few days has been that the 50p rate is killing off at source the entrepreneurs setting up small innovative companies that will drive the country out of recession - which is nonsense.

 

What it is, in reality, is a bit of hypocritical special-pleading by extremely wealthy commentators, professional, higher civil servants, and banking and other corporate executives to contribute much less to digging this country out of a hole. The special pleading, in other words, comes from precisely some of those deeply implicated in creating this mess in the first place. What kind of 'entrepreneurs' are these?

[Whitey Grandad]

High taxes stifle investment and entrepreneurs. f you fine people enough they will stop doing it.

[Lord Duckhunter]

Time to combine income Tax and NI. The whole tax system needs to be simplified, this would save money if nothing else. Also child benefit should be scrapped, if you can't afford to have kids don't have them. And yes, I am a parent by the way.

 

Spot on,

 

How on earth did we end up with a tax system that takes tax out of someone's take home pay, and then gives them some of it back in the form of "tax credits" (which is just welfare). If people need welfare, then dont tax them in the first place.

[badgerx16]

If you earn £200K pa, you will pay 50% tax on your earnings in excess of £150K, = £25K. If you paid tax @ 45% you would save £5K pa, hardly going to dig the country out of recession when you 're-invest' it in the UK, which of course you would.

 

If the 50% rate were abolished you would save £10K; a nice upgrade for your German luxury sedan, or an extra couple of weeks on your Caribbean hideaway.

[trousers]

I'm still mildly astounded that people think that politicians and civil servants are the best people to spend as much of our money as possible.

 

I'm renting out barge poles at a reasonable rate.

[aintforever]

It's a sick world where people earning over £150,000 a year moan about paying a few extra percent in tax whilst half of Africa starve to death.

[trousers]

It's a sick world where people earning over £150,000 a year moan about paying a few extra percent in tax whilst half of Africa starve to death.

 

Source?

[Thedelldays]

It's a sick world where people earning over £150,000 a year moan about paying a few extra percent in tax whilst half of Africa starve to death.

 

Whilst Africa starves.I assume you give more than generously every month from your capitalist wage. Whilst sat at home with broadband, drive a car and have holidays???

[Lord Duckhunter]

It's a sick world where people earning over £150,000 a year moan about paying a few extra percent in tax whilst half of Africa starve to death.

 

Cheap point, that you could fit to any arguement. It's a bit rich people complaining about their benefits being cut "whilst half of Africa starve to death", it's a bit rich people complaining about the price of beer, the SFC ticket charges, The poll tax, the coalition Government or the price of petrol "whilst half of Africa starve to death". Perhaps we could all live on £300 a week and thank our lucky stars we dont live in Africa.

[aintforever]

Whilst Africa starves.I assume you give more than generously every month from your capitalist wage. Whilst sat at home with broadband, drive a car and have holidays???

 

I do, and I don't moan about paying tax because the society that allows me to earn my wages relies on people paying tax.

[Thedelldays]

I do, and I don't moan about paying tax because the society that allows me to earn my wages relies on people paying tax.

 

Good, maybe give more to Africa if you are that worried

[Lord Duckhunter]

I do, and I don't moan about paying tax because the society that allows me to earn my wages relies on people paying tax.

 

Surely if your tax was used for polititicans to waste, for work shy lay-a-bouts to buy new TV's and have foregin holidays, then you have a right to moan. If tax revenues was targetted at the very needy and welfare was a safety net only, then you would get to keep more of your own money. You could then donate more of it to causes close to your heart, rather than the man in Whitehall spending it for you.

[aintforever]

Good, maybe give more to Africa if you are that worried

 

I'm not worried, I just think the world is sick with greed.

[Thedelldays]

I'm not worried, I just think the world is sick with greed.

 

And you like me, are part of that sick process. And by choice too

[aintforever]

Surely if your tax was used for polititicans to waste, for work shy lay-a-bouts to buy new TV's and have foregin holidays, then you have a right to moan. If tax revenues was targetted at the very needy and welfare was a safety net only, then you would get to keep more of your own money. You could then donate more of it to causes close to your heart, rather than the man in Whitehall spending it for you.

 

I don't agree with hand outs to the lazy, the government should be much tougher and force people to work.

 

We all have to pay tax though, if any tax breaks are given it should be for the lowest paid then it might actually help get people off their asses.

[aintforever]

And you like me, are part of that sick process. And by choice too

 

I agree, greed has become the norm. I give a bit to charity and trust my taxes to do some good but I could do alot more.

[trousers]

I give a bit to charity and trust my taxes to do some good

 

Isn't it more cost effective to give your money more directly to those who need it (aka charity donations) rather than funnel it through a series of beaurocratic government departments (aka tax)?

[Clapham Saint]

Isn't it more cost effective to give your money more directly to those who need it (aka charity donations) rather than funnel it through a series of beaurocratic government departments (aka tax)?

 

If you give directly to the charity you can also claim gift aid thereby reducing your tax bill...

[Johnny Bognor]

Of course, there are many 'high earners' who are not entrepreneurs. But the flannel over the last few days has been that the 50p rate is killing off at source the entrepreneurs setting up small innovative companies that will drive the country out of recession - which is nonsense.

 

What it is, in reality, is a bit of hypocritical special-pleading by extremely wealthy commentators, professional, higher civil servants, and banking and other corporate executives to contribute much less to digging this country out of a hole. The special pleading, in other words, comes from precisely some of those deeply implicated in creating this mess in the first place. What kind of 'entrepreneurs' are these?

 

In essence, I agree. I would rather see employers NI for small businesses cut instead to encourage job creation.

[angelman]

Isn't the optimum point on the Laffer Curve about 20-25%?

 

As it is, those that say that the super rich don't pay enough tax and that it is all unfair might want to consider the figures. At present the top 1% of earners pay 25.7% of all income tax (compared to 11% in 1978). Isn't that fair? I think that sometimes there is a little bit of jealousy involved.

[Verbal]

Isn't the optimum point on the Laffer Curve about 20-25%?

 

As it is, those that say that the super rich don't pay enough tax and that it is all unfair might want to consider the figures. At present the top 1% of earners pay 25.7% of all income tax (compared to 11% in 1978). Isn't that fair? I think that sometimes there is a little bit of jealousy involved.

 

The top 1% of earners each possess an average household wealth of £2.6 million. The bottom 10%, by comparison, have an average household wealth of less than £8,800. I imagine that's why the top 1% pay as much as they do.

[trousers]

At last. We all agree. Phew. Thread closed?

 

:-)

[angelman]

The top 1% of earners each possess an average household wealth of £2.6 million.

 

I am surprised that it is £2.6m. Given the cost of housing for a start, I would have expected it to be more.

[sandwichsaint]

Isn't the optimum point on the Laffer Curve about 20-25%?

 

As it is, those that say that the super rich don't pay enough tax and that it is all unfair might want to consider the figures. At present the top 1% of earners pay 25.7% of all income tax (compared to 11% in 1978). Isn't that fair? I think that sometimes there is a little bit of jealousy involved.

 

Rather than the point you are attempting to make (using the figures 25.7% and 11% to somehow imply that tax rises on the rich have risen massively, they haven't - in the 70's we still had 'super-tax' in the 80%s and 90%s).

 

Your figures actually show how unequal income distribution has become, to the extent that we are now relying on 1% of the population to fund 25% of the income tax base - as well as the more unequal distribution of wealth we now have much higher indirect taxation which is paid by everyone at the same rate.

 

Of course the top-rate turkeys won't vote for Xmas; read Simon Jenkins in today's Grauniad for a more realistic comparison of income tax versus other types of taxation.

 

http://www.guardian.co.uk/commentisfree/2011/sep/08/tax-winners-trickle-up-economy

[solentstars]

Rather than the point you are attempting to make (using the figures 25.7% and 11% to somehow imply that tax rises on the rich have risen massively, they haven't - in the 70's we still had 'super-tax' in the 80%s and 90%s).

 

Your figures actually show how unequal income distribution has become, to the extent that we are now relying on 1% of the population to fund 25% of the income tax base - as well as the more unequal distribution of wealth we now have much higher indirect taxation which is paid by everyone at the same rate.

 

Of course the top-rate turkeys won't vote for Xmas; read Simon Jenkins in today's Grauniad for a more realistic comparison of income tax versus other types of taxation.

 

http://www.guardian.co.uk/commentisfree/2011/sep/08/tax-winners-trickle-up-economy

lets face it the super rich have got away with murder for decades now putting the burden on working people and small business i would have thought the public would have woken up to the nonsense that we have swallowed the last 30 years of rubbish llke trickle down economics. all i can see is special interest groups like bankers etc bailed out by the taxpayer and their type. i am all for cutting taxs and helping small business and helping them grow and create real jobs and long term investors who putting money into them to help them grow.