Time limited tax for the rich

[buctootim]

Obviously that's the problem.

 

The so called charity tax was put in place to try and stop aviodence, but there was an unintended consequence in that charity donations would be hit. Same with Jimmy Carr's scheme, that tax break was designed to help the film industry. There are some clever barstewards out there and as weve seen with the Skates, the HMRC are'nt a patch on them. I think we'd all love to be able to knock on these people's doors and demand they cough up, but its not that simple.

 

It's been the same all through history. There was the window tax in the 18th and 19th century, as rich people's houses had more windows. What happened, they bricked them up. A simplistic example, but you get the jist.

 

You can have a principles rather than the current rules based approach to tax colection though - clever tax lawyers can circumvent rules. That said it will always be worth some companies and people offshoring. Its not a perfect solution but imo more focus on assets would capture some of that avoided tax. Council tax should be levied at something like 0.5% of a properties value for example, land similalrly.

[pap]

That's a convoluted argument. PAYE is only a fraction of tax revenue and you have hypothecated part of it. This is an example of how we can reduce spending instead of stealing perceived wealth.

 

Fine then. We pay slum landlords out of the entire tax budget. Happier? PAYE was just an example. But it's wasted money nonetheless.

[Whitey Grandad]

Nice wail. As to the susbstance, do you agree that taxation rates should reflect income levels - or should they be lower for the top 1%?

 

Absolutely no I don't. There should be a flat rate of 20%. Increasing them for the higher earners is a major disincentive to self-advancement.

[Whitey Grandad]

Fine then. We pay slum landlords out of the entire tax budget. Happier? PAYE was just an example. But it's wasted money nonetheless.

 

So stop paying them.

[pap]

So stop paying them.

 

Totally agree, as long as it doesn't make the tenant homeless. Some of the more aggressive slum landlords have had their entire portfolio paid for by you, I and anyone else that pays tax.

 

Transfer the deeds back to the Government in drastic cases, I reckon.

[pap]

Absolutely no I don't. There should be a flat rate of 20%. Increasing them for the higher earners is a major disincentive to self-advancement.

 

I actually think a low tax / high volume approach is the way forward.

[thefunkygibbons]

pap - this has the potential to be an interesting debate. Sadly my time to give full replies is really limited today

 

However, in order to do it justice, we do need to deal in facts, and also think about unintended consequences

 

The fact remains - that there are not nearly so many rich people out there as people imagine, and even if the HMRC took 100% of their income, it would not be enough to plug the gap in the govt coffers. Tax needs a broad base and needs to be on things that are hard to avoid - hence VAT at 20% and high taxes on fuel, booze and fags

 

Try this for an idea

Personal allowance at £10,000

Flat tax of 30% on all income above that level, regardless of earned, investment or capital gains

No exemptions, reliefs, allowances, special cases

VAT on everything at 10%

No exemptions, reliefs, allowances, special cases

 

and

 

Every single person in the country has their annual income and tax return published on line

[buctootim]

Absolutely no I don't. There should be a flat rate of 20%. Increasing them for the higher earners is a major disincentive to self-advancement.

 

So you agree with me that the owners of 21% of the wealth should be paying 21% of the tax, not 7%. Goodo.

[pap]

pap - this has the potential to be an interesting debate. Sadly my time to give full replies is really limited today

 

However, in order to do it justice, we do need to deal in facts, and also think about unintended consequences

 

The fact remains - that there are not nearly so many rich people out there as people imagine, and even if the HMRC took 100% of their income, it would not be enough to plug the gap in the govt coffers. Tax needs a broad base and needs to be on things that are hard to avoid - hence VAT at 20% and high taxes on fuel, booze and fags

 

Try this for an idea

Personal allowance at £10,000

Flat tax of 30% on all income above that level, regardless of earned, investment or capital gains

No exemptions, reliefs, allowances, special cases

VAT on everything at 10%

No exemptions, reliefs, allowances, special cases

 

and

 

Every single person in the country has their annual income and tax return published on line

 

That's fair enough, thefunkygibbons - didn't realise you were time-poor when you posted.

 

As to your proposal, I'm all for transparency in taxation, and most people would be better off under your proposal (accountants excepted). True burden of taxation is probably close to 50% anyway. It's the indirect tax that is a killer.

[pap]

Perhaps I'm a bit simple, but I dont get the 300k figure and certainly never used it.Apoligies if it's in a link, but my understanding of the top 1% of income tax payers is baiscally the top 1% of everyone who pays income tax.Surely it's a number of people, not a £ and p figure.

 

Might be a case of crossed wires here, so allow me to expand my point.

 

Your link was all about income tax. The top 1% of your income tax earners will be paying the highest rate of tax. In the articles you posted - the top 1% specifically refers to the 308,000 people who were paying the now defunct 50% top rate of tax.

 

So it is a specific number of people, but that's not really in contention. The threshold is £150K, not £300K. My mistake on that.

 

My point is that there are people who earn as much or far more than the 308K referenced in your article, yet find ways of not paying it.

 

One of the reasons I keep bringing land tax up. Pretty cut and dried way to establish wealth, isn't it?

[Jonnyboy]

It's a big chunk of change, I'll not deny it.

 

Still, those people are not the top 1% of earners. They are the top 1% of earners with transparent tax arrangements. My hat is off to them.

 

What about the rest?

 

So if all the super-rich tax evaders/avoiders actually paid their income tax we'd be able to lower the tax paid by the 1% who are actually paying it now. These 1% should be campaigning against tax avoidance as they'd be better off if everyone paid.

[Whitey Grandad]

So you agree with me that the owners of 21% of the wealth should be paying 21% of the tax, not 7%. Goodo.

 

That would be confusing wealth with earnings.

[buctootim]

That would be confusing wealth with earnings.

 

Are you implying tax is only levied on earnings - or that it sould only be levied on earnings? No council tax, VAT etc then. Whilst were at it we could could have an engaging apologists debate in what consitutes earnings and whether company dividends, capital gains and offshored income should count.

[pap]

So if all the super-rich tax evaders/avoiders actually paid their income tax we'd be able to lower the tax paid by the 1% who are actually paying it now. These 1% should be campaigning against tax avoidance as they'd be better off if everyone paid.

 

See the comments on the flat rate tax earlier. I'm not really a fan of squeezing the pips out of the rich. I think progressive tax systems are ultimately counterproductive, because they punish success and have tax accountants poring over our statute books to find ways out of it.

 

thefunkygibbons' suggestion of 30% flat tax sounds about right. It's psychologically pleasing. It's not even a third of your income. Keep it simple and come down like a ton of bricks on anyone who avoids it. 30% of something is a crapload better than 45% of nothing, after all.

 

Tons of other benefits too; particularly for business.

[aintforever]

Absolutely no I don't. There should be a flat rate of 20%. Increasing them for the higher earners is a major disincentive to self-advancement.

 

How can a high rate of tax ever be a disincentive to self-advancement? You still earn more money the more you work, even if you set a top rate at 90%.

 

If you are that greedy to hate paying tax so much you will want to earn the extra money regardless of how much tax you pay.

[Lord Duckhunter]

Are you implying tax is only levied on earnings - or that it sould only be levied on earnings? No council tax, VAT etc then. Whilst were at it we could could have an engaging apologists debate in what consitutes earnings and whether company dividends, capital gains and offshored income should count.

 

Please tell us how you are going to judge someone wealthy. We cant have the buctootim ststem, where you decide who is wealthy and who isn't. To set taxes you have to have specific and clear guidleines. Earnings are easy, as is VAT. How are you going to define wealth, that clever tax experts cant drive a coach and horses through? but doesn't affect ordinary people?

[Lord Duckhunter]

See the comments on the flat rate tax earlier. I'm not really a fan of squeezing the pips out of the rich. I think progressive tax systems are ultimately counterproductive, because they punish success and have tax accountants poring over our statute books to find ways out of it.

 

thefunkygibbons' suggestion of 30% flat tax sounds about right. It's psychologically pleasing. It's not even a third of your income. Keep it simple and come down like a ton of bricks on anyone who avoids it. 30% of something is a crapload better than 45% of nothing, after all.

 

Tons of other benefits too; particularly for business.

 

careful, you're starting to make sense.I posted months ago that a % is a %, and why should the rich pay a higher % of their money. By being a % they are in effect paying more. It would also as you say have other benefits. Jim davidson had an arguement with Portillo over this on "This week". You are taking Jim's side, repeating exactly what he said. Nick,Nick

[buctootim]

Please tell us how you are going to judge someone wealthy. We cant have the buctootim ststem, where you decide who is wealthy and who isn't. To set taxes you have to have specific and clear guidleines. Earnings are easy, as is VAT. How are you going to define wealth, that clever tax experts cant drive a coach and horses through? but doesn't affect ordinary people?

 

As I said in an earlier post, you will always have people who can successfully avoid most income tax - just as many companies do with corporation tax. The result is an increasing tax burden on the middle class - because the underclass cant pay and many of the wealthy dont pay. Its an imperfect system but one of the few levers to redress that balance is to tax assets - land, houses and shares. Its not about having the current payers pay more nor increasing the total tax burden its about catching those who can pay but dont.

[Lord Duckhunter]

As I said in an earlier post, you will always have people who can successfully avoid most income tax - just as many companies do with corporation tax. The result is an increasing tax burden on the middle class - because the underclass cant pay and many of the wealthy dont pay. Its an imperfect system but one of the few levers to redress that balance is to tax assets - land, houses and shares. Its not about having the current payers pay more nor increasing the total tax burden its about catching those who can pay but dont.

 

But do you accept that there will be people in big houses, with no or little income coming in. Maybe a retired couple who bought the house 40 years ago. Also you have such variation of house prices over the country. You could set the bar at over £2mil, and that would catch middle class people in London, whereas just under £2mil house in parts of the North will be really rich.I'm no expert but I'm sure the rich could find a way of setting up a company to buy the house and then rent if off that company.

 

If you tax shares too heavily, what incentive is there for people to invest in Companies via shares?

 

Do you really think no Government has ever looked at your suggestions?

[CB Saint]

How can a high rate of tax ever be a disincentive to self-advancement? You still earn more money the more you work, even if you set a top rate at 90%.

 

If you are that greedy to hate paying tax so much you will want to earn the extra money regardless of how much tax you pay.

 

In the same way as someone on benefit won't take a job because they would only be ten quid better off a week after working 40 hours.

[pap]

But do you accept that there will be people in big houses, with no or little income coming in. Maybe a retired couple who bought the house 40 years ago. Also you have such variation of house prices over the country. You could set the bar at over £2mil, and that would catch middle class people in London, whereas just under £2mil house in parts of the North will be really rich.I'm no expert but I'm sure the rich could find a way of setting up a company to buy the house and then rent if off that company.

 

If you tax shares too heavily, what incentive is there for people to invest in Companies via shares?

 

Do you really think no Government has ever looked at your suggestions?

 

So if property valuation is such a problem, why not be pragmatic and set a flat, country-wide rate based on square footage? As Jim Davison and I like to say, something is better than nothing. I'd also add that a flat rate wouldn't be as susceptible to volatile market forces, and immediately kills your "we can't solve this problem because another problem exists" line of reasoning.

[Whitey Grandad]

How can a high rate of tax ever be a disincentive to self-advancement? You still earn more money the more you work, even if you set a top rate at 90%.

 

If you are that greedy to hate paying tax so much you will want to earn the extra money regardless of how much tax you pay.

 

You cannot be serious.

[pap]

You cannot be serious.

 

[Whitey Grandad]

 

And I thought you were a young 'un. ;-)

[aintforever]

You cannot be serious.

 

Have you turned down a promotion and pay rise because you would pay more tax? Seriously?

[Whitey Grandad]

Have you turned down a promotion and pay rise because you would pay more tax? Seriously?

 

I have been self employed for 30 years. Every penny I have earned has been down to my own efforts. I have worked extra hours and weekends and holidays in an attempt to make a little extra for my family and give me something for my old age. Now I am recovering from a heart attack and bypass operation and I am lucky that it wasn't a lot worse. Would it have been worth it if all my extra efforts had gone to the government to waste? Certainly not.

 

I know many people who will lose their child benefit if they get a pay rise so it's not worth their time. I know plenty of cases where people have refused promotion because of the extra hours and responsibility. Repeat until you're blue in the face: tax is a disincentive.

[pap]

Have you turned down a promotion and pay rise because you would pay more tax? Seriously?

 

The biggest promotions and pay-rises often come when you change jobs, not when you're internally promoted. So, while I'm happy to concede that people wouldn't turn an internal promotion down because of a higher rate of tax, people who move companies often re-consider their tax arrangements. There is an entire industry built around it.

[aintforever]

I have been self employed for 30 years. Every penny I have earned has been down to my own efforts. I have worked extra hours and weekends and holidays in an attempt to make a little extra for my family and give me something for my old age. Now I am recovering from a heart attack and bypass operation and I am lucky that it wasn't a lot worse. Would it have been worth it if all my extra efforts had gone to the government to waste? Certainly not.

 

I know many people who will lose their child benefit if they get a pay rise so it's not worth their time. I know plenty of cases where people have refused promotion because of the extra hours and responsibility. Repeat until you're blue in the face: tax is a disincentive.

 

The extra hours and responsibility is the disincentive, tax would only play a minor role because the percentages are only ever a few either way.

 

Everyone thinks they work hard, wether they are on minimum wage or in the highest tax bracket. I earn an above average salary and coudn't even tell you how much tax I pay a month - it doesn't interest me. My nan is recovering in hospital at the moment as well, I'm glad I have helped contribute to the care she and you are receiving. I'm certainly not moaning about how much the government have "stolen" off me or bothered that I couldn't afford that second week abroad.

[Whitey Grandad]

The extra hours and responsibility is the disincentive, tax would only play a minor role because the percentages are only ever a few either way.

 

Everyone thinks they work hard, wether they are on minimum wage or in the highest tax bracket. I earn an above average salary and coudn't even tell you how much tax I pay a month - it doesn't interest me. My nan is recovering in hospital at the moment as well, I'm glad I have helped contribute to the care she and you are receiving. I'm certainly not moaning about how much the government have "stolen" off me or bothered that I couldn't afford that second week abroad.

 

But your case may not be typical. There are tens of millions who may take the view that if they are going to put in an extra shift then it needs to be worth their while.

[saintfully]

I have been self employed for 30 years. Every penny I have earned has been down to my own efforts. I have worked extra hours and weekends and holidays in an attempt to make a little extra for my family and give me something for my old age. Now I am recovering from a heart attack and bypass operation and I am lucky that it wasn't a lot worse. Would it have been worth it if all my extra efforts had gone to the government to waste? Certainly not.

 

I know many people who will lose their child benefit if they get a pay rise so it's not worth their time. I know plenty of cases where people have refused promotion because of the extra hours and responsibility. Repeat until you're blue in the face: tax is a disincentive.

 

Who paid for the training of the medical staff that saved your life? Tax payers. If paying tax really is a disincentive to someone then that person is ignorant and short-sighted in the extreme.

[Whitey Grandad]

Who paid for the training of the medical staff that saved your life? Tax payers. If paying tax really is a disincentive to someone then that person is ignorant and short-sighted in the extreme.

 

It's all a question of degree. What we pay now is far too high and too much is wasted. High taxes are a disincentive, I know of nobody who would deny that.

[saintfully]

It's all a question of degree. What we pay now is far too high and too much is wasted. High taxes are a disincentive, I know of nobody who would deny that.

 

So you agree that paying tax is necessary, worthwhile and a benefit for the country that (I presume) you love?

 

As you say its a question of degree - whats high? 50% for someone earning over 100k doesn't sound high to me. The point surely is that if you want good services and a strong civil society it costs money and someone has to pay for it. As for waste, show me the private sector company that doesn't waste money? I feel sorry for anyone earning over 100k who is disincentivised by paying extra tax - they must have no understanding of how a successful nation functions and cares for its citizens.

[saintfully]

It's all a question of degree. What we pay now is far too high and too much is wasted. High taxes are a disincentive, I know of nobody who would deny that.

 

Nobody? How about the previous contributor aintforever for a start? People who complain about being disincentivised by high taxes care too much about money and not enough for the society of which they are a part.

[buctootim]

It's all a question of degree. What we pay now is far too high and too much is wasted. High taxes are a disincentive, I know of nobody who would deny that.

 

You sound like the suporters of the now discredited Tea Party in the US. Whats been happening in both the US and UK over the past 20 years or so is that wealthy people and companies have found increasingly aggressive ways to avoid paying tax. As a result individual taxpayers from the 'working class' to the 'upper middle class' have had to pay a far greater share of the tax burden. That enabled people like the Tea Party and you to claim we all need to be more right wing, business like and if we just cut the mythical, magical waste in the public sector everyone could be happy and richer. Its lie brought to you by wealthy politicans with self interest. What is really needed is international effort to clamp down on offshoring and artifical tax domiciles. Its not that the tax take is too high, its that its become unfairly spread.

[Lord Duckhunter]

As a result individual taxpayers from the 'working class' to the 'upper middle class' have had to pay a far greater share of the tax burden.

 

This is just completely untrue.

 

In 1988 the richest 10% of Americans accounted for 28% of the total tax paid. It now stands at 45%.Therefore your claim that "working class" and "upper middle class" are paying a greater share is completely contray to what OECD reports claim.

 

I would be interested in the data you have to back your claim up ,so we can judge who is right, The OECD or a bloke on a football forum...........

[bridge too far]

This is just completely untrue.

 

In 1988 the richest 10% of Americans accounted for 28% of the total tax paid. It now stands at 45%.Therefore your claim that "working class" and "upper middle class" are paying a greater share is completely contray to what OECD reports claim.

 

I would be interested in the data you have to back your claim up ,so we can judge who is right, The OECD or a bloke on a football forum...........

 

Tim can answer for himself, I know but I suspect you're talking about different 'shares'. You're talking about the share of total tax take. Maybe he's talking about an individual's share of income paid in tax.

[Lord Duckhunter]

Tim can answer for himself, I know but I suspect you're talking about different 'shares'. You're talking about the share of total tax take. Maybe he's talking about an individual's share of income paid in tax.

 

Surely the way to judge how much the richest pay in tax is the % of the total tax take that they contribute.

 

In 1988 it was 28 cents of every dollar collected, and it's now 45 cents .

[Whitey Grandad]

Nothing mythical about waste in the public sector. The real question is who is going to get the best value out of any spending, those who earn it or those who have votes to buy?

[bridge too far]

WG the myth is that, somehow, the private sector isn't wasteful. That's just plain wrong. And to boot, the private sector is often hugely incompetent viz G4S, ATOS and the jobs placement firm whose name escapes me. Because they were 'providing' to the government, that also makes them very expensive and poor value for money for the tax payer.

[Whitey Grandad]

WG the myth is that, somehow, the private sector isn't wasteful. That's just plain wrong. And to boot, the private sector is often hugely incompetent viz G4S, ATOS and the jobs placement firm whose name escapes me. Because they were 'providing' to the government, that also makes them very expensive and poor value for money for the tax payer.

 

Quite correct, but if a private company loses money it soon goes out of business. Government procurement is beyond belief.

[bridge too far]

Quite correct, but if a private company loses money it soon goes out of business. Government procurement is beyond belief.

 

As someone who has worked in government procurement (NHS) and who has audited government supply and construction contracts I can confidently say that your generalisation is far too sweeping.

[trousers]

As someone who has worked in government procurement (NHS) and who has audited government supply and construction contracts I can confidently say that your generalisation is far too sweeping.

 

I can confidently say WG's sweeping statement is pretty accurate. That said, procurement in some large scale private corporations is equally cumbersome and inefficient (I'm thinking banks here, but the worst ones my company deals with are part owned by the state....pure coincidence I'm sure...)

 

:-)

[Whitey Grandad]

As someone who has worked in government procurement (NHS) and who has audited government supply and construction contracts I can confidently say that your generalisation is far too sweeping.

 

Which sweeping generalisation would that be?

[bridge too far]

Which sweeping generalisation would that be?

 

The one that says 'government procurement is beyond belief'.

[saintfully]

Quite correct, but if a private company loses money it soon goes out of business. Government procurement is beyond belief.

 

Have you forgotten about the banking sector? Biggest bail out ever!

[buctootim]

This is just completely untrue.

 

In 1988 the richest 10% of Americans accounted for 28% of the total tax paid. It now stands at 45%.Therefore your claim that "working class" and "upper middle class" are paying a greater share is completely contray to what OECD reports claim.

 

I would be interested in the data you have to back your claim up ,so we can judge who is right, The OECD or a bloke on a football forum...........

 

All you've done to make your sums work is take the top 10% out of the 'middle class' bracket where they belong and put them with 'the rich'. 98% of Americans earn less than $250,000 pa - ie the same or less than a hospital consultant or lawyer in the UK.

 

The top 1% in the US control almost 35% of the wealth. Edward N. Wolff at New York University (2010) but a gradually reducing proportion in tax. As I said the majority are having to pay more because the wealthy and companies are paying less. The graph below demonstrates only what proportion of their declared income they are paying - not their wealth. Their wealth is far greater due to offshoring and the reclassification of income as company investments or capital gains. Indeed as the former Chief Economist at McKinsey's found the wealthy are hiding c$22 trillion in assets in offshore accounts - the equuivalent of the GDP of US and Japan combined.

 

The effective taxation rate for the rich is in the mid 20s percentages

http://www.theatlantic.com/business/archive/2011/09/buffett-rule-rorschach-7-000-millionaires-paid-no-income-taxes-in-2011/245469/

http://www.politifact.com/truth-o-meter/statements/2011/jul/12/timothy-geithner/geithner-says-top-1-percent-have-tax-rate-low-20s/

http://www.dailyfinance.com/2011/08/24/why-taxing-the-rich-is-good-for-america/

and many avoid it all together

 

Edited 4 September, 2012 by buctootim