Keep taxes simple – treat all income the same

I’ve been flicking through a 417 page consultation into reforming the UK tax system over the next decade (
www.2020tax.org

) put together by City AM’s Allister Heath, together with the TaxPayers’ Alliance and Institute of Directors, and talking it over with regular MoneyWeek and CityAM reader Nick Reid.

I’m short on time today so here’s Nick’s take on it (which by the way I entirely agree with). I’ll be writing more on the idea of a standard flat tax later in the week.

“The central tenet of the consultation is not one to argue with. It is that the UK tax system is horrendously complicated and that this results in all manner of economically damaging avoidance scams and poorly directed investment. The solution isn’t bad either. Heath and co recommend a massive simplification of the tax regime, the abolition of many trying taxes, and the setting of a standard 30% flat rate of tax on all forms of income.

“All music, I’m sure, to the ears of MoneyWeek commentators and readers alike.

“However, there is one fundamental area where Allister Heath’s argument falls into inconsistency: when he discusses the abolition of Inheritance Tax. He claims, when proposing the abolition of stamp duty and IHT: ‘At the moment, a pound earned by a worker is taxed and triple taxed: there is income tax, National Insurance (of two different kinds) and then more tax when – for example – the worker buys a house (stamp duty) or when she dies (inheritance tax).’

“But while this is certainly true for stamp duty, it simply isn’t the case for inheritance tax. The woman who dies doesn’t pay inheritance tax on her money. She’s no longer available to do so. Instead, it is the people who inherit from her who pay inheritance tax – they get an unearned lump sum as a result of her death. Allister Heath claims that there are only two types of income that should be taxed; that earned through labour and that earned through capital investment. The unearned income derived from the death of a parent relation or friend doesn’t fall into either of these two categories.

“Yet to the person receiving the inheritance there is no economic difference between receiving a £100,000 sum from a deceased parent or receiving a £100,000 bonus from a generous employer. Yet, one would quite rightly expect to pay income tax on a bonus. So why not treat all forms of income equally? That, after all, is what the commission is aiming to do. Indeed take it to its logical extreme and all cash gifts made should always be subject to tax.

“It makes sense that money shouldn’t be taxed twice. But the nub of most tax systems is that money – which is in constant circulation – is taxed at every stage it is passed on. We all buy things out of taxed earnings, that provides an income to others, who then pay tax on that income. And so it goes round. Getting rid of IHT would represent a nice tax cut for the better off. But it would be an odd gap in what otherwise is supposed to be a consistent simplified and fair tax regime.”

108 Responses

  1. 21/05/2012, dose wrote

    But inheritance is just a gift, albeit one given on the day you die.

    It is a gift made with already-taxed funds.

    Are you saying that the state should take a cut of all gifts? That we should be encouraged to spend our taxed money only on ourselves? Seems like a rather selfish society.

  2. 21/05/2012, Agnostic wrote

    I agree with Merryn. Inherited wealth should be taxed like any other income. BTW, even spending money on yourself is taxed, at 20% currently, by VAT. So it’s no more selfish than anything else.
    Can I ask (anyone) why stamp duty is levied against the buyer, as opposed to the seller? After all, it’s the seller who is ‘in funds’ in the transaction.

  3. 21/05/2012, Boris MacDonut wrote

    Merryn. You are either getting soft in your old age or you have finally listened and read some Danny Dorling. IHT is a force for good, a genuine Robin Hood redistribution from rich to poor. Only the richest 6% pay IHT. It is levied on net wealth over £325,000, or £650,000 for couples after all other costs of winding up an estate, funerals etc….. Those who bleat are mostly millionaires and the rest of us do not care less about the inconvenience to their hiers.

  4. 21/05/2012, Critic Al Rick wrote

    Probably most people who are not concerned about their estates being eligible for IHT are those whose estates would not be eligible for IHT. Not all of us have pensions c/o Robbing Hood.

  5. 21/05/2012, Romford Dave wrote

    I must remember to reduce my estate to ensure IHT is avoided, otherwise a lifetime in the hereafter awaits endlessly grave turning, tortured with the knowledge that the spendthrifts had their grubby paws on it and were busy wasting it on their latest wheeze.

    Perhaps I’ll spend the excess on Jaffa cakes, just to rub it in, you know with the VAT treatment. Who would have thought all these years later Ms Antoinettes advice was good old fashioned tax avoidance for the masses.

  6. 21/05/2012, luke wrote

    Interesting. I’ve no objection in principle to a flat tax, and, depending on rates and nil rate bands, it can be quite re-distributive if you want.

    But if you cut the rate to a flat one of 30%, won’t that massively reduce the overall tax take? The top 5 or 10%, many of whom are presumably paying 40-45% on at least quite a lot of their income, pay a huge proportion of the total income tax – I think it’s about 52% for the top 10%, 44% for the top 5% and 25% for the top 1%. (And if you include NI. plenty of people are paying more than 30% on the top slice of their income.) I don’t think there are really that many loopholes around.

    Now a massive reduction in income tax take might be a good thing. But I don’t think a huge reduction in taxes, mainly for the better off, should be dressed up as just a simplification. You’ve got to explain why that money isn’t needed, or how extra will be raised.

  7. 21/05/2012, Nick wrote

    @ dose

    You obviously don’t realise that you can’t go round giving gifts to people tax free at the moment.

    There’s a £3000 annual tax free gift allowance.

    And “spending it on yourself” also isn’t tax free. Unless you are just buying food, children’s clothes or books for yourself you will be paying VAT.

  8. 21/05/2012, luke wrote

    Agnostic,

    I think it’s because it’s easier to collect from the buyer. The buyer can’t register the property at the Land Registry as belonging to her till she pays the stamp duty. For all sorts of reasons, it’s pretty dangerous not to register, so people pay the SD so they can register. So the tax gets collected without the Revenue really having to try. The seller might do a runner or spend the money.

    I think certainly used to be one of the cheapest taxes to collect. No idea if it still is.

  9. 21/05/2012, Critic Al Rick wrote

    Why shouldn’t the very rich be screwed for tax? After all, they screw us to get themselves and/or keep themselves very rich; unless they’ve just been plain lucky.

  10. 21/05/2012, Boris MacDonut wrote

    #6 Luke. The average income tax take from the average taxpaying worker is 18.4%. If you add in Nics it rises to about 23.9%. A flat rate tax of 30% without generous personal allowances will heavily hit the poorest,those on minimum wage and pensioners and be an absolute godsend for the 1%.That is why their lackeys at the Tory think tanks put forward these ludicruous ideas.

  11. 22/05/2012, Nick wrote

    @Nick you can give anything tax free as long as you live for 7 years. That’s why the very rich pay so little IHT as a percentage of their assets. They can give away surplus income and assets early. The one in 10 first time buyers who get £100k from parents as deposit? No tax there – its a free transfer.

  12. 22/05/2012, dose wrote

    As has been pointed out – you can indeed go around giving your money away (as long as you don’t die within 7 years) without tax implications.

    Furthermore, the money you give away will eventually be spent by the beneficiary, and taxed at 20% VAT (at it would be if you spent it yourself).

  13. 22/05/2012, Critic Al Rick wrote

    @ 11. Nick

    You’re right and I don’t mean you any criticism; only cynism to the very wealthy – how very convenient for them; purely coincidental, I’m sure!

  14. 22/05/2012, Roberto Birquet wrote

    Alistair Heath and the Taxpayers’ Alliance – a well to do pressure group for the rich – is just rehashing old excuses for tax cuts on the wealthy. This report proposes nothing new and can neither find new excuses nor new language. “Simplification” of the tax system does not fool people. We know it is an excuse to tax the wealthy less and the poor more; those who say otherwise are simply pretending to fool themselves.
    Even the otherwise economist of choice for the wealthy pressure groups – Adam Smith – recognised this, and called for graduated income tax with the rich paying more, while warning against their pressure to bend policy to suit them.

  15. 22/05/2012, Roberto Birquet wrote

    And besides, our income tax system is not far off flat.
    standard rate is 20% plus 12% national insurance – and income tax in all but name. So the marginal standard rate is 32%.
    Those paying the higher rate 40% and top rate 45% pay only an extra 2% NI.
    So we have three rates: 32%, 42%, 47%.
    It has rarely so close to flat. And meanwhile the the differentials between middle and elite are at highs not seen since the gross inequality of Queen Victoria’s reign.
    But it is just never enough.
    The fairest and least harmful tax is a land value tax. If through the labour of others a landlord sees a rise in his land’s value for which he has done nothing. Not only is he not taxed, but the labourers, entrepreneurs or others who caused the value to rise are taxed.
    In the UK, we reward wealth not effort or ingenuity.

  16. 22/05/2012, Joe Wilson wrote

    Rather than Inheritance tax, wouldn’t it be fairer to levy capital gains tax (and possibly stamp duty) on the transfer of assets to beneficiaries without any exemption for principle private residence?

    That way at least the tax is proportionate to the gains made in the deceasts lifetime?

    Whilst a flat tax is conceptually fair, while profits, gains and income for the rich continue to by channelled through tax havens I don’t think it would be political suicide.

    Perhaps a long transition period might encourage salary rebalancing as well as encouraging investment by making bonus’ and dividents paid today less tax efficient than future distributions?

  17. 22/05/2012, Romford Dave wrote

    Tax receipts have risen from £321,064,000,000 in 2002 to £466,213,000,000 ten years later, yet still they speak of wanting to find a fairer way of taking more.

    Why not expend as much energy into reducing the need to take?

    There must be an awful lot more money wasted now than there was then, because we sure as hell don’t live in a society that’s 45% fairer or 45%better or 45% anything since that huge amount was taken in 2002, worse maybe could be in with a shout.

    If you actually stopped and asked someone in the street how the last ten years have been, no real prizes for guessing the answer, but what do they know, they only have to live it.

    Lord give us an increase, but please let it not be tax.

  18. 22/05/2012, dickyjim wrote

    I have read only the 7 page summary of the 417 page report and flicked through the main report but it appears extremely well researched and eminently reasoned and sensible in its proposals.

    It makes it quite clear that it does not represent simple favouritism of the better off and that all tax payers would be better significantly better off under the system. I recall that under the proposed system a couple on a fairly low income of £28,000 would receive a tax cut of £3,400! This is in part owing to a proposed rise in the income tax allowance to £10,000.

    Less spending and lower taxes. That can only be a good thing.

  19. 22/05/2012, CKP wrote

    30% flat rate tax is a great idea, assuming an increase in tax free allowance to at least £10k AND abolition of National Insurance, which is just an odiously complicated stealth tax. In other countries that have introduced a single flat rate, the treasury tax revenues actually increase due to reduced evasion/avoidance (presumably it is deemed fairer by the rich) and also motivates people to work harder and earn more (who’s gonna put in the overtime when the taxman takes half?)

  20. 22/05/2012, Boris MacDonut wrote

    #19 CKP. You are hopelessly out of touch. 30% tax with £10k personal allowance and no Nics would mean a 15% reduction in tax take, or a £100 billion increase in the deficit.
    #17 Romford Dave. Woah.Where do you get these “facts”?Do you make them up? Tax take in the UK is at £670 billion. On another thread you regaled us with the Government taking 52% of GDP. If that is the case,based on your figures UK GDP is only £900 billion making average income about £17,000…..we are poorer than the Greeks….yikes.

  21. 22/05/2012, Romford Dave wrote

    http://www.hmrc.gov.uk/stats/tax_receipts/tax-nic-receipts-info-analysis.pdf

    Obviously I can’t guarantee their accuracy Boris, they are after all compiled by HMRC and I wouldn’t be surprised if the figure you quote is the true figure, it certainly feels like they take a lot more.

    I can’t recall the 52% figure I regaled you with to be honest, I’m sure if it was me it would have been based on suitably researched material as I do try to be factual insofar as Google will allow.

    Anyway enough already, it’s good to know I regale you Boris, you likewise, actually you’re the second person to compliment me today! Luke being the other person for my public service broadcast on the other thread and as compliments are as rare as hens teeth on here, it must go down as a red letter day ;-)

    And they’re ever rarer!

    Hey this lovey dovey and getting along stuff isn’t so bad really, maybe Dave & Nick have started something?

  22. 22/05/2012, Roberto Birquet wrote

    It makes it quite clear that it does not represent simple favouritism of the better off and that all tax payers would be better significantly better off under the system. I recall that under the proposed system a couple on a fairly low income of £28,000 would receive a tax cut of £3,400! This is in part owing to a proposed rise in the income tax allowance to £10,000.
    ——————
    How can it be well researched if it ends up with a lower tax take? That creates a bigger deficit doesn’t it? Tell you what, cut top rate tax by 5%, and bottom rate by 1%. Everyone’s a winner. I researched it well. If you cut tax for everyone, we are – it seems – all better off. Phew, took some working out.
    And they say they are not favouring the rich. Oh, it must be true then. Good Grief!

  23. 22/05/2012, Roberto Birquet wrote

    Yes no 19, the rich only avoid tax as it’s unfair – zero to do with just saving money. If their tax was cut they would hold up their hands and say: “Right guv, seems a fair cop.”

    Honestly is this what private education buys? No wonder the nation is crocked.

  24. 23/05/2012, Boris MaDonut wrote

    #23 Roberto . A famous media baron recently at the House of Commons sought to avoid £70 million in CG tax levied at an effective rate of 12%. Did he do this to save money? Or because it is unfair?
    A couple on £28,000 would currently pay £2560 after allowances and on the new system £2400 . If only one earner and one allowance the figures are £5760 and £5400. A saving of £3 a week. If Nics were retained they’d lose £800.

  25. 23/05/2012, Romford Dave wrote

    Boris never mind with the mutual appreciation with Roberto, we know you’re both making the same point, did you read the HMRC report and locate the discrepency?

  26. 23/05/2012, Critic Al Rick wrote

    Nevermind the very rich avoiding tax as they consider it unfair; don’t you consider running cartels to be unfair? They wouldn’t be anywhere near as rich without those rigged instruments of collusion; nor would they have to pay as much tax!

    Furthermore, their operations without such collusion would have to be run truly competitively and so their overheads and therefore charges could be less. Less for us to pay, meaning less for us to earn, meaning improved global competitiveness of UKplc.

    The Great Correction won’t be complete before the cartels are smashed.

  27. 23/05/2012, Critic Al Rick wrote

    Further to @ 26.

    It’ll not be long before the masses have awoken to the dawn of realization they have a common enemy, that the common enemy will have engineered a distraction from themselves – possibly WWIII.

    It’s treacherous politicians (supposedly elected by the majority to represent the majority) selfishly ‘feathering their own nests’ that’s led us to being wide open to the abuse of the common enemy; they’re running rings around us. The tax they do presently pay is tantamount to a token gesture, the least they think they can get away with.

    So they’re probably now thinking they can get away with even less; they’re probably right. Yes, the World is ripe for a reboot!

  28. 23/05/2012, Romford Dave wrote

    Easy there Al, I know Boris has come up short on this occasion, but common enemy, WWIII?

    Isn’t that a bit OTT?

    It’s only a difference of opinion ffs and even then it may be down to the work of a fifth columnist at the ONS!

  29. 23/05/2012, Critic Al Rick wrote

    @ 28. Romford Dave

    Time will tell.

  30. 23/05/2012, Boris MacDonut wrote

    #21 &25 Romford Dave. You make the mistake of looking only at the taxes collected by HMRC. Albeit that they are many and varied they do not include Local Government taxation in the form of Council Tax, Business rates, various licenses. These amount to at least another £100 billion. Then there are vehicle excise duties, passport renewals, gun licenses, thousands of patent royalties and charges as well as many devolved taxes outside England. The IFS has our spending at £720 billion and with a deficit of £120 billion last year that makes about £600 billion actually raised. Right wing commentatotrs claim that Government spends over half our GDP. I try to look through the “noise”. Best estimate of GDP is now £1,550 billion , so Gov’t takes near enough 40%, but it is done for your own good….especially if you are rich and work for a Bank.

  31. 23/05/2012, Critic Al Rick wrote

    Boris, I like the sting in the tail!

  32. 23/05/2012, Boris MacDonut wrote

    #31 Thank you Rick. I’m here all week. Remember the waitresses and do try the Fish…..I’m Terry Tibbs.Talk to me…. Much love.

  33. 23/05/2012, Romford Dave wrote

    Well done Boris, a quintissential Orwellian apology, Napoleon will be impressed.

  34. 24/05/2012, Boris MacDonut wrote

    #33 Romford Dave. You did ask. I don’t make the rules, I just try to comprehend them and ensure facts are reported accurately. A £466 billion tax take equates to under 30% of GDP,we’d be on a par with banana republics and tax havens………….oops ,I nearly forgot.We are a tax haven just not for those who genuinely live here.

  35. 24/05/2012, Romford Dave wrote

    No you don’t make them, you just choose which rules you want to use to support the argument you happen to be making at any particular time.

    Your allegation that I’d made up the figures to was clearly disproved by my referencing of the HMRC document. Instead of acknowledging your error, you choose to bluster on about even higher levels of taxation as though that somehow that supports your viewpoint oblivious to it actually strengthening my original argument.

    A bigger person would have simply apologised, you opted for the George Galloway approach, making it impossible to read your future posts without thinking of you making cat noises for Rula Lenska

  36. 24/05/2012, Boris MacDonut wrote

    #34 Romford Dave. I thought you asked me to find the discrepancy. I did. You were wrong. The UK tax take is over £600 billion. Your citing of HMRC figures missed too much detail. The HMRC report is factually correct,but HMRC do not collect all Government Revenue. As I’ve said before,I just like accuracy. I do not seek to twist facts, merely verify them or challenge those who try to misrepresent them(deliberately or otherwise). Your reference was not wrong – just not complete. I’m sorry you are so disappointed,but i’ve no reason to apologise for pointing out a glaring fault.

  37. 25/05/2012, Romford Dave wrote

    Meow slurp

  38. 25/05/2012, Barkingmad wrote

    “But if you cut the rate to a flat one of 30%, won’t that massively reduce the overall tax take?”

    It can be the other way around – higher tax rates do not necessarily increase tax revenues in the medium to long term – so by the same token lower tax rates may increase overall tax revenues. Google ‘gaffer curve’.

    Some of the reasons are lower taxes reduce tax evasion and encourage people to work more as they keep more of the reward for their work. Probably one of the biggest costs of higher taxes is that it discourages people to work harder. If you were paying base rate tax and earning just under the high rate boundary – there is less incentive for you to work more when every extra £1 you earn is taxed at 40%.

  39. 25/05/2012, Barkingmad wrote

    Excuse my typo – when I said Google ‘gaffer curve’ I meant:

    Laffer Curve

  40. 25/05/2012, Roberto Birquet wrote

    Barkingmad It can be the other way around – higher tax rates do not necessarily increase tax revenues in the medium to long term.
    ——————–
    Yawn, that old malarkey…less is more. If only, if only…back in the real world, flat-rate tax is the already over-paids’ fantasyland. The days of deregulated, taxcuts for the rich stitched-up for elites economy will soon come to an end. The emergency bailout of banks and emergency interest rates have sheltered to many people from seeing the utter failure of modern economics.

    Change is coming. It’s a question of when and how much change.

  41. 25/05/2012, Daniel wrote

    I used to think Merryn had some quite sensible opinions, but this is obviously complete nonsense – a massive tax hike for the poor & a massive reduction for the rich. Most of the middle classes would be left worse off as well as anyone earning up to at least £50k would be hit by a 30% flat rate. Extreme right wing ideological tosh.

  42. 25/05/2012, Barkingmad wrote

    It’s not ‘old malarkey’ – would you work more to earn £1 if every one of those £1 would be take off you in tax / lost benefits – if not you prove my point. If you could keep increasing tax rates to increase tax revenues put them at 100% – no-one would work and you can have your 100% of nothing.

    If you tax people more and more they will work less and / or look for ways of (legally and probably illegally) reducing the tax they pay – the very rich are also typically very mobile so will just move to Switzerland / Monaco and pay the UK no tax.

  43. 25/05/2012, Barkingmad wrote

    The problem is wherever you are on the income ladder you believe it’s fairer for you to pay less and someone earning more to pay more. Someone with an income 5x more pays a lot more than 5x the tax.

    I’m also sure peoples perceptions of tax change as their income rises – if you were earning an average salary you are probably ok with paying 20% tax, receiving a certain amount of benefits etc. However, if you were to get some promotions and ended up earning 2-3x as much would you still feel now paying 40% and of a larger amount and losing benefits ‘fair’.

  44. 25/05/2012, Barkingmad wrote

    “a massive tax hike for the poor & a massive reduction for the rich”

    Someone on 8k a year pays no income tax, someone on 24k pays about 3k in income tax, someone on 72k pays about 19k in income tax, someone on 216k pays something like 86k in income tax.

    Go 3x from 24k to 72k and you pay more than 6x the tax – go 9x from 24k to 216k and you pay 29x the income tax. These are just quick calculations – but also remember the loss of benefits / personal allowances etc.

    I have no issue with increasing the tax free allowance for the lowest earners – it’s probably pretty pointless anyway as many will be entitled to benefits and every £1 less they pay in tax they probably lose from their benefits – so neutral to the treasury (giving with one hand – taking with the other).

    A lot of richer people make capital gains – would probably make more sense to count capital gains and income and charge both at 30%.

  45. 25/05/2012, Roberto Birquet wrote

    Daniel
    Most of the middle classes would be left worse off as well as anyone earning up to at least £50k would be hit by a 30% flat rate. Extreme right wing ideological tosh.
    ————–
    I’m curious. What do you call MIDDLE class?

    ———-
    Barking
    quit barking!

  46. 25/05/2012, Roberto Birquet wrote

    Barking…Someone on 8k a year pays no income tax, someone on 24k pays about 3k in income tax, someone on 72k pays about 19k in income tax, someone on 216k pays something like 86k in income tax.
    ———–
    Actually, someone on £24k pays £5,147.96 in income tax. Or rather if you add NI – which is income tax except in name. So let’s put it another way: Someone who earns £24K has £5,147.98 taken in taxes direct paye, while someone on £72k is taxed £23,461.36, and someone on £216K is taxed £93,783.36. This means all of your subsequent figures are wrong, and dare I say deliberately misleading.
    On top of that there is virtual taxation as I call it, whereby about the first £18K in net income is eaten up on staying alive: paying rent/mortgage, bills, food, basic clothing, and travel. Add all that in and your £24k a year person has a full tax rate of 97.8%.
    Welcome to the real world! I assume you’ve never known it. If you have, you’ve evidently forgotten it.

  47. 25/05/2012, Roberto Birquet wrote

    Ps my source for taxation of different income levels, including NI (a direct tax on income; it quaks like a duck, looks like a duck….):
    http://www.uktaxcalculators.co.uk/

  48. 25/05/2012, Boris MacDonut wrote

    #41 Daniel. Well said. I totally agree that the fragrant Merryn has done herself a disservice spouting this rubbish.
    #42 to 44 Barkingmad. A more appropriate name comes from the John Cooper Clarke poem ……I think it says “like a newly bleached lavatory you’re clean around the bend”. Even Roberto has seen through your spin. The Tax and NI on £40,000pa is 25.7% and on £200,000 is 40%. Five times income means 15% more TAX. Take home is £2,470 a month for the ordinary guy and £10,000 for the rich bloke. So earn 5 times and get to keep 4 times seems a good deal unless you are a self entitled greedy creep.

  49. 25/05/2012, Critic Al Rick wrote

    Boris – the epitome of diplomacy!

    Following through on Roberto’s theme:

    whereas:
    the £24K person is ‘taxed’ @ 96.45%; annual disp inc £0.85K

    the £72K person is ‘taxed’ @ 57.58%; annual disp inc £30.8K

    the £216K person is ‘taxed’ @ 51.75%; annua disp inc £104.2K

    by my hasty calculations.

    I think Roberto makes a very good point.

    How much annual disposable income is a ‘person’ on a salary of £1M left with after ‘taxation’ when calculated on the same basis?

  50. 25/05/2012, Critic Al Rick wrote

    I should have put @ 49.

    Is the person on £72K really worth 36 (30.8/0.85) times as much as the person on £24K?

    Is the person on £216K really worth 122.6 (104.2/0.85) times as much as the person on £24K?

    And as for the pompous ass on £1M. No, I am not jealous, not even envious; just contemptuous. I’m sure I am not alone.

  51. 26/05/2012, Boris MacDonut wrote

    #49&50. Well said Rick. The disposable income angle is a very good take on “fairness”. The why should I be taxed at whatever rate? (usually rich) brigade rarely consider that most people simply work to pay for essentials, to eke out a “living wage” from the pittance they are offered by the self entitled.
    Why will nobody buy our massive yachts?

  52. 26/05/2012, Critic Al Rick wrote

    Thanks Boris; ‘disposable income’ could also be thought of as ‘freedom money’. I can foresee slavery becoming exceedingly common!

  53. 27/05/2012, Henry Thompson wrote

    Instead of this conversation it is far better to be a tax exile.

  54. 27/05/2012, Barkingmad wrote

    “This means all of your subsequent figures are wrong, and dare I say deliberately misleading.”

    I clearly said income tax – not NI – if you want to include NI then you better muddy the waters further with benefits etc.

    I was trying to keep it simple to make the point that (regardless of your figures or mine) as you earn more you not only pay more but you pay much more – i.e. earn double and pay more than double the tax.

    I agree with simplification of the tax system (which was actually the point of the article) – why not get rid of NI (as it is a tax on employment) and tax income and capital gains at 30%? High earners would be better off but many probably manage to make capital and remember that extra money they may have will probably find it’s way back into the economy anyway.

  55. 27/05/2012, Barkingmad wrote

    “And as for the pompous ass on £1M. No, I am not jealous, not even envious; just contemptuous. I’m sure I am not alone.”

    People who earn these sums are certainly not all ‘bankers’ – do you also hate the business people who start a business from nothing and make it a success (probably employing people and paying a lot of tax in the process).

  56. 27/05/2012, Barkingmad wrote

    Boris your ad hominen comments are nothing more than a distraction from your own dodgy spin / figures – you said:

    “Five times income means 15% more TAX.”

    Populist and convenient – making it ‘sound’ like someone who earns 5x as much only pays 15% more tax – what you should have said is someone who earns 5x as much pays much more than 5x as much tax. No surprise there.

    Perhaps we should do the maths of the total tax paid less benefits received of someone on 25k a year and total tax paid less benefits received of someone on 25k a year?

  57. 27/05/2012, Barkingmad wrote

    If you are that person on 25k perhaps you feel another person on 30k is ‘overpaid’ – but I bet you feel your salary is justified. Then when you are that person on 30k the person on 35k is overpaid? Human nature.

    It appears a few people here may prefer everyone to earn the same – it’s a simple fact – a doctor will continue to earn more than a cleaner but is it ‘fair’ that if you work harder / earn more you should not only pay pay more but pay disproportionately more – i.e. earn 10% more and pay more than 10% more tax?

  58. 27/05/2012, Barkingmad wrote

    Oops another typo – where I said:

    “Perhaps we should do the maths of the total tax paid less benefits received of someone on 25k a year and total tax paid less benefits received of someone on 25k a year?”

    The second 25k should have been 125k.

  59. 27/05/2012, Critic Al Rick wrote

    @ 55. Barkingmad

    It is not necessarily the case that all on £1M+ /annum are pompous or that all on less than £1M /annum are not pompous.

    My grouse is not with the wealthy per se, it is with the corrupt ‘playing field’. I would imagine that a lot, if not all, pomposity is derived from being advantaged in some way or another by the corrupt ‘playing field’.

  60. 27/05/2012, Barkingmad wrote

    Talking about people earning £1m+ is pretty irrelevant – there are very few people in that bracket anyway. The fact is for most people – there will be people who earn less and people who earn more than you do.

    Some people work fewer hours (by choice or necessity), some people are more ‘able’, worked harder at school, others have earned seniority over time and with experience and others take more risks or have more responsibility – and many other reasons.

    The key issue is – is it fair that as you earn more you pay more in tax – most would argue ‘yes’ (i.e. a slice of a bigger pie) – but is it fair that as you earn more you pay ‘even’ more in tax (i.e. a bigger slice of a bigger pie).

    If the latter is fair – where does it end – if you earn twice as much as someone else should you pay more for your shopping as well?

  61. 27/05/2012, Boris MacDonut wrote

    #53 Henry. Better for whom? To seek tax exile is to act in an uncivilised way. It is a selfish attempt to shirl=k one’s moral responsibility to one’s fellow citizens.
    #56 Barking. I meant a 15% higher rate,that seems obvious.
    #58 Barking. The person on £125k is unlikely to need many benefits.
    #60 Barking. HMRC show 46,000 earning over £1 million and £465,000 worth over £1 million( at an average nearing £3 million each),and those are the ones who chose not to pretend to live elsewhere.

  62. 28/05/2012, DickyJim wrote

    It may be a moral responsibility to pay some tax but it sure ain’t right to take so much that Government spending is 52% of GDP (a widely touted figure that I don’t doubt is conservative).

    I believe that historically taxes often amounted to approximately 10% of a person’s income whether paid in money or labour. Obviously this would not work in a complex modern state but a flat tax of 30% should be more than adequate and if not then Government spending must decrease not taxes increase. Talk of ‘fairness’ is all relative and not worth paper space.

  63. 28/05/2012, Roberto Birquet wrote

    “This means all of your subsequent figures are wrong, and dare I say deliberately misleading.”

    I clearly said income tax – not NI – if you want to include NI then you better muddy the waters further with benefits etc.
    ———————–
    As I thought. You were deliberately misleading. YOU were muddying waters, not me. NI is income tax. It is a tax as it is taken from government. It is an income tax as it is taken by government directly from your wage packet. But of course, it is rather inconvenient for the wealthy brigade to mention it as it is only charged at 2% above about £40k annual earnings, whereas standard rate taxpayers pay a marginal rate of 12%.
    The tax deducted for the various py rates I mentioned above is accurate; yours is not.

  64. 28/05/2012, Barkingmad wrote

    @Roberto – I was merely trying to keep it simple – but if you want to add in NI well you better add in benefits received as well. Work it out for the average person earning at 25k, 37k, 56k, 84k, 126k and 189k (approximately 50% steps).

    My issue is it’s ‘fair’ to earn 10% more and pay 10% more tax but in reality you earn more you pay not just the same slice of a bigger pie but a bigger slice of a bigger pie.

    If you want to play with ‘virtual’ taxes for cost of living – well guess you should then also include total taxes paid at the different income levels including CGT, VAT and death duties.

    A flat rate of tax for income (including CGT) would be fairer and could actually increase overall tax revenues in the medium to longer term.

  65. 28/05/2012, Barkingmad wrote

    @Boris – you said “#56 Barking. I meant a 15% higher rate,that seems obvious.”

    Despite it being ‘obvious’ (what you thought you meant) – it would read as if you were claiming that someone earning 5x as much was only paying 15% more tax – when in reality they would be paying significantly more than 5x as much tax (as well as qualifying for fewer benefits and losing their personal allowance etc.).

  66. 28/05/2012, Barkingmad wrote

    @Boris

    #58 Barking. The person on £125k is unlikely to need many benefits.

    That’s not really the point – benefits are like a negative tax rate – so if we are comparing how much people are contributing at different income levels they are valid.

    #60 Barking. HMRC show 46,000 earning over £1 million

    I’m surprised it’s so few – so all this populist talk about bankers etc. is fairly irrelevant to the vast, vast majority of more normal tax payers and my point is perfectly relevant to more normal income levels. You earn more you pay EVEN more than your increase – that is a disincentive to work more / harder and unfair.

  67. 28/05/2012, Boris MacDonut wrote

    #64 &65 Barking. I’ve done the maths. The person on 5 times £25k pays 8.8 times as much tax and nics. It means he keeps £6,430 a month compared to £1,625 giving him £160 a day of extra income.(No allowing for pension contribs).
    The figures for all your quoted incomes are : £25k =21.8%, £37k= 25.1%, £56k=29.7%, £84k= 33.7%, £126k=39.2% and £189k=44.4%. (30% flat tax hurts all below £60,000 pa).
    I prefer to equalise the playing field. Let’s say no child benefit or personal allowances for anyone who has had the advanatage of a private education.

  68. 28/05/2012, Boris MacDonut wrote

    #66 Barking. We are all surpised it is so few. 46,000 people are those on PAYE. HMRC is ponderously slow and poor at chasing the many rich paid by dividends and CG and the very many who pretend to live in the Isle of Man,Jersey or Cayman. The more important figure is number of millionaires not the number earning a million every year.
    Benefits can only be a negative tax rate if you work and earn or have a pension,otherwise they are part of the cost of civilsation.

  69. 28/05/2012, Barkingmad wrote

    @Boris – you said: “Benefits can only be a negative tax rate if you work and earn”

    We were talking about income taxes so would have thought that (as you say) ‘seems obvious’.

    @Boris – you said: “We are all surpised it is so few. 46,000 people are those on PAYE.”

    465k millionaires is that really that surprising in a country of over 65m (so not even 0.75%).

    @Boris – you said: “I’ve done the maths. The person on 5 times £25k pays 8.8 times as much tax and nics.”

    My point exactly – surely it is fairer that someone who earns more pays more but pays EVEN more?

  70. 28/05/2012, Barkingmad wrote

    @Boris – you said: “I prefer to equalise the playing field. Let’s say no child benefit or personal allowances for anyone who has had the advanatage of a private education.”

    Equalise the playing field – of course Comrade Boris.

    And of course that would be fair how? To be taxed on something you probably did not have a choice about – has reality left your room? The reality is private education actually saves the tax payer money – imagine the extra cost of those children in the state education system!

    Private education is a choice but also a bit like an extra tax – you have to earn the money to pay for the place AND save the tax payer the cost of providing it.

    Perhaps you have it the wrong way and private education costs should be made tax allowable?

  71. 28/05/2012, DickyJim wrote

    @Boris “I prefer to equalise the playing field. Let’s say no child benefit or personal allowances for anyone who has had the advanatage of a private education.”

    Boris, if your left wing claptrap ever had any credibility it is now blown to smithereens by the above statement which clearly shows your diatribe to be motivated purely by the politics of envy as is invariably the case with lefties.

    Your arguments are forceful and well made but left wing thinking cannot ultimately work because it manipulates society so that the ‘weak’ win over the ‘strong’ and that is clearly a contradiction of nature, notwithstanding spurious arguments.

  72. 28/05/2012, Boris MacDonut wrote

    #71Dicky. No, the article is about keeping taxes simple. What could be more simple than not having in place the admin’ or resources to provide unneeded benefits to the already wealthy who have chosen to opt out?
    #70 Barking .Those who either enjoy or endure private education have a choice 92% of people have no “choice”. They cannot afford it.
    #69 “Income” Tax is levied on pensions and benefits too. 465,000 is millionaire households,so nearly 2%.

  73. 28/05/2012, Roberto Birquet wrote

    Private education is a choice but also a bit like an extra tax – you have to earn the money to pay for the place AND save the tax payer the cost of providing it.
    ———————
    Who chooses their school? My parents chose mine from a choice of about three alternatives. And what child can have earned the amazing amounts required to go to a private school?

    And I do not see how a tiered tax system is not simple. Pay nowt for first $8k; then pay 32% for the next £32k (ish), then pay 42% for the next £110k, and finally if you are fortunate/bright/well connected enough pay 47% on the rest. Perfectly simple to me. I’m sure the higher paid get it.
    I would also bring in a land tax at around 1.5% plus 40% on gains, and use the raised funds to cut employers NI (supply side help), and standard rate income tax (demand side help).
    It is fairer to tax unearned income than earned. It also happens to aid wealth creation. Work more, earn more.

  74. 28/05/2012, Roberto Birquet wrote

    Perhaps you have it the wrong way and private education costs should be made tax allowable?
    ——————————–
    I am not with Boris on stopping higher rate child benefit, but there is a whinge in this about paying tax for the education system. The Education system is open to all – opt your kids in or out. No taxpayer is paying my kids’ education, ‘cos I don’t have a child.

    You would have the rich pay less tax if they send their kids for a privileged education, and have a childless middle income earner pay full tax even though it is not for the benefit of his kids.

    I do not complain about paying tax for others’ kids. It’s called living in a society.
    DickyJim
    The rightwing manipulates society so that the already rich win: whether they are strong or not. It’s like starting the Olympics marathon from within the stadium.

  75. 28/05/2012, Boris MacDonut wrote

    #73 Roberto. You sound more and more plausible as you go on. I think tax cuts should be aimed lower down the pecking order. If we go for a Flat tax, perhaps everyone who owns a flat and everyone who’s car sustains a flat could pay a bit more.
    I like the idea of everyone getting a Joker they can play at any point between ages 30 and 50 to claim a tax free year. Or maybe £1 in every £1,000 that HMRC collects goes into a monthly raffle and only those who have paid in can take part. One ticket for every £10k paid should ensure a few of the rich pay up too. That’s a £40 million monthly prize draw which pays for itself if receipts increase by just 1%. People respond to incentives.
    Oh and one more………what about a married couples tax allowance. Seemed popular at election time.Conveniently forgotten now the Eton toffs are back in charge.

  76. 28/05/2012, Barkingmad wrote

    Boris – you said: “I like the idea of everyone getting a Joker they can play at any point between ages 30 and 50 to claim a tax free year.”

    A joker now – perhaps you are the one who is jesting – but (assuming not) did you really think that through (if at all) – you effectively rob the taxman of at probably at least 5% of the tax that would have been paid for that 20 year period. Most people would probably take it at near 50 as that is when they earn the most so it is quite likely to be more than 5% lost.

    Also it plays into the right into hands of the very highest earners who can often elect to take salary, dividends, bonuses at a specific time – defer a few years and have a massive tax free ‘bonus’ curtesy of the tax man and comrade Boris. Well done.

  77. 28/05/2012, Barkingmad wrote

    @Roberto – you said: “No taxpayer is paying my kids’ education, ‘cos I don’t have a child.”

    Although I assume that is either your choice or the cards that life has dealt you. Your taxes pay for plenty of things you will never make use of – but equally other peoples taxes probably pay for things that do benefit you.

    In terms of paying for schooling – would probably be better if the government worked out what each school place ‘cost’ and gave a voucher for that value to the parents. They can then send their kids to a government school at no extra cost or top-up the extra and send them to a private school.

    After all they have paid their taxes IN for education but have received no benefit – if you choose private health or education you are effectively paying twice.

  78. 28/05/2012, Barkingmad wrote

    @Roberto – ou say: “It is fairer to tax unearned income than earned. It also happens to aid wealth creation. Work more, earn more.”

    Is it fairer when you have probably paid tax to receive the money in the first place then pay a higher rate on any gain / income that is unearned. Assume that also includes savings, pensions etc.?

    Then you say “work more, earn more” – unfortunately the truth is “tax more, work less”.

  79. 28/05/2012, Barkingmad wrote

    @Boris – you said (earlier): “You are hopelessly out of touch. 30% tax with £10k personal allowance and no Nics would mean a 15% reduction in tax take, or a £100 billion increase in the deficit.”

    Your argument is (unsurprisingly) biased on the negatives – you do not take into account any other factors like increased tax from less evasion, people working more (as they keep more of it), potential for more economic growth / employment, encouraging people to move to and invest in the UK – and don’t forget as people are taxed less they can spend / save more – which of course is also taxed!

    What is better in the long run – that larger slice of a smaller pie or smaller slice of a bigger pie.

  80. 29/05/2012, chris wrote

    The 30% flat rate is not really attractive, as there are lots of other taxes. 15-20% would be more reasonable (icidentally these rates are prevalent in HK, Singapore, Isle of Man among others). But as you can see 30% is still not enough for the Fabians of this country. What a strange one way love…

  81. 29/05/2012, Boris MacDonut wrote

    #76 Barking. The whole point of this thread is to air new ideas. I thought this Government liked the psychology of ” nudging” we citizens. These are excellent nudges.
    I have rethought the £10k to enter the raffle bit, as many of our poorer neighbours only pay a small amount. So perhaps one entry for every £1,ooo tax paid.
    As for playing a joker. At the moment HMRC loses £43 billion in tax evaded, so it only needs to recoup 1.2% of this to fund the raffle that encourages compliance. Not sure why you think HMRC loses 5% of it’s revenue. It’s not just those aged 30 to 50 who pay tax, but it is them who bear the burden. A one year relief at the payer’s discretion is empowering , encouraging of compliance and fair.

  82. 29/05/2012, Barkingmad wrote

    @Boris – you said: “Not sure why you think HMRC loses 5% of it’s revenue.”

    I said: “probably at least 5% of the tax that would have been paid for that 20 year period” – seems ‘pretty obvious’ that HMRC would lose around (if not at least) 5% of the tax that would otherwise have been paid by those people if you gave them 1 year in 20 tax free.

    Nice idea but not sure why ‘you’ like it so much as it clearly benefits the richest ‘most’ as their income is often more flexible – so it would be quite possible for them to perhaps defer income for several years then take a big hit in that one ‘free’ year. Imagine all those bankers deferring their bonuses – you feeling ok Boris… Boris… he’s fainted ;)

  83. 29/05/2012, Barkingmad wrote

    @Boris – you said: “The whole point of this thread is to air new ideas.”

    … and here was I thinking it was to comment on the article and ironically the point of discussion is making the tax system ‘simpler’ yet you want jokers, raffles, variable tax rates, special rates for people who have been to private school and a tax on people who own flats – enough to give even the chancellor indigestion.

  84. 30/05/2012, Boris Macdonut wrote

    #82&83. Barking. These are nudges designed specifically to encourage compliance, so my “system” presupposes a greater tax take. If extrta tax take were not to transpire even a useless Chancellor like Gideon could/would drop the gimmicks pronto. If just 3% of the lost £43 billion came in each year for 20 years the tax take would rise 20% and fall 5% ,a net 15% gain.

  85. 30/05/2012, Barkingmad wrote

    @Boris – not sure how giving 1 year out of 20 tax free is going to encourage compliance – if you are not paying anyway are you going to then pay for 19 years to get the 1 year free – think not. Equally having a tax lottery – if you are not paying tax anyway you would just buy premium bonds or National Lottery tickets – surely?

    At least by lowering tax rates you would encourage work – especially at ‘boundaries’ there will be a lot of people who would work more / harder if the extra were not charged at a much higher rate.

    I think there is certainly more chance that a simpler, lower tax rate system will reduce evasion, encourage work, promote growth and increase the overall tax paid as a result.

    As I raised before if you reduce income taxes you encourage more work / jobs / reduce unemployment / reduce benefits paid – plus more salary will largely be ‘spent’ so the government gets it back anyway in VAT. A complex / high tax regime has the opposite effect.

  86. 30/05/2012, Barkingmad wrote

    Boris – you said: ” If just 3% of the lost £43 billion came in each year for 20 years the tax take would rise 20%”

    3% of your lost $43 billion per year is £1.29 billion per year – how is that increasing the tax take by 20%? The government received about £260 billion from income tax and NI – so to generate 20% of 1 years income tax receipts you need £52 billion – your 3% / £1.29 billion is about half of one percent of the annual tax take and even if you added it up over 20 years it is still only £26 billion.

    So it’s not 20% (as you said) and making a unrealistic assumption that people who were evading tax previously would then be encouraged to pay tax in for 19 years to then not pay tax for 1 year – really.

    Plus it still benefits the richest most… perhaps you want to drop / rethink this one?

  87. 30/05/2012, Boris MacDonut wrote

    #86 Barking. Sorry. The local celebrations for the Pasty tax abolition mean I missed a zero. If 30% of the missing tax came inwa the intended figure.
    We are looking at income tax and looking at the next 20 years. IT brings in £150 billion pa approx. Let’s say half that is paid by the 30 to 50 year olds in my scenario. That is £1500 billion in total. £13 billion a year for 20 years is £260 billion ,around 18%.

  88. 30/05/2012, Barkingmad wrote

    @Boris – I’m assuming to qualify for this 1 year free option you actually have to pay in for the other 19 years… even so think it’s extremely optimistic of you to think that almost a third of people (or at least by almost a third of by value) evading tax will be ‘turned’ honest by the prospect of getting 1 year free.

    Let’s see – evade for 20 years = 100% saving (for them) or pay and get 1 year free = 5% saving. Back to the drawing board / bin I’m afraid.

    Think they would be ‘more’ likely to respond to generally lower taxes as a whole over that period and that both discourages evasion and encourages growth.

  89. 30/05/2012, Boris MacDonut wrote

    #88 Barking. Hence the raffle is the better option. Or how about a sliding scale of 3% per £5,000 earned. So on £10k you pay 3% of 5 and 6% of 5……£450. Someone on £50k pays about 17% and above £170k all income is taxed at 100%. Maybe a bit draconic. Probably needs a maximum rate of say 80%.

  90. 30/05/2012, Barkingmad wrote

    You gloss over one of the key aims of making taxes simpler and fact that taxing more (and more) is a sure-fire disincentive to work and (further) encourages evasion.

    If you earn 10% more why not just pay 10% more income tax.

    Would be a lot simpler to merge NI and income tax and treat charge capital gains at income. Getting rid of (employers) NI would mean employment was less expensive – creating jobs / reducing unemployment and the massive amount we pay in welfare payments.

    People would have more money to spend / saves which gets taxed anyway – should encourage growth, reduce evasion and you may find it increases overall tax revenues in the medium / longer term. as well as reducing government spend (welfare etc.).

  91. 31/05/2012, Barkingmad wrote

    Boris – you said: “Hence the raffle is the better option.”

    Except it’s not and for the same reasons – do you really expect people are going to suddenly pay tax (when previously they were not) for the ‘slim’ chance to win. As I mentioned they would carry on as they were doing and just buy premium bonds or national lottery tickets.

    I’d consign these ideas to the bin – try and be constructive with your suggestions instead of jokers and raffles! If you want to reduce evasion a lower rate and simpler tax system has a lot more chance of success. Complexity created loopholes and high taxes encourage people not to pay as all and discourage tax payers from working more.

  92. 31/05/2012, Barkingmad wrote

    Boris – you said: “and above £170k all income is taxed at 100%. Maybe a bit draconic. Probably needs a maximum rate of say 80%.”

    So all those people you previously identified who earn £170k+ would not work and you would end up with 100% of nothing above that level and how does that make things better – by reducing the overall amount of tax revenue. Well done.

    At 80% it’s going to be a massive disincentive and greatly encourage evasion – watch house prices in Jersey / Guernsey / IOM soar as the highest earners (who make a massive contribution jump ship). Why would you pay 80% when you could live elsewhere and pay much, much less.

    Your increasing tax rates totally kills the idea of working harder – work more get taxed more – progress in your career / get promoted – pay even more. For many people seeing the road ahead get steeper and steeper they may just not bother…

  93. 31/05/2012, Boris MacDonut wrote

    #90-92.Barking. You seem to have bought the Tory myth that lower tax rates increase tax take . I strongly disagree. Many of the most sophisticated avoidance schemes are designed to avoid marginal rates of only 12%. Those people will avoid tax at any rate. My,tongue in cheek ,suggestions try to move the debate towards innovative ideas to encourage voluntary compliance.
    I think Employer’s Nics is a heinous tax, but i’m not sure abolition would create jobs. Are employers going to think great,10% more money so I’ll employ 10% more? Most likely they would pay existing staff a bit more, invest a bit and pay themselves more. To create real jobs involves a radical switch in working hours to a 4 day/32 hr week.
    Tax at 80% over £170k would send a clear message, the UK does not support inequality and incentivise those who genuinely do not want the benefit of living in the World’s geatest nation to leave. Many Britons will not miss them.

  94. 31/05/2012, Barkingmad wrote

    @Boris – so you really believe that dropping employers NI would not create jobs – the ‘simple’ economic ‘fact’ is it makes labour cheaper so fewer jobs overseas / makes us more competitive. If it also gets people off unemployment and similar benefits and into work there is another benefit. The reality is it would create jobs and would reduce some unemployment – no-one knows for sure if those combined would offset removing it but with ‘welfare’ being a third of government spend and more and more jobs moving overseas it may be a worthwhile experiment!

    You could do a limited trial (initially) where no NI is charged for 3 years when employing under 25′s and / or when employing someone who had been unemployed for 6 months or more.

    But that’s complex – how about scrapping it completely and charging 25% income tax (after your personal allowance) for people earning 50k or less and 35% for everyone above. I’d probably rather see just one single rate but that can come over more time.

  95. 31/05/2012, Barkingmad wrote

    @Boris – you said:

    “Tax at 80% over £170k would send a clear message, the UK does not support inequality and incentivise those who genuinely do not want the benefit of living in the World’s geatest nation to leave. Many Britons will not miss them.”

    They may not miss ‘them’ but with the top 10% paying 35%, the top 5% paying 25% of top 1% paying over 12% of all the income tax – you would certainly miss their tax contribution. Plus of course that is only income tax not their total tax contribution.

    Personally I would rather someone was in the UK – earning a high salary and paying taxes here than going to Switzerland etc. Clearly you would cut off your nose to spite your face.

  96. 31/05/2012, Barkingmad wrote

    @Boris – you said:

    “To create real jobs involves a radical switch in working hours to a 4 day/32 hr week.”

    You are being radical (unrealistic) – so let’s see you have 100 workers in a factory – cut their work from 5 days to 4 days – pay them 20% less and employ 20% more people. How do you expect the existing workers to manage on 20% less money?

    Or let me guess – wave your magic wand and with a sprinkle of pixie dust you manage to pay them the same money for working less hours AND still have money left over to employ the new workers. Magic – and for your next trick?

    You create jobs by genuine economic growth in the private sector and by reducing the cost of labour (employers NI) = what I have been saying.

  97. 31/05/2012, Barkingmad wrote

    Boris – you said: “#90-92.Barking. You seem to have bought the Tory myth that lower tax rates increase tax take . I strongly disagree.”

    Clearly – so you suggest you increase tax revenue by putting up taxes. Why not tax everyone 100%, no-one would work and the tax man gets nothing.

    You miss the point that the government gets the money in tax anyway – lower taxes = more money in your pocket = more money spent or saved which in turn is taxed.

    The aim should be to reduce government spending – so the government does not need as much ‘tax’ – since ‘welfare’ is around 1/3 of the total spend – if we were to start by cutting employers NI you would create jobs (in the UK) and cut the cost of welfare / benefits. It’s a start and seems to have more chance of success than gimmicks of raffles, tax free years etc.

  98. 31/05/2012, Boris MacDonut wrote

    #97.Barking. Most of the money spent on “welfare”is pensions to the elderly…..all 12 million of them and rising. Payments to the disasbled, a million or so of them. To children etc. In your cloud cuckoo world ,there are no dependents, no vulnerable groups,no kids needing educating. Just rational hard working , god-fearing folk. Happy to pay up a tithe to maintain the roads and to hell with everyone else. It might just work. In fact it does in little corrupt tax havens like Cayman and the Vatican. Maybe you could try moving there and we can be spared your odd little experiments that seem skewed towards the selfish and the indignant.

  99. 31/05/2012, Barkingmad wrote

    @Boris – I said nothing about the elderly, disabled or children – that is purely your negative spin.

    Not sure how my suggestions relating to employers NI are ‘skewed towards the selfish’ when it would create / safeguard UK jobs (who would become / are taxpayers) and reduce unemployment / other benefits paid out – more tax in – fewer benefits paid out. Indeed in a previous post you yourself describe it as a ‘heinous tax’ – but perhaps now have a change of heart?

    Then simplifying tax to get rid of NI altogether – would have thought you a fan of that as it hits lower earners ‘more’ than higher earners.

    In contrast your have just provided negative ‘spin’, gimmicks and complications (with raffles and tax-free years – all of which which are extremely unlikely to significantly reduce evasion) and (strangely for you) most likely benefit the richer members most! Perhaps it is not I that should be the one boarding the plane to Cayman… ;)

  100. 31/05/2012, Boris MacDonut wrote

    #99. Barking. It is just that most of the sentiment in your posts is weighted to the old fashioned Thatcherite ideal of self help. That Government needs less income and every citizen should be responsible for his own welfare. These problems do not go away. They just mutiply due to underfunding. I say again. I do not like the idea of Employers Nics, but I cannot see how abolition will create jobs. If there is work there the market will provide a job.You put too much trust in our business leaders to altruistically create hole digging/filling jobs as a way to spend their tax windfall. I am more cynical regarding our wealth creators. If things could be simplified it would have been done years ago. Tax is taxing.

  101. 31/05/2012, Barkingmad wrote

    @Boris – to quote: “I do not like the idea of Employers Nics, but I cannot see how abolition will create jobs”

    I did not think I had to labour (pardon the pun) the point – but if you get rid of employers NI it will simplify and reduce the costs of employment – you will make UK companies more competitive, fewer jobs will be lost ‘abroad’, it will encourage growth and therefore create and safeguard UK jobs. In the process of creating jobs you have the extra benefit of reducing unemployment which would also reduce what we have to spend on welfare.

    Certainly making employment more complex and more expensive will ‘cost’ jobs. I specifically suggested targeting it initially at employing young people and those that had been out of work for 6+ months.

  102. 31/05/2012, Barkingmad wrote

    @Boris – you said: “It is just that most of the sentiment in your posts is weighted to the old fashioned Thatcherite ideal of self help.”

    I do not feel government spend is often ‘good value’ or ‘well targeted’ – so a lot of tax revenue will be poorly spent / wasted, I do believe reducing taxes can reduce evasion, help ‘growth’ and result in a slightly smaller slice of a bigger pie and increase overall tax revenue – surely a good thing.

    I’ve no problem with increasing personal allowances so the lowest earners pay less or no tax – after all (and without being flippant) the government probably realises it is probably fairly ‘neutral’ in that it should make ‘working’ more worthwhile and as you give people more in their pay you end up paying them less in benefits.

  103. 31/05/2012, Boris MacDonut wrote

    #102 Barking .Yes I agree. The ta credit systems works to about £16,000 being Tax/Benefit neutral,so we should aim towards a £16,000 personal allowance. But it gets complicated where a single childless person is compared to a family. I am with you,bleieve me,as regards Employer’s Nics. It is plain wrong and could be eradicated by increasing Corporation Tax.

  104. 31/05/2012, Barkingmad wrote

    @Boris – except you miss the point that reducing employers NI is to make employment cheaper and create jobs etc. – if you increase corproration tax you negate those benefits AND would encourage more companies to move their profits / taxes / jobs abroad. Lose – lose.

  105. 07/06/2012, Boris MacDonut wrote

    #104 The point you miss, Barking, is that 90% of CT is paid by the biggest 200 companies while 75% of jobs are created by SME’s and small businesses for whom Nics are an excess burden.

  106. 16/06/2012, Barkingmad wrote

    @Boris: “90% of CT is paid by the biggest 200 companies while 75% of jobs are created by SME’s and small businesses”

    Or to read your statement a different way – SMEs create most of the jobs *despite* NICS so perhaps they are not an excess burden. For a small business / shop perhaps there is less choice – i.e. you choose to employ a person – you ‘have’ to employ them whereas for the big business the extra NICS may make the difference between do they open or keep open a factory in the UK with 5000 staff or more it to Poland, China etc.

  107. 16/06/2012, Barkingmad wrote

    Putting up CT would therefore hit these 200 biggest companies ‘most’ and may encourage these companies to move themselves out of the UK entirely (after all CT is probably easier to reduce than employer NI) or move jobs abroad (for which they may have more flexibility than a smaller company).

    Getting rid of employers NI would reduce the cost of and simplify employment (for all businesses) so would help encourage job creation / retention and reduce unemployment – surely all good things? By reducing costs you may increase company profits but they are then taxed anyway and increase dividends which again are taxed.

  108. 16/06/2012, Barkingmad wrote

    I think the reduction in tax revenue from scrapping employers NI would be largely (if not completely) offset by having to pay out less in benefits with the jobs you create / retain. If that was not enough then you have extra taxes paid by those extra people now / still in employment, extra taxes on increased company profits (without increasing the actual rate) and dividends and you have made British businesses more competitive which should help them grow further.

    Unfortunately (Boris) your idea of just sliding employers NI over to increased CT would negate these benefits / could even cost revenue if companies ‘move’ abroad.

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