What should the highest marginal tax rate be for any personal income

[TeePee]

0.

Sales tax only, combined with a minimum guaranteed income. Tax consumption, not success.

[ik9000]

There ought to be a 100% tax threshold above which you don't get anymore. Some of the "wages" given to people are a joke. And that money ought to be invested into proper state education and health, not used to give MPs perks and back-handers, nor financing illegal wars or BS referenda that end up crippling the economy.

[Dashers]

During the second world war, the UK tax rate for top-band incomes was 99.25% it then dropped to around 90%. It wasn't really until Thatcher that it went down to 60%.

I'm all for a high-rate of tax on high earners, the question is best where to position this.

Currently the highest rate of tax is 45% on income over £150K. You could easily start off in the crazy end of the spectrum, income over £500K goes back to 90%.

[badass]

0.

Sales tax only, combined with a minimum guaranteed income. Tax consumption, not success.

What if that success is gained through means that have no benefit to no one other than the person that is "successful"
Taxing consumption is regressive. i.e. it hits those with the lowest ability to pay the most. Unless of course to counter that, the more luxurious an item, the higher the sales tax. Say, tax superyachts at 98%, Yachts at 80%, houses over £5million with a stamp duty of 25% and a land value tax of 2% of its value per year, and introduce capital controls so that they don't just go and buy their stuff elsewhere?

[badass]

There ought to be a 100% tax threshold above which you don't get anymore. Some of the "wages" given to people are a joke. And that money ought to be invested into proper state education and health, not used to give MPs perks and back-handers, nor financing illegal wars or BS referenda that end up crippling the economy.

Where would you place the 100% threshold?

£100k?
£500k?

Or, as I suspect, just above the amount of money that is the highest you can ever see yourself being able to earn

During the second world war, the UK tax rate for top-band incomes was 99.25% it then dropped to around 90%. It wasn't really until Thatcher that it went down to 60%.

I'm all for a high-rate of tax on high earners, the question is best where to position this.

Currently the highest rate of tax is 45% on income over £150K. You could easily start off in the crazy end of the spectrum, income over £500K goes back to 90%.

So what would those on Wages over £500k do?

With the UK on a 90% marginal rate or the rest of the world offering much better rates, do you think we would see any hanging about to pay a 90% marginal rate of tax?

[Dashers]

Indeed, income tax is the only real way to be progressive. The more you get, the more you give back. I'd argue that VAT should be removed from a lot more items than they currently do.

I'd also argue for greater fuel tax, and scrapping of road-tax. People who drive a lot, contribute towards the wear on the roads. People who have some gas-guzzling kit car for use a few times a year don't pay silly amount.

[BobF64]

0.

Sales tax only, combined with a minimum guaranteed income. Tax consumption, not success.

Now, that's fair taxation.

The amount you pay is entirely controlled by what you spend, not what you earn.

[scaryjim]

Now, that's fair taxation.

The amount you pay is entirely controlled by what you spend, not what you earn.

I'm not sure I'd call that fair, tbh. Exploitable, certainly. Regressive, absolutely. I suppose if you dislike public services and want the rich to get richer and the poor to get poorer, it's an ideal solution. Or if you want personal spending to be largely controlled by the government, I guess - I'm sure they'd only ever set taxation rates based on logic and evidence, and never through self-interest, for personal gain or as a cheap vote-winning measure....

Consumption taxation is behaviour modifying. That's really the only point to it. And of course the UK already has some of the highest consumption taxes (and lowest personal taxes) in Europe. OTOH, no-one likes paying tax, and they particularly don't like paying consumption tax on things they think they have a right to.

The big question, which I don't think anyone's asked yet, is what is the point of taxing people? Why do it? It seems to me the only sane reason is to provide services to those who could otherwise not afford them; that makes ability to pay the whole bedrock of taxation, so logically those who can afford to pay more should pay more.

As to the poll, I'm not going to vote because it really depends far too much on all the other factors in the taxation system - it's far too complex a system to set an ideal level for one part in isolation. If we chose to heavily reduce our consumption taxes, we could up the marginal rates, and vice versa. If you cut marginal rates people have more money in their pockets so consumption goes up and you can offset on consumption taxes and business taxes. So there isn't a sensible value to highest marginal rates - it depends entirely on other taxation and on the services being provided (which I know is rehashing an earlier point, but I think it's important enough to be said again!).

[badass]

As to the poll, I'm not going to vote because it really depends far too much on all the other factors in the taxation system - it's far too complex a system to set an ideal level for one part in isolation. If we chose to heavily reduce our consumption taxes, we could up the marginal rates, and vice versa. If you cut marginal rates people have more money in their pockets so consumption goes up and you can offset on consumption taxes and business taxes. So there isn't a sensible value to highest marginal rates - it depends entirely on other taxation and on the services being provided (which I know is rehashing an earlier point, but I think it's important enough to be said again!).

I agree with the quoted part apart from the bit I have highlighted in bold. I think that regardless of consumption taxes, there is an upper limit to reasonable marginal rates. If the marginal rates are too high for high earners, they take their entire income elsewhere. If you increase them too much for lower earners, they will get very annoyed about the amount of tax they pay - particularly if the rate is over 50%

However a government can raise more money based on ability to pay without annoying people too much. Certain public services can also be charged based on ability to pay. Like parts of the French healthcare system.

Low earners get a 100% rebate for healthcare whilst the highest earners get none. This has 2 benefits:
People appreciate just how much they are costing, unlike in the UK where thickos don't care about wasting NHS time and money "Because its free"
If higher earners feel they are getting poor value for government services they can take their money to private organisations that provide the same services and are forced to compete on quality and efficiency.

Right now, if someone earns over £100k not only do they only see 38p of every extra pound they earn, they also have to put up with a health service that is generally rubbish apart from small parts of the country, some specialist units and generally in emergency care. Private health insurance still does not cover primary care (e.g. GP visits) in most cases.

[TeePee]

What if that success is gained through means that have no benefit to no one other than the person that is "successful"
Taxing consumption is regressive. i.e. it hits those with the lowest ability to pay the most. Unless of course to counter that, the more luxurious an item, the higher the sales tax. Say, tax superyachts at 98%, Yachts at 80%, houses over £5million with a stamp duty of 25% and a land value tax of 2% of its value per year, and introduce capital controls so that they don't just go and buy their stuff elsewhere?

Consumption taxes alone are, of course, very regressive, which is why they are usually combines with a prebate. I go further and suggest a guaranteed minimum income instead. With this, almost all other welfare programs can be eliminated, saving vast amounts of government beaurocracy, and reducing wastage in the system. Varying rates and exemptions become completely unnecessary.

To answer the question, if someone's success is gained through a means that benefits no one else, I wish them all good fortune in life. It's their success, I have no right to demand they share it with everybody.

[ik9000]

The most stable societies are those with the smallest gap between highest and lowest earners. High taxation and well funded state services. The greedy action of those trying to get ahead by trampling on those beneath them is greatly limited when there is a plateau beyond which they simply won't receive anything further. It strips the motivation to exploitation and greed somewhat. We all have responsibilities to each other whether we like it or not. The rampant selfishness that says "it's all about me and screw everyone else" is one of the biggest problems in modern society IMO.

And to answer the person's question above, I don't particularly care where the 100% threshold is set, just get on with it and introduce it. If I'm in it, then fine, and if it's above my wage, then fine. But it should be low - not ultra high. No-one needs 6-figure salaries. They simply don't.

[peterb]

Except that by reducing the differential, the more demanding and perhaps difficult jobs won't get filled. After all, why do a demanding job that might mean working long hours when I can do a less demanding job for very little less.

And that goes for punitive rates of taxation, there is no insentive to do more. Generally when the upper rate of taxation is reduced, income to the exchequor increases.

And those with high disposable incomes tend to er dispose of it, paying sales tax of some sort on their purchases, and providing employment for those making the products.

While philanthropic giving is less prevalent in the UK, in the US organisations like the Gates Foundation distribute large amounts to non government funded organisations.

JK Rowling is a notable exception in this country, although I am sure there are many others.

http://www.mnn.com/lifestyle/arts-cu...lionaires-list

[TeePee]

The most stable societies are those with the smallest gap between highest and lowest earners. High taxation and well funded state services. The greedy action of those trying to get ahead by trampling on those beneath them is greatly limited when there is a plateau beyond which they simply won't receive anything further. It strips the motivation to exploitation and greed somewhat. We all have responsibilities to each other whether we like it or not. The rampant selfishness that says "it's all about me and screw everyone else" is one of the biggest problems in modern society IMO.

And to answer the person's question above, I don't particularly care where the 100% threshold is set, just get on with it and introduce it. If I'm in it, then fine, and if it's above my wage, then fine. But it should be low - not ultra high. No-one needs 6-figure salaries. They simply don't.

Greed is good.

[opel80uk]

Generally when the upper rate of taxation is reduced, income to the exchequor increases.

Whilst technically that is correct, that statement doesn't paint the whole picture, to such an extent that it is IMO misleading. One of the biggest drives of income to the exchequer increasing after a reduction of the upper rate of tax in announced is the forestalling of certain payments of tax that are liable for top rate tax. HMRC have actually looked at this previously, and their findings were that whenever a reduction is announced, that tax years take is artificially low, as people wait for the lower rate to kick in, and the following years take is artificially high, as tax is deducted for that current tax year and the previous tax year that was forestalled, and would account for the 'increase'. It is the perfect example of being 'economical with the truth'.

What would be a better indication of whether income genuinely increases after a top rate tax reduction would be to look at the actual figures after the reduction, and the forecasts made if no reduction was announced, and look at the difference. Obviously, with it being a forecast it's not exact, but again HMRC have looked at this previously and in the short term reductions often do cost the exchequer as a result.

[ik9000]

Greed is good.

No, no it isn't. That is a crazy thing to say and I trust you don't actually mean that.

[TheAnimus]

Ambition, drive and desire are good. They are somewhat similar to greed, without greed we wouldn't have left the caves.

But back to the poll topic, what I hate about these kind of things is the way we tax income higher than wealth people are born into...

Strikes me as somewhat spiteful.