50p tax thing, should we keep it long term?

[TheAnimus]

You also wouldn't have any money, or any economy.

Really? I beg to differ!

There is a difference between someone using credit in a sustainable fashion and an unsustainable fashion.

Case one, a freelance developer buys a £300 laptop on credit because they have just payed their tax bill and didn't have the cash to hand to replace their previous one, which got broken, they repay it over three months.

Case two, a student buys a mac book, because they want to pounce round coffee shops. Regretabbly daddy refuses to pay for it. It lives on the credit card accuring interest which they are able to service but take 30 months to pay off, after which time, because been a student charged 33%+ APR, it costs double.

One stimulates growth, helps the economy in a sustainable fashion. One does not.

No, but the majority of people in the 50p bracket created the system and benefited from it enormously.

Citation Needed. My friends who are in this bracket did not create it, and benefited from it no more so than anyone else by this i mean:

Say hypothetically the credit splurge, people like a mate of mine who bought a new TV and Reciever despite been £5k in the whole, then moaning to be about his money worries, these people, added 20% to the economy. Are you saying everyone in the 50p bracket benefited more than someone else would have by the 20% did they somehow benefit 30%? I can't see that as being true. And you know why I choose a percentage, to signify relative value, as I'm not suggesting capping tax at anything remotely low. (Thou I do think it would be an intresting experiment, to see what would happen if you had a £250k then 22% model, maybe dropping to 10% after £10M, I wouldn't be suprised if we got more in taxation that way!)

[Bugbait]

Personally I think the tax free allowance should be raised considerably to help out people with lower incomes. If they did that I'd be more than happy to see it balanced with changes to where the 40% rate cuts in.

I support a flat rate tax system but your suggestion above would be a "fairer" compromise, even in the eyes of a capitalist such as myself.

A higher VAT rate in an ideal world (ie. More responsible personal spending) would naturally act as a tax on the financially better off. A lot of essentials are not subject to VAT (http://www.hmrc.gov.uk/vat/forms-rat...s-services.htm) which means the core essentials for living in theory should be more affordable for all. Luxury consumables rightly incur the full VAT rate which should be viewed as an additional consumption tax for those who can afford and choose to pay for it.

[aidanjt]

Really? I beg to differ!

You can if you wish. That doesn't change the fact that the money supply from fiat currency is directly linked to the the level of debt the currency has. If nobody was in debt, nobody would have any money, as it's impossible to pay off principle + interest, when all you have is principle. The system doesn't support mass productivity and fiscal responsibility, it only supports mass consumption and perpetual borrowing.

My friends who are in this bracket did not create it

Strictly speaking, you're right, the system creators are dead and their children, the maintainers, are more like the top .1%, but out of self-interest, they gear the system to the advantage those in the 50p bracket by proxy of themselves being in it, and as such, in receipt of non-trivial salaries and often, with similar pay structures and benefits.

and benefited from it no more so than anyone else by this

If you haven't benefited more from £150k+, than someone on £20k, then I have no pity, at all. Ultimately, the extensive borrowing the masses on low income are compelled to avail themselves of pays for the lavish income of those in the 50p bracket.

Say hypothetically the credit splurge, people like a mate of mine who bought a new TV and Reciever despite been £5k in the whole, then moaning to be about his money worries, these people, added 20% to the economy. Are you saying everyone in the 50p bracket benefited more than someone else would have by the 20% did they somehow benefit 30%? I can't see that as being true. And you know why I choose a percentage, to signify relative value, as I'm not suggesting capping tax at anything remotely low. (Thou I do think it would be an intresting experiment, to see what would happen if you had a £250k then 22% model, maybe dropping to 10% after £10M, I wouldn't be suprised if we got more in taxation that way!)

And if 50 million other people like your friend didn't do the exact same thing, the economy would drop flat like a house of cards. Bemoaning people as a whole doing what they've been systematically corralled and coerced into doing is silly.

Now, with that said, please don't think I'm supporting the 50p tax solution. The entire premise of tax brackets is also broken and stupid, any solution which leaves you with a lot more net income from £149,999.99 than £150,000.00 acts as a wage depressor, and should be taken out the back and shot. The degree of income deduction should be linear. And I wouldn't even attempt to tack on a scale without massively rearranging and simplifying the tax system, first (pretty much lighting a match and throwing it on all previous tax law). If most tax men, lawyers, and accountants join the bread line then tax reform will be doing its job right. Less administrative waste means more resources available for the poor and the actually productive work, something more and more of the west has been shying away from.

[badass]

As someone on considerable less than £150k, I am both for and against the 50p rate.
In principle I am for it - as our government likes to keep saying - those with the broadest shoulders should bear the heaviest burden. A 10% increase in tax over £150k will hit those it targets' lifestyles far less than even a 1% increase on the basic rate tax band on people on less than £40k for example.

In reality though most on huge incomes aren't on payroll and those who are may well consider living elsewhere whilst prospective 50% tax payers thinking of working in the UK will be discouraged.
If the 50% tax rate was global AND applied to income regardless of source then I would support it.
Unfortunately that's never going to happen so I don't support it.

[TheAnimus]

You can if you wish. That doesn't change the fact that the money supply from fiat currency is directly linked to the the level of debt the currency has.

Your missing my point about debt thou, some debt is good debt, other debt is squandered money debt.

Strictly speaking, you're right, the system creators are dead and their children, the maintainers, are more like the top .1%, but out of self-interest, they gear the system to the advantage those in the 50p bracket by proxy of themselves being in it, and as such, in receipt of non-trivial salaries and often, with similar pay structures and benefits.

Considering about a third of those I know who must be in the 50p bracket aren't native english but want to be, I'd say some of these people have VERY different ideas. I mean who pays the 50p bracket when they earn over 500k/1M..... Very few I'd imagine.

If you haven't benefited more from £150k+, than someone on £20k, then I have no pity, at all. Ultimately, the extensive borrowing the masses on low income are compelled to avail themselves of pays for the lavish income of those in the 50p bracket.

Erm? I'm saying its at the same rate, so why not tax at the same rate. I'm saying there is no relative more benefit. As such tax fairly.

And if 50 million other people like your friend didn't do the exact same thing, the economy would drop flat like a house of cards. Bemoaning people as a whole doing what they've been systematically corralled and coerced into doing is silly.

Nonsense. Its a sizeable amount of people who were doing that, and its about sustainability, pure and simple. Its why I try to call it bad borrowing, or any of those other terms.

Now, with that said, please don't think I'm supporting the 50p tax solution. The entire premise of tax brackets is also broken and stupid, any solution which leaves you with a lot more net income from £149,999.99 than £150,000.00 acts as a wage depressor, and should be taken out the back and shot. The degree of income deduction should be linear. And I wouldn't even attempt to tack on a scale without massively rearranging and simplifying the tax system, first (pretty much lighting a match and throwing it on all previous tax law). If most tax men, lawyers, and accountants join the bread line then tax reform will be doing its job right. Less administrative waste means more resources available for the poor and the actually productive work, something more and more of the west has been shying away from.

The tax doesn't work that way, its only on everything above 150k.

A turely linear tax, is a flat rate tax.

[usxhe190]

This is a difficult topic because the very rich will always restructure the tax plans to reduce the tax due to the complexity of the tax system. Some will also move to Switzerland to avoid the tax all together. etc.

I just think sometimes tax complexity is making the tax system very inefficient but at the same time the tax complexity is there so it is fairer for all people. Tax is just too hard!

Will it make the UK less competitive? Very hard to say. Competitiveness of a country is not just measured on salary tax...

[billythewiz]

I work in finance in the city. I left Bear Stearns a few months before they went bankrupt and moved to Lehman Brothers. They made me redundant (after they had paid me my guaranteed bonus), a few months before they went bankrupt. I now work for a small firm in High Frequency Trading. IMO, I work in the sector that is most responsible for the financial collapse of 2008.

Last year I earned a little under £150k. This year the company I work for may IPO. If it does I will earn between 200k-300k. Assuming 250k (a guess), the 50% rate will cost me an extra £10,000.

Here's what I believe :-

When tax cuts give money to poor people, they spend it in the economy.
When tax cuts give money to rich people, they save/invest it (largely abroad).
Raising the nil band to 10k would be a great achievement.
Paying tax is not a punishment, it is a patriotic duty and honour. I felt proud in April when my P60 showed that I had paid over £50k.
The 50% rate affects very few people (the richest 0.1% ?). It has an insignificant impact on those that do pay it .... Imagine a person on 150k gets a £10417 pay rise. They pay 50% tax (5208.50) and 2%NI (208.50) and take home £5000. If income tax had only been 40%, they would have taken home an extra £1042. So the person on £13,350/month gross pays an extra £87 a month tax. Whup-dee-doo. That's three rounds of drinks in Canary Wharf !
Interestingly, if a person on £100k received a £10,417 raise, they would pay £6,250 tax and only take home an extra £3960 (i.e. >£1k less !). That just seems silly to me.

I like the new tax that's been imposed on the banks. The fact that the banks are "happy" with it indicates to me that it's not at a high enough rate.
I think the bonus tax (that the Tories abolished) had a very positive effect on the finance industry. It certainly raised a lot of money.
The threats of people departing the UK are just a smoke screen. The 50% bonus tax had a negligible effect.
Personal income tax has very little affect on job creation. Companies react to corporation tax, not income tax. Can you seriously imagine a CEO/MD on £250k thinking .... "now that I'm paying £10k/yr less tax, I'll get my company to employ another person !" .

This topic was discussed extensively on the BBC news site.

If you want a laugh, have a read of the lowest rated comments ...

@6. ravenmorpheus2k
I earn less than 20k, and if I was earning 75k I could live a life of luxury and still save enough for my early retirement.

I can assure you you couldn't. Once I have paid National Insurance and tax including Company car and other benefits I do not have a lot left to pay, pension, mortgage, school fees, holidays and other necessary expenses. 75k is a pittance now days.

Hilarious !!

It's interesting that both Warren Buffet and a consortium of France's richest are calling for increased taxes for the richest.

[TheAnimus]

The threats of people departing the UK are just a smoke screen. The 50% bonus tax had a negligible effect.

This is not true, companies have already left over this.

We've lost two of the 20 largest hedge funds we had, which in previous years have contributed between 1bn-3bn in taxes.

Personal income tax has very little affect on job creation. Companies react to corporation tax, not income tax. Can you seriously imagine a CEO/MD on £250k thinking .... "now that I'm paying £10k/yr less tax, I'll get my company to employ another person !" .

Absolutely true, its often better to tax the personal income, rather than the employer.

It's interesting that both Warren Buffet and a consortium of France's richest are calling for increased taxes for the richest.

This is just not fair.

The french lady has been found guilty in the past of dodging tax rules, and buffets are been taken out of context. Lets also not forget both of these people are not subjected to even 40%.

What buffet has been promoting is a tax that they actually will pay, rather than the tax they currently don't.

In the US thou, they also have a much better kind of philanthropic attitude, if you work for an american fund you will be expected to go to charity balls and the like soon as your earning £100k. One US fund a mate works for its known if you don't give at least a fifth of your bonus to a good cause, you may well find yourself donutted! Its a very different attitude indeed.

[billythewiz]

This is not true, companies have already left over this.

We've lost two of the 20 largest hedge funds we had

You have absolutely no evidence of this. You know as well as I do that hedge funds are extremely secretive. More likely that they lost a ton of money in the May 6th Flash Crash (or some other dodgy deal prior to that) and had to cut everything back. As they did so, they had to announce a smoke screen story to hide the real truth and "it's because of bonus taxes" is a very popular one. Remember Amaranth Advisors ? They lost $6B in one week !

which in previous years have contributed between 1bn-3bn in taxes.

Again, you have no knowledge of how much tax these extremely secret companies paid. It's unlikely that they paid more than Barclays (who paid 0.113bn in 2009)!

This is just not fair.

Sorry, I work in the city. Fairness has nothing to do with anything.
The fact is there are some very wealthy people advocating tax rises for themselves.

In the US thou, they also have a much better kind of philanthropic attitude, if you work for an american fund you will be expected to go to charity balls and the like soon as your earning £100k. One US fund a mate works for its known if you don't give at least a fifth of your bonus to a good cause, you may well find yourself donutted! Its a very different attitude indeed.

There's some truth in that. At Bear, the highest paid (Senior Managing Directors) had to give 4% of their bonuses to charity. Lehmans had a charitable trust. They gave £18,000 to a charity that I recommended. They also had a tax free canteen. A building full of people with an average earning >£100k, all buying tax free lunch !!

[TheAnimus]

You have absolutely no evidence of this. You know as well as I do that hedge funds are extremely secretive. More likely that they lost a ton of money in the May 6th Flash Crash (or some other dodgy deal prior to that) and had to cut everything back. As they did so, they had to announce a smoke screen story to hide the real truth and "it's because of bonus taxes" is a very popular one. Remember Amaranth Advisors ? They lost $6B in one week !


Again, you have no knowledge of how much tax these extremely secret companies paid. It's unlikely that they paid more than Barclays (who paid 0.113bn in 2009)!

You assume wrong. I've been nobbing the right legal. I suppose I've 'inside' knowledge.......

Sorry, I work in the city. Fairness has nothing to do with anything.
The fact is there are some very wealthy people advocating tax rises for themselves.

Erm did you get my point about fair, I was refuring to the comparison.

If someone who has been caught shoplifting says "people shouldn't shoplift" I can't help but take their advice with a pinch of salt.

Espesually when you consider that they were not talking about this kind of tax, they are after all paying MUCH less than 50% on ANYTHING they earn.....

You can't turn round and say to me "its the city its not fair" because I'm talking about your comparison. And guess what. I work for the city too, and I'm no boyscout.

They also had a tax free canteen. A building full of people with an average earning >£100k, all buying tax free lunch !!

They also had a duty to their shareholds, a legal one, to not pay excess tax.

But from a political point, I prefer people been in control of the charity their monies go to. Whilst I don't think the RSPCA needs governement funding, plenty of people decide to give money to them, its their money and their choice, just because there are people dying for lack of clean water doesn't mean I've a right to impose my choices on them. And that is why I think we could do with a heavy does of the yankie philathropic traits, just look at the Gates foundation...

[G4Z]

Right, this might be a lengthy post I will try to keep it coherent...

Firstly, I am in favour of the 50p tax rate in fact I favour increasing it, 75% for over £500k maybe. I am also in favour of leveraging CGT on share dividends and sales even though this would hit me personally as I do have a share plan with work.

The fact is Rich wealthy people have it easy. They do.

I am not saying some them don't work hard and they don't deserve rewards for that, some definitely do. However I take issue with the fact that in every discussion of this issue the focus seems to be on what the government is taking from the individual when the question should be 'what does the individual owe society for the very fact that they are in the position they are in?' there seems to be this tendency for self congratulation among the wealthy, as if they did it on their own. They didn't do it on their own, they could have just as easily ended up on the street if they had been born into different circumstances.

I don't care if you are an a business owner or a doctor or a call centre worker.

You wouldn't have those skills if it wasn't for society, you wouldn't have the infrastructure to get you to work each day (roads, public transport), you probably wouldn't even be alive without out NHS given what live birth rates and childhood death rates are like in places like Sierra Leone where they don't have the kind of society that we do.

Rich and wealthy people owe society, it is in their interest to support society. Without society they couldn't be in the situation they find themselves in. Consequences for not paying their share to society are already apparent, we can see the economy going down the tubes, we can see the wealth divide and we have seen riots which in some part probably had jealousy as a factor.

If wealthy people don't want the proletariat breaking down their gated communities Bastille style it is in their interest to act now to support increasing the fairness of wealth distribution and stop being so bloody selfish.

I don't believe in the Laffer curve by the way, I don't believe people will leave this country to avoid paying tax and if they do I say we don't need them. Let them go bleed some other society dry we are better off without them, they are really not so smart we can't lose them, nobody is irreplaceable and I am sure we can find more civic minded people to fill those roles.

After all, it is a tenant of capitalism that supply will always try to match demand. That goes for overpaid fat cat ******s as well.

[roachcoach]

Rich and wealthy people owe society, it is in their interest to support society. Without society they couldn't be in the situation they find themselves in.

That's not really a 'rich' exclusive thing though.

[G4Z]

No it isn't, we are all benefiting from society.

Some people benefit disproportionately to others though.

[Saracen]

I can't answer the poll, because I'm both for and against. In the short-term, I'm for it. In the long term, against. But even if I were against right now, this is not the time to be removing it, because no matter the truth of any actual figures, revenue raised or effect on investment, it'd be a hugely poor signal to even appear to be giving the rich a tax break while clobbering everyone else, in the current climate. I think we're stuck with it for the foreseeable future, even if it's harmful.

[G4Z]

This guy seems to be in a great position to comment and I rather agree with his opinion.

http://www.taxresearch.org.uk/Blog/2...or-what-it-is/

[TheAnimus]

No it isn't, we are all benefiting from society.

Some people benefit disproportionately to others though.

Yes, and I'd say your use of the word disproportionately is the problem.

Why? Because a lot of people take more than they give, and a lot of people who earn a lot give far more than they take.

An example would be a Vietnamese friend of mine, I met her two years ago whilst I was backpacking as a spoilt rich westerner! Anyway, the point is, society gave her two years of schooling, and the oppertunity to work, her family, all of them, are paddy field workers. Lets get some perspective on what that means, you work a paddy field in Vietnam, its about $500 to $700 per year, depending on the harvest. She decided to work as a maid, for a wealthy party member (very nepotistic culture) this ment moving to a near by big town. Whilst working as a maid she noticed that the taylors seemed to make good money. As such she went to night school, again not free, she would wake at 5am, cook, wash, escort children to school, clean, cook, snooze, cook, collect children, cook, children to bed, clean, cook, then nightschool, then sleep. She worked herself hard in a manner I doubt any of us can understand who are privileged enough to browse hexus. She became a taylor, she worked in a shop, and quickly learnt that she needed to understand more english, she charmed a phrase book from a tourist, and 18 months later had a limited but suitable vocab. That was when I met her. Two years later she had managed to save enough money, persuade others to lend (no bank would invest, it doesn't work like that there) and now has a tiny little shop, about 2m by 3m, and is now earning to her, a fortune, we're talking about $300 per month, it might even be $500 by the time the tourist season ramps up. By wage distribution there she would be in the upper echelons, $1000 per year is a good living after all, so should she pay 75% tax?

She had no advantages her sisters didn't have on offer.

She cost society no more than her sisters would.

She produces a big benefit for society, she is buying produce which is produced locally, creating jobs, she is considering hiring another person to help sell in her shop. She is repaying the people who lent her the money for rent (6 months, in advance). She is also putting almost every penny back in, she shares a 5m by 3m room with half wet room, with 2 other girls for accommodation, yet is turning over enough to afford her own room.

You say these people owe society for their luck, that much is very true. Do they owe it 75%, hell no. Are there plenty of other countries which will give more via society in return for less? Well we know the awnser to that.

If those who felt so envious got of their arse and did something, the economy, and society would benefit, instead, they seem to want to drag those who have down! The best way to equality is to help lift everyone up. The lowest common denominator approach is rather irksome for those who actually try well enough to succeed.