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Time To Rasie The Threshhold For 40& Rate?
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I think Lamont has a point the 40% rate is fast becomming the basic rate. I remember way back when I started work the 40% bracket seemed a long way away now most earners seem to be in it. personally I'd abolish the band alltogether and just have one basic rate. Well actually I'd abolish direct taxation full stop but that's another story!
I think Lamont has a point the 40% rate is fast becomming the basic rate. I remember way back when I started work the 40% bracket seemed a long way away now most earners seem to be in it. personally I'd abolish the band alltogether and just have one basic rate. Well actually I'd abolish direct taxation full stop but that's another story!
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What does " the 40% rate is fast becoming the basic rate" actually mean? According to the lastest figures I have seen, even on the latest projections only 1 in 6 taxpayers actually have to pay 40% on that proportion of their earnings over 41K. The number caught in the band has risen, for sure, but it is hardly anywhere close to overtaking the numbers of those paying only basic rate tax.
Why not increase the tax free earnings threshold still further instead? That benefits everyone.
As to abolishing direct taxation - what alternative would you offer instead?
Why not increase the tax free earnings threshold still further instead? That benefits everyone.
As to abolishing direct taxation - what alternative would you offer instead?
// the 40% rate is fast becoming the basic rate. I remember way back when I started work the 40% bracket seemed a long way away now most earners seem to be in it. //
Not quite.
81.6% of tax payers pay the basic rate of 20% which is about 23million people.
14.7% of tax payer pay the higher rate of 40% which is about 3million people.
Osborne has just lowered the threshold for the higher rate, so changing it back will be seen as a temporary election bribe.
Not quite.
81.6% of tax payers pay the basic rate of 20% which is about 23million people.
14.7% of tax payer pay the higher rate of 40% which is about 3million people.
Osborne has just lowered the threshold for the higher rate, so changing it back will be seen as a temporary election bribe.
LG:"As to abolishing direct taxation - what alternative would you offer instead? "
Naomi: "Someone was talking this morning about abolishing direct taxation, thereby giving people control over their own money. I'd be interested to know how that would work. "
many nations operate this way indeed, less than 200 years ago that's how Britain operated.
I'm surprised that LG and Naomi are unaware of these, anyway the answers are, we put it on purchases/services etc like duty/vat but more so, we find new revenue streams by taxing other things, chewing gum for example etc, and also we create wealth by every company on earth flocking here and creating jobs etc, imagine for a minute, a giant Monaco(tax free? Please!), it's how we actually operated originally, Income tax like most inventions was British, temporary, of course! As it stands only 30% of revenue is direct anyway, would you pay more for things if you could keep your wages, all of them?
Naomi: "Someone was talking this morning about abolishing direct taxation, thereby giving people control over their own money. I'd be interested to know how that would work. "
many nations operate this way indeed, less than 200 years ago that's how Britain operated.
I'm surprised that LG and Naomi are unaware of these, anyway the answers are, we put it on purchases/services etc like duty/vat but more so, we find new revenue streams by taxing other things, chewing gum for example etc, and also we create wealth by every company on earth flocking here and creating jobs etc, imagine for a minute, a giant Monaco(tax free? Please!), it's how we actually operated originally, Income tax like most inventions was British, temporary, of course! As it stands only 30% of revenue is direct anyway, would you pay more for things if you could keep your wages, all of them?
@3T I am hardly unaware that people may wish to abolish direct taxation, Tora. I am sure Naomi is equally well aware of that, too. My question was- what system would you replace it with? And as best I can tell what you are proposing is to replace it with what amounts to a sales tax - a tax on every item/service sold, to replace the revenue raised by direct taxation.
But the devil, as always, is in the detail. How much more expensive would general consumables become, under such a proposal? How much more expensive would a car become, either brand new, or presumably second hand? How would you legislate to stop the inevitable increase in wide-spread smuggling, and people "popping across" to europe to buy cheaper alternatives under this new scheme?
I am not necessarily against such a scheme- indeed before now I have proposed in AB that we abandon corporation tax in favour of a new sales tax, but no one seemed all that enthused, and instinctively I think this amounts to a regressive tax, where the poor and disadvantaged would be disproportionately affected by such a change.
I know you dislike socialist views, but direct taxation allows for the redistribution of wealth. And in a world where the the vast proportion of resource and wealth is owned by a vanishingly small proportion of the population, largely through inheritance, a means of redistributing that wealth is necessary.
But the devil, as always, is in the detail. How much more expensive would general consumables become, under such a proposal? How much more expensive would a car become, either brand new, or presumably second hand? How would you legislate to stop the inevitable increase in wide-spread smuggling, and people "popping across" to europe to buy cheaper alternatives under this new scheme?
I am not necessarily against such a scheme- indeed before now I have proposed in AB that we abandon corporation tax in favour of a new sales tax, but no one seemed all that enthused, and instinctively I think this amounts to a regressive tax, where the poor and disadvantaged would be disproportionately affected by such a change.
I know you dislike socialist views, but direct taxation allows for the redistribution of wealth. And in a world where the the vast proportion of resource and wealth is owned by a vanishingly small proportion of the population, largely through inheritance, a means of redistributing that wealth is necessary.
As only a very small percentage of people pay any tax at 40%, I think its more important to give more money back to ordinary people. And I still maintain that any advice that Lamont gives should be taken with a bucket load of salt as he was the one that bu**ered everything up 1992 over Black Friday.
Here is a link, just in case anybody has forgotten what it was like ::
http://
Here is a link, just in case anybody has forgotten what it was like ::
http://
Yes LG it would take some working out a lot of existing things would have to rise a lot as would VAT but at least you'd have all of your earnings to decide what to spend it on. There will also be huge savings in sweeping away the inland revenue, a huge cost. Fuel is far too cheap anyway, snout £100 a packet booze £10 a pint. chewing gum £1trillion dollars a strip. All I'm saying is that direct taxation is a collection disaster. Then there is also the attractiveness of business, they'd flock here, full employment, the paramters need thrashing out but in principle it would be very fertile.
@3T We should try it out with abolishing corporation tax first. The benefit to changing to an addition or extension of the sales tax on everything - from cups of coffee through to a new car or house and including a micro-tax on every financial transaction ( Tobin Tax) would be that the exchequer would definitely get a share of all goods and services sold by multinationals in this country, unlike at present, where multinationals take advantage of all sorts of loopholes in corporate law and revenue regulations to avoid income tax.
Personally, I think that would bring billions more into the exchequer and would save HMRC a fair bit in revenue collection costs.
But before you abolish direct taxation and do away with HMRC completely, you need to be very sure that you have a mechanism in place that will reliably bring in more income than currently, and does not cost us more than the £4billion a year that HMRC currently costs us.
You would have to demonstrate that such a switch was not regressive- ie that the vast majority of tax-payers, those only paying the standard rate, were not financially disadvantaged as a result of any proposed change, and no one has been able to offer any figures on that yet. And it still does not to address the massive imbalance between the vanishingly small number of people who control the majority of the worlds wealth and resources.
If it were up to me, I would advocate the abolishment of corporation tax as a first step, to be replaced with a flat sales tax of, say 9% on sales of everything within the UK to go the exchequer. (corporation tax currently raises around 8% of total revenue to the exchequer), including a micro-tax on all inter-bank and share dealing transactions (Tobin Tax).
And, rather than just raise the threshold at which taxpayers pay 40%, I would instead just raise the tax-free earnings threshold more agressively, since this would benefit all taxpayers, not just the better-off.
Personally, I think that would bring billions more into the exchequer and would save HMRC a fair bit in revenue collection costs.
But before you abolish direct taxation and do away with HMRC completely, you need to be very sure that you have a mechanism in place that will reliably bring in more income than currently, and does not cost us more than the £4billion a year that HMRC currently costs us.
You would have to demonstrate that such a switch was not regressive- ie that the vast majority of tax-payers, those only paying the standard rate, were not financially disadvantaged as a result of any proposed change, and no one has been able to offer any figures on that yet. And it still does not to address the massive imbalance between the vanishingly small number of people who control the majority of the worlds wealth and resources.
If it were up to me, I would advocate the abolishment of corporation tax as a first step, to be replaced with a flat sales tax of, say 9% on sales of everything within the UK to go the exchequer. (corporation tax currently raises around 8% of total revenue to the exchequer), including a micro-tax on all inter-bank and share dealing transactions (Tobin Tax).
And, rather than just raise the threshold at which taxpayers pay 40%, I would instead just raise the tax-free earnings threshold more agressively, since this would benefit all taxpayers, not just the better-off.
Yes, LG, it would need careful phasing in, I'm just taling really abot a general aim, yes the transition would need careful implementation. I'm so glad that you haven't just reacted in ire like so many. I firmly believe that the world economy is purpetually stuck in first gear by this direct taxation milstone.
“…but direct taxation allows for the redistribution of wealth. And in a world where the the vast proportion of resource and wealth is owned by a vanishingly small proportion of the population, largely through inheritance, a means of redistributing that wealth is necessary.”
But leaving aside people who inherit vast sums (which I suggest is a separate argument), this question is about people on modest incomes of about £40k-£60k. People like senior nurses, police officers, vets, junior doctors, junior and middle managers, train drivers, car assembly workers. People who have studied or acquired skills and worked hard to achieve a decent standard of living for themselves and their families. Are you suggesting that such people should have their wealth (such that it is) redistributed away from them in favour of people who may not have applied themselves in the same way?
On a more general note I thought that the purpose of taxation was to secure funds for the government of the day to squander as they see fit. Although part of that process may involve robbing the “rich” to give to the poor I did not think that it was designed for “wealth redistribution”.
To suggest that people on salaries of just over £41k somehow should have their “wealth” redistributed is simply laughable. Many people on such incomes are just about getting by. I don’t mean they are queuing at soup kitchens but they are only just managing to maintain a decent standard of living to which they are entitled. Someone earning £50k will, in the coming tax year, pay £9,627 income tax and £4,231 in National Insurance. I think £13,858 (27.7%) is a little too much of the “wealth” to face redistribution.
But leaving aside people who inherit vast sums (which I suggest is a separate argument), this question is about people on modest incomes of about £40k-£60k. People like senior nurses, police officers, vets, junior doctors, junior and middle managers, train drivers, car assembly workers. People who have studied or acquired skills and worked hard to achieve a decent standard of living for themselves and their families. Are you suggesting that such people should have their wealth (such that it is) redistributed away from them in favour of people who may not have applied themselves in the same way?
On a more general note I thought that the purpose of taxation was to secure funds for the government of the day to squander as they see fit. Although part of that process may involve robbing the “rich” to give to the poor I did not think that it was designed for “wealth redistribution”.
To suggest that people on salaries of just over £41k somehow should have their “wealth” redistributed is simply laughable. Many people on such incomes are just about getting by. I don’t mean they are queuing at soup kitchens but they are only just managing to maintain a decent standard of living to which they are entitled. Someone earning £50k will, in the coming tax year, pay £9,627 income tax and £4,231 in National Insurance. I think £13,858 (27.7%) is a little too much of the “wealth” to face redistribution.
To suggest that people on salaries of just over £41k somehow should have their “wealth” redistributed is simply laughable. Many people on such incomes are just about getting by.
The principle starts from the top and filters down - rather like the laughable "trickle down" theory of economics.
If you really really really want to see a tax cut, during a time when the politicians and economists inform us that the priority is to pay down the deficit, then I would suggest that, rather than raise the tax threshold for those earning of 41K ( and remember that that represents only around 1/6 of the workforce), we should focus on raising the tax-free earnings threshold - because that benefits everyone.
The principle starts from the top and filters down - rather like the laughable "trickle down" theory of economics.
If you really really really want to see a tax cut, during a time when the politicians and economists inform us that the priority is to pay down the deficit, then I would suggest that, rather than raise the tax threshold for those earning of 41K ( and remember that that represents only around 1/6 of the workforce), we should focus on raising the tax-free earnings threshold - because that benefits everyone.
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