50p tax rate - perception or impact

[Marmora Man]

What is more important in the discussion regarding the 50p tax rate?

1. The perception it creates that the 320,000 earning above ?150,000pa are "in this together" and paying their share

2. The actual absolute sum it raises in revenue for Gov't

3. The potential negative impact on entrepreneurs and wealth creators

A rational observer would ignore the perception issue and concentrate on points 2 & 3. If the absolute sum raised (after costs of collection) is negligible and there is an actual / probable negative impact on wealth creators then the rate should be abolished.

If the absolute sum raised is substantial (say > ?2bn) and there is little / no evidence of a negative impact on wealth creators - leave it unchanged.

However, in all probability it will be politics that takes precedence as the comment on the BBC 50p Tax Rate story demonstrates. It would take a brave politician to make a rational decision in the face of such a mob.

[Jeremy]

The BBC article is what caused me to revisit the "Inequality In Britain" thread.

In theory I am in favour of the 50p bracket, as well as the VAT rise - it seems fair that cuts in services are offset to an extent by increased taxation. However, I think the main reason it hasn't brought in a lot of extra revenue is because most wealthy people have ways of obfuscating their real income.

In practise, if it is not working and there is genuine evidence it is harming the economy, then reluctantly I would agree that it should be abolished.

There has been a bit of discussion on here about wealth tax - I see Italy are introducing one as part of their austerity package. However, it is means tested on income, so may suffer from a similar problem.

[DJKillaQueen]

Whether the rate is 50p or 45p the wealthy will still find ways of dodging it. Tbh I don't really know where I stand on this because there is no convincing data that it will make much difference to commerce and/or jobs either way. I would favour a raise in the threshold over a tax cut though I think, because those above a certain income can more than afford to pay it. Only their personal greed makes them unhappy about doing so. What that threshold should be though is perhaps another debate altogether.

I feel that the way to motor the economy out of recession, is through investment in small business (rather than relying on big business). If we are going to reduce taxes for the wealthy then better to do it as tax breaks on business tax rather than on personal salaries or wealth.

Having said all of that though.....we live in a ludicrous system of greed and inequality so the older I get, the less I'm caring what the government or world banks do anyway. Nothing is going to change.....and we'll see another crisis within a generation and yet more people turned over whilst those at the top remain largely unaffected. I've lived through three recessions, and I'm only in my early 40's............it's all bs and the those that keep it turning are deluded beyond help.

[Huguenot]

It might be greed...

...Or possibly it could be resentment at the abuse they get when they already pay more tax than the average person by several orders of magnitude, and it was them that risked everything to launch their own company, it was them that worked 14 hours a day, it was them that had no weekends, it was them that got ripped off and had their employees steal from them...

I worked throughout my university years, and went straight into full time work before I'd finished my finals - I didn't even get to collect my degree because of work commitments. Most of my mates pissed off for a couple of years then before starting work.

Then quite a few got snotty because I got paid more than them, said I had to pay more share of the rent etc.

So they get to pay less rent because they had a five year holiday? Fu*k off.

[david_carnell]

Bitter, moi?

Nice use of anecdote there though.

All people with high income made those sorts of sacrifices did they? Hmmm.

[StraferJack]

I had to read Huguenot?s post a few times to see if I was missing something

So if everyone worked as hard as he did when he was young, they too could, no would, be earning as much as him and wouldn?t want any extra cash?

Wow

And we are raising taxes so that other people ?pay less rent?

I had no idea? I thought the economy was knacked and a deficit needed paying off. I didn? t realise it was a bunch of slackers asking expats for handouts

[Huguenot]

Ha ha - I was just putting a perspective against this relentless attack on wealthy people that presumes they 'owe' more tax, and are greedy if they don't pay it.

I have no idea how people make their money, but the assumption that they don't deserve it and are either avaricious or thieves is completely inappropriate.

I'm sure there are some people that don't get the opportunity and maybe in that context a social safety net is a resposnbility that the more fortunate may have a moral obligation to take on.

However, for every one of those I reckon there's five that had plenty of opportunity and just didn't fancy knuckling down, didn't fancy taking the risks or putting in the hours, and are now getting all hoity toity that 'rich' people somehow owe them money.

I can smell the sour odor of middle class self-righteous entitlement...

[Loz]

An interesting couple of ideas from the Guardian...

Firstly, MM's 320,000 high-rate tax payers contribute 24% of income tax intake. But then consider why the tax may do more harm than good.

An individual on ?500k per annum will pay ?241k a year Income Tax and Emploees NI - of this ?17.5k is due to the increase from 40% to 50%. The additional income raised is therefore ?17.5k. If one person on ?500k pa leaves the country or retires early we "lose" ?241k tax income.

Therefore the additional income raised from 14 people (?17.5k x 14 = ?245k) is required to cover the loss from one person leaving/retiring (?241k). So if 1in 15 stops paying the tax by emigrating or stopping working we break even. If 1 in 14 stops we are worse off.

And if the one who leaves is on ?5m pa then we need shedloads of people "only" on ?500k to cover the loss!!

[DJKillaQueen]

it was them that worked 14 hours a day, it was them that had no weekends, it was them that got ripped off

This could be many minimum wage employees too. Where is their financial reward for the 'hard work'? So that's my problem. Hard work is not rewarded in equal measure, and many more people would love to work for themsleves if only they could get a start up loan.......it's not a level playing field and never has been and yes greed is at the heart of 'what's mine is mine' and 'because I worked for it'. Inequality is the biggest ill of any society. The more unequal a society is, the more violent it is and so on. So I personally struggle to find any positive reasoning when it comes to the protection of minority wealth.

I was just putting a perspective against this relentless attack on wealthy people that presumes they 'owe' more tax, and are greedy if they don't pay it.

You always jump on this line H tbh. You can't seem to seperate the experiences of individuals from the more serious issue of the consequences of inequality. Every piece of data shows that poverty has grown globally and that the inequality gaps have risen. Inequality is disastrous for social cohesion and for a healthy society.

How about we put a perspective on what level of income a person really needs to live on, as opposed to the addiction that makes those at the top pursue maximum profit over the general well being of humans. It's that attitude that I morally object to...and it's one that permeates every aspect of our global economy...an economy that incidentally is doomed to collapse unless we do something to change it's reliance on debt.

[Huguenot]

That's just got an almost comic-book simplicity about it's assessment that makes it meaningless.

Contrary to popular belief, 'rich' people don't just take in piles of money and sit on it - they reinvest the money to create millions of jobs.

Most of the high earners who are questioning higher tax rates are not trying to keep the money to themselves, they are arguing that they are more likely to benefit society by investing in growth in the economy, than the government is going to generate through inefficient public spending and welfare payments.

In that sense it's feck all to do with 'what's mine is mine'.

They argue that it is excessive welfare payments and an entitlement pathology that has created the wealth gap - because the welfare payments trap the poor in a situation where there is no incentive to work, and no investment in business to generate the opportunity.

They may well be right.

What I do know is that your world of rich people who are greedy thieves stealing from the deserving poor may work in children's books, but it doesn't even sniff at real societies or economies.

[Ridgley]

I understand your points H and you are right but there are a lot of wealthy people who have offshore accounts who work and live in Britain and don?t pay tax or if they do it a game called hide the money and pay as little as possible. When it comes to paying taxes it the pooper people that are hit more as well.

[Jeremy]

Huguenot Wrote:

-------------------------------------------------------

> Contrary to popular belief, 'rich' people don't

> just take in piles of money and sit on it - they

> reinvest the money to create millions of jobs.

In this scenario the money they reinvest would probably never have been paid to themselves as income.

[Senor Chevalier]

It needs to go. I'm not going to bang on about taxing wealth here, but it is a tax that largely misses the richest guys who structure around it and as Arthur Laffer would point out the amount it will raise is debatable.

I assume that if there is a change they will also take the opportunity to fix the tapering out of the personal allowance which was an undisputedly moronic change that was introduced at the same time to give a marginal tax rate of around 80% to those in the zone. Again hitting one group of people (who do OK, but are not stinking rich) disproportionately compared to people with far higher incomes.

You'd think that when setting tax rules some input from people with a basic regard for maths would be sought to cull the nonsensical "out of the box" thinking that emerges from political brainstorming exercises. Especially after the 10p tax fiasco. There's really no excuse.

[david_carnell]

I guess I could feel more sympathetic to Huguenot's plight if he was, in fact, paying the 50% tax rate. But he doesn't. Because he lives and works abroad.

Standing outside the tent pissing in.

I'm not sure you get to bleat about how awfully hard done by the rich are from your sunnier climbs. You're essentially a tax exile.

And whilst I respect all those who use their fortune for job creation, they are the same people who threatened that the minimum wage would destroy businesses - cobblers then as now. The idea of a philanthropic rich who, if left to their own devices, would donate loads to charity, create wealth throughout society (the notorious "trickle-down effect" is palpable nonsense. They don't unless you make them.

I can see the logic of the argument about the small amount of extra income that it generates - but why don't all these people leave the country because of the 40% tax rate? Is the extra 10% really so punative you throw your toys out the pram and head for the Cayman Islands? I doubt it.

[Ridgley]

David_Carnell wrote

------------------------

Standing outside the tent pissing in.

Love the turn of phrase ;-)

[Huguenot]

D_C, you're making the same mistake as DJKQ in making this a cartoon style argument between the rich and the poor, and charity and indulgence.

It's a simplistic argument which contributes nothing to the long term debate.

As for the ad hominem attack - really? Isn't that a little below you?

I don't have a plight. I was just pointing out that assuming rich people are thieves and the poor are deserving victims is to fabricate a back story that has little basis in reality, but gives moral justification for what is actually a smash and grab raid otherwise known as a forcible redistribution of wealth.

I made no claim about "a philanthropic rich who, if left to their own devices, would donate loads to charity", so knocking this down is a straw man. Wealthy individuals will do whatever is right for them - and that involves investing in companies that generate wealth for their employees.

Your fierce rejection of this I'm sure is embedded in some socialist conviction that either the workers or the state should own the means of production and that we'd be better as a result. There's no evidence that this is the case.

Once again, your argument about the additional 10% rate misses the point - as I've said before, the complaint is from people who seriously question whether continuing to wank more money into the government is the best way of solving our problems.

Yours is simply an ideological position. You think that if you take rich people's money and give it to poor people everything will be alright. This is not sound reasoning.

By and large socialists lay claim to a moral argument that redistribution of wealth through taxation is the solution to society's problems. This is fatuous. All the evidence is quite to the contrary.

[StraferJack]

?wealthy individuals will do what is right for them?

That sounds fine and dandy ? but when poorer people do the same with the means at their disposal ? strikes for example ? then they are roundly condemned

Nor do I think anyone is claiming ?assuming rich people are thieves and the poor are deserving victims?

If rich people have done well for themselves, good luck to them. But there comes a point in time where the people with the cash need to do pay their fair share to the society that enabled that wealth. This is one of those times. It doesn?t mean they have to give their hard earned cash to ?the poor? ? but it does mean a country facing a deficit (and we aren?t alone) could do with more grunt

Be you rich or poor, the society you live in is facing major problems ? problems which need money. The poor aren?t deserving victims, but are bearing the brunt of the current measures. The rich could be doing a bit more, surely?

(here it should be noted that I?m open around the 50p tax bracket ? if it does raise the targetd 2ish billion then I can?t see a problem)

But let?s go with the theory that the rich know best what to do with the money ? better than governments

Is there any chance those rich people would get around to sorting out the problems, instead of just call for more QI?

I?m not looking for simple redistribution of wealth, and to claim that is the debate is missing the point

[DJKillaQueen]

It's not a cartoon argument H. We live in a system that causes more problems and misery than problems it solves. And even if I were to accept that a fractional monetary system works.....how many more times do you think the World Bank, run mainly by the US federal reserve can go on inflating the world's economy by printing money every time it reaches crisis point? Ok perhaps that's not the core discussion at hand in this thread but to argue that the idea the wealthy should pay more tax is simply an attack on the rich is equally cartoon I'm afraid.

We don't live in a fair economy. To make money you need money in the first place (even if it is just a loan) and unfortunately that is beyond the reach of the majority of people living on this planet irregardless of talent or work ethic. 1% of the world owns 40% of it's wealth or something like that. Only a fool would really believe that the 1% somehow work harder or are more deserving than the 99%.

My view has nothing to do with socialism (the bog standard claim of anyone who criticises the current economic system - so bog standard it's laughable)....it is to do with the blatent realisation that a system that rewards the few and enslaves the rest is not a good thing for humanity. I don't give a hoot for 'isms', just for balance, fairness and a cohesive and healthy happy society.

I have never claimed that taxing the rich heavily to provide for the poor is an ideal answer either. What I'm arguning is that the current economic system does not work on any level. It simply gives power to the few, the consequences of which are waste, the destruction of the planet, brutal poverty and the subjegation of developing and poorer countries via debt to America and the other superpowers, whose agenda is not the well being of those developing countries, but to bleed them as dry as possible through the pursuit of profit. And it doesn't matter if it's a US multinational or the self made small business tycoon.......nothing is never enough.....where does it stop?

Yes I'm arguing from a philosphical perspective, mainly because I am pessimistic about the worlds willingness or ability to change that system before it implodes completely. And arguing the toss over a measly 5% of tax for those who can afford to pay it I'm afraid is the perfect demonstration of how sick our values as a species really are.

[david_carnell]

Huguenot - to accuse me of using cartoon arguments and then proceed to paint an inaccurate portrait of me as some unreformed Scargillite is not only hypocritical but ridiculous.

And whilst knocking down my straw man you proceed to build your own. I have never expressed a desire to take into state hands the means of production. Do I think some public infrastructure fails miserably when left to the private sector on the other hand? Absolutely.

And perhaps you could outline your own ideological standpoint - just so we all know you have solutions as well as criticisms.

[DJKillaQueen]

I agree SJ. And of course there are other things that can be done to make sure the wealthy are paying the taxes they should be, by closing loopholes. Even I, as a self employed person pay proportionately less tax than someone earning the same amount PAYE. That's because I'm allowed to offset some of my receipts, including part of the utility bills I pay for my home. There is nothing fair about the current tax system, but it is always those that do best out of it who whine the most it seems.

[Jeremy]

Wealthy individuals will do whatever is right for them

Indeed. But maybe they should do what's right for the community instead..

[Huguenot]

Who know's what's right for the community?

Do you pay them welfare or facilitate jobs? I know where my belief lies, but I can't do anything about it if you've taken my cash.

There's two ways of generating more cash for the public purse - you can either asset strip those who still have any cash left, or you can get out there and make some more money and raise tax revenues that way.

There are undoubtedly those that simplistically believe that the only solution when their wallet is empty to say 'who can I rob to fill it again?'.

There are others that argue that instead, we should be thinking about how we can get out there and generate some wealth.

Perhaps it's the latter option that is actually 'what's right for the community' Jeremy?

It is a mark of the moribund nature of British society that when under pressure the best of us can only roll out tired and unproductive Robin Hood arguments about taking from the rich to give to the poor.

If Robin Hood had any sense of responsibility he'd have been less of a parasite.

In its empty desperation British society is willing to destroy the incentives and motivation for the brightest and most capable people to get them out of that hole.

More fool Britain...

[Huguenot]

"a system that rewards the few and enslaves the rest"

Oh please. What bollocks. Modern UK has no idea what slavery is, people coming out with that should get around more.

The greedy motorists of East Dulwich are playing their part in destroying half the planet and half the rest are really enslaving Bangladeshis for cheap trainers. Perhaps they should think about what's right for the community? People in glasshouses etc.

"I don't give a hoot for 'isms', just for balance, fairness and a cohesive and healthy happy society"

I don't want to call you naive, but have you never noticed the pecking order and physical justice generated amongst the working 'poor'?

That's human nature that is. Whatever happens we live in hierarchies, 'La Revolucion' just swaps one set of petty tyrants for another. I don't want yours much either thanks.

[StraferJack]

you are being awkward for the sake of it now H

"or you can get out there and make some more money and raise tax revenues that way. "

So all the people that have had business go under in the last few years weren't trying to make money?

I don't know if you have noticed but it isn't the tax regime that's making "making money" hard in the UK

"Do you pay them welfare or facilitate jobs?"

Again, that's not the question anyone wants answered. The question that needs answering is, the government/country needs money. It needs it to reduce the deficit and stimulate the economy. THEN the people who start business and create wealth can crack on

So the question is where does the money come from - because it can not come from people magically "making" new money. Far quicker for everyone if people who have money cough up before the whole market crashes good and proper, and those wealthy people lose their supposed wealth (or have they got it all stored in the mattress?)

[Huguenot]

And therein lies the redundancy of your argument SJ - you can think of no other way out of this impasse than 'people who have money cough up before the whole market crashes good and proper'

And what do you think is more likely to create a market crash than taking the cash out of it and bunging into government?