Simpler Tax and Benefits System

[Snowboy]

mrmr96 said:

Some good arguments . . . .

Those are all good points.
But, I think that if someone was getting paid the equivalent of 12k per annum for 2 days work then it would be quite a high daily rate.

Perhaps this could be easily remedied by saying it’s tax free to earn up to 12k, but any single day earning of over £60 would need to be recorded by the employer, even of no tax was paid.
Just a simple case of recording the amounts and the NI number and sending this to the tax man.
But no hassle with employers NI and the like.

I’m sure some people could work out dodges and ways to avoid some tax.
But that’s done anyway.
There’s already plenty of cash in hand work around – this just legitimises it.

[rover 623gsi]

Everyone pretty much agrees with the principle that we ought to have a simpler tax / benefit system. However, the problem is that once you start putting forward ideas it becomes quickly apparent that creating a simple tax / benefit system isn’t very simple at all.

[Shaolin]

I'd prefer to see all taxes as sales taxes rather than income taxes.

More difficult to avoid that way and more incentive to work and earn more.

Different tax rates for basic items, nice to haves and luxury goods.

[V8mate]

Shaolin said:

I'd prefer to see all taxes as sales taxes rather than income taxes.

More difficult to avoid that way and more incentive to work and earn more.

Different tax rates for basic items, nice to haves and luxury goods.

[king arthur]

Shaolin said:

I'd prefer to see all taxes as sales taxes rather than income taxes.

More difficult to avoid that way and more incentive to work and earn more.

Different tax rates for basic items, nice to haves and luxury goods.

Hasn't it been shown that for that to work, VAT would have to be stupidly high?

[V8mate]

king arthur said:

Hasn't it been shown that for that to work, VAT would have to be stupidly high?

The tax take necessary is a factor of the size of government. As always, policies would have to go hand in hand.

[Snowboy]

V8mate said:

king arthur said:

Hasn't it been shown that for that to work, VAT would have to be stupidly high?

The tax take necessary is a factor of the size of government. As always, policies would have to go hand in hand.

I believe the major argument against that is the problem with tourism.
It would make the UK look like a very expensive holiday destination as all the prices in shops and hotels would be so much higher.

Apart from that, it’s a nice idea.
But, it would need some sort of international implementation to work.

[sinizter]

Stevenj214 said:

Proposal:

• Basic Guaranteed Income of £15,000 given to all UK citizens every year.

• Flat Rate Tax of 50% on all income above £15,000.

• Repeal of National Minimum Wage.

• Repeal of all other financial benefits.

What would be the effect of a system like this (or similar - the numbers are a bit of guesswork)? Would it be financially viable?

I wouldn't be working in this country for the privilege of paying 50% on all income above a measly £15,000.

30%, yes. 40% maybe .... 50% Hell, No.

[Stevenj214]

V8mate said:

Frankly, I think my wife and I would give up work if you offered us fifteen grand each to stay at home. We're in our 40s, kids have left home; that would bring a sufficiently comfortable lifestyle for the two of us to do sweet FA.

Think how many people earn enough in 1 or 5 years that they could live a sufficiently comfortable lifestyle for the rest of their lives yet continue to work.

I would hazard a guess that many people in a similar situation, with similar intelligence levels to you and your wife, would not do sweet FA.

I would guess:

Part time work
New business venture
Study

Either way, you and your wife's previous jobs would then be available for someone else who does want to work.

[Stevenj214]

Would there be as many teenage pregnancies if young girls knew at age 18, they would receive the guaranteed minimum income?

Again, it would remove the need to 'scam' the system by becoming a sprog factory to receive a free house and benefits.

[Snowboy]

V8mate said:

Frankly, I think my wife and I would give up work if you offered us fifteen grand each to stay at home. We're in our 40s, kids have left home; that would bring a sufficiently comfortable lifestyle for the two of us to do sweet FA.

That could work just like an early retirement fund perhaps.


But, how about if you got 6k in benefits, but you have a tax free allowance of 12-15k.
6k will keep you alive, but it’s no much fun.

Some sort of sliding scale of benefit loss vs income so you’ll always be significantly better off with a job than without one.
Somewhere around about the 12-20k mark the benefits drop off and the salary takes over.

But, if you do hit 40 or 50 and you have saved and invested enough to stop work and live on 6k a year, then that’s great.
Retire and enjoy it.

[Gaspode]

king arthur said:

Hasn't it been shown that for that to work, VAT would have to be stupidly high?

I like this idea, as it makes as much tax as possible elective. There would, however, still be a need to top this up with some earnings-related tax to avoid VAT having to be pushed higher and higher, resulting in a smaller and smaller tax take.

So how about this:

1. Everyone gets a 10k or thereabouts tax-free allowance
2. Everyone earning over that has to pay a flat rate of 20% of earnings OR they can choose to make a fixed annual tax payment of 20k (or whatever) and no questions asked about their total earnings. This works on the basis that rich people will tend to spend more on nannies, butlers, expensive meals out in restaurants and so on - all of which contribute more to the economy than simply paying more tax would. So if you don't want the government to know how much you earn, just stump up the flat fee.

The idea is that these figures would be set to provide a base minimum level of government spending - enough to pay for the core central government services, the government would define what this would be. Then to top it up:

3. VAT is calculated each year to provide the necessary additional income to meet the government's election pledges/promises

Local government could be funded in the same way, with taxpayers making a choice whether to pay a proportion of their earnings or a flat fee.

[Snowboy]

But, then I’d earn my money in the UK and do all my shopping in France.

Then I’d quote some random freedom of movement of goods in the EU bullst and bring it back for personal use without paying duty.

[Gaspode]

Snowboy said:

But, then I’d earn my money in the UK and do all my shopping in France.

Then I’d quote some random freedom of movement of goods in the EU bullst and bring it back for personal use without paying duty.

Would you be able to afford the VAT on the Ferry/Tunnel tickets, though? It could be perfectly possible that HMRC would determine that the Value Added in getting someone across the channel was actually very great, and would therefor attract a very high rate of VAT on it...

[V8mate]

Well here's the UK 2011/12 tax take by source.

For me, personal taxation has to go. Corporation tax is already reasonably competitive. So the government has to find £150bn in savings if it doesn't want to raise any of the other taxes.

Source	2011/12 £bn
Income tax	152.6
NI contributions	102
Value added tax	98
Corporation tax	43.4
Fuel duties	26.9
Business rates	24.5
Council tax	26

[Snowboy]

Gaspode said:

Snowboy said:

But, then I’d earn my money in the UK and do all my shopping in France.

Then I’d quote some random freedom of movement of goods in the EU bullst and bring it back for personal use without paying duty.

Would you be able to afford the VAT on the Ferry/Tunnel tickets, though? It could be perfectly possible that HMRC would determine that the Value Added in getting someone across the channel was actually very great, and would therefor attract a very high rate of VAT on it...

I shall use the internet to order it online from a French website and pay all sales tax there. Then have it shipped to me.
Or something like that.

I love the idea of all tax being paid when we spend money not when we earn it.
But in practice I don’t think it would work in a global economy.

I wonder how many people would want to be employed by a UK company but then actually live their lives overseas.

[12gauge]

Stevenj214 said:

Removing Housing Benefit and Council Tax Benefit alone would save £16.6bn on payments and £0.8bn on administration.

http://research.dwp.gov.uk/asd/asd5/rports2005-200...

That report is from 2005. Housing benefit is now nearer £25bn...

[markcoznottz]

V8mate said:

Well here's the UK 2011/12 tax take by source.

For me, personal taxation has to go. Corporation tax is already reasonably competitive. So the government has to find £150bn in savings if it doesn't want to raise any of the other taxes.

Source	2011/12 £bn
Income tax	152.6
NI contributions	102
Value added tax	98
Corporation tax	43.4
Fuel duties	26.9
Business rates	24.5
Council tax	26

Look at ni contributions! How do they collect that much?!
Council tax surprisingly low, shows how many people have thiers part/fully subsidised.
Fuel tax and business rates surely stagnating or falling even with recent increases.

With regard to changes, agreed never goin to happen. IDS has locked himself in a room for 6 years+ and he can't make nor tale of it. I think at last count over 60 different pieces of state payment issued, st piled on top of st, excuse the French, like a patchwork quilt. You can't have a system that pays people not to work, you can't forever import a workforce, you can't keep raising tax. Looks like all the easy options are gone, political class aren't going to get rid of thier old boy network jobs, so the only end result is that will be some SERIOUS losers in all this eventually, with a genuine underclass who will get hardly anything from the state, because if we're talking priorities the average tax paying joe has to be kept solvent to keep the merry go round going, otherwise it will stop.

[Murph7355]

markcoznottz said:

Look at ni contributions! How do they collect that much?!...

Employers' NI.

No cap on personal payments either.

One more blag.

[AJS-]

I think a lot of tweaking with those numbers is needed first. I'd be thinking more like 5K "negative income tax" and not more than 25% income tax on every pound earned. That way it's always worth working, every pound is worth earning, but to get a decent standard of living you have to put some effort in.

Under your regime, I'd probably take the money and spend as much time on holiday somewhere cheap as possible. Ideally with my also eligible wife (and kids?) and have a grand old time in Thailand.