The fairest way to tax people?

[1]

The problem with a simple flat rate of income or sales tax is that people will actually realise how much tax they are paying.

When you add it all up I suspect the averaged person pays something like 70 - 80% of everything they earn in tax.

[ErnestM]

Consumption tax not income tax would be my vote if you have to have taxes. In the US, that is being referred to as "the fair tax" (google "fair tax" for more info)

Personally I believe that taxes (in general) are the last vestigial remnant of Imperial Autocracy...

("now we see the violence inherent in the system", etc, etc")

ErnestM

[The Moose]

If I remember rightly from a question I posed on a similar thread a while back, the amount spent by the government is 115% of the total GDP of the country on an annual basis (note, these are not my figures, or my calculations - what I remember from before). Now this would indicate a minor problem...!!!

To be fair if you got rid of the majority of people wasting the money you could do much better.

If you are a business you collect VAT on behalf of the government (i.e. their clever ways of making businesses do their work for them). I would propose a variable %age value added tax on all goods (imported or otherwise) and scrap everything else.

This wouldn't penalise one for saving, you could get rid of all the bloody tax collectors etc etc etc that don't do anything productive for the country and possibly end up with a better ratio of earnings to spendings...!!! The other benefit is that foreigners will be paying this VAT as well, so we will be taxing their income too.

This (in my mind) is the fairest option. I can see other options being fair, I just don't necessarily agree with them!

If I was in the position, I would push this.

Cheers

The Moose

[Mattt]

Out of interest, what proportion of the country pays the 40% tax?

[klootzak]

Mattt said:

Out of interest, what proportion of the country pays the 40% tax?

Only around 6.2 million earners fall into the 40% tax band. That's 20% of all earners or just 10% of the population.

Not so surprising when you consider that the median earnings for an employed person in the UK are £20,801 a year.

I can't lay my hands on the precise figure right now, but the total tax burden (including all the taxes they would pay, income, NI, VAT, etc) for a working family in the UK is somewhere around 44%.

k

[A.Wang]

Hong Kong got it pretty spot-on - no VAT, no capital gains, no death tax, income tax capped at 17%. The latest addition to the list is no tax on wine, only beer and spirits.

How do they "make" money? Well alcohol, fags, gambling etc. all take a huge hit. Still, their fuel taxes are lower than ours!

It seems to have worked very well for a tiny city packed with 7 million people...the poorest people don't get hit with ridiculous income tax (the starting rate is just 2%), and those who earn enough to get taxed at 17% are encouraged to spend what they earn at home, ploughing it back into the local economy.

Win-win for government and citizens.

Now why can't we do that here? Well we have somehow committed ourselves to carry generations of those who are too lazy to work. I blame Labour (both Old and New - they're all s off the same block).

[DangerousMike]

I suggested a single flat rate of income tax to a tax adviser once, and said that surely it was a good idea as the huge cost of the inland revenue would be slashed (no complicated sums). Didn't go down to well but there were no real arguments against it put to me.

personally I am of the view that the primary consideration of the state should be to be as small and non-interfering as possible. Low taxes are both a consequence and a goal of such a philosophy.

[johnfm]

Here you all go

155 pages of flat tax analysis in a PDF.

All your queries answered.

In summary, around 20%~ish income tax, VAT, corporation tax and CGT would initially result in a dip in revenue, but lead to greater total tax receipts after a small number of years, lower costs for collection, lower rates of avoidance etc etc


http://tpa.typepad.com/research/files/flattax.pdf

Edited by johnfm on Monday 12th October 16:28

[blindswelledrat]

ErnestM said:

Consumption tax not income tax would be my vote if you have to have taxes. In the US, that is being referred to as "the fair tax" (google "fair tax" for more info)

Personally I believe that taxes (in general) are the last vestigial remnant of Imperial Autocracy...

("now we see the violence inherent in the system", etc, etc")

ErnestM

Certainly not something you could introduce though I would suspect.
The economy would be ruined.
If things were suddenly 50% more expensive then people would simply not buy anything and switch dramatically to saving.
Can you imagine buying things like cars and paying 50% more?
And presumably houses would need vat to compensate?

[fido]

Vixpy1 said:

First 10K tax free, flat rate 25% after that. Though i'm not sure how the sums would add up

They wouldn't. We would have no NHS, no free education, and bin collections every month.

[Don]

Alex said:

We need a flat-rate of income tax with a high tax-free allowance. Then we need to abolish all the indirect and social engineering taxes.

They'll never do it, though. Government just can't resist wanting to interfere.

[JonRB]

otolith said:

The only universal truth is that if you ask people who should pay more tax, they won't nominate themselves - i.e. "The Rich" means "The Richer Than Me".

So very true.

[johnfm]

fido said:

Vixpy1 said:

First 10K tax free, flat rate 25% after that. Though i'm not sure how the sums would add up

They wouldn't. We would have no NHS, no free education, and bin collections every month.

Not so.

By the way, we don't have 'free' eduction. We taxpayers pay for it.

There would still be plenty of tax revenue for the NHS and education etc if the government learnt to downsize and spend less on non-essentials.

The benefits budget alone exceeds our tax revenues - so I'd start there.

[Halb]

otolith said:

People have different ideas of what constitutes "fair".

Everyone pays the same amount
Everyone pays the same percentage
Everyone pays the same percentage up to a cap
Everyone pays the same percentage after an allowance
Everyone pays an increasing percentage according to wealth
Everyone pays according to how much they earn
Everyone pays according to how much the consume
Everyone pays according to how much they own
Everyone pays according to how much they need

Some people think it unfair that some have more than others. Some people think it unfair that some who work hard are taxed to give the money to some who don't.

The only universal truth is that if you ask people who should pay more tax, they won't nominate themselves - i.e. "The Rich" means "The Richer Than Me".

Best post so far;)

[Dunk76]

blindswelledrat said:

ErnestM said:

Consumption tax not income tax would be my vote if you have to have taxes. In the US, that is being referred to as "the fair tax" (google "fair tax" for more info)

Personally I believe that taxes (in general) are the last vestigial remnant of Imperial Autocracy...

("now we see the violence inherent in the system", etc, etc")

ErnestM

Certainly not something you could introduce though I would suspect.
The economy would be ruined.
If things were suddenly 50% more expensive then people would simply not buy anything and switch dramatically to saving.
Can you imagine buying things like cars and paying 50% more?
And presumably houses would need vat to compensate?

In theory you could - because essentially (in theory) all money is tax.

However, you'd need a budget surplus and an economy on the rise in order to do it successfully.

Last time we were in surplus was 1997.

[ErnestM]

blindswelledrat said:

ErnestM said:

Consumption tax not income tax would be my vote if you have to have taxes. In the US, that is being referred to as "the fair tax" (google "fair tax" for more info)

Personally I believe that taxes (in general) are the last vestigial remnant of Imperial Autocracy...

("now we see the violence inherent in the system", etc, etc")

ErnestM

Certainly not something you could introduce though I would suspect.
The economy would be ruined.
If things were suddenly 50% more expensive then people would simply not buy anything and switch dramatically to saving.
Can you imagine buying things like cars and paying 50% more?
And presumably houses would need vat to compensate?

For the USA, it could replace the income tax with a 27%-29% consumption tax on FIRST SALE retail consumption...

...What you also have to keep in mind is that everyone would immediately be taking home MORE MONEY as well...

ErnestM

[Halb]

Dunk76 said:

However, you'd need a budget surplus and an economy on the rise in order to do it successfully.

Last time we were in surplus was 1997.

Have you any links to that? I looked and found that we had a surplus in '89 (that went) but also found this
http://www.encyclopedia.com/doc/1P2-18788240.html
"TAX revenues are gushing into the Treasury at a record rate, with new figures showing that Britain amassed a budget surplus of pounds 37 billion in the last financial year - nearly GBP 3 billion higher than Gordon Brown, the chancellor, forecast in his Budget last month. " for 2001

Edited by Halb on Monday 12th October 11:17

[Dunk76]

Halb said:

Dunk76 said:

However, you'd need a budget surplus and an economy on the rise in order to do it successfully.

Last time we were in surplus was 1997.

Have you any links to that? I looked and found that we had a surplus in '89 (that went) but also found this
http://www.encyclopedia.com/doc/1P2-18788240.html
"TAX revenues are gushing into the Treasury at a record rate, with new figures showing that Britain amassed a budget surplus of pounds 37 billion in the last financial year - nearly GBP 3 billion higher than Gordon Brown, the chancellor, forecast in his Budget last month. " for 2001

Edited by Halb on Monday 12th October 11:17

No, it was from memory.

2001 it was then.

Pissed that up the wall a bit, didn't he?

I have a vague memory of that surplus being down to the (deliberately) underestimated increase in taxation from the change in Company Car Tax, Inheritance Tax, and the raid on Pensions which was announced in March 2001.

Certainly my personal taxation went up by £7600 per annum in April 2001 due to my company car (a perk, and not a tool for work, don't forget) having high emissions - even though it had been ordered six months before he changed the taxation device.

My socialist-envy capitalist pig transportation device?

A Nissan 200sx Touring doing around 50,000 miles a year.

A right fking perk that was.

Edited by Dunk76 on Monday 12th October 11:23

[elster]

johnfm said:

fido said:

Vixpy1 said:

First 10K tax free, flat rate 25% after that. Though i'm not sure how the sums would add up

They wouldn't. We would have no NHS, no free education, and bin collections every month.

Not so.

By the way, we don't have 'free' eduction. We taxpayers pay for it.

There would still be plenty of tax revenue for the NHS and education etc if the government learnt to downsize and spend less on non-essentials.

The benefits budget alone exceeds our tax revenues - so I'd start there.

We would get the same income if everyone was taxed at 12.5%

23% if there was the £6k allowance.

This is income tax.

Edited by elster on Monday 12th October 11:29