Tax and Welfare - a new way that PHers may approve of.
Discussion
AJS- said:
JagLover said:
30% tax sounds allot but we are already paying 32% when you take into account NI. Personally I still think that a level as high as this will entrech statism and wasteful state spending, particularly as there will be a new source of revenue from taxes on assets.
Actually we pay quite a bit more than that one way or another. With government spending running at 45% of GDP, you are paying for it somewhere. Even if it is corporate taxes, special duties on certain things it feeds back through into prices and the overall tax rate has to be around 45%AJS- said:
...With government spending running at 45% of GDP, you are paying for it somewhere. ...
Surely only if the government were balancing its books...The tax idea mentioned by the OP has been suggested on here before, less the 6% complication (if you're going to do a flat rate tax on income, just do that. No need for complication).
I think it would be a great idea, but it will never happen. Many simple changes are great ideas but will never happen (e.g. why do we have a "road fund license when it could just be scrapped and added to fuel to ensure everyone pays?).
I guess you'd also need to up the tax %age slightly to allow for the millions of additionally unemployed govt workers too.
It doesn't matter if it's a great idea, no government would go for it. It would cause huge upheaval negotiating the change, whether it was done quickly or slowly, and no government would be willing to take the risk.
Nobody likes the current system but it is a system and it works to an extent. You can tinker around the edges with it but if you make radical changes, you'd be heading for big uncharted waters...
Nobody likes the current system but it is a system and it works to an extent. You can tinker around the edges with it but if you make radical changes, you'd be heading for big uncharted waters...
caziques said:
A new book written in New Zealand called The Big Kahuna (US$11 for a kindle version) proposes a radical shake up of tax and welfare.
Three basic propositions.
Every adult receives a basic income (5500 pounds proposed)- and get rid of ALL benefits and transfers (including state pension)
Everyone pays 30% tax on everything they earn by way of income. (So on about 15000 you effectively pay back the 5500 basic income).
ALL assets, including houses, business, land etc (but excluding cars and artworks etc) will be deemed to return 6% a year. And 30% tax will have to be paid on this, regardless if it returns 6% or not. (The asset is the net amount you own, ie only the equity in a house). Earn more than 6% and there will be 30% tax to pay on the extra.
The whole point is to stop all the crap about the deserving poor and how that is determined - and to make wealthy people, who generally arrange their affairs to pay little tax, pay more.
The west is infatuated with income taxes, in general it's a very poor way of determining wealth.
Obviously there are a number of other conditions, but the basic reasoning seems sound.
Recommend you read the book.
The Big Kahuna: Tax And Welfare : Turning Tax And Welfare In New Zealand On Its Head
by Susan Guthrie, Gareth Morgan.
This ignores several problems:Three basic propositions.
Every adult receives a basic income (5500 pounds proposed)- and get rid of ALL benefits and transfers (including state pension)
Everyone pays 30% tax on everything they earn by way of income. (So on about 15000 you effectively pay back the 5500 basic income).
ALL assets, including houses, business, land etc (but excluding cars and artworks etc) will be deemed to return 6% a year. And 30% tax will have to be paid on this, regardless if it returns 6% or not. (The asset is the net amount you own, ie only the equity in a house). Earn more than 6% and there will be 30% tax to pay on the extra.
The whole point is to stop all the crap about the deserving poor and how that is determined - and to make wealthy people, who generally arrange their affairs to pay little tax, pay more.
The west is infatuated with income taxes, in general it's a very poor way of determining wealth.
Obviously there are a number of other conditions, but the basic reasoning seems sound.
Recommend you read the book.
The Big Kahuna: Tax And Welfare : Turning Tax And Welfare In New Zealand On Its Head
by Susan Guthrie, Gareth Morgan.
1 Tax isn't just there to raise money, it's designed to influence behaviour.
2 Some people will need more than that basic £5,500 to survive, for example people who are severely disabled.
3 Trying to police a 'tax on value' will be difficult.
4 As it's been set out above this tax regime seems only to apply to individuals, so how would it relate to companies? (i.e. will there be a corporation tax for example?)
5 What happens to other taxes, like fuel duty [scrap?}, road fund licence[scrap?}, vat[scrap?}, inheritance tax[scrap?} and capital gains tax[30% or scrap?}?
6 Inevitably some people will be better off and others worse off. Some substantially better or worse off. People plan for the future, and how can it be fair if a sea change in policy leaves them high and dry?
Edited by mrmr96 on Monday 31st October 10:17
Murph7355 said:
AJS- said:
...With government spending running at 45% of GDP, you are paying for it somewhere. ...
Surely only if the government were balancing its books...It's a very crude method of working out the actual tax rate for any given individual, but IMO a very accurate guide to the weight of the burden that the government imposes on us.
AJS- said:
Nice idea, and not a new one either.
The bit about the asset tax is strange, overcomplicated and would hit people on low income with assets (eg pensioners with a house paid off) disproportionately hard.
They wouldn't have paid it off though. Under the scheme only a moron would pay down any securitised debt. No one would own property, simply take out 25 year variable leases.The bit about the asset tax is strange, overcomplicated and would hit people on low income with assets (eg pensioners with a house paid off) disproportionately hard.
Taxing only the equity in an asset is flawed, but I suspect the author has a reason for this element which may not be being made totally clear. Property is theft, afterall.
If you are taxed on the equity then you would ensure that there is no equity. Such a tax would change asset ownership and create a different economy.
The clue in the authors motives lies in why he doesn't advocate a lower tax but on the full value?
In addition, accept that the £5k a year payment makes everyone owned by the 'system' and all of a sudden you can see some kind of Orwellian sickness in the authors thinking.
Far better to have no welfare per se. Flat rate of tax from zero to £1M and drop it to 10% on income above £1m (this will encourage wealthy from overseas and incentivise locals). This tax to include NHS, pensions and basic welfare.
No welfare until you have 5 years tax returns lodged at HMRC, so nothing for new arrivals, dodgers and youngsters.
No payments for having children.
Means test school fees, council housing etc.
Add a property value tax to the Council Tax.
Edited by DonkeyApple on Monday 31st October 11:27
mrmr96 said:
DonkeyApple said:
No welfare until you have 5 years tax returns lodged at HMRC, so nothing for new arrivals, dodgers and youngsters.
So how does that help people who are born disabled?DonkeyApple said:
mrmr96 said:
DonkeyApple said:
No welfare until you have 5 years tax returns lodged at HMRC, so nothing for new arrivals, dodgers and youngsters.
So how does that help people who are born disabled?mrmr96 said:
DonkeyApple said:
mrmr96 said:
DonkeyApple said:
No welfare until you have 5 years tax returns lodged at HMRC, so nothing for new arrivals, dodgers and youngsters.
So how does that help people who are born disabled?
rover 623gsi said:
indeed - most disabled people are not born disabled. The majority of them acquire their disability either through accident or illness.
Indeed, and when Mr Apple confirms to me that people who acquire a disability will be eligible for assistance I will go on to ask him how he would go about differentiating people with a genuine acquired disability vs. lazy scum who fake "back problems".Basically the point I'm driving at is that the /theory/ of the current system is ok. What's no OK is the extent to which it's manipulated and abused by undeserving people. So rather than changing the system per se, we should instead stop the abuses of it.
mrmr96 said:
rover 623gsi said:
indeed - most disabled people are not born disabled. The majority of them acquire their disability either through accident or illness.
Indeed, and when Mr Apple confirms to me that people who acquire a disability will be eligible for assistance I will go on to ask him how he would go about differentiating people with a genuine acquired disability vs. lazy scum who fake "back problems".Basically the point I'm driving at is that the /theory/ of the current system is ok. What's no OK is the extent to which it's manipulated and abused by undeserving people. So rather than changing the system per se, we should instead stop the abuses of it.
mrmr96 said:
"Calm down dear!"
No, I'm just making the point that determining between genuine cases and fraudsters isn't easy and we must not punish the genuine cases in pursuit of the fraudsters.
No, I'm just making the point that determining between genuine cases and fraudsters isn't easy and we must not punish the genuine cases in pursuit of the fraudsters.
I totally agree but you seemed to burst out of the blue with some kind of hysterical 'will no one think of the children!' commentary when I had only posted a very elementary outline of a hypothetical structure of which a genuinely disabled proportion of the work force will be tiny and any sane reader would not leap to the conclusion that the proposal would deliberately discriminate against genuine welfare cases.
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