Income tax - should it be capped?
Discussion
I despise tax.
The concept of mindlessly giving away bloody great chunks of my income for purposes largely unknown to me is the ultimate ball ache.
Ok, so we have to pay something.
But shouldn't there be a limit?
Just as there's an allowance right at the bottom, shouldn't there be a vast acreage of loot in the clouds to which attainment yields more wonga for the pursuit of Lambonic hedonism? Or great works of charidee, whichever is yer poison?
In other words - an INCENTIVE?
How could this work? Well, as indicated, you could set a simple limit above which tax simply wasn't levied?
OR, as I was thinking yesterday, how about limiting tax to the preposterously unworkable EU directive on working hours? In other words, tax rates apply but only for 37 hours' income so that if you are so predisposed or required by the demands of the job, all earnings based on additional hours worked are tax free.
I am convinced that individuals and corporations do better with more dosh of their own than the mandarins in local and national government.
It sounds revolutionary but who would you rather trust with YOUR money - yourself, or somebody who somewhere down the line wants to pay Marvin Pomfret £75,000 for beating up a prison officer?
More sensible policies for a happier Britain c/o your caring sharing Derestriction Party.
The concept of mindlessly giving away bloody great chunks of my income for purposes largely unknown to me is the ultimate ball ache.
Ok, so we have to pay something.
But shouldn't there be a limit?
Just as there's an allowance right at the bottom, shouldn't there be a vast acreage of loot in the clouds to which attainment yields more wonga for the pursuit of Lambonic hedonism? Or great works of charidee, whichever is yer poison?
In other words - an INCENTIVE?
How could this work? Well, as indicated, you could set a simple limit above which tax simply wasn't levied?
OR, as I was thinking yesterday, how about limiting tax to the preposterously unworkable EU directive on working hours? In other words, tax rates apply but only for 37 hours' income so that if you are so predisposed or required by the demands of the job, all earnings based on additional hours worked are tax free.
I am convinced that individuals and corporations do better with more dosh of their own than the mandarins in local and national government.
It sounds revolutionary but who would you rather trust with YOUR money - yourself, or somebody who somewhere down the line wants to pay Marvin Pomfret £75,000 for beating up a prison officer?
More sensible policies for a happier Britain c/o your caring sharing Derestriction Party.
What really hacks me off is that I run my own company - ie i spend about 24 hours a week NOT working. I employ 3 other people. I then have to pay Tax on profits from my company, tax on my earnings and employers NI for all of us.
I therefore REFUSE point blank to pay myself over £32K so I have to pay 40% tax because I don't believe there is any incentive to people to earn an extra 60p in the pocket for each extra pound I earn.
I'm honest with my expenses and I get my accounts done on time all the time. I would have thought I deserved a BIT of a break!
I therefore REFUSE point blank to pay myself over £32K so I have to pay 40% tax because I don't believe there is any incentive to people to earn an extra 60p in the pocket for each extra pound I earn.
I'm honest with my expenses and I get my accounts done on time all the time. I would have thought I deserved a BIT of a break!
Where would you think of capping it?
I don't think anyone would stay in power long if they actually stood up and gave the super rich money at the expense of lower earners. After all, people already think that the better off don't pay enough tax.
Since, currently, the figures are something along the lines of the top 10 of earners pay 25% of tax, you'd need to charge everyone below the cap a lot extra to make up for it.
I think that as long as the marginal tax rate is below 50%, those of us fortunate enough to be into the top bracket (which I know is a lot of us nowadays) will still tend to have enough of an incentive to try to earn more.
The tax levels, in my opinion, are still set according to how much people can afford, and are willing to, pay. They are not yet set at levels which are punitive (i.e. they are not supposed to be punishing us for earning more), even though they can seem onerous.
To be honest, as I never see my pre tax number, tax on my monthly income goes pretty much unnoticed. It's only the 40% of my bonus (or 41% this year) that I see go. I certainly do notice that one.
I don't think anyone would stay in power long if they actually stood up and gave the super rich money at the expense of lower earners. After all, people already think that the better off don't pay enough tax.
Since, currently, the figures are something along the lines of the top 10 of earners pay 25% of tax, you'd need to charge everyone below the cap a lot extra to make up for it.
I think that as long as the marginal tax rate is below 50%, those of us fortunate enough to be into the top bracket (which I know is a lot of us nowadays) will still tend to have enough of an incentive to try to earn more.
The tax levels, in my opinion, are still set according to how much people can afford, and are willing to, pay. They are not yet set at levels which are punitive (i.e. they are not supposed to be punishing us for earning more), even though they can seem onerous.
To be honest, as I never see my pre tax number, tax on my monthly income goes pretty much unnoticed. It's only the 40% of my bonus (or 41% this year) that I see go. I certainly do notice that one.
My missus was shocked to realise that although she earns 60% of what I do, she takes home 76% of what I do.
No, that company car is NOT free, love.
I think that phasing the change from 23% to 40% via a few intervals would help as I am only just over the boundary. BTW I thought that it was £27k rather than the £32k mentioned previously? It does make that pay rise that flips you into 40% look pretty sad when you see the take home increase for the first time...
Still, I guess we should be grateful that our biggest problem is paying too much tax, rather than having no roof over our heads or no food or having to drive a Black Leon Cupra R...
No, that company car is NOT free, love.
I think that phasing the change from 23% to 40% via a few intervals would help as I am only just over the boundary. BTW I thought that it was £27k rather than the £32k mentioned previously? It does make that pay rise that flips you into 40% look pretty sad when you see the take home increase for the first time...
Still, I guess we should be grateful that our biggest problem is paying too much tax, rather than having no roof over our heads or no food or having to drive a Black Leon Cupra R...
If it was 40% I would be unhappy but basically I understand that those of us lucky enough to be with should help those without
However - with NI on top and Vat+petrol+council tax (for LOCAL services) this runs at about 60% on my marginal pound
This is way to high- yes a capped rate would be great news but I would prefer to see the lower bands extended and the banding pushed up ie 40% at x2 the national average salary eg 36k
Btw the reason some think 27k and some 32k is because of the 5k nil band
Ie you are liable above 27k but if you have a full allowance (ie no car etc) you only pay on the incremental pound above 32k - ahhh forget go see a tax accountant !
However - with NI on top and Vat+petrol+council tax (for LOCAL services) this runs at about 60% on my marginal pound
This is way to high- yes a capped rate would be great news but I would prefer to see the lower bands extended and the banding pushed up ie 40% at x2 the national average salary eg 36k
Btw the reason some think 27k and some 32k is because of the 5k nil band
Ie you are liable above 27k but if you have a full allowance (ie no car etc) you only pay on the incremental pound above 32k - ahhh forget go see a tax accountant !
Nboy, I think the problem is this thing you say about 'giving' high earners more 'at the expense' of lower earners.
To me, the guy making it is my inspiration. I don't think 'why should he have that - gimme some.' I think, 'wow, that's great - I hope to be there myself, some day.'
That's why, this last week, my working week was the wrong side of junior quack times - I am inspired to kill myself working for the simple acquisition of things that I want. It really is as starkly vaccuous as that.
For an idiot like me, doing 3-4 times what Brussels reckons is normal, I actually find talk of being 'willing to pay' (the phrase, not you Nboy!) horrendous.
If I'm prepared to work extreme hours then surely extreme tax breaks should apply here as they do at the other extreme of the tax scale?
My rant is not just centred on greed, though the Gekkoism that this is good is not without some merit, but that the economic multiplier effect of additional financial liberation to both individual and corporate bodies would better benefit the whole order of things. Very Adam Smith, I'm sure.
The point about having to charge the bulk of people more to make up for higher rate breaks assumes that one maintains current state spending patterns. Obviously, I would seek sweeping cuts in the administrative costs of government administration and disqualify enormous numbers from the state drip feed of this and that allowance.
On the subject of state administration, at local levels, the way councils habitually 'spend up' is anathema to fiscal efficiency by any rational standards in the real world.
And finally, to any who say the higher earners don't pay enough I'd simply have to disagree. With slightly more energy than Vesuvius having had a bad madras.
Tax is merely official theft, societies everywhere, tricked for centuries that 'it's (kind of) ok;' it should be seen as something intrinsically negative and worth phasing out at all and every opportunity.
To me, the guy making it is my inspiration. I don't think 'why should he have that - gimme some.' I think, 'wow, that's great - I hope to be there myself, some day.'
That's why, this last week, my working week was the wrong side of junior quack times - I am inspired to kill myself working for the simple acquisition of things that I want. It really is as starkly vaccuous as that.
For an idiot like me, doing 3-4 times what Brussels reckons is normal, I actually find talk of being 'willing to pay' (the phrase, not you Nboy!) horrendous.
If I'm prepared to work extreme hours then surely extreme tax breaks should apply here as they do at the other extreme of the tax scale?
My rant is not just centred on greed, though the Gekkoism that this is good is not without some merit, but that the economic multiplier effect of additional financial liberation to both individual and corporate bodies would better benefit the whole order of things. Very Adam Smith, I'm sure.
The point about having to charge the bulk of people more to make up for higher rate breaks assumes that one maintains current state spending patterns. Obviously, I would seek sweeping cuts in the administrative costs of government administration and disqualify enormous numbers from the state drip feed of this and that allowance.
On the subject of state administration, at local levels, the way councils habitually 'spend up' is anathema to fiscal efficiency by any rational standards in the real world.
And finally, to any who say the higher earners don't pay enough I'd simply have to disagree. With slightly more energy than Vesuvius having had a bad madras.
Tax is merely official theft, societies everywhere, tricked for centuries that 'it's (kind of) ok;' it should be seen as something intrinsically negative and worth phasing out at all and every opportunity.
Theres an interesting argument that says if you got rid of all tax allowances inc CGT, etc, a flat rate of tax of around 12% could be applied to everyone and that would generate the same amount of revenue for the Chancellor as the present system.
But that would just be far to easy to administer, and tax returns would be too simple and the IR wouldn't need all those staff and....
davidy
But that would just be far to easy to administer, and tax returns would be too simple and the IR wouldn't need all those staff and....
davidy
Gargamel, are you sure that you've no done your maths wrong?
If you earn an extra pound, once you are in the 40$ band, then you only pay 1% NI on it, and you don't pay any increased council tax or petrol tax on it either.
Marginal rate of tax is just the amount you pay on one pound extra, not the total tax you pay divided by the amount you earn.
As we're on marginal amounts, it's worth pointing out that marginal propensity to consume is larger with those on lowest money. A pound extra to a low wage earner will likely be spent, a pound to a rich man will probably get saved. These differences have definite economical effects, and can argue for pushing tax breaks up or down the wage scale as the government's aims change.
Overall, I still think that we are a relatively low tax regiime, compared to continental Europe, or to most places in the US (remember, you need to include both state and federal taxes there). It stings me when I think how much I'm paying out, but, given the spending commitments, I'd find it very hard to argue that I should pay less, at the expense of the lower paid.
If you earn an extra pound, once you are in the 40$ band, then you only pay 1% NI on it, and you don't pay any increased council tax or petrol tax on it either.
Marginal rate of tax is just the amount you pay on one pound extra, not the total tax you pay divided by the amount you earn.
As we're on marginal amounts, it's worth pointing out that marginal propensity to consume is larger with those on lowest money. A pound extra to a low wage earner will likely be spent, a pound to a rich man will probably get saved. These differences have definite economical effects, and can argue for pushing tax breaks up or down the wage scale as the government's aims change.
Overall, I still think that we are a relatively low tax regiime, compared to continental Europe, or to most places in the US (remember, you need to include both state and federal taxes there). It stings me when I think how much I'm paying out, but, given the spending commitments, I'd find it very hard to argue that I should pay less, at the expense of the lower paid.
One problem with arguments about who should pay more, and who less, is that just about everyone will agree that those above them should pay more than is currently the case.
I'm not sure that the current level of 40% is a disincentive. All around me, I see people still beavering away, even though they have hit the 40% level about 4 weeks into the working year.
We too are all doing at least 60 hour weeks, and are not paid by the hours we put in. The current tax system has not stopped us becoming the world financial capital, so definitely isn't top heavy enough to discourage people from working and living here.
I'm curious as to what level you'd bring the cap in at. What do you reckon, should it cme in at 100k, or are we talking half a million pounds per year?
I'm not sure that the current level of 40% is a disincentive. All around me, I see people still beavering away, even though they have hit the 40% level about 4 weeks into the working year.
We too are all doing at least 60 hour weeks, and are not paid by the hours we put in. The current tax system has not stopped us becoming the world financial capital, so definitely isn't top heavy enough to discourage people from working and living here.
I'm curious as to what level you'd bring the cap in at. What do you reckon, should it cme in at 100k, or are we talking half a million pounds per year?
derestrictor said: To me, the guy making it is my inspiration. I don't think 'why should he have that - gimme some.' I think, 'wow, that's great - I hope to be there myself, some day.'
That is pretty much the US ideology.. Good stuff...
To me when they close the loopholes that allow multi millionaires to pay 10% tax (and some who pay NO TAX) then I will be willing to pay more.
I think you'll find that high earners in the states pay a higher rate of tax than they do here.
On this idea that the super rich use loopholes to get away with paying less, I'd point out the stat (which I may have a bit askew, but which is of the right sort of order) tha tthe top 10% of earners pay 25% of the income tax.
If the money is earned, as a wage, then in this country, you won't be able to avoid paying tax on it.
Well, not legally.
On this idea that the super rich use loopholes to get away with paying less, I'd point out the stat (which I may have a bit askew, but which is of the right sort of order) tha tthe top 10% of earners pay 25% of the income tax.
If the money is earned, as a wage, then in this country, you won't be able to avoid paying tax on it.
Well, not legally.
If you guys wanna get really depressed, add up all the tax you pay as a proportion of your start point:
Income Tax, NI, Council Tax, VAT, Fuel tax, Cigarettes, Alcohol, Capital Gains, pensions tax...
Seriously work it all out - you won't be very happy at the answer even if you pay basic rate tax.
Oh, and then they f&ck your relatives with Inheritance Tax when you die...
Income Tax, NI, Council Tax, VAT, Fuel tax, Cigarettes, Alcohol, Capital Gains, pensions tax...
Seriously work it all out - you won't be very happy at the answer even if you pay basic rate tax.
Oh, and then they f&ck your relatives with Inheritance Tax when you die...
corozin said: If you guys wanna get really depressed, add up all the tax you pay as a proportion of your start point:
Income Tax, NI, Council Tax, VAT, Fuel tax, Cigarettes, Alcohol, Capital Gains, pension...
You missed out 'Road Fund License' (oh sorry, 'Vehicle Excise Duty') and 'Television License'.... the latter of which I avoid paying by the simple expedient of not having a telly. But I find as many ways to cause the department inconvenience as I can...
I am in lucky position of owning a just profitable business, I employ nine people creating nine streams of income for the government. My reward is 45hrs at work, 25 hrs admin plus availablity on my day off. Perhaps business owners should get tax break? But then I'm more deserving (but everyone else thinks this about themselves)
Forgot to say.... as a caveat to those who work all the hours in pursuit of wad to buy those 'important' things in life:-
"The more you have, the more you have to lose."
I tell myself this to justify why I keep working for a pittance for a man who has two Mercs, a big house in the country, a villa in Spain, skiing hols in Switzerland and a Breitling Aerospace. See, me not being one of those 'dynamic' types, I like to think there are other things in life besides working. However I'm not sure exactly what they all are, but since according to www.deathclock.com I've only got 14 years left, I'd better not waste any mre time finding out, eh?
Ian
"The more you have, the more you have to lose."
I tell myself this to justify why I keep working for a pittance for a man who has two Mercs, a big house in the country, a villa in Spain, skiing hols in Switzerland and a Breitling Aerospace. See, me not being one of those 'dynamic' types, I like to think there are other things in life besides working. However I'm not sure exactly what they all are, but since according to www.deathclock.com I've only got 14 years left, I'd better not waste any mre time finding out, eh?
Ian
Gassing Station | General Gassing [Archive] | Top of Page | What's New | My Stuff