Out of touch Labour

Anonymous

http://www.bbc.co.uk/news/uk-politics-28331810

"Ms Harman had been asked whether it was fair that wealthier people, who are more likely to pay to use private schools and healthcare services, should contribute more in taxes than lower earners who benefit more from state-funded public services"

One for VTech, probably.

I think someone on here mentioned that it is the lower and middle classes who work to create the wealth for these higher earners. (Assuming business owners and entrepreneurs). Presumably they owe an even greater debt to the country for enabling such high quality public services which in turn has enabled such a productive workforce which have made them so rich? Furthermore, the country is politically an economically stable which has further helped their ability to establish a successful business, so don't they owe more?

metronome

I think we should all pay the same amount of tax.

verylonglegs

I don't know about the wealthy but I do find it odd that I was in the position of paying slightly more tax due to my employer providing private healthcare. It's classed as a benefit so your tax code changes yet in theory (and in practice as it turned out) the NHS weren't having to spend money to treat me and yet I had to pay more tax as a result. I think I was only earning £18k at the time so hardly a high earner. I don't think I should pay less tax because of it though, as per the lines of your post, only not be expected to pay more.

You can't apply selective tax breaks to people wealthy enough to take their kids out of state education because then anyone who doesn't have kids, regardless of income, would make the same claim. It would be a free for all of people arguing they shouldn't pay selectively for services they don't feel they are using.

gingaman

From an American perspective; but poigniant, I think.
http://topinfopost.com/2014/06/30/ultra-rich-mans-letter-to-my-fellow-filthy-rich-americans-the-pitchforks-are-coming

Anonymous

It's silly. A millionaire employs people. He doesn't take the bus. How many of his employees do? Surely it's in his interest to keep the bus running?

The system works on a general level, but HMRC need to not be such nitwits at collecting. Of the 40bn missing, 32 not collected HMRC fault. 6 avoided, rest evaded. Can't remember where stats from. Sorry

morstar

You can argue all day long about what rates of tax are appropriate for different earners to pay but a lower earner will always benefit disproportionately more from wealth distribution and centralised services. If you want everybody to pay identical tax (either absolute or relatively) you need to flatten pay rates or what do you about somebody earning 10K with a high tax liability.

nathancom

The growth in wealth is primarily tied to increases in productivity, ie more being produced per man hour. Increases in productivity can be achieved by multiple measures, improvements in business processes, technological developments, increased worker morale, etc. Historically the increase in productivity has led to increased wages as the greater wealth has been spread fairly equitably between workers and senior management.

However, in USA since the 1970s we have seen workers' wages effectively stagnate whereas senior management have taken huge pay increases. The wealth created by improvements in productivity has been inequitably divided. The last decade has seen a similar situation arise in Western Europe and the fear is that wages will now stagnate for workers as senior managers take a much greater share. Our current economic recovery has not seen a growth in wages.

In light of this, what levers does the state have to equalise such an inequitable division of wealth and the product of labour? Clearly taxation is the most direct method though increasingly inefficient in this era of highly liquid capital. I don't know what the answer is beyond state intervention into the wage structures of private enterprise (which is never going to happen) but inequality does not breed stability and social wellbeing.

Also, the holders of capital benefit disproportionately from state services such as the police, health service, fire services, education etc, since their wealth is derived from the labour of many workers whose productivity is an great part determined by these services. For example, UK companies benefit greatly from having a highly educated workforce therefore they should contribute towards the cost of this education.

florerider

isn't is as simple as services have to be paid for, and not much money is raised from people who have little to start with?

Anonymous

Yes but stupidly that quote almost seems to say 'those who use it more (directly) should pay more'.

The reality is that those who have made a success of themselves possibly owe more to the public services indirectly as it keeps their workforce healthy, educated and mobile.

arran77

coriordan wrote:

The reality is that those who have made a success of themselves possibly owe more to the public services indirectly as it keeps their workforce healthy, educated and mobile.

Their workforce surely pay for all the services they use themselves through their own taxes?

pblakeney

coriordan wrote:

Yes but stupidly that quote almost seems to say 'those who use it more (directly) should pay more'.

The reality is that those who have made a success of themselves possibly owe more to the public services indirectly as it keeps their workforce healthy, educated and mobile.

But don't they already pay more?

Corporation tax.
VAT on company income/expenditure.
Employer's N.I.
Higher tax rate.
Tax on higher earnings.
VAT on higher spending.
And on and on with numerous other hidden taxes.

What you are asking for is that they pay more of more.

Anonymous

Yeah but it's all relative. I imagine the taxes you pay don't directly cover £ for £ the services you use.

Likewise someone on minimum wage doesn't, they probably consume considerably more than they put in.

What if you fall ill more often through allergies, genetic illness?
What if you are less ill because you are made of tougher stuff?
What if you cycle to work and don't use PT?
What if you were privately educated?
What if you're on benefits?

There are too many variables, but if you only paid for what you used, that is called privatisation.

The point is the the fact that the UK can provide these services makes it a good place to do business because we are politically and economically stable. Therefore, it is in the interests of the wealthy to pay their taxes to ensure this continues. If there is a mass shortage of fit, educated, mobile labourforce, who's gonna do the work?

"IMMIGRANTS!"


(edit - no - I'm not saying what PBlakeny is saying - the labour MP seems to be saying the middle pay more of the average, because they use public services more - I'm say the richest should pay more because they indirectly benefit more from it's existence).

arran77

coriordan wrote:

There are too many variables, but if you only paid for what you used, that is called privatisation.

Correct, there are many variables and as you say some will take more from the system and some less, similarly the amounts that different people put in also varies but the system works in general.

Anonymous

Agreed. I did in fact say the same (my 2nd/3rd post).

Annoyingly I can't find the reference, but some 40-45bn tax isn't collected. Of this, only 6bn is avoided, 5 evaded and 30-35 not collected due to HMRC incompetence.

Edit: here we go: (oct 2013)

http://www.theguardian.com/politics/201 ... nonpayment

£35bn not collected (some commentators think it's nearer 120bn):
£5.1bn was lost as a result of evasion
£4.7bn as a result of criminal activity including fraud and smuggling
£4bn through avoidance schemes.

drlodge

coriordan wrote:

"Ms Harman had been asked whether it was fair that wealthier people, who are more likely to pay to use private schools and healthcare services, should contribute more in taxes than lower earners who benefit more from state-funded public services"

As I understand it, the right honourable member for god knows where was defending the current situation (where middle earners pay more) rather than saying middle earners should pay even more tax than they already do (which is the view the PM took).

Of course middle earners should pay more tax, just like they already do.

There's no point taxing the poor people, the don't have any money to be taxed on
There's little point taxing the high earners to death, since there are so few of them
Which means the majority of the tax burden rests with middle earners.

florerider

exactly - it is simply a matter of how the money is raised.

bdu98252

It is simple really, 25% tax on all earning that year whether it be pay, savings, investment profit. Take the tax laws from 3000 pages to 10 with nine of them being the basic exclusions that can be allowed for. Result entire sections of the HMRC and Accountancy trades made redundant. I don't think any political party wants to go down this route.

florerider

bdu98252 wrote:

It is simple really, 25% tax on all earning that year whether it be pay, savings, investment profit. Take the tax laws from 3000 pages to 10 with nine of them being the basic exclusions that can be allowed for. Result entire sections of the HMRC and Accountancy trades made redundant. I don't think any political party wants to go down this route.

since it would double the amount of tax paid by someone on average earnings it is probably not an election winner either

symo

florerider wrote:

bdu98252 wrote:

It is simple really, 25% tax on all earning that year whether it be pay, savings, investment profit. Take the tax laws from 3000 pages to 10 with nine of them being the basic exclusions that can be allowed for. Result entire sections of the HMRC and Accountancy trades made redundant. I don't think any political party wants to go down this route.

since it would double the amount of tax paid by someone on average earnings it is probably not an election winner either

Ah but it would stop us losing masses more going off shore. 20% flat rate is the number I have heard bandied about.

drlodge

What about a flat 40% tax rate, lower than the current threshold, but a much higher tax free allowance?

The principle of everyone "paying the same" is upheld and set the thresholds to raise the same amount of tax as today.

arran77

drlodge wrote:

Of course middle earners should pay more tax, just like they already do.

There's no point taxing the poor people, the don't have any money to be taxed on
There's little point taxing the high earners to death, since there are so few of them
Which means the majority of the tax burden rests with middle earners.

Not really sure what you consider a middle earner to be but I reckon I fall firmly into that category with a gross annual income of less than 50k.

As the only one with an income in our house because Mrs 77 is a stay at home mum (I know it's our choice ) I really could not afford to pay any more in taxes than I do, we don't lead an extravagant life and just about get by.

I think there are things wrong with our tax system that make it too easy for those who's interests (i.e. the 'high earners') that it suits to avoid paying the taxes which they should pay, this needs to be sorted out.

Also as coriordan points out there are vast sums of money not collected due to the incompetency of HMRC.

There is already more than enough burden on the average tax payer like me so I really don't think hammering us for any more is going to prove a popular move

drlodge

Cant disagree with any of that arran77!

arran77

drlodge wrote:

Cant disagree with any of that arran77!

Maybe I should go into politics, how much do they earn

drlodge

arran77 wrote:

drlodge wrote:

Cant disagree with any of that arran77!

Maybe I should go into politics, how much do they earn

About £20k more than you :shock:

florerider

that would be an interesting one - but I would bet on people complaining about paying "40% tax" just as someone on average earnings pays something like 12% tax but believes they are paying 20%, because that is the marginal rate.

Someone on 5 times average earnings pays something like 12 times more tax, even though the marginal rate "only" doubles.

florerider

drlodge wrote:

arran77 wrote:

drlodge wrote:

Cant disagree with any of that arran77!

Maybe I should go into politics, how much do they earn

About £20k more than you :shock:

confusing earning and income :?

arran77

florerider wrote:

that would be an interesting one - but I would bet on people complaining about paying "40% tax" just as someone on average earnings pays something like 12% tax but believes they are paying 20%, because that is the marginal rate.

Someone on 5 times average earnings pays something like 12 times more tax, even though the marginal rate "only" doubles.

That's the thing, the whole system is so confusing, people will always complain especially about things they don't fully understand, myself included

arran77

florerider wrote:

drlodge wrote:

arran77 wrote:

drlodge wrote:

Cant disagree with any of that arran77!

Maybe I should go into politics, how much do they earn

About £20k more than you :shock:

confusing earning and income :?

Ok, what we're saying is that their annual gross earnings will be about £70k but the total income will be far higher because of all the other 'benefits' we know that they are 'entitled' to

bdu98252

florerider wrote:

bdu98252 wrote:

It is simple really, 25% tax on all earning that year whether it be pay, savings, investment profit. Take the tax laws from 3000 pages to 10 with nine of them being the basic exclusions that can be allowed for. Result entire sections of the HMRC and Accountancy trades made redundant. I don't think any political party wants to go down this route.

since it would double the amount of tax paid by someone on average earnings it is probably not an election winner either

Yes but these lower earners are the first in the tax the rich whinging crew. So whilst they would be paying more tax, richer people would also be paying more tax as a percentage and not the sub 10% that the really wealthy typically pay. Lets face it given they are under the line of where you pay more than you receive I don't see what the problem is other than someone wanting high class services paid for at someone else's expense.

Anonymous

Because the poor can't afford it? I'm not sure what angle you are coming from. Any increase in taxation makes a proportionately higher indent into disposable income available to poorer households than richer. Some families barely break even and genuinely rely on the safely net of the welfare service and free healthcare and travel. An increase in tax could see them evicted, have to choose between food or heating, or live a miserable existence.

If you earn £100K, a 1% increase in tax isn't going to send you below the poverty line.

Furthermore, as has been mentioned a few times, the rich (although they don't use it) do benefit from excellent public services, so it doesn't seem to unreasonable to make them help contribute towards it. Business owners, entrepreneurs, upper management rely on the fact their workforces can come to work and are educated and healthy. If they didn't pay tax on the basis they privately educate, travel and look after their families, what would happen if their workforce couldn't come to work any more? Would make that high salary harder to achieve.

I am no socialist, but you need to be a little less blinkered.

kajjal

The problems are the wealthiest avoid a lot of tax they really should be paying leaving the middle earners to pick up a disproportion amount of tax. They wealthiest also got bailed out by quantitive easing etc and benefit from employing people on salaries on wages so low they have to be subsidised to afford food and a roof over their heads. So effectively the wealthy dodge paying tax while getting cheap state subsidised labour. Wasn't that what the Labour Party formed to stop ?.

The only fair way is to relate the amount of tax paid to your income and wealth but good luck getting that to work