Join the Labour Party and save your country!

Stevo_666

kingstongraham said:

Stevo_666 said:

kingstongraham said:

They seemed to do OK between the war and 1982 when the top rate of income tax was 69% or higher. I don't think the "stifling innovation" argument works - you can't seriously think that anyone is going to decide not to start a business because they are only going be able to make £500m out of it rather than £1bn.

There's a lot more to it that the headline rate - for example if that is personal income tax you're quoting as most ventures of that type will be done via companies. And of course a really successful entrepreneur can always become non-resident for tax purposes before they 'cash their chips in'.

When you say ' they seemed to do OK...', what are you referring to?

The USA as a country, and especially as a place where innovation could thrive.

Culturally it is to a certain degree like that, although clearly the sort of tax rates that were imposed in the past ran somewhat counter to that.

bianchimoon

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

kingstongraham

Stevo_666 said:

kingstongraham said:

I imagine Larry Ellison is happy he decided to also ignore the high top rate income tax rate and set up his company too.

Missing the point really. Think how many other Gates and Ellisons there might have been if it were not for punitive tax rates at the time.

If anyone was put off by the rates being 70%, they shouldn't have been. If those others had just got on with it, they could have founded Apple like the Apple founders did when the top rate was 70%.

rjsterry

"I'd better not aim to be too successful in case I break into the top tax bracket." said no-one starting a business ever.

Stevo_666

rjsterry said:

"I'd better not aim to be too successful in case I break into the top tax bracket." said no-one starting a business ever.

Of course not. They find ways to mitigate if they feel the rates are too high. As it is the capital gains rates are pretty reasonable in UK and US. At present anyway.

Stevo_666

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

Such as moving themselves or their business investments abroad. Most governments realise there is a balance and that getting a reasonable percentage of something beats getting high percentage of nothing.

I would repost the tax parable of ten men in a bar but that will annoy Rick.

kingstongraham

So it is only people who are already wealthy that will be discouraged by high top rates of tax, it is other factors that encourage new entrepreneurs to innovate (such as bankruptcy law, ease of company formation, a social safety net, government investment etc)?

Stevo_666

kingstongraham said:

So it is only people who are already wealthy that will be discouraged by high top rates of tax, it is other factors that encourage new entrepreneurs to innovate (such as bankruptcy law, ease of company formation, a social safety net, government investment etc)?

To your first point, no.

To your second point, there are other factors. But tax is a material one : not just for entrepreneurs etc but for large corporates who can choose where to put their capital quite easily. Something I am familiar with on a professional basis.

rjsterry

Stevo_666 said:

rjsterry said:

"I'd better not aim to be too successful in case I break into the top tax bracket." said no-one starting a business ever.

Of course not. They find ways to mitigate if they feel the rates are too high. As it is the capital gains rates are pretty reasonable in UK and US. At present anyway.

I'm glad we agree. Although I'm not sure feelings have anything to do with it. Surely businesses would only move if they were overall better off.

Stevo_666

rjsterry said:

Stevo_666 said:

rjsterry said:

"I'd better not aim to be too successful in case I break into the top tax bracket." said no-one starting a business ever.

Of course not. They find ways to mitigate if they feel the rates are too high. As it is the capital gains rates are pretty reasonable in UK and US. At present anyway.

I'm glad we agree. Although I'm not sure feelings have anything to do with it. Surely businesses would only move if they were overall better off.

Mitigation doesn't necessarily mean moving. There are other ways. Where there's a will there's a way, as the saying goes. Which goes back to being sensible about taxation. We have had the debate before, but tax is often a tool that countries use to attract investment.

kingstongraham

Stevo_666 said:

kingstongraham said:

So it is only people who are already wealthy that will be discouraged by high top rates of tax, it is other factors that encourage new entrepreneurs to innovate (such as bankruptcy law, ease of company formation, a social safety net, government investment etc)?

To your first point, no.

Can you explain?

I know the 60% marginal rate had no impact on my thinking until it got a bit close to home, and I can't see how a 70% rate on earnings over $10m (as an example proposal from the USA) would have any effect on anyone's actions who isn't already earning a shitload.

Stevo_666

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

Stevo_666

kingstongraham said:

Stevo_666 said:

kingstongraham said:

So it is only people who are already wealthy that will be discouraged by high top rates of tax, it is other factors that encourage new entrepreneurs to innovate (such as bankruptcy law, ease of company formation, a social safety net, government investment etc)?

To your first point, no.

Can you explain?

I know the 60% marginal rate had no impact on my thinking until it got a bit close to home, and I can't see how a 70% rate on earnings over $10m (as an example proposal from the USA) would have any effect on anyone's actions who isn't already earning a shitload.

It is not just the 'wealthy' who are put off by high tax rates. Individuals who are looking to create successful businesses plan ahead and structure their affairs to reduce the burden. Mobile capital (multinationals etc) factor in tax to their investment decisions. I see this in my job as mentioned above. That is the reality.

Hard to explain the mindset if you have never had any real exposure to this area. But knowing that the state will relieve you of most of what you worked hard for can be a real disincentive.

Edit: thresholds as high as the specific you quote above are pretty rare. The old UK 82% rate back in the 70's kicked in at pretty normal income levels.

rjsterry

Stevo_666 said:

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

The criticism is that it was intended as a tax break to help start ups but is being used by people who are not starting up anything and is difficult to access for those that are, presumably due to poor drafting of the particular scheme. If it's not achieving the intended aim, what's the argument for not at least modifying it?

Stevo_666

rjsterry said:

Stevo_666 said:

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

The criticism is that it was intended as a tax break to help start ups but is being used by people who are not starting up anything and is difficult to access for those that are, presumably due to poor drafting of the particular scheme. If it's not achieving the intended aim, what's the argument for not at least modifying it?

'If' being the operative word. He offered no verifiable evidence, just his view as a civil servant whose role was to raise more tax when he was employed.

It's pretty well established that a friendly tax regime is key to encouraging this sort of activity. Another example is that there are several hundred thousand French people in London. Partly because France is pretty hostile towards business compared to the UK. Including the tax burden.

kingstongraham

Stevo_666 said:

.

Edit: thresholds as high as the specific you quote above are pretty rare. The old UK 82% rate back in the 70's kicked in at pretty normal income levels.

Used that example as it was what AOC got called a communist for suggesting.

rjsterry

Stevo_666 said:

rjsterry said:

Stevo_666 said:

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

The criticism is that it was intended as a tax break to help start ups but is being used by people who are not starting up anything and is difficult to access for those that are, presumably due to poor drafting of the particular scheme. If it's not achieving the intended aim, what's the argument for not at least modifying it?

'If' being the operative word. He offered no verifiable evidence, just his view as a civil servant whose role was to raise more tax when he was employed.

It's pretty well established that a friendly tax regime is key to encouraging this sort of activity. Another example is that there are several hundred thousand French people in London. Partly because France is pretty hostile towards business compared to the UK. Including the tax burden.

Well who else would know if the particular scheme is working? Everything really looks like a tax nail to you doesn't it.

TheBigBean

I think the article is correct about entrepreneurs' relief. It is a nice bonus when you have a succesful business, but ultimately it encourages entrepreneurs to sell out, and probably wasn't a factor when they started their business.

Now that CGT is only 20% the biggest saving comes from making income look like a capital gain.

Also, it is not hard to claim. If you add a capital gain to your tax return, the system even asks you to double check that you aren't elligible for any relief.

TheBigBean

kingstongraham said:

I know the 60% marginal rate had no impact on my thinking until it got a bit close to home,

Are you considering the possibility of reduced pension contributions?

Stevo_666

rjsterry said:

Stevo_666 said:

rjsterry said:

Stevo_666 said:

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

The criticism is that it was intended as a tax break to help start ups but is being used by people who are not starting up anything and is difficult to access for those that are, presumably due to poor drafting of the particular scheme. If it's not achieving the intended aim, what's the argument for not at least modifying it?

'If' being the operative word. He offered no verifiable evidence, just his view as a civil servant whose role was to raise more tax when he was employed.

It's pretty well established that a friendly tax regime is key to encouraging this sort of activity. Another example is that there are several hundred thousand French people in London. Partly because France is pretty hostile towards business compared to the UK. Including the tax burden.

Well who else would know if the particular scheme is working? Everything really looks like a tax nail to you doesn't it.

Entrepreneurs? Ironically a French word.

Problem here is you are looking at ifromt your centre left/employee perspective and these are a completely different set of people. The ones we deal with (and buy out) in various countries seem to think it works,

Stevo_666

Also for the many serial and multiple entrepreneurs, it frees up more capital to invest in the next venture - which generates more jobs, wealth etc. Sometime you have to look past the short term leftie 'they're rich so they should pay more' guff and see the longer term benefits.

surrey_commuter

If you want proof that high marginal tax rates impact the effort people put in then look at what is happening in the NHS at the moment.

Also consider what you would do if you earnt £120k this year, pay the Govt £12k in tax or put an additional £8k in your pension and the Govt will pop the £12k in their for you.

TheBigBean

I think the point of the discussion was that no one decides to follow a low paid career instead of a high paid career due to marginal taxation. They may later find themselves paying 62%, and decide to work less, leave the country or pay into their pension.

Stevo_666

surrey_commuter said:

If you want proof that high marginal tax rates impact the effort people put in then look at what is happening in the NHS at the moment.

Also consider what you would do if you earnt £120k this year, pay the Govt £12k in tax or put an additional £8k in your pension and the Govt will pop the £12k in their for you.

It definitely does have an effect. I have 2 mates who are consultant doctors and it definitely affected their behaviour. Luckily the govt took notice when professionals like them stopped offering to do extra hours.

And going back to the entrepreneur situation, people like that need to be encouraged as they are a job creators and an important part of the economic growth engine. The overall approach at present is quite sensible IMO.

I suspect that most people who think high marginal rates have no effect are not subject to a high marginal rate themselves so don't feel the impact personally.

Also I've already explained above that it impacts corporate behaviour and that is because it impacts the decisions that I make on behalf of my employer.

Stevo_666

TheBlueBean said:

I think the point of the discussion was that no one decides to follow a low paid career instead of a high paid career due to marginal taxation. They may later find themselves paying 62%, and decide to work less, leave the country or pay into their pension.

That's one line of argument but not mine. If you want to encourage entrepreneurship & business investment and growth then a business friendly environment is important. The tax regime is an important part of that. It also includes tax competition between countries.

kingstongraham

The effect a high marginal rate has on those who are fortunate enough to be high earners already is a different argument to the effect it has on entrepreneurs starting a business.

Stevo_666 said:

Also for the many serial and multiple entrepreneurs, it frees up more capital to invest in the next venture - which generates more jobs, wealth etc. Sometime you have to look past the short term leftie 'they're rich so they should pay more' guff and see the longer term benefits.

There are longer term benefits for the country to a social safety net, particularly in the appetite for risk for a potential entrepreneur who is not already wealthy. This needs to be paid for, and there is an argument for higher taxes on the very wealthy.

rjsterry

Stevo_666 said:

rjsterry said:

Stevo_666 said:

rjsterry said:

Stevo_666 said:

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

The criticism is that it was intended as a tax break to help start ups but is being used by people who are not starting up anything and is difficult to access for those that are, presumably due to poor drafting of the particular scheme. If it's not achieving the intended aim, what's the argument for not at least modifying it?

'If' being the operative word. He offered no verifiable evidence, just his view as a civil servant whose role was to raise more tax when he was employed.

It's pretty well established that a friendly tax regime is key to encouraging this sort of activity. Another example is that there are several hundred thousand French people in London. Partly because France is pretty hostile towards business compared to the UK. Including the tax burden.

Well who else would know if the particular scheme is working? Everything really looks like a tax nail to you doesn't it.

Entrepreneurs? Ironically a French word.

Problem here is you are looking at ifromt your centre left/employee perspective and these are a completely different set of people. The ones we deal with (and buy out) in various countries seem to think it works,

Now I know you hate assumptions. 😉

Stevo_666

rjsterry said:

Stevo_666 said:

rjsterry said:

Stevo_666 said:

rjsterry said:

Stevo_666 said:

bianchimoon said:

Stevo_666 said:

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

kingstongraham said:

I didn't realise that at the time that Bill Gates set up Microsoft, the top rate of income tax in the USA was 70%. Wonder why he even bothered.

If JC gets in quite a few entrepreurs etc may well not bother.

I'm sure they'll be alright, they'll just find another loophole to avoid paying their fair share
https://www.theguardian.com/politics/2019/nov/06/scrap-tax-relief-used-by-britains-richest-urges-former-hmrc-head

What you would expect from a civil servant who is unlikely to have been an entrepreneur. Many countries provide substantial reductions or even exemptions from CGT in various circumstances. There will be a reason why they do.

The criticism is that it was intended as a tax break to help start ups but is being used by people who are not starting up anything and is difficult to access for those that are, presumably due to poor drafting of the particular scheme. If it's not achieving the intended aim, what's the argument for not at least modifying it?

'If' being the operative word. He offered no verifiable evidence, just his view as a civil servant whose role was to raise more tax when he was employed.

It's pretty well established that a friendly tax regime is key to encouraging this sort of activity. Another example is that there are several hundred thousand French people in London. Partly because France is pretty hostile towards business compared to the UK. Including the tax burden.

Well who else would know if the particular scheme is working? Everything really looks like a tax nail to you doesn't it.

Entrepreneurs? Ironically a French word.

Problem here is you are looking at ifromt your centre left/employee perspective and these are a completely different set of people. The ones we deal with (and buy out) in various countries seem to think it works,

Now I know you hate assumptions. 😉

It's more of an observation

Stevo_666

kingstongraham said:

The effect a high marginal rate has on those who are fortunate enough to be high earners already is a different argument to the effect it has on entrepreneurs starting a business.

Stevo_666 said:

Also for the many serial and multiple entrepreneurs, it frees up more capital to invest in the next venture - which generates more jobs, wealth etc. Sometime you have to look past the short term leftie 'they're rich so they should pay more' guff and see the longer term benefits.

There are longer term benefits for the country to a social safety net, particularly in the appetite for risk for a potential entrepreneur who is not already wealthy. This needs to be paid for, and there is an argument for higher taxes on the very wealthy.

For starters, how do you define 'wealthy'?

There is such an argument for more tax but it's not reallya very good one.
- First of all there are a limited number of the target audience.
- Secondly, many of them can choose where to invest and pay their taxes (corporates included).
- Third, overly high taxes discourage wealth creatiion so can reduce overall tax revenues
- Fourth, they pay a lot already:
https://telegraph.co.uk/politics/2019/08/05/record-number-adults-pay-no-tax-top-one-per-cent-earners-shoulder/
https://pwc.co.uk/services/tax/total-tax-contribution-100-group.html

Alternatively, if you think it's that important then lead by example and pay some more yourself.

kingstongraham

Stevo_666 said:

Alternatively, if you think it's that important then lead by example and pay some more yourself.

I actually said "very wealthy".

If it was a choice, then it wouldn't really be a tax would it? That would be charity. Which is a different argument entirely. I disagree with the concept of gift aid and being able to offset charity contributions against tax.

But any increase in tax that is likely to make a difference would probably affect me.