I think he’s right regarding Brown and Darling.

can we post that somewhere else as I feel my self agreeing with things published in the sun.

Apart from that the only people who seen to disagree with Clarkson do so on principle and have given up actually listening.

Maybe we can have some sort of Clarkson (Top Gear Party)/Green/Mountain Bike party coalition in charge

For anyone who can’t be bothered to click, the story goes like this.

Man earning disproportionate wage, complains at paying too much tax. Uses lowest common denominator publication to find enough nodding dogs to agree with him.

I think he’s producing a load of lazy rheteric designed to please the masses.

We’ve had this doing the rounds at work:

Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

the first four men, the poorest, would pay nothing;
the fifth would pay $1;
the sixth would pay $3;
the seventh would pay $7;
the eighth pays $12;
the ninth would pay $18;
and the tenth man, the richest, would pay $59.

That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).

“‘Since you are all such good customers,’ he said, ‘I am going to reduce the cost of your daily meal by $20. So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six–the paying customers? How could they divvy up the $20 windfall so that everyone would get his ‘fair share?

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, Then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay:

as before, the first four men paid nothing;
now the fifth man also paid nothing;
the sixth man now paid $2;
the seventh paid $5;
the eighth man paid $9;
the ninth man paid $12;
leaving the tenth man with a bill of $52 instead of his earlier $59.
Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. ‘I only got a dollar out of the $20 reduction,’ declared the sixth man, but he, pointing to the tenth. ‘But he got $7!’. ‘Yeah, that’s right,’ exclaimed the fifth man, ‘I only saved a dollar too; it’s unfair that he got seven times more than me!’

‘That’s true,’ shouted the seventh man, ‘why should he get $7 back when I got only $2? The wealthy get all the breaks!. ‘Wait a minute,’ yelled the first four men in unison, ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were now Fifty-Two Dollars short of paying the bill. Imagine that!

And that, boys and girls, journalists, and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

I don’t know if there’s a flaw in the logic there somewhere but what I do know is that a lot of tax lawyers and accountants will be rubbing their hands together at the thought of all the extra work they’re going to be getting…

Odds are that almost all Clarksons income is paid to his company instead of himself, he draws down £90 a week or so as salary and pays no ni and income tax. The rest of his income will be as dividends attracting f* all tax. Remember the ‘only little people pay taxes’ jibe? Well, it’s still pretty true. I really doubt that he’s going to be hit by 50% tax, and don’t think that many others will be – the only ones affected by stuff like that are genuine paye employees of big companies and there’s bugger all of those earning 150k.

The rich are only rich from exploiting the poor, so when they get beaten up and don’t show up at the table, their wealth just gets redistributed (eventually).

Are you sure about that footflaps? Are you assuming a robbery takes place at the time of the beating?!

Dividends above £37,400 attract tax at 32.5% so not quite F* all vinnyeh. I agree though that the number of people impacted by PAYE on >£150k is very small.

Some of the changes did seem a little complicated to me. I think a 50% level of tax is fair enough, but not sure a what income level, but all this messing about with pension contributions seems odd to me. Maybe just making pension tax benefit to be a max of 40% in conjunction with introducing the new 50% band would have been more my idea of sense.

As far as I’m concerned:

I don’t really care. I would love to “earn” > £150k pa. Of course it is obvious that someone who “earns” that much is working at least ten times harder than someone who earns £10k pa.

Hopefully some of the eejits in the banking sector that helped cause this issue (admittedly with the numpties that were greedy for mortgages) will take heed and leave.

If some of the bankers decided that they were acting immorally, and causing problems for the economy, there bank would just have gone bust wouldn’t it?? who would invest in a bank making half as much as all the others?

I don’t think you can really blame the bankers directly. It wasn’t just them remember, how many people were rushing to buy houses to make a killing when they were going up?

IMO the worst measures are those ‘propping up’ the economy, such as the 2k scappage charge, or payment holidays for home owners. A crash is unavoidable and this just prolongs it.

The good measures are those thinking about how to rebuild everything in the economy, such as getting everyone trained up in new skills. Maybe they should be offering more phd places at the moment too?

As those of us at the bottom are told, you can always go somewhere else. There will also be someone else along with a money making idea for the rest to work for. The joy of capitalism that the seriously rich forget sometimes, the other thing they ignore at their peril is that fixed assets can be removed by the state at any time (bank bail outs anyone?).

I don’t really care. I would love to “earn” > £150k pa. Of course it is obvious that someone who “earns” that much is working at least ten times harder than someone who earns £10k pa.

Maybe not working harder but possibly contributing more benefit to society – hard to tell which is why we allow market forces to dictate salaries. Except for firemen…!

Its a common and convenient form of misinformation to state that people earning over £150k pa will now pay half of their income to the tax man.
It is in fact half of the additional income over £150k.

Their are several tax bands from zero up to the 50% max. It could be said that they also pay no tax on there income as they also benefit from the zero rate.

If some of the bankers decided that they were acting immorally, and causing problems for the economy, there bank would just have gone bust wouldn’t it?? who would invest in a bank making half as much as all the others?

Some if not most of the banks would have gone bust if we – the taxpayer, including person-on-a-very-low-wage – hadn’t bailed them out. The money they were making at the time was monopoly stuff.

It’s time all government economists were shot and replaced by primary school arithmetic teachers. 🙂

Maybe not working harder but possibly contributing more benefit to society – hard to tell which is why we allow market forces to dictate salaries. Except for firemen…!

I am not sure I agree with you here. I suppose it gets to the semantics of ‘contributing more benefit to society’. And that assumes a completely free market and no employment laws. A true Darwinian ‘dog-eat-dog’ scenario which is always trumpeted by governments/right-wingers but never really happens.

I agree with everything he says, baring the Olympics. Some things are worth spending money on.

vinnyeh – Member

Odds are that almost all Clarksons income is paid to his company instead of himself, he draws down £90 a week or so as salary and pays no ni and income tax. The rest of his income will be as dividends attracting f* all tax. Remember the ‘only little people pay taxes’ jibe? Well, it’s still pretty true. I really doubt that he’s going to be hit by 50% tax, and don’t think that many others will be – the only ones affected by stuff like that are genuine paye employees of big companies and there’s bugger all of those earning 150k.

He actually lives on the tax haven that is The Isle of Man.

The Isle of Man has its own government but is a dependency of the British crown meaning that the UK looks after its foreign affairs and defence but apart from that it remains strictly hands off allowing the government of the Isle of Man to manage the important things like taxes!
In terms of the taxation benefits of investing or incorporating in the Isle of Man, they are impressive and manifold. There are no capital gains taxes, turnover taxes or capital transfer taxes and there is no stamp duty. There is VAT and income tax however but the latter is levied at a maximum rate of 18% and the government are reducing this rate of tax all the time.

So his little rant about tax has no effect on him anyway… **** hypocrite.

<pedant>surely they’d be $42 short without the tenth bloke, not $52</pedant>

get those who can work to work. Whether they earn **** all or not, if you want money from the state, earn it.

I thought the Isle of Man house was a “holiday” place, he actually lives in Oxfordshire.

I appreciate that “it’s Clarkson” and therefore he just spouts rubbish to annoy people and then pretends it was a joke as opposed to an opinion, but that piece is about as close to a perfect example of “power without responsibility” as one could possibly ask for. 🙂 🙄

power without responsibility

BD, were you referring there to author or subject? 😈

The rich are only rich from exploiting the poor, so when they get beaten up and don’t show up at the table, their wealth just gets redistributed (eventually)

So it’s ok to stupid tax the ones making more money, right? What if it’s you who makes enought to be affected? What if it was you who came up with a great idea that sold well? Will you still be talking cr@p about the poor and the rich? Bleeding Marxist!

So it’s ok to stupid tax the ones making more money, right?

Stupod tax? An increase of 10% on taxable earnings over 150k per year is a stupid tax? I doubt that it’s going to make much, if any difference to those affected. If you’re paying paye on 200k at the mo you’re takehome is around 10.5k – it’ll drop by around 400 a month under the new rules.
A stupid tax to introduce because it’ll make f* all difference, except as a media headline, but it ain’t ‘stupid taxing’ the rich- there’s too many loopholes, and folks on paye earning this aren’t normally wealthy enough to move to Monaco.

Whenever I hear arguments like “the rich should pay more tax because they can afford it”, I can’t help feeling that the arguee doesn’t quite understand how percentages work.

Define “rich”. Why is earning >£150k now “rich”? What about someone with several million in assets but a lower income? I know as many in each category…so why not have a property tax on any property worth >£1m when sold? After all, it’s the fetish we, as a nation, have with property that really is the root cause of many problems (it’s why we borrow to excess).

Chats I’ve had with the >£150k income earners suggest 4 strategies:
1. Accept it – that’s life.
2. Go part-time & thank the government for making you realise the value of leisure time. This way you’ll take home less, but at least you won’t be putting in an hour for the government for every extra hour you work.
3. Move abroad – impractical for all but the extremely rich who will already have plenty of schemes in place for this not to hit them anyway.
4. For those hit for the first time, start getting good tax advice.

Most will simply accept it in muttering English style, other than the non-UK nationals who will do 3.

People seem to be missing the obvious point that the 50% rate is mostly about trying to trap the Tories into looking like the party of the rich if they say they will get rid of it. Unfortunately for labour cameron isn’t going to fall for it.

he draws down £90 a week or so as salary and pays no ni and income tax. The rest of his income will be as dividends attracting f* all tax.

The company will still have to pay corporation tax on profits.

I liked Sam Seaborne’s take on the issue from the west wing:

“Henry, last fall, every time your boss got on the stump and said, “It’s time for the rich to pay their fair share,” I hid under a couch and changed my name. I left Gage Whitney making $400,000 a year, which means I paid 27 times the national average in income tax. I paid my fair share, and the fair share of 26 other people. And I’m happy to, ‘cause that’s the only way it’s gonna work. And it’s in my best interest that everybody be able to go to schools and drive on roads. But I don’t get 27 votes on Election Day. The fire department doesn’t come to my house 27 times faster and the water doesn’t come out of my faucet 27 times hotter. The top one percent of wage earners in this country pay for 22 percent of this country. Let’s not call them names while they’re doing it, is all I’m saying.”

The rest of his income will be as dividends attracting f* all tax.

Dividends are still income – I think you have to pay 32.5% on them as a higher rate tax payer.

The company will still have to pay corporation tax on profits.

Yes, a bit of hyperbole on my part- but you know what I mean- there’s simple and more complex ways of avoiding paying tax – and I’m sure that very few of the 150k+ earners will be affected by this. Porterclough has made a good point tough, hadn’t thought of that.

Whenever I hear arguments like “the rich should pay more tax because they can afford it”, I can’t help feeling that the arguee doesn’t quite understand how percentages work.

At a higher level the concept of “marginal propensity to consume” kicks in. I see it as morally defensible to increase tax at higher income levels.

surfer has a very good point ^ up there.

The overall tax rate (income & NI) of someone earning 150k is c.37%
The overall tax rate of someone earning 1m is c.43%

The marginal rate of tax on £1 income over £150,000, however, is c.64% when you take into account NI.

At that level there is a substantial disincentive to be “more productive” in generating the next pound over the one before the £150k threashold. Which the insitute of fiscal studies identified at the 45% rate introduction, let alone 50%

There are also considerable uncertainties in forecasting the underlying pre-tax incomes of the very rich in 2011-12 given that the latest micro-data available on the incomes of the very rich dates from 2005-06, and given that recent analysis showed a close relationship between income growth amongst the very rich and the performance of the stock market, which has been extremely volatile in recent months. These issues, combined with the uncertainty over how very rich adults will respond to higher marginal tax rates, must surely mean that the HM Treasury’s estimated revenue yield of £1.6bn a year is subject to an extremely wide margin of error, and the possibility must exist that the measure could lose the government income tax revenue.

page 21
http://www.ifs.org.uk/bns/bn80.pdf

The marginal rate of tax on £1 income over £150,000, however, is c.64% when you take into account NI.

How does that work out?

50% (Income Tax) + 13.8% higher rate National Insurance contrib.

i.e. for every pound you earn over £150k, 64p goes to the exchequer.
http://www.direct.gov.uk/en/Nl1/Newsroom/Budget2009/DG_172915

by the way, my original reference to surfer was his earlier post, not the one directly above mine.

I disagree with the “marginal propensity to consume”.

The more important measure is marginal productivity.

It is morally defensible to increase the rate of taxation as tax increases, but its a very well known phenomenon that there is a ceiling at which total tax receipts plateaus and then falls if that mraginal rate is set too high.
http://www.guardian.co.uk/business/2009/apr/20/budget-2009-tax-ifs

<pedant>surely they’d be $42 short without the tenth bloke, not $52</pedant>

<uberpedant>$44, as they were only paying $80</uberpedant>