[Closed] 50p tax rate

£7 billion to lose an election, puts Romney's election expenses into perspective.

Perceptions rather than effective solutions.

Politicians eh.

two thirds of all millionaires gone, apparently

when can we get rid of the other third ?

Thats a pretty lazy conclusion given the recession surely?

C'mon Zulu be fair. Both Brown and Darling knew exactly what they were doing. The end of term 50p tax rate was nothing more than a political stunt. They knew what impact it would have economically (that's why they did not raise it earlier in their term) and politically (thats why they did it, when they did it).

Brilliant political stunt 10/10 with exactly the result intended - "tax cuts for millionaires"
Dubious economic stunt 4/10, although still far too early to determine exact results and reliable TIE for uk economy.

But since when have politicians put the interests of the country first 😉 ?

Bit misleading, it's talking about people declaring earnings over £1million, most of those people probably have a Joe Bloggs plc, so the money's not disappeared, they were just leaving it in the company waiting for the tax rate to be repealed. So the effects been exaggerated purely because it was a short term stunt.

That's my hypothesis anyway.

I saw some figures about how many before during and after but the monetary claim was somewhat inevidenced and a bit of a leap.

The treasury report was a little more substantial and little less clear cut - iirc it agreed with the politics of which ever government commisioned it 😉 and also sadly that is true

Basically what THM said.

For some balance

The Treasury predicts that over the next five years the 50p tax rate will raise £5.3bn more than it would have raised if the top rate of tax had remained at 45p, and £12.6bn more than it would have raised if the top rate had stayed at 40p.

Its also worth noting what the HMRC report said[ Coalition]

The uncertainty regarding the extent to which the unwinding of this forestalled income[ they claimed more income pre the tax rise hence the figure disparity*] depressed incomes in 2010-11 makes isolating the true underlying behavioural response to the additional rate challenging

It's a bit more complicated than will be teased out in a STW debate and THM and stone rwill be more informed on this than I am.

Persoanlly i dont doubt some left and the impact [money raised] was less than expected but I have yet to see anything conclsuive either way re a loss with almost every report [ HMRC included] being at the behest of someone with a political agenda.
Though georges did conclude

The conclusion that can be drawn from the Self Assessment data is therefore that the underlying yield from the additional rate is much lower than originally forecast (yielding around £1 billion or less), and that it is quite possible that it could be negative.

I do agree with THM and it was a political milestone for the Tories to ganrer tax cuts for millionairres

Nice polemic article but the actual figures are far less clear than that headline suggests

JY, nice to be on the same side!!!!

yes we both think you know more than me 😉

Ho Ho , thats a good line to remember and re-quote. I like it 😉

Like the line a friend used recently, " there's a guy who knows where his elbow is!"

Good riddance to the greedy tossers. 🙂

The point of my post was that it was a clear scorched earth electioneering policy. This is merely a likewise headline grabbing analysis to confront the effects of that policy.

As always you need to look more deeply into the issue. The acceleration of income analysis has some merit, based on a straw poll of the people I know in this situation they were looking to accelerate about three years of income as this met their return requirements, likewise the well advised users of film finance shelters would have accelerated their income. There are further complicating factors like the reduction in relief for pension fund contributions.

Just shows you what a bunch of selfish bankers the rich are!!!

The headline and article are misleading. Before the 50p rate came in, many wealthy individual brought forward earnings from their companies / investments to maximise use of the 40% rate whilst it still existed. Then they deferred payments for a year (eg looking at taking the money abroad). When it became obvious the rate was going to be reduced, they just defer income until a lower rate comes into force.

So the tax hasn't been lost, just brought forward / deferred to avoid the temporary 50% rate.

This is not a surprise, when the top rate of tax was cut from 60% to 40% (in late 80's I recall) the tax take went UP.

I personally know more than a dozen 52p rate (when you include NI) taxpayers who left the uk as a result of the increase. One hedge fund where all the high earning traders (eg £5m-£10m types) moved to Switzerland whilst all the support staff (who are paid much less and use the state school system and the NHS) remained in the UK. The other factor to consider is that it takes more than a reduction back to 40% to get them back.

The left wing French government introduced a 75% tax rate (admittedly on those earning circa £850k vs UK 52% at £150k) and the response was pretty prompt with the country's richest man promptly moving to Belgium and giving up his passport.

It's ok to say good riddance but you need to understand that in the UK the top 1% pay 25% of the income tax (source IFS) - so if they leave are you happy to pick up the difference

Just shows you what a bunch of selfish bankers the rich are!!!

Hedge fund managers moved abroad for a number of reasons including no doubt income tax, although the capital gains tax change would likely to be as influential, but fear of regulation was another.

But as you say we do need the rich to fund our public expenditure.

poor journalism, but it is the torygraph

all its says that less people were liable for tax over a million

I wonder how they could've achieved that?
http://www.bbc.co.uk/news/business-20288077
http://www.guardian.co.uk/uk/series/offshore-secrets

meanwhile the condem solution

http://www.bbc.co.uk/news/uk-18575439

so all the hedge fund managers left, shame they were doing so well

how much did the bank bailout cost that they helped necessitate?

The offshore secrets stuff is pretty slip shod as well, after all the Guardian building is owned by an offshore company and the company is owned by an offshore trust. We could change the law and tax property gains in this country and still retain much of the tax take despite our tax treaty obligations so the tax haven ownership is a irrelevance in this context.

how much did the bank bailout cost that they helped necessitate?

Hedge funds never shorted HBOS did they jamba? 😉
I admit they didnt start the drowning but they probably helped with their foot on HBOS's head...

Jam. - not sure that suggesting "rich greedy bankers"(TM) messed it up by themselves is helping your argument.

Might still be time to edit...

well as I understand it the crash was precipitated by the sub prime lending bubble in the USA,
hedge funds bet on derrivatives of these mortgage loans, greedy hedge funds 'leveraged?' these chopping them and selling them on again
when the underlying loans started to go south the ridiculously complex system meant no one new what anything was worth and so every one stoppped lending to everyone and the global economy was screwed

im no economist so please correct me if im wrong

well as I understand it the crash was precipitated by the sub prime lending bubble in the USA,
hedge funds bet on derrivatives of these mortgage loans, greedy hedge funds 'leveraged?' these chopping them and selling them on again
when the underlying loans started to go south the ridiculously complex system meant no one new what anything was worth and so every one stoppped lending to everyone and the global economy was screwed

im no economist so please correct me if im wrong

Pretty much right.

We need a nice flat tax system - say 15/20% of everything you earn. No if's/but's/exceptions or thresholds. At the moment if you worked hard at school and earn twice as much as your neighbour, your treat is to pay 3x as much tax. You've then a moral case to call in an accountant and get that down. Take away the escalator and introduce a system where everyone pays to society the same % they earn under its protection.

and as regards to the uk banks, they had massively over reached themselves so when the music stopped they were exposed for the frauds they were

people can hide behind phrases like 'wealth creators' or 'duty to shareholders' but imho avarice and greed are the real motivators here

well as I understand it the crash was precipitated by the sub prime lending bubble in the USA,
hedge funds bet on derrivatives of these mortgage loans, greedy hedge funds 'leveraged?' these chopping them and selling them on again
when the underlying loans started to go south the ridiculously complex system meant no one new what anything was worth and so every one stoppped lending to everyone and the global economy was screwed

im no economist so please correct me if im wrong

An inaccurate over simplification, many lenders were overeliant on short term money markets to finance long term asset books, they had underpriced the cost of their asset books either because they had passed on the oost their capital savings to their customers in the case of own book loans or underpriced the credit risk on their investment books. Hedge funds were part of the market but they were not asset producers. However the market would not have grown to its size without the availability of hedge fund capital, which exacerbated the problem.

This is a more accurate over simplification but it is still an oversimplification. Short selling is in my view an irrelevance other than it drove up the cost of capital that the banks needed to raise, but frankly there wouldn't have been enough buyers anyway.