Same old Tories…

that video is just brilliant in terms of the timing and rhythm

Thanks Grum – outstanding. 😀

Happily in the real world the top rate is 45% I hope it’s stays that way for a long time although even that’s about 15 % north of what it should be but you know, society.

@jools just an aside that the top rate is 45% plus 2% national insurance plus the 12.8% of employers national insurance = so total tax take at top end is basically 60p for every pound earnt

@ernie, there is plenty of evidence that when tax rises above a certain “tipping point” it drives changes in behaviour which means less tax is collected. When Thatcher cut tax from 60% to 40% the tax take went up not down. Also as you raise taxes you take money out of the economy (as it was previously spent one stuff) and gives it to the government who may or may not return it to the economy. As I have posted before when the tax went to 50% I was directly aware of lots of changed behaviour including people moving their jobs abroad, maxing out pensions etc all in a way which meant less tax paid to the government than before and much less spent in the economy. Increasing top rates of tax encourages the top jobs to go abroad at which point the lower ranks follow suit as you want to work near the bosses if you are interested in promotion. Pushing top rates of tax up leads to less tax collected and lower economic activity. Singapore has a big and growing financial services sector actively encouraging people to relocate. I posted before how Brevan Howard (Hedge Fund) moved all its high paid traders to Switzerland. The lower paid back/middle office staff remain in the UK. The lost £10’s of millions in tax and spending every year as a result.

France has a top rate of 66% now (payable by the company on wages not the employee as that rate was decided by the courts to be confiscatory). What is laughable is footballers are exempt !!! Also wealthy French now hold 17 billion euros in assets in Belgium due to high French taxes. So instead of taxing interest on those 17 billion of assets in France that money goes to the Belgium government. Genius, not !

Changing taxes has a habit of producing unintended consequences. I think high rates of stamp duty (5% and 7%) has meant the wealthy have bought cheaper (or less expensive) buy-to let property rather than move house. Why pay 300k stamp duty moving from a £3m to £4m house when you can put £1m into 2 or 3 buy to let or a second home ?

Increasing top rates of tax will slow the economy and result in less tax actually being collected as a result of that and of changed behaviour.

That sounds like an argument for a more unified tax policy across Europe, surprises me from you.

@jools just an aside that the top rate is 45% plus 2% national insurance plus the 12.8% of employers national insurance = so total tax take at top end is basically 60p for every pound earnt

Not if you classify yourself as self employed, a simple tool not allowed for most of us

I think high rates of stamp duty (5% and 7%) has meant the wealthy have bought cheaper (or less expensive) buy-to let property rather than move house.

Or they have built huge basements.

I read a lot about high taxes lowering the tax take as if it were fact but no one ever posts compelling evidence. It makes sense and at really high levels I’m sure its true but from 40 – 50% is there real evidence?

Don’t forget you’re only talking about tax on income here, which is the obvious one.

I wonder what would happen if we abolished all income (and perhaps profit) based taxes completely and just taxed on consumption. You could include all consumption to spread the load – so VAT or duty on things like insurance policies and loans.

We could then choose to pay tax by choosing whether to spend money or not.

So those who can save pay less tax, wonder who they would be? Sounds like a recipe for economic collapse.

….by choosing whether to spend money or not.

Spending money is a choice for some people ?

12.8% of employers national insurance

Er, employers pay that, it doesn’t come out of your salary.

Spending money is a choice for some people ?

Well assuming that our actions are not just the result of automatic responses to external stimuli and that humans do indeed have free will, then yes, not spending money is a perfectly valid choice.

Of course, all choices do have consequences. The most serious one in this case would be starving to death. But you would avoid paying taxes, thus proving that Mark Twain was wrong about one thing. 😀

Er, employers pay that, it doesn’t come out of your salary.

It does. Your budget for staff includes it. One of the reasons that contractor get paid more.

But you would avoid paying taxes,

No VAT on many foods 😀

Edit

Of course, all choices do have consequences. The most serious one in this case would be starving to death. But you would avoid paying taxes, thus proving that Mark Twain was wrong about one thing.

This clearly explains the beauty of Inheritance tax! 😈

Well assuming that our actions are not just the result of automatic responses to external stimuli and that humans do indeed have free will, then yes, not spending money is a perfectly valid choice.

Well not spending money is a perfectly valid choice if you are a hunter-gatherer, otherwise it isn’t.

And it’s rather silly to suggest it is.

that video is just brilliant in terms of the timing and rhythm

Seriously brilliant piece of work.

😆

I’ve just read this :

jambalaya – Member

When Thatcher cut tax from 60% to 40% the tax take went up not down.

The “tax take” went up under Thatcher because she increased the tax burden. In fact the highest tax burden Britain has ever endured, in its history, was under Thatcher.

So yes the “tax take” went up under Thatcher, because everyone bar the rich had to pay more in taxes to fund her failed policies of mass unemployment and tax cuts for her wealthy mates.

national insurance plus the 12.8% of employers

That should be 13.8% shouldn’t it? But not if you are classified as a mariner as they are exempt, although HMRC has been tightening up on that.

Well not spending money is a perfectly valid choice if you are a hunter-gatherer

http://en.wikipedia.org/wiki/Freeganism

It’s about time they added ‘National Insurance’ and income tax together. Then we would realise what our actual tax rates are

The only problem with that is the employers part of NI – this is as much as you pay

My highest paid employee is the Paye !

(Yes I am one of the scum who has invested a large amount of money for the joy of employing people, who mostly earn more than me at the mo !)

Free Hover-boards for everyone!!! And your lunch served to you every day by Kelly Brook in here underwear*

* terms and conditions apply

And it’s rather silly to suggest it is.

Sorry Ernie. Forgot you didn’t have a sense of humour.

jambalaya – Member
there is plenty of evidence that when tax rises above a certain “tipping point” it drives changes in behaviour which means less tax is collected. When Thatcher cut tax from 60% to 40% the tax take went up not down.

‘History’ of economics in many respects is interesting but doesn’t necessarily dictate how it will play out, its the present and future which rules.

not sure I buy that jambalaya on several counts:

1. The HMRC receipts after the 50% tax rate was introduced show that revenue was down in both of the following years – discounting the short term effect of deferring bonus payments etc and showing a longer term trend.

2. In two periods (70s and 2000s) the experience in the UK has been that when tax rates go higher than 50% the net receipts go down and people who are able to move abroad – with 1% of the population paying 30% of all tax it takes tens of thousands of “normal” tax payers to make up the gap caused by one “rich” person moving abroad for tax purposes.

3. The socialist experiment in France (much lauded by Ed Miliband when it was announced in 2012) significantly raised taxes on wealthy individuals and businesses and by all accounts has completely wrecked their economy in the following two years. Well paid jobs and professionals have been move abroad – London’s francophile population would make it France’s 4th biggest city of french speakers. Capital has also been moved abroad (17Bn euro to Belgium so far) , even the left wingers in France are now using language such as “we’ve only got 3 months left to reverse the policy and save France from disaster”.

4. The experience of some people I know (mix of friends and neighbours working in the public and private sectors) is that as tax has gone up they’ve simply bought more holiday / worked less.

Whilst appearing not to have lost sight of money not being everything and their need to pay towards the things that make the UK country great (healthcare, education, benefits for people who need them), my acquaintances use language along the lines of “when you see a net salary of 38% of your gross pay above a certain threshold you basically land up thinking “what’s the point” and choose to work less. Their change in behaviour doesn’t create jobs or help the economy – it just reduces direct tax receipts (and indirect taxes such as VAT on spending) and also means that some “key” professional roles like Hospital Consultants are now seeing fewer patients at a time when there are waiting lists.

But.. surely if people have the option to work less, and you tax them LESS they would be likely to work fewer hours as they wouldn’t need to to remain comfortably off?

That’s a question, btw – just saying it’s probably quite complicated.

I’ve been pretty open on here and have plenty of examples of friends and colleagues who changed their behaviour when the tax rate went from 40% to 50%. This included maxing out pension contributions (inc making use of historical unused allowances), changing their working practices and the way they where paid and ultimately moving abroad (a big part of why I went to Singapore for 2 years).

I’ve posted example before of sailing, a sport I am familiar with. Participation in racing has dropped more than 50% since 2008 and most notably since the tax rate went up. The marginal increases in tax affect peoples leisure and luxury spending. For every rich yacht owner you have plots of people sailing for free (and buying clothing, drinks, food etc) and all the support staff be they maintenance, marina staff, component manufacturers. These people’s livlehoods are impacted, jobs and skills are lost. The guy who did my boat maintenence has 25% of the businesses he used to have. The flip side is the government now has more money to what with exactly ? They may help the poor but there is a raft previously employed people now out of work or making less money with a shrinking economy. High taxes take money out of the general economy and hand it to the government.

@robdixon – I think you and I are in agreement, I agree with what you’ve posted above

On NI, yes @dragon you are right I didn’t remember the correct figure (12.8 vs 13.8). Also employers National Insurance is a tax on employment, whether it’s paid by the employee or employer, as noted above it’s in your staff costs budget. Its one of the drivers as to whether busineses decide to locate in the UK or not. Its all about the total tax burden.

Sorry Ernie. Forgot you didn’t have a sense of humour.

I thought your joke :

Well assuming that our actions are not just the result of automatic responses to external stimuli and that humans do indeed have free will, then yes, not spending money is a perfectly valid choice.

was absolutely hilarious !

Surely my witty response provided you with a clue 🙂

The flip side is the government now has more money to what with exactly ?

Oh I don’t know, possibly invest it in infrastructure, health, or education, just like Germany has now that it has abolished all tuition fees for Universities, or they could just let the rich have it to spend on luxury yachts that keep a few people employed I suppose.

There seems to be a lot of talk over personal taxation on the rich, leading me to believe that some people round here still believe in the trickle down effect, yet no talk on VAT which affects all, I could mention corporation tax, which is one of the lowest in the EU.

ernest has already established that his particular slice of leftism does not include being a “trot” and therefore, not humourless, apparently.

He’s a “Lenin-ist”. This means that he is prepared to laugh at certain things, as long as there’s a side-benefit to a restricted strata of the population and is allowed by the Central Committee of the Comictern..

All other jokes are ruthlessly quashed if they are found to alleviate the mood of the middle and upper classes, under the tracks of history as laid down by the Party.