UK Politics General Discussion

[Dave]

The biggest problem with Tax is people don’t understand it. People freak when they hear of a 40% tax bracket because they think when they tip into that point all their income is taxed at 40% when it isn’t.

When you actually explain progressive tax to people quite a lot become far more reasonable about.

 

[JAperson]

The biggest problem with Tax is people don’t understand it. People freak when they hear of a 40% tax bracket because they think when they tip into that point all their income is taxed at 40% when it isn’t.

When you actually explain progressive tax to people quite a lot become far more reasonable about.

Well yes, people think if they go into the next tax bracket by just a little bit they'll actually earn less, and if you try and tell them otherwise they insist they are right. When in real world terms this is incredibly unlikely (it may even be completely impossible, but I'm factoring NI here).

 

[rob666]

Could I point out that our Chancellor of the Exchequer, our second lord of the Treasury, occasionally known by some as Rachel from accounts, is still firmly in office, despite the arrival of a new week.

Bond market picked up sharpish as well, good to see.

Very sad storm in a teardrop.

 

[Smiley]

There might be an argument for raising the tax rates if the tax bands actually increased in line with inflation. Currently, more people every year are dragged into tax/higher rate; I firmly believe no-one should be paying tax on the first £20k, nor the magical *62%*

Let's not forget that "those with the broadest shoulders" likely already pay far more tax than the rest on stealth taxes also:
- general VAT, private school fees, private healthcare (reducing the burden on the state/NHS)
- stamp duty (both stocks and housing), VED, etc
and quite possibly employer NICs, CGT, ....

Everyone's view and situation is different. But at least in the south-east/London, earning over £100k makes you neither well-paid nor well-off. Someone earning £125k will pay £47k in NI/Tax - personally I think that's enough!

 

[Dave]

There might be an argument for raising the tax rates if the tax bands actually increased in line with inflation. Currently, more people every year are dragged into tax/higher rate; I firmly believe no-one should be paying tax on the first £20k, nor the magical *62%*

Let's not forget that "those with the broadest shoulders" likely already pay far more tax than the rest on stealth taxes also:
- general VAT, private school fees, private healthcare (reducing the burden on the state/NHS)
- stamp duty (both stocks and housing), VED, etc
and quite possibly employer NICs, CGT, ....

Everyone's view and situation is different. But at least in the south-east/London, earning over £100k makes you neither well-paid nor well-off. Someone earning £125k will pay £47k in NI/Tax - personally I think that's enough!

The tax bands used to increase with inflation until the Tories got into power. And the primary reason they don’t is to hide tax rises because this country wants social spending but doesn’t want to pay for it because the billionaire owned media feed folk this bias against paying tax.

As for your stealth taxes:

1) Everyone pays VAT and rich people often reduce VAT costs by claiming items are required for work when they are self employed. The majority of VAT receipts come from lower earners.

2) Private school fees have only just become taxable, and the evidence from countries that banned private schools was that the burden on state schools did not increase that much and that education improved for everyone as rich people suddenly gave a damn about state education.

3) Private medical fees are only taxed if it’s an employment benefit. As for private health reducing pressure on the NHS, not a lot, and in fact the NHS subsidises rich people’s insurance costs as private hospitals don’t have to provide emergency care in this country (in other countries premiums are higher as the private hospitals also have to cover the costs of emergencies and those that default on their bills). Also private health companies take NHS staff, trained by the NHS causing shortages in the health system which exacerbates waiting times that then force Trusts to outsource to the private sector (feeding the beast).

Rich people nearly always get paid outside of PAYE, apply any number of tax avoidance schemes, hence why the effective tax rate of many is lower than that of poorer people (classic example being Rishi Sunak effective tax rate being somewhere around 20% on earnings in the millions.

 

[rob666]

...Everyone's view and situation is different...Someone earning £125k will pay £47k in NI/Tax - personally I think that's enough!

Indeed.
I don't think that is anything like enough...
Minimise all the regressive taxes, slap them all on income tax, especially on higher earners.
Personally, I don't think there should be any basic tax allowance, we should all pay tax on all our earned income.
Make it progressive, and hit the highest earners hardest, as they are in a high position to support society overall.
Four million kids in poverty in this country.

 

[Matt N]

Out of curiosity, what do we think about wealth taxes? These are an option now apparently being mulled by the government.

Personally, I’m not sure. It sounds like a sound idea in some senses, but I’m not sure how you’d implement it (how is the value of a non-liquid asset like a house or car measured year-on-year, for example?), and I’m also not sure whether it might disincentivise wealth if implemented on too much of an extreme level.

The thing I do wonder with tax rises is; do they not disincentivise working hard and striving to earn more if taken beyond a certain extreme? I’m not saying there isn’t room to raise taxes in the UK, but if we want people to earn lots of money and be good taxpayers, surely they need an incentive to do so? If people feel like they’re working hard to go up the career ladder and not getting anything from it in terms of increased disposable income and living standards, won’t many struggle to see the point of earning more?

Like I say, I’m not saying there isn’t room for tax rises, but I do think the brain drain is a thing that could happen if taxation is taken beyond a certain extreme.

 

[rob666]

A lot of business owners would simply give themselves a payrise of the same amount as the new tax rate...or better, to maintain the status quo.
Fine, the increase to the exchequer is still there.
Increase the vat on luxury goods, increase the tax rates of the very highly paid, corporation tax on profits, and inheritance tax.

Needed doing back in Blair's day.

 

[GooseOnTheLoose]

I’m also not sure whether it might disincentivise wealth if implemented on too much of an extreme level.

The inherent issue with wealth is that it is economically useless and wasteful. It sits, often unused and under utilised, for the benefit of one person incase they may need it. It is literally hoarding.

The wealthy are only useful if they spend. If they hoard and are thrifty they're not contributing. If they're not contributing, their wealth to a wider society is meaningless. It effectively doesn't exist.

France trialled a 75% tax rate on earnings over €1 million. It was dropped in 2014 after two years of implementation. It faced significant backlash from high earners. French football players, fashion designers and actors. Crucially, none of these people left France. Their productivity didn't decrease. They still worked as hard as they did before. Instead, they all took up Belgian nationality and opted to pay their income taxes there at a lower rate. They did all, however, remain in France.

A wealth tax, rather than an income tax, encourages those with wealth to actually spend it. To make it economically active. It's not too dissimilar to the Freelancer Christmas of January 31st, where those who are self employed spend and claim back as much as they can on expensive toys to keep their tax bracket down.

VAT is problematic as a tax because we all pay the same amount. @Smiley often boasts about how much he earns, but you as a student will pay the same amount of tax on everything you buy. Smiley may only have as much disposable income as you, because he invests, saves and squirrels his wealth away, but that makes you roughly equal in economic terms.

 

[rob666]

... It's not too dissimilar to the Freelancer Christmas of January 31st, where those who are self employed spend and claim back as much as they can on expensive toys to keep their tax bracket down. ...

Yup, there is no way I would have spent silly money on a new gearbox for a shed volvo if I was employed in a "real" job.
That bill means I can earn a few grand more tax free.
Edit...contributing further in the vat on the bloody great bill as well!

 

[Matt N]

With that in mind, some degree of wealth tax sounds as though it makes a lot more sense than rises in income tax. And I’m honestly surprised that no government has reached for it sooner, and that it seems to be seen as such a preserve of the far-left (only the Greens proposed it at the last election, as far as I can tell). It almost seems to support capitalism by encouraging the wealthy to spend, which is the opposite of the far-left, if anything (The far left wants to dismantle capitalism, does it not?)!

My one question, though, would be; what is considered “wealth”? Is it purely referring to liquid wealth like savings, stocks and shares, or are non-liquid assets like houses and cars counted as wealth too? The former sounds logical, but I’m not so sure about the latter.

It seems to be a better form of taxation than increasing income tax, because it seemingly allows (and almost encourages) higher earners to have a higher standard of living. With how you describe it, I do wonder why no government has gone for it sooner! I’m not sure what about it is far left, but it seems like only the far left typically supports it…

 

[GooseOnTheLoose]

With that in mind, some degree of wealth tax sounds as though it makes a lot more sense than rises in income tax. And I’m honestly surprised that no government has reached for it sooner, and that it seems to be seen as such a preserve of the far-left (only the Greens proposed it at the last election, as far as I can tell). It almost seems to support capitalism by encouraging the wealthy to spend, which is the opposite of the far-left, if anything (The far left wants to dismantle capitalism, does it not?)!

My one question, though, would be; what is considered “wealth”? Is it purely referring to liquid wealth like savings, stocks and shares, or are non-liquid assets like houses and cars counted as wealth too? The former sounds logical, but I’m not so sure about the latter.

It seems to be a better form of taxation than increasing income tax, because it seemingly allows (and almost encourages) higher earners to have a higher standard of living. With how you describe it, I do wonder why no government has gone for it sooner! I’m not sure what about it is far left, but it seems like only the far left typically supports it…

Wealth would be the appreciation of any additional assets that you have, outside the necessity you need to live.

It would be the appreciation on the value of your second home. Cars mostly depreciate in value, so you can forget about those.

The hard left is about sharing resources and spreading the wealth, creating as equal a playing field and entitlements as possible. Capitalism can be a tool to get there, it has to be as world trade relies on it, but that's getting into a different conversation entirely.

 

[BarryZola]

Wealth taxes would work better if every country in the world had the exact same taxation system. As that's not the case, some people would just take their family and wealth to another country that doesn't have a wealth tax. This is the problem, in reality.

 

[GooseOnTheLoose]

Wealth taxes would work better if every country in the world had the exact same taxation system. As that's not the case, some people would just take their family and wealth to another country that doesn't have a wealth tax. This is the problem, in reality.

Which doesn't matter, as the wealth primarily sits there doing nothing. The wealthy will still come to London to spend, regardless, plateauing the economic impact of any leaving.

 

[Ash]

The inherent issue with wealth is that it is economically useless and wasteful. It sits, often unused and under utilised, for the benefit of one person incase they may need it. It is literally hoarding.

The wealthy are only useful if they spend. If they hoard and are thrifty they're not contributing. If they're not contributing, their wealth to a wider society is meaningless. It effectively doesn't exist.

France trialled a 75% tax rate on earnings over €1 million. It was dropped in 2014 after two years of implementation. It faced significant backlash from high earners. French football players, fashion designers and actors. Crucially, none of these people left France. Their productivity didn't decrease. They still worked as hard as they did before. Instead, they all took up Belgian nationality and opted to pay their income taxes there at a lower rate. They did all, however, remain in France.

A wealth tax, rather than an income tax, encourages those with wealth to actually spend it. To make it economically active. It's not too dissimilar to the Freelancer Christmas of January 31st, where those who are self employed spend and claim back as much as they can on expensive toys to keep their tax bracket down.

VAT is problematic as a tax because we all pay the same amount. @Smiley often boasts about how much he earns, but you as a student will pay the same amount of tax on everything you buy. Smiley may only have as much disposable income as you, because he invests, saves and squirrels his wealth away, but that makes you roughly equal in economic terms.

Damnit the goose is right

Hoarded wealth is wholly unproductive and we have so much of it tied up in bricks and mortar instead of contributing to improving the economy (new machinery, investments, r&d etc) it’s frightening

Combine this with the fact we are being extracted via our water, energy, transport, infrastructure, telecoms etc with all this money going out the country with what’s left going to the wealthy in dividends the normal folk in this country are just being rinsed.

All of us.

Every day.

And no current government has the guts to undo this machine.

So says Adam curtis…

 

[BarryZola]

Which doesn't matter, as the wealth primarily sits there doing nothing. The wealthy will still come to London to spend, regardless, plateauing the economic impact of any leaving.

I take your point, but don't forget that they do spend on cars, clothing, weddings, staff, shopping etc etc. I'm not defending people who simply stack millions or more in bank acccounts just for the sake of having more and more money, by the way. I'm just saying there is 'some' impact if lots of wealthy people suddenly exit the country. We'd be better off if all world governments came together and decided that as soon as any individual earns more than £1 billion then any further earnings are put into a 'world re-distribution fund' where it's shared out equally on giving everybody a better standard of living worldwide (adjust the max amount as you wish, that was just an example). £1 billion is more than enough for anyone and it's certainly enough to 'work hard to better yourself and achieve something in life' for those kinds of people. There's absolutely no need for anyone to have more money than that.

 

[rob666]

Rich people spend 1% of their wealth on cars, shopping, weddings etc.
The less well off spend 90% of their wealth on the same things.

So, proportionately, the rich spend far less of their income generating wealth for others.
They just sit on it...and that money does nothing for the greater society...that doesn't really exist, remember.
Tweak all taxation a little, increase taxation for those that can afford it a little more, especially large, profitable tech companies...where the money is.

 

[Matt N]

On a curious political question, would somebody mind explaining to me what the difference between social democracy and socialism is?

I’m aware they’re broadly allied, but different political belief systems, and I’ve never been quite sure what the difference is. I tried Googling it, but I still feel a bit none the wiser.

As there are folks here who seem a lot more politically informed than me, would anybody mind explaining that to me?

 

[rob666]

Sounds like a defunct middle of the road party, with mixed up wishy washy centre left liberals.
But I have had my Salad days...

 

[GooseOnTheLoose]

On a curious political question, would somebody mind explaining to me what the difference between social democracy and socialism is?

I’m aware they’re broadly allied, but different political belief systems, and I’ve never been quite sure what the difference is. I tried Googling it, but I still feel a bit none the wiser.

As there are folks here who seem a lot more politically informed than me, would anybody mind explaining that to me?

Social democracy seeks to reform and humanise capitalism, using socialist principles within the existing system. Traditional socialism aims to replace capitalism entirely.