UK taxation policy.

[Matt N]

May I ask, other than blind trust, what are you basing any of this argument on? You have looked into Neo-liberal economics pre 2000 haven't you?

OK, it might be a lot to do with blind trust. I do believe that if Truss and Kwarteng didn’t have a high degree of knowledge about this stuff and didn’t know what they were talking about, they wouldn’t be where they are today, so I am inclined to trust them to a fair degree. That could be me being a tad naive, though…

Also, though; as far as I’m aware, Liz Truss is far from the first political leader to pursue this type of economic policy. Correct me if I’m wrong, but didn’t the likes of Thatcher and Reagan also do this?

When my parents and I were talking about Thatcher the other day, they said that the economy was actually greatly successful when similar things were done under Thatcher, so maybe there’s a possibility that Truss’ gamble could work?

If trickle down economics never worked, why would so many political leaders be keen to pursue it?

 

[Matt.GC]

OK, it might be a lot to do with blind trust. I do believe that if Truss and Kwarteng didn’t have a high degree of knowledge about this stuff and didn’t know what they were talking about, they wouldn’t be where they are today, so I am inclined to trust them to a fair degree. That could be me being a tad naive, though…

Also, though; as far as I’m aware, Liz Truss is far from the first political leader to pursue this type of economic policy. Correct me if I’m wrong, but didn’t the likes of Thatcher and Reagan also do this?

When my parents and I were talking about Thatcher the other day, they said that the economy was actually greatly successful when similar things were done under Thatcher, so maybe there’s a possibility that Truss’ gamble could work?

If trickle down economics never worked, why would so many political leaders be keen to pursue it?

To deal with this by paragraph as I have no idea how to multiquote;

1. Politics

2. Yes. It's been alluded to many times in many threads on here and I banged on about it at length 2 posts ago.

3. Was the Thatcher era successful? For who? By what measures please? And how the situation in 1979 is comparable to that of 2022 and thus requires a similar solution (clue - it's very different)?

4. Politics/ideology.

There are plenty of resources out there to learn about this stuff. I've read books, websites, opinion pieces on both sides, listened to podcasts and lived through some of this stuff to form my opinions on it. I would thoroughly recommend you do the same if it interests you and form your own opinions.

But please be sensitive to those of us who have actually had our lives damaged by this stuff. Just a little research and you'll hopefully understand what I mean.

 

[rob666]

As always with these fiscal events the devil will be in the detail.

On the face of it I’m a little disappointed, the whole system needs a complete shake up not just tax cuts for all.

If it was tax cuts for all, then things wouldn't be too bad.
You do not realise that 43% of people in this country pay no income tax.
(Inst.of fiscal studies)
Tax cuts for all this isn't!
Very large tax cuts for the rich, peanuts for the less well paid, absolute zero for the low earners.
The devil isn't in the detail, this is absolute rob from the poor to feed the rich.
Civil disorder of the highest order over the coming winter, cold hungry people will get angry.
Good old Truss will sort 'em out though.

 

[BigT]

If it was tax cuts for all, then things wouldn't be too bad.
You do not realise that 43% of people in this country pay no income tax.
(Inst.of fiscal studies)
Tax cuts for all this isn't!
Very large tax cuts for the rich, peanuts for the less well paid, absolute zero for the low earners.
The devil isn't in the detail, this is absolute rob from the poor to feed the rich.
Civil disorder of the highest order over the coming winter, cold hungry people will get angry.
Good old Truss will sort 'em out though.

I’ll lead you back to the second post on this thread for an explanation of how tax cuts disproportionately give more to those that actually pay income tax, it was laughed at for being simplistic but what just happened? exactly what is in that post.
What is your solution? Civil disorder? exactly the same as beating up the rich man in this example.
Be careful though as one day that rich man might not turn up then what are you going to do?

 

[rob666]

Civil disorder is no solution, neither is beating up (or eating) the rich man.
The answer is a fair system, based on individual needs and ability to pay within a civilised, caring society.
The current system is biased towards the rich, and will increase divisions between rich and poor.
And I refer you to the third post in this topic, (which I did not create), your beer buying tale is a poor oversimplistic comparison, that had many holes picked out of it in the following posts.
Unfortunately, not all of us can sell a boat to heat and eat.

 

[Matt N]

To deal with this by paragraph as I have no idea how to multiquote;

1. Politics

2. Yes. It's been alluded to many times in many threads on here and I banged on about it at length 2 posts ago.

3. Was the Thatcher era successful? For who? By what measures please? And how the situation in 1979 is comparable to that of 2022 and thus requires a similar solution (clue - it's very different)?

4. Politics/ideology.

There are plenty of resources out there to learn about this stuff. I've read books, websites, opinion pieces on both sides, listened to podcasts and lived through some of this stuff to form my opinions on it. I would thoroughly recommend you do the same if it interests you and form your own opinions.

But please be sensitive to those of us who have actually had our lives damaged by this stuff. Just a little research and you'll hopefully understand what I mean.

Apologies; I must have missed your previous post, and I did not mean to come across insensitive.

I won’t lie, I am more nervous about it than I was yesterday given how freaked out everyone seems to be by the announcements (pound at its lowest since 1985, analysts rubbishing the plans, the BoE holding an emergency meeting about interest rates etc).

Truss and Kwarteng’s gamble could work, but that is far from a certainty by the sounds of things; this is some very bold economic policy with an awful lot of risk involved. But my word, I hope it does work, because it sounds as though the consequences could be catastrophic if it doesn’t… from what I can tell, critics of trickle down economics argue that when done badly, it makes the rich get richer and the poor get poorer, and we really don’t want increased inequality during a cost of living crisis.

 

[BigT]

Civil disorder is no solution, neither is beating up (or eating) the rich man.
The answer is a fair system, based on individual needs and ability to pay within a civilised, caring society.
The current system is biased towards the rich, and will increase divisions between rich and poor.
And I refer you to the third post in this topic, (which I did not create), your beer buying tale is a poor oversimplistic comparison, that had many holes picked out of it in the following posts.
Unfortunately, not all of us can sell a boat to heat and eat.

Except no holes were picked in it, you said yourself 40% of adults don’t pay income tax so that’s the 4 in 10.
I don’t get how people that don’t pay income tax can complain when they don’t get a cut in it? How can you cut nothing?
I actually hate income tax, the system is wrong, you shouldn’t be taxed more because you do more, take overtime, if someone puts themselves out and does extra hours why should the government take 40% of that? It takes away the incentive.
Personally I’d like to see more of a wealth style tax system where items of high value are taxed more, 200% VAT on cars over 100k for instance, yes even boats tax them to the hilt but let me keep more of my money that I actually earn so I can decide where to spend it.
That’s what I would have liked to see in this mini budget, some out of the box thinking instead of just cutting tax by an actual small amount for those that actually pay it.

As for selling my boat to pay for heating and eating, if you can afford to buy and maintain a boat you won’t need to sell it to pay for those.

 

[Benzin]

Worked out I'll be getting £300-400 extra with the reduction in tax.

Shame it gets eaten up almost instantly by the increases in bills everywhere else.

The cuts won't go far for the average earners at all. But as said, the Tories don't care about those.

Also seeing someone say Thatcher was a success clearly didn't live in the North at the time.

 

[WillPS]

Worked out I'll be getting £300-400 extra with the reduction in tax.

Shame it gets eaten up almost instantly by the increases in bills everywhere else.

The cuts won't go far for the average earners at all. But as said, the Tories don't care about those.

Also seeing someone say Thatcher was a success clearly didn't live in the North at the time.

Don't get too excited. Once you factor in the tax threshold freezes which apply for 4 years, you'll be much worse off:

From: https://twitter.com/resfoundation/status/1573570487329996800

 

[Tom]

I was trying to find out why the IFS fella said more people would be dragged into tax bands. Funnily enough it’s quite hard to find details of these freezes.

The Tories are screwed unless Labour makes the most epic of blunders, which I guess is always possible.

 

[khalichanan]

I’ll lead you back to the second post on this thread for an explanation of how tax cuts disproportionately give more to those that actually pay income tax, it was laughed at for being simplistic but what just happened? exactly what is in that post.
What is your solution? Civil disorder? exactly the same as beating up the rich man in this example.
Be careful though as one day that rich man might not turn up then what are you going to do?

I don’t think I’d say I was laughing. I certainly wasn’t smiling then and I’m not smiling now. The tax that has seen the biggest cut is the top rate of tax being abolished (45%). You made the point that if a percentage of everyone’s earnings is no longer taxed means that means that rich naturally see more money in their pockets because 1% of 10k is much less than 1% of 100k - and it wasn’t invalid, it’s basics maths (ie when basic rate goes from 20% to 19% next year). I just pointed out it isn’t that simple - and it isn’t. They have cut a tax specifically for high earners whilst very little has been done for lower earners, even more so in 2022. Attached is an image showing how it’s not just more money that the rich are getting in their back pockets, but a higher percentage as well. That isn’t fair.

 

[Alsty]

Would've made more sense to keep the taxes in place, maybe even increase them slightly for the highest earners temporarily, and then use that to provide targeted support for low earners and those who're struggling to make ends meet. That would be better than a tax cut which disproportionately helps higher earners and offers little or no help for those who're in dire straights right now.

Of course a windfall tax would also have helped rather than just dumping all the burden on taxpayers.

If this budget helps to kick start the economy as claimed then I'll eat my proverbial hat.

 

[Nick🎢]

Keep in mind the picture is quite a bit more opaque than just bands and percentage.

Consider that low earners have their income topped up currently with universal credit, family tax credit etc. This is of course paid for by middle and high earners. A side note, when you think about it. Middle and high earners are subsidising the labor costs of big employers like Tesco! On the flip side, higher labor cost leads to higher prices which hurts those on low income anyway. The whole flow of money it's quite complicated - likely purposefully so.

 

[WillPS]

Keep in mind the picture is quite a bit more opaque than just bands and percentage.

Consider that low earners have their income topped up currently with universal credit, family tax credit etc. This is of course paid for by middle and high earners. A side note, when you think about it. Middle and high earners are subsidising the labor costs of big employers like Tesco! On the flip side, higher labor cost leads to higher prices which hurts those on low income anyway. The whole flow of money it's quite complicated - likely purposefully so.

Tax is paid by everyone.

 

[Nick🎢]

Tax is paid by everyone.

Thread is called UK income tax. It's not paid by everyone.

It's paid by...
- people who work.
- people who earn over 12,570PA

 

[Matt.GC]

Keep in mind the picture is quite a bit more opaque than just bands and percentage.

Consider that low earners have their income topped up currently with universal credit, family tax credit etc. This is of course paid for by middle and high earners. A side note, when you think about it. Middle and high earners are subsidising the labor costs of big employers like Tesco! On the flip side, higher labor cost leads to higher prices which hurts those on low income anyway. The whole flow of money it's quite complicated - likely purposefully so.

"Labor" is an American spelling. I'm a grammatical car crash myself but that word does not exist in real English, much like the word "gotten" that I see people keep typing.

Tesco is a big company, and it's only a big company because food retail is so unprofitable without volume. It makes approximately 5% profit in every pound that rings through its tills. Not that I'm defending Tesco, but high earners (not middle) are subsiding benefits for underpaid workers, working for British companies that themselves pay British taxes.

So how is lowering taxes for predatory investors working for multinationals going to make anything any better?

I think Tesco workers should be paid more. But there's absolutely nothing in these top loaded tax cuts that will encourage them to do so. Managers of those supermarkets (like me) will benefit. The directors, even more so. All paid to maximise profits, not pay workers more or lower food prices.

The decisions of the government are ideological. Their nostalgia is trying to resurrect the "Big Bang", or as they call it (their actual words) "Big Bang 2". When you base policy on a nostalgic falacy, it's never a good idea.

So I'm struggling to understand your point? Most of us know all this stuff. Shouldn't we be dealing with the problem of so many low paid workers relying on benefits in the first place? Or should we be accepting that poverty is a fact of life, so no point in bothering to fix it like Truss and Kwateng seem to be doing.

 

[Nick🎢]

So I'm struggling to understand your point?

First up, when somebody starts a post by calling somebody out on a spelling mistake it tells you a lot. But we shall not dwell on that.

The point was simply that the tax is a series of circular flows. It can be a bit like the natural order in nature. A minor chance to one element can have cascading ramifications elsewhere. That isn't an endorsement of any particular view.

 

[Matt.GC]

First up, when somebody starts a post by calling somebody out on a spelling mistake it tells you a lot. But we shall not dwell on that.

The point was simply that the tax is a series of circular flows. It can be a bit like the natural order in nature. A minor chance to one element can have cascading ramifications elsewhere. That isn't an endorsement of any particular view.

Not a spelling mistake. It's an American word and is spelled correctly if this forum was indeed based in that violent, gun loving, poverty stricken nation that our current government seems to idealise by copying their unfair economic model.

So what you're saying is, survival of the fittest?

 

[Nick🎢]

Not a spelling mistake. It's an American word and is spelled correctly if this forum was indeed based in that violent, gun loving, poverty stricken nation that our current government seems to idealise by copying their unfair economic model.

So what you're saying is, survival of the fittest?

That isn't an endorsement of any particular view.

Just going to leave this here please. You appear to be both focused on the use of an Americanisation and purposefully or not misrepresenting what I said.

 

[BigT]

I don’t think I’d say I was laughing. I certainly wasn’t smiling then and I’m not smiling now. The tax that has seen the biggest cut is the top rate of tax being abolished (45%). You made the point that if a percentage of everyone’s earnings is no longer taxed means that means that rich naturally see more money in their pockets because 1% of 10k is much less than 1% of 100k - and it wasn’t invalid, it’s basics maths (ie when basic rate goes from 20% to 19% next year). I just pointed out it isn’t that simple - and it isn’t. They have cut a tax specifically for high earners whilst very little has been done for lower earners, even more so in 2022. Attached is an image showing how it’s not just more money that the rich are getting in their back pockets, but a higher percentage as well. That isn’t fair.

I don’t think we are disagreeing too much at all to be honest, I didn’t say tax was simple in fact I said it was too complicated.

I certainly didn’t say I agreed with the removal of the 45% bracket but I just don’t see a need for it.
The current 40% higher level tax bracket could quite easily be 45% or 50% but it should start a lot higher somewhere like 100k instead of £50k, the whole point of the higher band originally was to tax higher earners not mid level earners like some teachers (although not all before Astrodan arrives to plead poverty) and manager level public servants as well as your average plumber and spark.
What this current 40% bracket does is encourage tax management by the self employed, pay yourself £49k and then take tax free dividends above that. (Okay corporation tax has to be paid but a good accountant reduces that)
The income tax system has been broken for years and I just wish someone had the balls to finally admit it and fix it, the fairest way to collect tax is through wealth taxes as I have already stated, they realised that in countries like Denmark years ago.