!!!!!! - Clown to raise the top rate of tax to 45%

Dithering_Dad

I don't see any reason, morally or otherwise why we need tiered tax rates. A flat tax rate would be much easier and cheaper to administer.

Why should a single person earning £70k pay a much larger proportion of tax than a couple with a joint income of £70k?

StevieJ

Dithering_Dad wrote: »

I don't see any reason, morally or otherwise why we need tiered tax rates. A flat tax rate would be much easier and cheaper to administer.

Why should a single person earning £70k pay a much larger proportion of tax than a couple with a joint income of £70k?

That is a very good point.

lostinrates

Dithering_Dad wrote: »

I don't see any reason, morally or otherwise why we need tiered tax rates. A flat tax rate would be much easier and cheaper to administer.

Why should a single person earning £70k pay a much larger proportion of tax than a couple with a joint income of £70k?

OK, I see your argument,- I prsum you'd like rid of the current break point for higher rate tax too thn? and don't necessesarily disagree with what you are saying, but in the current arrangement I feel that one, or now two, break points are difficult: at the levels thay are set. I maintain that £150k in parts of the country doesn't go as far as lots of people think it might.

stephen163

With a flat rate of tax and to get the same revenue as a progressively tiered tax system, the lower and middle income individuals would lose out and only higher earners would benefit.

Given that lower earners tend to spend a greater proportion of their income on goods and services, is this not an unwise move?

mitchaa

A couple earning £70k will have 2 x personal allowances and will both pay tax at the 20% rate. (Assuming 2 x £35k earners)

A single £70k earner will have 1x personal allowance and pay tax at both 20% and 40%.

The £70k single earner after deductions earns £3939pm
The 2 x £35k earners after deductions earn £4326pm

So the couple earn £387pm more than what the single earner earns but yet both have the same salaries.

To get them both the same..

Single earner would have to earn £78k in order to match the couples £70k.

So £70k and £78k are exactly the same when you look at it this way

lostinrates

stephen163 wrote: »

With a flat rate of tax and to get the same revenue as a progressively tiered tax system, the lower and middle income individuals would lose out and only higher earners would benefit.

Given that lower earners tend to spend a greater proportion of their income on goods and services, is this not an unwise move?

I have no idea. However, it could be argued that this is the bracket in which saving for retirment etc is most important too, and that further incntivising saving in this group and increased spending in the highest brackets. People laughed at Elton John buying however many thousands of flowers a week and a CD for every house, but isn't that more useful to economy than him hoarding it-offshore -or becoming a LL . If you are that rich and you spend spend spend that has to be both rewarding oneself for earning and usefully redistributing?

Dithering_Dad

stephen163 wrote: »

With a flat rate of tax and to get the same revenue as a progressively tiered tax system, the lower and middle income individuals would lose out and only higher earners would benefit.

Given that lower earners tend to spend a greater proportion of their income on goods and services, is this not an unwise move?

You could jiggle the tax free allowances depending on the individual's income and circumstances to ensure that the very low paid are not penalised. For example, instead of having Children's Tax Credits and Working Tax credits where the government take tax off you to then give it back (after it has passed through the hands of several civil servants), they could simply increase your tax free allowance and not take the tax off you in the first place.

It would act as an incentive for people to get higher paid jobs because they keep more of their money, it would be much cheaper to administer than the tax credits regime and it's not as open to fraud (didn't they have to close down the tax credit online service because of overseas scammers with stolen NI numbers).

Again, I don't see why higher earners have to pay tax at a much higher rate than low earners. They should pay more tax because they earn more, but the proportion that they pay compared with their income pay should be the same.

Dithering_Dad

mitchaa wrote: »

A couple earning £70k will have 2 x personal allowances and will both pay tax at the 20% rate. (Assuming 2 x £35k earners)

A single £70k earner will have 1x personal allowance and pay tax at both 20% and 40%.

The £70k single earner after deductions earns £3939pm
The 2 x £35k earners after deductions earn £4326pm

So the couple earn £387pm more than what the single earner earns but yet both have the same salaries.

To get them both the same..

Single earner would have to earn £78k in order to match the couples £70k.

So £70k and £78k are exactly the same when you look at it this way

If the government allowed married couples to share their tax free allowances and tax thresholds, it would be a much fairer system.

michaels

One idea is to pay everyone (inc children) a flat lump sum say £4k pa, scrap all other benefits and have a constant tax rate on all income - say 20%

I think this may be too extreme but rather as the non-dom lump sum I think there might be mileage in having a lower top tax rate for the superrich - say 10% on everything earned over 2m on the grounds that this might be paid rather than evaded and thus bring in more tax than a 45% rate. No it doesn't sound fair but if it means that these people pay more tax then it is fairer.

Also in my tax manifesto:
1) scrap the artificial split between tax and NI and employers and employees NI - might not be popular but it makes sense
2) Increase the 0% band (tax plus both bits of NI) to something sensible - 15K?
3) Allow couples where one partner is not working as they are dong a caring role (kids or parents or whatever) to share tax allowances
4) Sort out stamp duty, priorty get rid of the silly everything at the highest rate bands, more radical scrap stamp duty and remove the CGT allowance (beyond index linking)

Any other 'sensible' suggestions for the MSE manifesto - may be we could have a poll thread once we have a few ideas?

Pennywise

Dithering_Dad wrote: »

If the government allowed married couples to share their tax free allowances and tax thresholds, it would be a much fairer system.

I really can't understand the logic behind not allowing this. It is completely at odds with other taxation.

If you take inheritance tax and capital gains tax, it is freely allowable to transfer assets, free of tax, between spouses, to enable both spouses to use their tax free allowances. So husband has some investments and wants to sell - he transfers some to his wife and then they sell, both getting their annual CGT exemptions. With IHT, we now have a fully transferably nil rate band between spouses, effectively doubling the threshold for paying IHT.

Where is the logic in not allowing the same transferability between husbands and wives? Surely it can't be morally right for the tax to be different if only the husband works earning £70k p.a., as opposed to both working and earning £35k each - it is completely illogical and morally wrong.