'Should high earners pay 50% tax?' poll discussion

KingRaj

bermudasniper wrote: »

I think the following tale sums up the situation:

HOW THE TAX SYSTEM WORKS

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by £20.' Drinks for the ten now cost just £80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the £20 windfall so that everyone would get his 'fair share?'

They realized that £20 divided by six is £3.33. But if they subtracted that from everyone's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid £2 instead of £3 (33%savings).
The seventh now pay £5 instead of £7 (28%savings).
The eighth now paid £9 instead of £12 (25% savings).
The ninth now paid £14 instead of £18 (22% savings).
The tenth now paid £49 instead of £59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. 'I only got a pound out of the £20,' declared the sixth man. He pointed to the tenth man, 'but he got £10!' 'Yes, that's right,' exclaimed the fifth man. 'I only saved a pound, too. It's unfair that he got ten times more than I did' 'That's true!!' shouted the seventh man. 'Why should he get £10 back when I got only two? The wealthy get all the breaks' 'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor' The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill.

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

This is great! Good find!!!

MSE_Martin

KingRaj wrote: »

Martin!:money: Oh dear.... from the results of this poll, it looks as though you are not attracting too many high earners to the site...........I wonder why that is.......:rolleyes:

Actually its the opposite - and im quite surprised by it. I believe (havent checked) only 1% of the adult population earn over 150k but 5% of our voters say they do. Originally I thought this may be because we hadnt clearly defined £150k as a high earner, but i've done that now and the new votes still show a standard 5% in that category.

I'm_With_Stupid

squidworth wrote: »

lols no!!!

add in national insurance (which goes in the same pot as income tax and is just income tax under a different name)

so if your employer decides to "pay you" £100 extra for sake of simplicity then the employer has to pay 12.8% of that as NI leaving you with £87.20 taxable income

then take off that your 11% NI and 20% tax (31% of 87.20 is 26.16) then that leaves you with 61.04, or in other words the standard uk rate of tax is more like 39%

And then there's always VAT... spend the 61.04 and 15% (£9.16) leaves you with 51.88, so the equivalent of 48% of your £100 can go in tax

Like I said, that's income tax, not corporation tax, which is what was claimed is higher in the UK than other countries. You're also conveniently ignorning the fact that the minimum wage in the UK is about £4.70 including this NI contribution, whereas many other western European countries have a minimum wage of around to €7-8 (some even higher). So corportation tax is lower, VAT is lower, and the minimum wage is lower. So it is simply untrue that it costs loads more to run a company in the UK than anywhere else.

wmfd

50%?

What about the not quite so high earners paying 60% as they lose their personal allowances - another stealthy one introduced at the same time.

wmfd

ducky2004

tuggy12 wrote: »

Not true !!

Dividends are paid net of 10% tax, so the marginal rate of 32.5% tax effectively increases the total tax to 40% of the gross dividend amount.

Worse than that I am afraid.
£1 of business pre tax profit
CT 21%, leaving 79p (the 10% credit is a bit of a cheat, it should have been 21 - 28% credit)
32.5% tax on 79p leaves 53.32p
Effective tax: 47.68%

If you take into account VAT, i.e £1 inc VAT receipt, and then minus the input VAT, and hence, say, split the 15% VAT half(which belongs to the business) and half against the VAT incldued input), the figure will probably be about 55p tax. Or, One only gets to keep 45% of one's effort.

For a bigger corporation (or those from stock market investments etc)
£1 profit
CT 28%, leaves 72p
32.5% on 72p leaves 48.6p
Effective tax : 51.4%

On the other hand, capital gains has the first 10k tax free, and then 18%. This is an incentive to moved away from stuff that adds value to the society towards asset speculation.

ducky2004

Mozette wrote: »

I don't see 50% on anything over £150,000 is unreasonable.
If I earned that much I'd happily pay it!

It depends on how the 150k is earned really. If I just need to fill in an online tax credit / benefit claim form and government fill my bank account with 150k, I am pretty happy to pay 90% on it, as it is still 15k nearly effortless money.

If I am have to mortgage my house and risk my entirely family future to begin with, I won't be happy to pay that. if I have to work 80 hours a week to get that, I won't be happy to pay that.

I seriously don't think this 150k gimmicks is going to raise much money. The next step would be 1% -> 3% NI stealth tax for the 40% earners and perhaps a 11.8->12.3->12.8% employee NI for everyone else (and yah, this raised money)

10 years from now, it will probably be a tax on the current tax free 25% pension lump sum withdraw if it exceeds, say 100k or so.

And with inflation coming, it probably won't be long before your current, say 40k becomes 150k nominally.

More to come..unless suddenly Britian becomes hyper productive or many people suddenly realsied that the state don't owe them a living...

mazzab_2

Lots of people seem to think that there are lots of high earners not maximising their tax avoidance who will now start doing so. I doubt this a lot. Most high and moderate earners (over £50k / year) pay VERY LITTLE tax and have an accountant to sort it all out for them. Phillip Green pays very little tax on his BILLIONS compared to moderate earners. This tax rise will mostly affect people who cant run overseas. the real rich have done that already with most of them being "non-Doms" with the Governments apparent blessing.

Tax mostly gets spent in the UK - on jobs in the public sector which improve all our lives, untaxed earnings of the rich and super rich often get spent making them richer and then spent abroad on holidays or imported supercars and property etc making everything the rest of us buy more expensive, and so relatively poorer. Higher taxes on high earners keep society fair and prevent the rich getting too much richer than the rest of us.

Keep the reqards of their labours? do they put in hundred of times as many hours or produce hundereds of times more than everyone else? No. they exploit others labours - make us "more efficient" (ie pay us less for doing more) by growing monopoly on production and distribution. The market makes the guys at the top rich at the expense of the rest. teh rich poor gap is widening under a "socialist" government.

What baffles me is that people who WILL NEVER PAY higher rate taxes get upset at the idea of someone else paying more - you will pay LESS in consequence and get BETTER public services. It's a no brainer to me.....

BTW I fully expect to pay higher rate tax at 50% or more and I DONT OBJECT.

koexelek

C.I’m NOT a high earner. 50% is too high.

melbury

Why couldn't they just raise the personal allowance to say £10,000? That would really help low earners.

harryhound

mazzab wrote: »

Tax mostly gets spent in the UK - on jobs in the public sector which improve all our lives.

There was me thinking that a lot of the tax is a simple transfer payment, with a big chunk taken out, to pay for the organisation that does the transfer?

There was me thinking that the country is Deeeeeeeeeeeeeeeeeeeeeeeeep in debt to foreigners for the next generation (30 years) and all those "jobs in the public sector" will some how generate enough income to pay even the interest on those borrowings?

Perhaps all this tax is being used to keep the sheeple in ignorance until after the next election. I think I would call that buying votes with other peoples money?