The last taboo -raising income tax

Radiantsoul

RJP33 wrote: »

Tax is too high as it is and higher rates only discourage entrepreneurship and wealthy people from settling here both of which create jobs.

You might find by dropping the higher rate to 30% we'd actually end up with more in receipts.

I am not sure that the correlation between higher rate taxes and entrepreneurship is all that strong.

Thrugelmir

RJP33 wrote: »

Tax is too high as it is and higher rates only discourage entrepreneurship and wealthy people from settling here both of which create jobs.

The weathy people that have created businessess that I 've worked for. Are more than happy to pay their fair share of tax. Besides which its not possible to uplift their business to another a country for a multitude of reasons. Neither do they wish to live elsewhere either.

RJP33

Fair, however you would attract more wealthy people who are not currently here into the country with lower rates, which in turn would create more jobs and improve the economy.

torontoboy45

PasturesNew wrote: »

He would also have been one of a few people "in the know". Information was not so freely available back then - apart from access to a Uni place (I think it was 10-12% of people, rather than the current 45-50%).

So he'd have known about Uni courses, known how to get onto one - and - known all about the money side of things. It wasn't everybody that had the knowledge of these things back then... and as for housing benefit, maybe he had some peculiar needs as I'm sure that wouldn't have been feasible.

IIRC those going onto HE (grad. courses as opposed to HNC/HND) in 1980 was c.8%.
I was too 'academically challenged'/idle to land a place but OH did and found the uni 3/4 full of privately-educated kids who wintered on the ski slopes and summered in tuscany. many considered uni a sort of 'finishing school'. (maybe a model for future uni demographic).
grants were means-tested against parental income. she was 25 which meant she rec'd nothing -even though she had been married to me for over 3yrs at the time (late 80's) and we were 1/2 broke!! (but no tuition fees either, so it wasn't all heartbreak).

Thrugelmir

RJP33 wrote: »

Fair, however you would attract more wealthy people who are not currently here into the country with lower rates, which in turn would create more jobs and improve the economy.

If they are already wealthy then they more than likely already have business interests. Somebody without wealth is more like to relocate in an attempt to find their fortune.

Many of todays successful firms were born out of family enterprises.

Radiantsoul

RJP33 wrote: »

Fair, however you would attract more wealthy people who are not currently here into the country with lower rates, which in turn would create more jobs and improve the economy.

Possibly but it is surely more complex. It is not clear that wealthy people(specifically entrepreneurs) have a set of skills they can uproot and use to create wealth anywhere.

It might be they have skills suited to a given sector that is underexploited and they manage to get in and build a monopoly position. It is not clear this entrepreneurship is a repeatable trick and even if it is it might be much harder in a different environment.

RJP33

We can attract more of the worlds richest people here if the tax rates are attractive. Britain still has enormous attraction and has big business attractions including the timezone and established markets.

These are the people who could create hundreds of jobs just by being here and bring a lot of money into the exchequer. I don't like the idea that we just put tax rates up again as a solution.

hugheskevi

It is interesting to consider what the marginal deduction rate will be in the future. Once announced NICs increases have kicked in, along with the new pension rules from 2012, the new student loans fee repayments, and perhaps something on social care, a graduate earning £21,000 - £42,000 could be looking at paying:

20% basic rate tax
12% National Insurance
9% Student Loan repayments
3%+ pension contribution
?% Social Care funding

That is a marginal deduction rate of in excess of 40%. And once they become a higher rate tax payer:

40% higher rate tax
2% NICS
9% Student Loan
3%+ pension contribution
?% Social Care funding

Marginal rates above 50%. All before VAT, Council Tax, Stamp Duty, etc, etc. Let alone the impact of any means-tested benefits such as Universal Credit.

It is a valid criticism that some of these aren't really tax, but in the past the State would have provided free (or cheaper) education, along with more generous pensions, which were funded out of tax. So by abolishing these and funding them privately, they could reasonably be viewed as a tax by another name.