A Taxing Question

Do_Gooder_2

deemy2004 wrote:

So what then ?

Do we have an uneconomically viable economy that gradually goes down the tubes ?

Its not a question of an alternative for there is none, to compete a country needs to be competitive or it will die... remember the soviet union and how un-competitive it was and what happened to all of the industry that went bust with unemployement approaching 40% ... There is no alternative to having a competitive workforce that has the necessary skills to do the work.

Of course we need a competitive work force. We also need an economy that provides work for all abilities of working age people. I am not opposing your aims but your method of getting there.

I do not understand why you appear to think that I am advocating Soviet style economic practices. I just think that the welfare state is still needed but it does need some reform. You want to abolish it.

deemy2004

No I don't want to abolish the welfare state....

I just don't want to pay for it ..........

IvanOpinion

Do_Gooder wrote:

Unfortunately not all 'redundant' workers are able to reskill to the needs of a high skill economy. The problem is that those not capable of doing high skilled work (through no fault of their own) have had the low skilled work moved to countries such as India and China - high skilled jobs are moving there as well.

Something I have been ranting on about for almost a year now .... and boy are you right that it is high skilled jobs that are being shipped off-shore.

People have to realise that they are going to have to reskill either through training or education. If not then they are not going to be able to find any work ... well possibly they could emigrate to India and clean the toilets for those people who do the job that they used to do. It may seem facetious but it is possible that the children and grandchildren of this generation are headed that way.

The vast majority of people could be trained to drive a bus .. yet we are bringing thousands of bus drivers in from Poland?

Anyhows, I think I am digressing from the origianl point of this thread ... what was it again?

Ivan

WHA

I see, at first hand, the effects of the relatively healthy benefits available set against the taxes which are already too high at too low a level.

Day after day, I talk to the self employed who are actively reducing their working hours, or attempting to keep their income low. They have realised that by working harder, their benefits reduce and their taxes rise. This is particularly true for those with young families who are not high earners. By working fewer hours and earning less profit, their entitlements for tax credits increase. Conversely, if they work harder and earn more profit, they are taxed on those higher profits, but lose tax credits. The problem is that tax credits and most other state benefits are non-taxable. I read on another post that a family earning £15,000 taxable wages (or profits) would be in the same position as a family earning £25,000 due to benefits payable to the lower income, but not to the higher income - I have not done the sums, but some rough jottings seem to confirm this. It would seem that people earning between say £10k and £20k need to get a large increase to say £30k before they are better off again to compensate for the loss of tax credits against their increased taxes (33%) on their income.

The same applies when a small business reaches the VAT registration limit. There must be thousands of businesses keeping their turnover (sales) just below the £58k limit to avoid having to register for VAT. If these artificial barriers were removed or transitional rules introduced, the self employed and small businesses would have a real incentive to grow their businesses.

We need some proper tiering of the tax system, together with making all benefits taxable and the abolition of NIC. Something like nil tax on the first £10k of total income, then 10% on £10k to £15k, then 15% on £15k to £20k, then 20% on £20k to 25%, then 25% on £25k to £30k, then 30% on £30k to £40k, then 40% on anything over £40k. The fact that tax is payable on benefits would have minimal effect on the truly "low income" people - if benefits of £15k p.a. were received - then tax would only be £500. Whilst this is a very simplistic idea and I have not even considered calculating the tax revenue, I am sure it could be "tweaked" to make sure it was "tax neutral".

The tax must never exceed 50% of income - there must always be the incentive that the tax musn't be more than the "take home" net amount. The tax on high earners must be comparable to other developed countries. We don't want David Frost to be a tax exile, paying his taxes to overseas governments - we are better getting just 40% of his £xk income than if we scare him to an offshore tax haven when we would get 0%.

We also need some form of "transferability" of unused allowances and lower rate tax bandings from a non or low earning spouse/partner to the other. It cannot be right that two spouses earning £25k each pay less tax than one spouse earning £50k and the other earning nothing. It is inconsistent that benefits (inc tax credits) are based on family income whilst taxes are calculated separately.

In my mind, the problem is that the govt are making the entire tax/benefit system far too complex for political reasons - i.e. to "buy votes". More and more, taxes are being used for social engineering. It is time for a radical overhaul of the entire tax/benefit structure - to start again with a clean sheet. There must be benefits set at a level to avoid poverty and provide a reasonable standard of living, BUT, it must always be beneficial to work rather than rely on benefits, and it must always be beneficial to earn more, whether by overtime, better jobs, working full time rather than part time, whatever. We must have the incentives to work and increase productivity/GDP.

The present dogs breakfast of a benefits/tax system disincentives large sections of the population from working harder. I know of a small convenience store who employ several part-time staff - whenever the minimum wage increases, the staff want to reduce their hours so that their benefits aren't cut - the only effect of the minimum wage increases are that they work fewer hours - surely the system must be wrong for this to happen!

Spendless

WHA- I am often making the point you have about the tax credit system once you reach a certain level of income.

I would certainly be very interested if you were to put up the income from the 2 different families salarys, and what it shows.

Thanks : - )

Former_MSE_Andrea

Poll Title: Should there be a top rate of income tax? Currently if someone earns above roughly £37,000 a year, all earnings above that amount are taxed at 40% (the basic rate of tax is 22%). The Lib Dems have a proposal to add in another band for those earning over £100,000. What do you think? Which of these is closest to your view?

Tax them at 50%. Half their earnings is fair 25.8% (314 Votes)
No higher rate band. People are overtaxed as it is. 25.1% (306 Votes)
Tax them at 50%, but introduce even higher taxes at even higher levels 17.5% (214 Votes)
No. It's a nice idea, but it'll disincentive people from working harder. 12.4% (152 Votes)
No. They'll just leave the country anyway and it'll damage the economy 10.6% (130 Votes)
Tax them at 100%. No one should earn more than £100,000 3.5% (43 Votes)
Tax them at 60%. It's a huge amount of money 3.3% (41 Votes)
Tax them at 80%. We need to redistribute the cash 1.3% (17 Votes)
Total Votes: 1217

zcaprd7

Excellent post WHA

chipskw

After reading some of the reviews I felt I had to put my two pence in.
Why is taxing them at half their earnings (or more) fair?
To me it shows how jealous and selfish people have become of anyone who has more than themselves. Ask yourself, would you be happy to be taxed 50% (or more) of your wages over a certain bracket? I'm sure the answer would be no. They've obviously worked very hard for that money, not that us lower earners don't (I'm not critising those that don't earn that much because I know that most of us do work hard) - I don't earn anywhere near 40k let alone 100k but I don't begrude anyone else earning it either.
Another thing, where does this all end? Do we continue to have to pay more and more tax when the government decides? Remember, we don't just get taxed on earnings!
In response to what footballers earn; top footballers really are in the minority, we are not talking about the minority earners here but the majority and why should those that have made it in their lives, get penalised.
I think the larger picture needs to be looked at, the government pocket most of the money and send it abroad……(I’m sure that will invoke a response)!
And hopefully the Lib Dems won't get voted in anyway.

deemy2004

Yeh, if there going to tax people at 50% then it should be EVERYONE ! Even the lazy 'people' on benefits...

fairenoughclough

deemy2004 wrote:

Yeh, if there going to tax people at 50% then it should be EVERYONE ! Even the lazy sods on benefits...

Subtly provocative, can I borrow your sledgehammer to break the ice off my car tomorrow ?

:rolleyes: