Tax wealth not income

dealer_wins

Tax Tax Tax Tax Tax, thats all we hear these days. No wonder there are so many people not working and getting free rent and free money, its tax free!!!

le_loup

getmore4less wrote: »

Where does it work?
what sort of rate is the tax.

There is this amazing thing out there called THE INTERNET. You type questions like yours into a little box and ... low, the answers pour forth. Try it. It's wonderful.

No, I do not own or have shares in THE INTERNET. I'm just a sometimes satisfied user.

talexuser

ed123 wrote: »

look at how they spend our money now:- invading various countries, aircraft-carriers with no aircraft, buying insolvent banks, borrowing money to give to India, China etc

That is the point, the whole argument is skewed to how much tax we should take and why the poor rich people can't pay 50% tax when there is more than enough money coming in.... just reams of Commons Public Account committee reports saying billions and billions of money disappears in defence contract overspends, non-functioning national IT systems, reorganisations that achieve worse performance than before because never trialled properly and never had a cost/performance analysis afterwards, multi national corporations let off huge tax bills in cosy deals over the (expensive) dinner table etc etc etc.

Biggles

I don't get the idea of a 'wealth tax'.

With an income tax, if I have a good year, I may pay a higher % of my income. OK, I can understand that.

But, if I have built up 'wealth' in previous years (whilst paying an income tax in years when I did well) but earn relatively little now, I must pay a certain % of my 'wealth' until it's all gone? Or is it just until people stop being jealous of me?

It doesn't seem very fair somehow.

PosterBoy77

The other thing to remember is that taxes for the "wealthy" usually get extended in time to cover almost everyone. Stamp Duty was started life as a tax on buying mansions. Now it has been extended to cover almost all houses. You can bet your life if a mansion tax were to be introduced at a level of £2 million, within 10 years it will have been extended to houses worth over 500k or even 250k.

opinions4u

Biggles wrote: »

With an income tax, if I have a good year, I may pay a higher % of my income. OK, I can understand that.

I'm not sure I do understand it.

If you have a flat tax rate and have a higher income you pay more income tax.

To disincentivse succeeding in increasing your income with a "progressive" tax rate seems bizarre to me. And who the hell called it "progressive" anyway? Shocking word to describe state sponsored theft!

While it's virtually enshrined in the way GB plc runs its affairs it doesn't seem logical. It simply isn't logical.

Indeed, the current coalition seems to be hell bent on screwing anybody who earns a tad over £40k by lowering trigger points for 40% tax, scrapping child benefit, increasing company car taxes way beyond "fair", restricting tax relief on pension contributions (which save the state money further down the line) and a general assumption that this sort of income makes somebody rich.

In many parts of the country it simply doesn't.

For the record, I won't be paying income tax at 40% this year.

Mandelbrot

opinions4u wrote: »

For the record, I won't be paying income tax at 40% this year.

Becoming a tax exile in Monte Carlo?

opinions4u

Mandelbrot wrote: »

Becoming a tax exile in Monte Carlo?

No. The dog is!

CKhalvashi

Nanpy wrote: »

http://www.bbc.co.uk/news/uk-politics-17292918

Vince Cable is "confident" there will be a move away from taxing income to taxing wealth. Savers getting the boot stuck in yet again.

Great, so we’re reducing inward investment and encouraging others to invest overseas?

Sopho

Aegis

opinions4u wrote: »

I'm not sure I do understand it.

If you have a flat tax rate and have a higher income you pay more income tax.

True, but then more of the tax burden shifts to the lower/medium earners and the top earners pay far less. With a flat tax arrangement you'd probably need to see the rate of tax increase to around 30-35% to generate the same level of revenue the government gets now.

To disincentivse succeeding in increasing your income with a "progressive" tax rate seems bizarre to me. And who the hell called it "progressive" anyway? Shocking word to describe state sponsored theft!

It's called progressive because as you generate more income, the levels are tiered and you progress from the non-taxpayer element through to basic, higher and additional rates, with tax due payable only on the element that actually passes that threshold (i.e. not on the full amount, as with stamp duty).

As such, the system on its own doesn't disincentivise someone from earning more, as the more you earn gross the more you will take home in net pay regardless of the initial level of earnings. There is no conceivable scenario under the income tax system where earning more gross pay will result in the worker getting less take home pay.

The trouble comes in because there are so many associated benefits linked in with levels of income that it is possible at the lower levels of earnings to earn more on benefits than in work. Likewise, the reduction of child benefits altogether at a fixed level of individual income isn't a progressive system, and I strongly believe that this should have been tapered away to avoid the situation where an extra £1 of earnings can feasibly lose the entire child benefit allowance.

While it's virtually enshrined in the way GB plc runs its affairs it doesn't seem logical. It simply isn't logical.

The core progressive system is very logical. Essentially the reasoning goes:

• Those with almost no earnings have no disposable income and can therefore bear none of the tax burden. The system should be designed to exempt them
• Those with some disposable income would be much more adversely affected by a flat tax than those with a lot of disposable income, and the level of tax on lower earners as a flat system might lower their standard of living below acceptable levels, therefore introductory rates of tax are required
• Those with a lot of disposable income can afford to lose more of it without reaching an unacceptably low standard of living

Indeed, the current coalition seems to be hell bent on screwing anybody who earns a tad over £40k by lowering trigger points for 40% tax, scrapping child benefit, increasing company car taxes way beyond "fair", restricting tax relief on pension contributions (which save the state money further down the line) and a general assumption that this sort of income makes somebody rich.

I'll agree, most of these aren't progressive at all. But these are the parts of the system that have been bolted on over the years, moving it away from a standard progressive system and into something of a mess.

Pension contributions are less of an issue at the moment, as everyone gets £50,000 of gross contributions a year at the moment, with carry forward of up to 3 years, so this restriction is far more likely to inconvenience the 50% taxpayers than the 40% ones.

I do agree that far too much fuss is made about the tax relief going into pensions. It's called a "cost" while it's actually just a deferment of revenue until retirement. Messing around with pension rules as much as they have done in the last six years is leading people to completely mistrust the pension system, which is a real shame as it's a very important aspect of almost anyone's long term financial plans.