MSE News: Mega rich tax bill 'under 10%', while millions pay 22%

VT82

Some wildly swinging opinions on here relative to the recent mainstream views on cutting the tax rate for high earners. But good to see some people are against taxing the hell out of high earners at least.

Putting aside the arguments about what is the correct level of taxation for the very wealthy, and why this is in the Charities board, is the argument about whether or not the rich should be able to decide where their tax money goes, i.e. by giving to charity to avoid paying tax.

The rule of the land is that the Government gets to decide where tax revenues are spent. The current government is simply closing a loophole whereby the rich can say 'Right, I've earnt another £1m, but instead of giving £450k to HMRC, I'm going to give it to Help For Horses instead'. It's a justified loophole to close. It's just facing more of an outcry than usual because instead of the rich suffering so that HMRC can gain, it's charities that will suffer so that HMRC can gain. I think still allowing 25% of income to be given to charity before the tax relief is ceased is actually quite generous.

corbyboy

rpb wrote: »

It makes sense to me that if the income tax rate is x% then people should pay that and not "avoid" tax by devious means. As income increases the bands increase and people should pay the relevant tax on income in that band. Those with huge incomes should therefore be paying tax on most of their income at the rate of the highest band. This is how it works for the rest of us and I see no reason it shouldn't also work for the super-rich.

When it comes to tax, things are either legal or illegal.

If somebody finds a legal way to minimise their tax liability then good on them. If the government see this as a loophole then they need to change the law.

It's interesting that MSE has the "new ISA year" as the headline in their newsletter this week. I find it ironic considering an ISA is just a vehicle to avoid tax.

Geedoubleu_2

I think people miss the whole point with tax. It seems outrageous to me that we have higher rate 40% and 50% tax rates.

Tax is a PERCENTAGE.

So someone earning 10 Million pays 1 Million tax at 10%. A 'poor' person on 30,000 pays £3,000 in tax at 10%.

The rich man already pays enough tax for 333 'poor' people.

the 40% tax rate already captures middle earnings, and should be dropped.

N1AK

Geedoubleu wrote: »

the 40% tax rate already captures middle earnings, and should be dropped.

Unless you're going to suggest what they do to either cut government spending by half or raise the tax elsewhere then that's a pretty pointless statement. I expect more tax is raised via the 40% & 45% tax rates than by all income tax paid at the lower rates, it certainly won't be far off.

Geedoubleu_2

N1AK wrote: »

Unless you're going to suggest what they do to either cut government spending by half or raise the tax elsewhere then that's a pretty pointless statement. I expect more tax is raised via the 40% & 45% tax rates than by all income tax paid at the lower rates, it certainly won't be far off.

I think my point is that if Tax was a flat rate 15% for all, the 'rich' wouldn't avoid so much tax and actual tax income might go up.

Imagine working your !!! of in your career, losing wives, disappointing your children along the way only to find that 50%+ of your income is taken away. It must drive your thinking to do whatever it takes to avoid tax. I certainly see this in the freelance community who are paid a daily rate or fixed price for a piece of work.

Although I understand there are lots of lower earners and people on benefits, it seems most people are pushing the 40% tax bracket these days.

As for why the government spending is so high and needs higher rate tax, thats a much bigger question.

Paul_Herring

N1AK wrote: »

Unless you're going to suggest what they do to either cut government spending by half ....

Well the government could stop wasting it for starters. I made some suggestions back in post #3.

There are lots more areas that could be cut back on.

danothy

N1AK wrote: »

Unless you're going to suggest what they do to either cut government spending by half or raise the tax elsewhere then that's a pretty pointless statement. I expect more tax is raised via the 40% & 45% tax rates than by all income tax paid at the lower rates, it certainly won't be far off.

Old figures (tax year 2008-09), and organised by income bracket not income tax bracket:



Source: http://news.bbc.co.uk/1/hi/8417205.stm

I don't imagine the situation will have changed materially since 2008-09 (at least in broad terms of proportion). Clearly shows to me though that the "rich" do pay their way, even with tax avoidance.

It does seem to me that lowering the higher bands and closing off tax avoidance loopholes would keep things in balance but make the whole process a bit fairer in terms of what is "demanded" of the rich in terms of tax percentage. It would also remove the moral ambiguity of what is legitimate to avoid paying.

MoneysavingArthur

i was very pleased to see the large number of sensible posts on the first page of this thread.

it's a nothing 'story' really, designed to whip people up into an angry frenzy and cause a cufuffle over nothing. especially in this economy and the furore over 'bankers bonuses' its an easy way to wind people up and just reinforces the 'us versus them' mentality of the general public against 'the rich'. which is stupid, we'd all love to be rich.

John_Pierpoint

Paul_Herring wrote: »

Of course they do. HMRC, however, aren't including it in their figures though. All they're doing is counting "Income Tax," as a percentage of totals income not (a) total tax on income or (b) income tax on income taxable as such.

Something else that stinks of political meddling in this is using the tax bands as bands in their table as if that's what people should be paying in total.

For example if you earn £1 over the lower rate band, you'll pay 40% on that extra £1, not on the whole amount. Quick question - as a percentage of your gross wage of £42,476, how much income tax would you pay?

Highlight to find out: 16.48% (£7,000.40)</answer>

Not to mention VAT NI SDLT IHT CGT ..............sorry running out of Scrabble tiles.

MonkeyMad

MSE_Helen wrote: »

This is the discussion thread for the following MSE News Story:

"Six percent of £10 million-plus earners paid less than 10% in tax, Treasury figures reveal"

94%of £10M+ earners paid 10% or more in Tax?