George Osborne MUST now U-Turn 'Granny Tax'!

zygurat789

jamesd wrote: »

This doesn't mean that all pensioners are well off, though. The median income of the lowest fifth of single pensioners was £4,940 after housing costs. Around three quarters of those are women, many after the death of their spouse. The median of the next fifth was £7,124, much easier to live on. (page 51)

If there's need here, it's concentrated in those single pensioners with low incomes. And those have low enough incomes that their income is likely to already be completely tax free, with benefits paying for housing costs if not an owner, so this age allowance change isn't likely to affect them at all. Better to get rid of the general pensioner age allowance and concentrate the money where it's most needed.

.

In other words the burden should fall on the broadest shoulders as GO said. So why did he reduce the tax rate on the rich from 50% to 45%?

gadgetmind

zygurat789 wrote: »

But you miss the point.
If abolishing a clawback is simplifying the tax system what is introducing one if not complicating it.

We seem to be agreeing. The changes to harmonise personal allowances are *eliminating* a "claw back".

And it isn't a complicated calculation, that accountant must have seen you coming.

When you have different Pension Input Periods on different pensions, and have to allow for carry forwards being used "oldest first" and expiring after three years, it gets very complicated very quickly.

If you disagree, why don't you knock up a spreadsheet that allows modelling of this from the 2008/2009 tax year to 2013/14, and don't go forgetting "special annual allowance" in 2009/10 and 2010/11.

As you think it's easy, this shouldn't take you very long and I'll be more than happy to check it for you afterwards.

browniej

zygurat789 wrote: »

Even those who've had their tax rate cut from 50% to 45%?

These were the people whose tax was raised from 40% to 50% on 6th April 2010, so 45% is still higher than it was.

Perhaps read this report?

http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf

gadgetmind

zygurat789 wrote: »

In other words the burden should fall on the broadest shoulders as GO said.

The burden falls there now and always will.

http://www.thisismoney.co.uk/money/news/article-2107031/UK-Budget-2012-Top-1-earners-contribute-income-tax.html

Those that hate "the rich", and want to see punitive taxes imposed that drive them away, had better be prepared to take up the slack on taxation if they get their wish.

So why did he reduce the tax rate on the rich from 50% to 45%?

Because dropping it back down to 40% (where it had been for 22 years!) all in one go was politically unacceptable, so he had to go for an ugly compromise.

The 50% bracket was a "poison pill" left by Labour; they knew it wouldn't collect any meaningful amount of money, and that it would be very bad for the country, but they also knew that lowering it again would cause political damage to whoever was forced to do it.

They also knew that as they'd driven our economy to the very brink of financial ruin, that they wouldn't be the ones having to do it.

margaretclare

browniej wrote: »

I would agree. Many women today are choosing to continue with work, probably out of need - large mortgages etc.

However some still choose to take time off whilst the children are at school so it will help there although HRP did also help.

...and many of us have always done so. It's untrue that all women stayed at home with children, although that was what Beveridge wanted (his 1942 report on which the welfare state was based).

Someone said 'there have been recessions before'. Yes, there have. Just about every decade has had one even back to the 60s and 70s. I never had the luxury of not going to work.

gadgetmind

browniej wrote: »

Perhaps read this report?

http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf

I'm on the verge of deciding not to discuss the 50%/45% tax rate with anyone who hasn't read that report and who therefore fails to refer to the relevant sections of it when debating the issue.

Similarly, I now ask people to provide me with a concise explanation of bond yield curves before entering into discussions regards the European sovereign debt situation.

These subjects are too important and complex for uninformed banter IMO.

le_loup

CLAPTON wrote: »

to some extent, that shows that measures of gdp are a little meaningless

Not a little meaningless. Largely meaningless.
If we have a cold day and use more electricity, GDP goes up! What use is that?

gadgetmind

le_loup wrote: »

If we have a cold day and use more electricity, GDP goes up! What use is that?

Dunno, but as a shareholder of SSE, I dislike global warming!

MonkeyMad

Very interesting. Some points I draw from this is that:

Those with the highest incomes pay a staggering proportion of tax relative to their population size, and you don't need to force many of these earners and their incomes away from your tax base to cause you a real problem.

At just over average salaries, every income group pays disproportionate amounts of income tax. Indeed almost half of taxpayers between them contribute only about 9% of the yield so the broadest shoulders (ie the other half) do seem to be taking the vast amount of the strain.

This burden has steadily increased over the last 20 years

Contrary to dogma, the majority of the high earning group are not in financial sectors

Constantly trying to tax high-earners out of existence through higher rates may be expected to reduce yield once a certain point is reached (which coincidentally is about where we are now). The Laffer curve is hardly a new phenomenon...



Heaven help people unsatisfied with their current lot if we ever had a flat rated income tax system (which is another interpretation of from each according to their means)

gadgetmind

MonkeyMad wrote: »

The Laffer curve is hardly a new phenomenon...

Well, quite. When New Labour hastily introduced this punitive and counter-productive tax rate, everyone said they were "having a Laffer."

Heaven help people unsatisfied with their current lot if we ever had a flat rated income tax system (which is another interpretation of from each according to their means)

Why stop at flat rate? Why not having an amount of tax per year after which HMG says, "Look mate, you've already done more than your fair share, and one man's shoulders are only so broad, so why don't you keep it all for yourself for the rest of the year?"

Well, we are allowed to dream, aren't we?