MSE News: Super-rich must give more, says Nick Clegg

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"The deputy PM has called on Britain's wealthiest to make an 'extra contribution' to the 'national effort' ..."

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Super-rich must give more, says Nick Clegg

MercilessKiller

In theory it's a good "idea", but as per most of the Lib Dems policies, an idea is what it should stay as!!!

In an ideal world, richer people would pay more tax.

In the real world, richer people go to places where they pay less tax. So let's look at the benefits of increasing tax for rich people... Well, there's only 1 - Government will recover more money.

However, the negatives come in a lot stronger!
1) Richer people will find other ways to avoid tax as per the past
2) Richer people will move away from the country
3) The lack of richer people in the county will have severe affects on other parts of the economy as there would be a huge drop in spending (seeing as a tiny % of the population generates a huge % of money spent)
4) Business would undoubtedly suffer in the same way

We have VAT, fuel tax, and other business taxes which are all contributed to from having very rich people in our country spending. By increasing the tax and pushing them out, this would harm us long term, so while increasing the tax in the very short term may recover some short term losses, it would make a very unstable long term future for the country!

Though just to add, I do think the rich should pay more tax... It's just that a "wealth tax" such as this wouldn't achieve the desired affect.

Randvegeta

They should tax the rich who cannot make their money outside of the UK. Not sure how to define this exactly. If you take a person who owns a retail chain, and s/he generated their wealth from selling to UK people, they should be the ones who pay the most tax, because they cannot easily pick up and leave.

On the other hand, a company that produces software and sells internationally, can easily pick up and move to a low tax jurisdiction to avoid paying UK taxes. So have a different rate of tax for those kinds of business (and their owners) to encourage more companies setting up shop in the UK, and exporting internationally. And we know this economy so desperately needs exports!

congratswin

I dont agree that the rich should be paying more and more. You get brought up well by your parents, you do well in your studies and work hard for your career. Then you end up being penalised for taking responsibility for your own life!?

MercilessKiller

But look at the counter argument - Should the poorer struggling population pay as much as the rich? Obviously not, but that's the same thing just worded differently

Randvegeta

So tax the rich that make their money off selling stuff to the poor and regular people?

The rich who make their money from domestic sales aren't going to stop selling domestically simply because they pay high taxes since they can't make up for those lost sales anywhere else. And since it would only apply to the rich, if they do decide to leave the market, it would only open up the market to smaller businesses.

Export businesses however are another story. Low taxes to keep those businesses in Britain. Let's encourage exports and bring in foreign currency to bolster our reserves and boost our economy. It is true wealth generating with no downside to the domestic economy.

cepheus

I think Clegg will be talking about the seriously rich, so rich that they couldn't possibly have put enough work in to justify those salaries. It's not just the money it's the message it gives, something for nothing.

jamesd

I'm fully supportive of Mr. Clegg's thoughts about "going to ask". I hope he'll get the uptake from those who follow his call to voluntarily pay that he wants. Now, if he's not talking about asking, but about forcing, that might be a little different.

MercilessKiller, the poorer don't pay anything remotely close to as much. For families, the lower quarter get more in tax credits than they pay in tax. The bottom tenth of those with two children end up with minus 37.7% income tax rate due to tax credits.

Here's how the income tax split is today:

Top 1% have an income of £156,000+ and pay 24.2% of all income tax
Top 5% have an income of £68,500+ and pay 44.3%
Top 10% have an income of £50,500+ and pay 55%
Top 25% have an income of £33,300+ and pay 72.8%
Top 50% have an income of £21,300+ and pay 89.2%

The whole bottom 25% on £14,500 or less pay just 2.6% of all income tax.
The bottom 10% are on £11,070 or less and pay 0.5%.
The bottom 5% are on £9,690 or less and pay 0.1%.

So it's worth wondering just how much bigger a share Mr. Clegg is thinking of asking the richest to pay, given that the ones with the highest 1% of incomes are already paying about a quarter of all of the income tax.

MercilessKiller

jamesd wrote: »

MercilessKiller, the poorer don't pay anything remotely close to as much.

I know, and I agree with this. I just think raising taxes more on the very rich will result in a lot of money leaving the UK, not entering.

jamesd

I agree. That population can easily choose to leave the country or generate wealth elsewhere if they want to and they would be welcomed with wide open arms and broad smiles in almost any country on the planet.

MercilessKiller

As much as people complain about very rich people, we do want and need them in our country if we want to grow and enjoy the luxuries that we have in the past....

Pushing them out by raising tax and causing more pain thresholds to entering the country is going to be a big problem in the future. People seem to miss this point because of bitterness, but economic stability needs to be thought of independently and this is where Mr Clegg's plans fall down. He's trying to win votes here and that's it.