Labour Plans to Cut Taxes Paid by Rich

cells

Income tax is what, 1/5th of gov funds? what about the other 4/5ths?

Someone on £100,000 pays 35% in NI and IT
Someone on £20,000 pays 15% in NI and IT

However the lower paid person pays perhaps 6% of his take home on council tax while the higher paid person pays 3% of his take home on council tax

Likewise if they both use £1500 a year in petrol then the poorer person pays 6% vs closer to 1.5% for the richer person in fuel taxes


overall I think taxes are far more flat than either side realise

Generali

cells wrote: »

Income tax is what, 1/5th of gov funds? what about the other 4/5ths?

Someone on £100,000 pays 35% in NI and IT
Someone on £20,000 pays 15% in NI and IT

However the lower paid person pays perhaps 6% of his take home on council tax while the higher paid person pays 3% of his take home on council tax

Likewise if they both use £1500 a year in petrol then the poorer person pays 6% vs closer to 1.5% for the richer person


overall I think taxes are far more flat than either side makes them out to be

And someone on £20,000 gets 20% of their income in 'free' schooling whereas the person on £100,000 probably pays for their kids to go to school. The person on £20,000 gets family tax credits and child benefit adding up to a substantial proportion of their income whereas the person on £100,000 gets nothing.

Someone on £20,000 is unlikely to be a net payer of any tax at all on average.

CLAPTON

Generali wrote: »

....and in the 1980s?

None of us doubt the general principle of the Laffer curve but the issue is where is the turning point and what tax are we talking about?
Does in vary with the general economic conditions or group think or whatever?


What was the evidence in the 1980s

Generali

CLAPTON wrote: »

What was the evidence in the 1980s

That the peak of the Laffer curve was 40%: Dr Laffer was an advisor to the Thatcher Government so it was not a coincidence that was the rate chosen.

http://blogs.spectator.co.uk/coffeehouse/2011/08/brown-still-hovers-over-the-50p-tax-debate/

That may have changed for cultural reasons, for example i suspect that rich people have more debt these days as house prices have risen relative to incomes so require more money to maintain a given lifestyle, regardless of tax rates.

jamesd

CLAPTON wrote: »

What was the evidence in the 1980s

The increase in revenue when taxes were cut. The top rate was reduced from 83% to 60% in 1979 then to 40% in 1988. Basic rate was cut from33% to 30% in 1979, then to 29% in 1986, 27% in 1987, 25% in 1988, 23% by 1997 then gradually to 20% by 2007. This in part reflects a change from direct to indirect taxation via VAT and also the increase in NI rates.

VAT replaced Purchase Tax in April 1973 at a 10% base rate. It was reduced to 8% in 1974 then increased to 15% in 1979 to pay for reducing the Community Charge. In 1991 it was increased to 17.5% and then to 20% from 2011.

Contracted in NI rates increased:

1978: 6.5%, 10% employee, employer
1979: 6.75%, 10%
1980: 7.75%, 10.2%
1981: 8.75%, 10.2%
1982: 9%, 10.2%
1983: 9%, 10.4%
1986: 9%, 10.45%
1994: 10%, 10.45%
1996: 10%, 10.2%
1999: 10%, 12.2%
2001: 10%, 11.9%
2002: 10%, 11.8%
2003: 11%, 12.8%, new 1% employee upper rate
same through 2005-6 then more increases to the current 12%, 13.8%, 2%

One result of the increase in NI is the introduction of a reward for salary sacrifice pension contributions and benefits.

princeofpounds

The real rich don't have income. That is for little people. Even the 50% tax band.

Personally, I have always thought there is almost something immoral about effective tax rates of over 50%.

The state obliges you to pay taxes through coercion. When they take the majority of your labour, you are more of a slave than a free person.

Not that I am comparing this to the tought conditions of 'real' slavery! But it passes a basic definition.

CLAPTON

jamesd wrote: »

The increase in revenue when taxes were cut. The top rate was reduced from 83% to 60% in 1979 then to 40% in 1988. Basic rate was cut from33% to 30% in 1979, then to 29% in 1986, 27% in 1987, 25% in 1988, 23% by 1997 then gradually to 20% by 2007. This in part reflects a change from direct to indirect taxation via VAT and also the increase in NI rates.

VAT replaced Purchase Tax in April 1973 at a 10% base rate. It was reduced to 8% in 1974 then increased to 15% in 1979 to pay for reducing the Community Charge. In 1991 it was increased to 17.5% and then to 20% from 2011.

Contracted in NI rates increased:



1978: 6.5%, 10% employee, employer
1979: 6.75%, 10%
1980: 7.75%, 10.2%
1981: 8.75%, 10.2%
1982: 9%, 10.2%
1983: 9%, 10.4%
1986: 9%, 10.45%
1994: 10%, 10.45%
1996: 10%, 10.2%
1999: 10%, 12.2%
2001: 10%, 11.9%
2002: 10%, 11.8%
2003: 11%, 12.8%, new 1% employee upper rate
same through 2005-6 then more increases to the current 12%, 13.8%, 2%

One result of the increase in NI is the introduction of a reward for salary sacrifice pension contributions and benefits.

so maggie reduced standard rate 'tax ' rates from 33% to 30%
whilst increasing NI from 6.75% to 9%
different rates for the richer section

interesting but inconclusive of where Laffer's turning point might lie.

Generali

CLAPTON wrote: »

so maggie reduced standard rate 'tax ' rates from 33% to 30%
whilst increasing NI from 6.75% to 9%
different rates for the richer section

interesting but inconclusive of where Laffer's turning point might lie.

Dr Laffer doesn't agree with you.

CLAPTON

Generali wrote: »

That the peak of the Laffer curve was 40%: Dr Laffer was an advisor to the Thatcher Government so it was not a coincidence that was the rate chosen.

http://blogs.spectator.co.uk/coffeehouse/2011/08/brown-still-hovers-over-the-50p-tax-debate/

That may have changed for cultural reasons, for example i suspect that rich people have more debt these days as house prices have risen relative to incomes so require more money to maintain a given lifestyle, regardless of tax rates.

I struggle to see any of the article as 'evidence' of any thing at all.

Generali

CLAPTON wrote: »

I struggle to see any of the article as 'evidence' of any thing at all.

Well there's a graph that shows the Laffer curve peaking at 40% tax and, of course, the Thatcher Government under advice from Dr Laffer set the income tax top rate at 40% but apart from that there's very little evidence.