Is personal tax optional ?

mwpt

N1AK wrote: »

If you're talking about whether a tax system is progressive or not then it's only meaningful to talk about it as a proportion of income as that's exactly what the terms progressive/regressive are talking about.

I doubt anyone seriously contests that most tax is paid by the small proportion of the population who have the highest incomes.

Ok, I forgot this all started with a reference to VAT being progressive or regressive. Clearly if the chart is correct then VAT is regressive but that was always my assumption anyway. I was just agreeing with Hamish about the indirect taxes and I still think that a discussion about taxation changes isn't fair without charting who pays what in actuality.

N1AK

mwpt wrote: »

Ok, I forgot this all started with a reference to VAT being progressive or regressive. Clearly if the chart is correct then VAT is regressive but that was always my assumption anyway. I was just agreeing with Hamish about the indirect taxes and I still think that a discussion about taxation changes isn't fair without charting who pays what in actuality.

I think it's useful to know who pays what, though in many societies that chart would show that a handful of individuals pay virtually all the tax; however that may just be highlighting the inequalities and issues in that country. The old stereotype of a tinpot dictator in Africa who is enriching himself and his cronies at the expense of the nation for example.

princeofpounds

If you're talking about whether a tax system is progressive or not then it's only meaningful to talk about it as a proportion of income as that's exactly what the terms progressive/regressive are talking about.

In the limited technical sense, yes it is often used that way.


But I am not sure that is the right way to look at it, nor the way most people consider the issue.


How 'progressive' would a policy be if it taxed a working binman in a rundown semi-detached, to pay for a widowed pensioner sitting on a country estate?


It's often been an issue of mine that our tax system goes after wealth creation through earnings, much more than it goes after wealth.


Really wealthy people don't have earnings. Those are for the little people.

N1AK

princeofpounds wrote: »

In the limited technical sense, yes it is often used that way.

How 'progressive' would a policy be if it taxed a working binman in a rundown semi-detached, to pay for a widowed pensioner sitting on a country estate?


It's often been an issue of mine that our tax system goes after wealth creation through earnings, much more than it goes after wealth.

You just need context, and when you're talking about progressive/regressive in the context of taxation it has a well defined meaning that most informed commentators know. Using the correct term to mean the correct thing when there is clear context isn't either technical or limited it's correct, doing otherwise is incorrect

Just like that Binman is likely extremely wealthy in a global sense, but it'd look like pedantry to point that out as a serious aside because of the obvious context.

Our tax system does tax wealth, quite aggressively in fact, which is why tax avoidance is such a large industry. People are taxed on dividend income, capital gains, savings interest, assets at the point of inheritance at quite high rates in fact. Just look at how much tax someone would pay on their savings/investments if they had £10 million in a typical year, and then on their estate when they die, if they didn't take any active steps to avoid taxation?

Generali

N1AK wrote: »

Our tax system does tax wealth, quite aggressively in fact, which is why tax avoidance is such a large industry. People are taxed on dividend income, capital gains, savings interest, assets at the point of inheritance at quite high rates in fact. Just look at how much tax someone would pay on their savings/investments if they had £10 million in a typical year, and then on their estate when they die, if they didn't take any active steps to avoid taxation?

None of those things are taxes on wealth, they are taxes on income that flows from wealth for the most part. If I held a billion dollars worth of gold or old paintings then I wouldn't pay a penny in tax on them.

michaels

I don't see why wealth should be taxed, I 'amass wealth' from my taxed income in order to even out my lifetime consumption and will no doubt spend it (and pay vat) when I am no longer earning. Why should I pay tax for the priviledge of this income/expenditure smoothing?

After all capital gains are taxed and even interest is taxed even though this mostly represents inflation rather than real income.

Daveech

How do I write a question on forum?

chucknorris

Thrugelmir wrote: »

I'd have thought that somewhere like Malta would suit you better Chuck. Far better climate.

I've been looking closer at the IOM (on the internet, obviously an actual visit will reveal far more) and it looks very nice:

- Lots of great walks/hiking/cycling
- Even found a disused railway line now used as a cycle way (good to go on with the wife (hates hills) and the dog (traffic free).
- Property very cheap.
- Rates much cheaper than council tax (in reality this will merely contribute to offsetting the additional cost of living there).
- Very low crime rates.
- Possibility of playing international bowls (rather than county bowls here).
- A chance to try out sea kayaking.

Thrugelmir

chucknorris wrote: »

I've been looking closer at the IOM (on the internet, obviously an actual visit will reveal far more) and it looks very nice:

- Lots of great walks/hiking/cycling
- Even found a disused railway line now used as a cycle way (good to go on with the wife (hates hills) and the dog (traffic free).
- Property very cheap.
- Rates much cheaper than council tax (in reality this will merely contribute to offsetting the additional cost of living there).
- Very low crime rates.
- Possibility of playing international bowls (rather than county bowls here).
- A chance to try out sea kayaking.

Never been there. On my list of places to visit if I ever get the opportunity. Just had a browse. A far more temperate climate than I imagined. Ideal for outdoor pursuits as you say.

N1AK

Generali wrote: »

None of those things are taxes on wealth, they are taxes on income that flows from wealth for the most part. If I held a billion dollars worth of gold or old paintings then I wouldn't pay a penny in tax on them.

Given that I listed inheritance tax I counter that you are in fact wrong that they are all taxes on income.

Assuming that you didn't actively avoid tax then you'd be paying 40% inheritance tax, plus capital gains on the old paintings (but not gold). Given that this is likely to be the best part of half a billion pounds I'd suggest that is in fact paying a tax on wealth, and a considerable one at that.

Furthermore I don't think it's even a realistic scenario. People with a billion pounds clearly don't have it all stored in shiny metal.