The Baroness and the triple lock!

jamesd

Shhh, you weren't supposed to tell.

Linton

Income tax is only part of total non-corporate tax, neglecting other taxation is very misleading. Figures on total tax paid as a % of household income show values that dont vary a lot over a wide range of incomes.

- What about NI? There is the Upper Earnings Limit of £42996, about the same as the higher rate tax band, beyond which NI drops from 12% to 2%.
- CGT is much lower than income tax and does not incur NI. This benefits the richer part of the population.
- Council Tax is a much higher % hit on the moderately poor than the very rich.
- Indirect taxes (VAT etc) take about twice the % of disposable income for the poor compared with the rich.

Nick_C

Linton wrote: »

Income tax is only part of total non-corporate tax, neglecting other taxation is very misleading. Figures on total tax paid as a % of household income show values that dont vary a lot over a wide range of incomes.

- What about NI? There is the Upper Earnings Limit of £42996, about the same as the higher rate tax band, beyond which NI drops from 12% to 2%.
- CGT is much lower than income tax and does not incur NI. This benefits the richer part of the population.
- Council Tax is a much higher % hit on the moderately poor than the very rich.
- Indirect taxes (VAT etc) take about twice the % of disposable income for the poor compared with the rich.

Yes but;

Council Tax: A rich person in a Band H property is paying 3 times as much as a poor person in a Band A property. Probably more as the poor person could be getting a means tested reduction.

CGT is a tax on investments. So a rich person earns lots of money, pays tax at 45%, then invests some of their net income. They buy shares. They pay tax on the dividends. They sell the shares and make a capital gain. They pay tax again on money that has already been taxed. Poor people dont pay CGT, only rich people, so the percentage rate is not comparable to Income Tax. It's an additional tax.

VAT - the more goods you buy, the more tax you pay. Rich people spending lots of money, as well as boosting the economy, are paying more VAT than poor people.

The Left want all the benefits of a Big State, but they want someone else to pay for it.

Personally, I think the rich pay too much in taxes. I would favour a flat rate of Income Tax. But then I believe in fairness for everyone, the rich as well as the poor.

Malthusian

Nick_C wrote: »

VAT - the more goods you buy, the more tax you pay. Rich people spending lots of money, as well as boosting the economy, are paying more VAT than poor people.

Don't forget the zero-rating of various items arbitrarily deemed "essentials" which make up a higher proportion of a poor person's shopping basket - so VAT is also a "progressive" tax.

PensionTech

Anyone else think "The Baroness and the triple lock" sounds like a Mills & Boon title?

Linton

Nick_C wrote: »

Yes but;

Council Tax: A rich person in a Band H property is paying 3 times as much as a poor person in a Band A property. Probably more as the poor person could be getting a means tested reduction.

But could easily be earning 10 times as much.

Nick_C wrote: »

CGT is a tax on investments. So a rich person earns lots of money, pays tax at 45%, then invests some of their net income. They buy shares. They pay tax on the dividends. They sell the shares and make a capital gain. They pay tax again on money that has already been taxed. Poor people dont pay CGT, only rich people, so the percentage rate is not comparable to Income Tax. It's an additional tax.

A capital gain is as much income as earnings. Your 45% is only on the initial investment. The capital gain is extra income. Why should it be charged less?

Nick_C wrote: »

VAT - the more goods you buy, the more tax you pay. Rich people spending lots of money, as well as boosting the economy, are paying more VAT than poor people.

The rich spend proportionately less on VATable goods and fuel.

Nick_C wrote: »

Personally, I think the rich pay too much in taxes. I would favour a flat rate of Income Tax. But then I believe in fairness for everyone, the rich as well as the poor.

I guess you arent poor. Fairness for everyone isnt a matter of %s. A better basis of measurement is surely absolute disposable income after all benefits and taxes.

Sipowicz

PensionTech, I was thinking of Harry Potter.

EdSwippet

Linton wrote: »

A capital gain is as much income as earnings. Your 45% is only on the initial investment. The capital gain is extra income. Why should it be charged less?

Because of inflation -- it is possible that much or even all of the gain is nominal but not real. Because it encourages efficient investment allocation over trapping resources in unproductive assets. Because it raises GDP by emphasising future consumption over present consumption.

bigadaj

PensionTech wrote: »

Anyone else think "The Baroness and the triple lock" sounds like a Mills & Boon title?

More like fifty shades of grey I'd assume.