Would an 80% income tax be reasonable?

redux

Make your mind up - 80%, 10%, which?

If both, and anyway with high taxes in one sector but not another, all you're doing is encouraging people to develop business departments and accountants that specialise in the bureaucracy of tax avoidance loopholes, not actually innovating new products and methods but just dragging efficiency down.

GreatApe

redux wrote: »

Make your mind up - 80%, 10%, which?

If both, and anyway with high taxes in one sector but not another, all you're doing is encouraging people to develop business departments and accountants that specialise in the bureaucracy of tax avoidance loopholes, not actually innovating new products and methods but just dragging efficiency down.

10% is the enterpenours relief tax rate. People who create products or inventions or companies should not be taxed lots but people who occupy positions/roles that would exist irrespective of if they had been born or not don't seem to me to deserve all that they are paid

80% would be the tax on jobs and positions that would exist irrespective of the person having been born or not past a certain income pehaps >£500,000

And yes there would be a small shift in people occupying positions that exist irrespective of them to trying to start and create businesses and inventions which would be a positive. Why should the greatly skilled John K waste away his time in a job that would exist without him he is clearly more capable that that he should go out and create new products and invsntions and pay only 10% tax

Yes its true people will try to avoid these additional taxes but a competnant government can blok these if they so wish. Not working anymore is also not a counter argument as these are jibs that exist die to dams and would exist if the person quits so no real loss. Leaving the country can be resolved by limiting service imports as many nations already do.

My general point is, do jobs and roles exist that are extremely well paid and the main reason they exist is not the person doing the job/role but Because of some sort of crowd network effects. Like I say you wouldn't go to see a man run 100 meters in 9 seconds probably even if he paid you to watch him if you were the only one there. So the value isn't the person running 100 meters in 9 seconds. The value is the crowd and the network effects.

MobileSaver

GreatApe wrote: »

For those earning say £500,000 plus could the country charge 80% income tax ... is it fair to tax them very heavily?

The highest earners already pay more tax in one year than the average worker pays in their entire working life; no reasonable person could claim it was fair to tax them even more.

GreatApe wrote: »

Many (most?) the highest earners do so due to a type of 'position monopoly'

This is just nonsense. Most of the highest earners have worked their way up the ranks in various companies.

GreatApe wrote: »

With regards to you moving abroad. I don't believe you are likely to do that you already pay 45% so why don't you move to a 0% country today?

It's called the straw that broke the camel's back. Everyone understands they have to pay tax but there's a point at which people start to aggressively avoid tax and another point at which people would simply move to another country and pay no tax. This already happens to a certain extant but as others have mentioned, raise income tax to 80% and it is odds on that in fact the treasury would end up with less money coming in than they do now.

economic wrote: »

You earn at least 500k and you are on a money saving site?

I always find it amusing when people show surprise that wealthier people are on MSE; for many high earners getting the best deal on something is part of their DNA, it's a significant part of the reason they became successful... indeed you need look no further than MSE's founder who is worth £50m or more and yet still contributes regularly to the site.

malkie76

Someone years ago here naively suggested a 100% tax bracket. I pointed out that companies would just cap salaries at whatever the limit was because it would pointless to pay them more because it would just be handed to the tax man.

Same thing in principle for an 80% rate. Companies would be paying their staff in other ways because a there!!!8217;s little incentive to work for the minority of your pay.

I!!!8217;ve advocated a flat 25% rate, with the threshold raised to £25k. I saw research that suggested this raises more in tax, and protects the lowest earners.

Nick_C

Although I think the lowest earners shouldn't pay tax, and there needs to be a transition from zero to basic or "normal" rate, I think incremental tax is extremely unfair.

If a fair rate of tax is 30%, then that is what everyone should pay above a certain threshold.

Someone on £30K would pay about £6K

Someone on £100K would pay about £27K.

The more you earn the more you pay; seems fair to me. Charging a higher percentage to people who earn more is simply punitive; the politics of envy.

Excessive wages should dealt with by shareholders, customers, and market forces.

MobileSaver

Nick_C wrote: »

Although I think the lowest earners shouldn't pay tax,

Everyone working should pay tax if they want to take advantage of any of the public services that the government provides. The problem with 0% tax rates is that you encourage the work shy to deliberately stay under whatever the arbitrary limit is.

Nick_C wrote: »

Charging a higher percentage to people who earn more is simply punitive; the politics of envy.

Agreed. And if you take it too far then karma kicks in and you end up with less money coming in from those same people.

westernpromise

What's usually missed in these hypotheticals is this.

If you have 50 people earning £100 and paying £50 tax, you can't simply assume that making them pay £51 will have no effect. If just one of those people leaves the country, you lose not the extra £1 but the whole £50. So even if the other 49 stay put you are collecting £2499 from those 49 people where previously you collected £2500 from 50.

Anyone who suggests that most people will do nothing different if you increase their tax rate is saying something that is accurate but completely misses the point. In the above example if the percentage by which you increase taxes is less than the percentage who leave then the exchequer loses. It's that simple.

It's so simple that even the envy brigade can't really claim not to understand it. Anyone who argues for such rises is simply saying that they envy those who earn well and they want such people's lives made worse as an end in itself. It's not about paying for stuff for the state, it's about loathing.

We should be widening the tax take, not concentrating it as we now are. When 27% of all income tax is paid by 1% of earners and 59% by the top 10% the problem you've got is that the state relies for its income on a tiny pool of people of which only a tiny proportion need to feel alienated. If that happens they go and they take their money with them, and it doesn't need to be that many who go to bring on the crisis.

It is deeply immoral for there to be so many people who pay no income tax.

GreatApe

westernpromise wrote: »

What's usually missed in these hypotheticals is this.

If you have 50 people earning £100 and paying £50 tax, you can't simply assume that making them pay £51 will have no effect. If just one of those people leaves the country, you lose not the extra £1 but the whole £50. So even if the other 49 stay put you are collecting £2499 from those 49 people where previously you collected £2500 from 50.

Anyone who suggests that most people will do nothing different if you increase their tax rate is saying something that is accurate but completely misses the point. In the above example if the percentage by which you increase taxes is less than the percentage who leave then the exchequer loses. It's that simple.

It's so simple that even the envy brigade can't really claim not to understand it. Anyone who argues for such rises is simply saying that they envy those who earn well and they want such people's lives made worse as an end in itself. It's not about paying for stuff for the state, it's about loathing.

We should be widening the tax take, not concentrating it as we now are. When 27% of all income tax is paid by 1% of earners and 59% by the top 10% the problem you've got is that the state relies for its income on a tiny pool of people of which only a tiny proportion need to feel alienated. If that happens they go and they take their money with them, and it doesn't need to be that many who go to bring on the crisis.

It is deeply immoral for there to be so many people who pay no income tax.

I am arguing that a lot of very high paid people are high paid not because of their skill or hard work but because of some sort of crowd dynamics

If someone could run a 9 second 100 meter dash would you go watch them if it was just you and him? No. Why would you care you probably wouldn't go even if he paid you to watch him. The same is likely true for people who go to the Olympics to watch the 100 meter finals. Almost none of them would pay to see a man run 100 meters in 9 seconds if it was just the two of them yet society today would reward such a man with at least $100m. What we value at zero individually is somehow valued at millions collectively? Why?

If this mans name was Bob and had Bob not been born we would value whoever else it was that could run the fastest 100 meter dash. So its not got anything to do with Bob or his skills but some sort of crowd worship

This is different than say someone who starts a business or intents a new drug or machine. It is arguably that they do deserve what they make. Hence why I think the £10m at 10% tax for these types of people is a good idea. Even up it to £1 billion if you like.

But Bob doesn't deserve his $100 million. It isn't really his skill that people are willing to pay for this is clear because no one would give Bob two bobs to watch him do a 100 meter dash in 9 seconds if it were just them and Bob.

westernpromise

Doesn't work.

If the Wright Brothers hadn't invented flight we wouldn't be making do with planes that don't quite fly.

Your argument maybe works for the public sector and charities but nor for wealth creation.

economic

GreatApe wrote: »

I am arguing that a lot of very high paid people are high paid not because of their skill or hard work but because of some sort of crowd dynamics

If someone could run a 9 second 100 meter dash would you go watch them if it was just you and him? No. Why would you care you probably wouldn't go even if he paid you to watch him. The same is likely true for people who go to the Olympics to watch the 100 meter finals. Almost none of them would pay to see a man run 100 meters in 9 seconds if it was just the two of them yet society today would reward such a man with at least $100m. What we value at zero individually is somehow valued at millions collectively? Why?

If this mans name was Bob and had Bob not been born we would value whoever else it was that could run the fastest 100 meter dash. So its not got anything to do with Bob or his skills but some sort of crowd worship

This is different than say someone who starts a business or intents a new drug or machine. It is arguably that they do deserve what they make. Hence why I think the £10m at 10% tax for these types of people is a good idea. Even up it to £1 billion if you like.

But Bob doesn't deserve his $100 million. It isn't really his skill that people are willing to pay for this is clear because no one would give Bob two bobs to watch him do a 100 meter dash in 9 seconds if it were just them and Bob.

This is nonsense. You are basically arguing that a persons athletic or singing or acting ability is down to luck/genetics etc. The people at the top of their game in their fields have worked hard at it over a long period of time, and you think the money is not deserved?

Also the same could be said for your job or my job or anyone else's job. We are also easily replaceable. In fact generally the lower the wage the more easily replaceable we are to achieve the same output.