How much longer will this bear market go on for?

billy2shots

MK62 said:

brasso said:

MK62 said:

The actual level of tax one group pays is a different argument........if you reduce the tax paid by one group of taxpayers by more than you reduce it on other groups, then by definition the burden shifts......even if every group's total tax goes down, and the overall total reduces, if one group's percentage of the total changes, then their burden changes......
The 60% of tax which is paid by 10% of taxpayers means 40% is paid by the other 90% of taxpayers.......if you reduce the tax on that first 10% so that they are only paying 59% of the total, then the other 90% of taxpayers must, by definition be paying the other 41%.....so you've shifted the tax burden from one group to another.

But the income tax changes announced are not a zero sum game i.e. reducing the income tax burden of one group hasn't shifted the payments to the other group -- the burden of both groups (as I understand it) are being reduced, with the shortfall coming from increased borrowing. Not a great policy IMO, as we'll all end up paying for the increased borrowing in the longer term.

Actually it won't......thanks to the freeze on the personal allowance and current inflation, low income groups will see their overall tax rate increase, while high earners will see theirs fall.

You continue to twist the narrative. 

The government can only control UK affairs. They can't stop global inflation. It's actually the BoE's job to work with inflation here anyway. 

They are lowering taxes full stop. You can't blame them that inflation will outpace the savings lower earners will see. 

Unless you are demanding even bigger tax cuts to make sure lowe earners beat inflation???
That would lead to higher targeted inflation in the UK and continue the viscous circle. 

In short, everyone will get a tax cut. It makes perfect sense that those that pay more tax will see a greater saving. It's basic maths. 

On the flip side, higher earners tend to have more expensive houses which in turn means larger mortgages. 
The mortgage rate rises will hit those with bigger mortgages more. 
Again simple maths. But again that doesn't fit the agenda for those wanting to bash higher earners so why talk about it. 

Type_45

'68' handle on FTSE 100. Could we see a '67' handle in this session...

Prism

This is great news for most investors...

artyboy

Finally decided its time to take the plunge with the 25k of cash I've been sitting on for about 6 months. The only question is whether I add to the existing ESG focused fund holding I have with vanguard or go for a more vanilla world tracker. 

In the mid term, I wonder if ESG considerations could end up getting pushed to one side in the interests of political expediency, and so those funds underperform relative to the wider markets they represent. Any opinions welcome!

Type_45

Prism said:

This is great news for most investors...

But of course...

Prism

Well if happy to see stocks falling is bullish then so be it

MK62

billy2shots said:

MK62 said:

brasso said:

MK62 said:

The actual level of tax one group pays is a different argument........if you reduce the tax paid by one group of taxpayers by more than you reduce it on other groups, then by definition the burden shifts......even if every group's total tax goes down, and the overall total reduces, if one group's percentage of the total changes, then their burden changes......
The 60% of tax which is paid by 10% of taxpayers means 40% is paid by the other 90% of taxpayers.......if you reduce the tax on that first 10% so that they are only paying 59% of the total, then the other 90% of taxpayers must, by definition be paying the other 41%.....so you've shifted the tax burden from one group to another.

But the income tax changes announced are not a zero sum game i.e. reducing the income tax burden of one group hasn't shifted the payments to the other group -- the burden of both groups (as I understand it) are being reduced, with the shortfall coming from increased borrowing. Not a great policy IMO, as we'll all end up paying for the increased borrowing in the longer term.

Actually it won't......thanks to the freeze on the personal allowance and current inflation, low income groups will see their overall tax rate increase, while high earners will see theirs fall.

You continue to twist the narrative. 

What narrative?......the only narrative about bashing higher earners is the one you created....

The government can only control UK affairs. They can't stop global inflation. It's actually the BoE's job to work with inflation here anyway.
They are lowering taxes full stop. You can't blame them that inflation will outpace the savings lower earners will see. 

We've seen that neither the government nor the BoE can currently control inflation.....many of the causes are external to the UK. However, it's certainly down to government policy "that inflation will outpace the savings lower earners will see".....the government set fiscal policy......who to tax, and by how much, and what to spend it on.

As to

They are lowering taxes full stop.

...this might be true, in the sense of the total tax receipts......and they will borrow money to do it......but only a minority of the UK population will have their tax cut......those at the bottom will be having it raised.

Unless you are demanding even bigger tax cuts to make sure lowe earners beat inflation???

That would lead to higher targeted inflation in the UK and continue the viscous circle. 

You can't have it both ways......if tax cuts lead to higher inflation, then why try to introduce any now.......and I'm not "demanding" bigger tax cuts.....I'm advocating no tax cuts at all at this current time (save for unfreezing the Personal Allowance), and certainly no tax rises.

In short, everyone will get a tax cut. It makes perfect sense that those that pay more tax will see a greater saving. It's basic maths. 

No they won't.....that's the point. All taxpayers will get a cut in the basic rate of tax, but not all taxpayers will get a tax cut. You are forgetting about the personal allowance freeze in your "basic maths".

So here's some maths......

Bill is a pensioner with index linked pensions totalling £16000pa in April 22. This tax year he will pay £16000-£12570*20% in income tax....£686, a total of c4.3%. In April 23, he will get his annual indexation increase......we don't know exactly what that will be yet, but we can use a range of figures to see the effect.

At 9.9% (current annual CPI), his income would rise to £17584, and his tax will be £17584-£12570*19%....£953, a total of 5.4%.

His gross income may rise 9.9%, but his net income will only rise by the lower figure of 8.6%. Far from seeing any tax cut, his tax will rise - the direct effect of the PA freeze outweighing the 1p basic rate cut.

Only with a rise of 1.5% will he see his tax stay at the same 4.3%, and he'll only see a cut if his inflationary rise is below 1.5%.

With no inflationary rise at all, he'd see his tax cut by £34pa.....is this really what you are advocating?.....I'm sure that would go a long way to paying for the rise in his heating bill.

I'm advocating that a far better use of the money, at this time, would have been to unfreeze the Personal Allowance, even a partial unfreeze if a full one was too costly.

On the flip side, higher earners tend to have more expensive houses which in turn means larger mortgages. 

The mortgage rate rises will hit those with bigger mortgages more. 

Again simple maths. But again that doesn't fit the agenda for those wanting to bash higher earners so why talk about it.

You might find that rising mortgages "hit" lower earners more as they are less able to redirect money to support the higher payments.......again, do the math.

Someone earning £200000 with a £600000 mortgage is paying £3000pm (at 3.5%)

Someone earning £20000 with a £60000 mortgage is paying £300pm (at 3.5%)

Rising to 6%, that'd be £3870 and £387......relatively speaking, it stays the same (though it might be tougher for the lower earner to find that £87pm extra than it would be for the higher earner to find the extra £870pm - don't forget you've just given that higher earner a sizeable tax cut)

As for this mystery agenda you seem to be fixated on......it is not about "bashing" higher earners...(not once have I advocated raising their tax - I'm advocating just not cutting it at this current time).....it's about ensuring that any and all changes to income tax (and indeed all taxes) are, at this time, fair and reasonable......you apparently feel, at this current time, that giving tax cuts to the highest earners should be the main priority, and is fair and reasonable....and on that we obviously disagree."

sevenhills

MK62 said:

You can't have it both ways......if tax cuts lead to higher inflation, then why try to introduce any now.......and I'm not "demanding" bigger tax cuts.....I'm advocating no tax cuts at all at this current time.
 You are forgetting about the personal allowance freeze in your "basic maths".

So here's some maths......

I also think tax cuts are wrong at the moment, but when you do the maths, is it that big?
Has the market over reacted because this is political posturing, with no statement about the maths?

billy2shots

MK62 said:

billy2shots said:

MK62 said:

brasso said:

MK62 said:

The actual level of tax one group pays is a different argument........if you reduce the tax paid by one group of taxpayers by more than you reduce it on other groups, then by definition the burden shifts......even if every group's total tax goes down, and the overall total reduces, if one group's percentage of the total changes, then their burden changes......
The 60% of tax which is paid by 10% of taxpayers means 40% is paid by the other 90% of taxpayers.......if you reduce the tax on that first 10% so that they are only paying 59% of the total, then the other 90% of taxpayers must, by definition be paying the other 41%.....so you've shifted the tax burden from one group to another.

But the income tax changes announced are not a zero sum game i.e. reducing the income tax burden of one group hasn't shifted the payments to the other group -- the burden of both groups (as I understand it) are being reduced, with the shortfall coming from increased borrowing. Not a great policy IMO, as we'll all end up paying for the increased borrowing in the longer term.

Actually it won't......thanks to the freeze on the personal allowance and current inflation, low income groups will see their overall tax rate increase, while high earners will see theirs fall.

You continue to twist the narrative. 

They are lowering taxes full stop.

...this might be true, in the sense of the total tax receipts......and they will borrow money to do it......but only a minority of the UK population will have their tax cut......those at the bottom will be having it raised.

In short, everyone will get a tax cut. It makes perfect sense that those that pay more tax will see a greater saving. It's basic maths. 

No they won't.....that's the point. All taxpayers will get a cut in the basic rate of tax, but not all taxpayers will get a tax cut. You are forgetting about the personal allowance freeze in your "basic maths".

So here's some maths......

Bill is a pensioner with index linked pensions totalling £16000pa in April 22. This tax year he will pay £16000-£12570*20% in income tax....£686, a total of c4.3%. In April 23, he will get his annual indexation increase......we don't know exactly what that will be yet, but we can use a range of figures to see the effect.

At 9.9% (current annual CPI), his income would rise to £17584, and his tax will be £17584-£12570*19%....£953, a total of 5.4%.

His gross income may rise 9.9%, but his net income will only rise by the lower figure of 8.6%. Far from seeing any tax cut, his tax will rise - the direct effect of the PA freeze outweighing the 1p basic rate cut.

Only with a rise of 1.5% will he see his tax stay at the same 4.3%, and he'll only see a cut if his inflationary rise is below 1.5%.

With no inflationary rise at all, he'd see his tax cut by £34pa.....is this really what you are advocating?.....I'm sure that would go a long way to paying for the rise in his heating bill.

I'm advocating that a far better use of the money, at this time, would have been to unfreeze the Personal Allowance, even a partial unfreeze if a full one was too costly.

 

 

This is probably better taken to a political thread rather than us keep disagreeing but I will make one final post on my thoughts.

My issue is you keep bringing inflation into things. 
The government does not set inflation so you can't blame them if Bill (in your example) falls behind on the rate of inflation (like most of us are).  
However you can not deny the government have given him a tax break, Income tax and NI. To argue otherwise is insincere. 

I'm confused, you're giving Bill more money then seem shocked his tax goes up even though he ends up 8.6% better off. 

I and others would bite your hand off for an after tax pay increase of 8.6%. so yes, that will HELP mitigate the energy increase cost. Not pay for it but HELP. Or should people earning more pay for the whole inflationary increase of lower earners and people on pensions?

To simplify what I think your argument is, I came up with the following-

KFC (the government) has lowered its price of a chicken burger by 2p. 

Petrol (inflation) has risen by 4p per litre. 

It takes a litre of fuel to drive to KFC. 

The total cost to you to drive and buy that burger has risen by 2p.

Now you want to blame KFC (the government) for your burger costing you more to acquire in total even though they have lowered their price. 

Madness....

Swipe

Prism said:

This is great news for most investors...

Not when the pound is low it's not as we don't get the benefit of lower prices