Non-partisan mini-budget predictions thread

sevenhills

Millyonare said:

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world.

How the tax system works is that richer people that own companies and get paid in dividends pay a lower percentage of their earnings in tax.
The poor also spend a higher percentage of their earnings on high tax products like fuel duty, alcohol and tobacco duty.

https://www.lse.ac.uk/research/research-for-the-world/economics/how-much-tax-do-the-rich-really-pay

Millyonare

sevenhills said:

Millyonare said:

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world.

How the tax system works is that richer people that own companies and get paid in dividends pay a lower percentage of their earnings in tax.
The poor also spend a higher percentage of their earnings on high tax products like fuel duty, alcohol and tobacco duty.

https://www.lse.ac.uk/research/research-for-the-world/economics/how-much-tax-do-the-rich-really-pay

The top 1% of earners pay nearly 30% of all UK income tax. They are among the most over-taxed groups on Earth. Envy politics is spiraling out of control in the UK, sadly.

Bridlington1

Millyonare said:

sevenhills said:

Millyonare said:

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world.

How the tax system works is that richer people that own companies and get paid in dividends pay a lower percentage of their earnings in tax.
The poor also spend a higher percentage of their earnings on high tax products like fuel duty, alcohol and tobacco duty.

https://www.lse.ac.uk/research/research-for-the-world/economics/how-much-tax-do-the-rich-really-pay

The top 1% of earners pay nearly 30% of all UK income tax. They are among the most over-taxed groups on Earth. Envy politics is spiraling out of control in the UK, sadly.

Moreover many of those top 1% of earners can quite easily choose to move where they earn their money abroad if they wanted to, taking their tax revenues and the wealth they create with them. I imagine if the top rate of income tax were raised to 50% we would end up with less money than if we'd left it at 45%.

sevenhills

Bridlington1 said

Moreover many of those top 1% of earners can quite easily choose to move where they earn their money abroad if they wanted to, taking their tax revenues and the wealth they create with them. I imagine if the top rate of income tax were raised to 50% we would end up with less money than if we'd left it at 45%.

I would be surprised if the top 1% earn their money via PAYE and pay income tax 

Gary1984

Sometimes I think people overstate just how easy it is for those paying additional rate tax to just up sticks. People have spent careers building contacts and reputations where they operate now. They have kids in schools, social lives, attachments to organisations, extended families. Some may also have specific knowledge that isn't easily transferrable, e.g. Solicitors in English Law. They may not get a visa or speak the language somewhere abroad. Other countries may offer better tax schemes but be very very boring or politically unstable.  I think the number of people who leave due to tax is probably very small indeed.

hallmark

As predicted in a different thread:

Energy handouts are set to be targeted at pensioners and those on benefits after April, as Jeremy Hunt seeks to cut the cost of the bailout.

One-off payments will be made to low-income and other vulnerable households when Liz Truss’s energy price cap comes to an end next spring, to help them deal with sky-high bills.

But those in other households will receive no extra handouts

NedS

sevenhills said:

Millyonare said:

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world.

How the tax system works is that richer people that own companies and get paid in dividends pay a lower percentage of their earnings in tax.

But the company will have paid corporation tax on those profits first (at 19%, rising to 25% next year), before they can be paid out as dividends and taxed again.

MK62

Millyonare said:

MK62 said:

kinger101 said:

MK62 said:

In the end, no matter what they do, some are going to be saying "ouch".......but  the government need to remember that there is a cost-of-living issue at the moment, coupled with an impending recession and many are already feeling the squeeze - the chancellor has little room for any more tax rises on the majority at this time.......which is why he might go more for spending cuts and other money saving measures, such as reliefs and allowances, which won't hit the majority directly in the pocket now.

I feel that's a circular argument though.  Freezing allowances will mean tax rises for the majority via fiscal drag.  E.g someone earning £15,000 getting a 5% pay rise from April would be paying £486 income tax this year (3.24 % overall) compared to £636 next year (which is 4.04%).  They're paying more tax, despite the fact their income has declined in real terms.

 

I wasn't really referring to the Personal allowance - it's already frozen until 2026, so all he can do is extend the freeze, which won't affect anyone's pocket now, at least not more than was already planned (unless he actually reduces it - but that would be unexpected and a major surprise).

I totally agree about this freeze though......and it's disproportionate effect on lower income groups.

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world. It is possible to earn £1000+ per month and not pay a bean in tax. The UK tax system is already incredibly favourable to entry-level workers. By some international standards, believe it or not, UK entry workers are very under-taxed (not over-taxed).

It can be quite misleading comparing single aspects of life in various countries.....the cost of living (inc housing), benefit entitlement, healthcare provision, state pension provision/entitlement, indirect taxes, direct taxes and a host of other aspects can all vary widely.
A bit like saying the minimum wage is higher in eg Germany.....tells you very little on its own, unless you also take a host of other factors into account.
 
As to the personal allowance freeze, while its true that it will increase income tax for all taxpayers, it will increase it for lower paid groups at a faster rate, at the very time when such groups are being hit harder by high inflation......but we'll have to wait and see what the chancellor's whole package is on Thursday.

MattMattMattUK

sevenhills said:

Millyonare said:

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world.

How the tax system works is that richer people that own companies and get paid in dividends pay a lower percentage of their earnings in tax.
The poor also spend a higher percentage of their earnings on high tax products like fuel duty, alcohol and tobacco duty.

https://www.lse.ac.uk/research/research-for-the-world/economics/how-much-tax-do-the-rich-really-pay

That is because "the rich" who own the companies have to pay dividend tax after their company has already had to pay corporation tax, so the effective rates of taxation are 26%, 46% and 51% once the taxation is properly accounted for. 

Whilst fuel duty is usually not avoidable as people need transport and the alternatives are not viable or cost more, alcohol or tobacco duty and taxes are entirely avoidable and a choice. Rent is tax free, utility bills are only 5% and most food from supermarkets is VAT exempt, as these costs are where much of lower income households spend a higher proportion of their income on goods which attract a low or zero rate of VAT. 

That article is an LSE opinion piece, light on facts, using unconnected figures to try to make a political point, finishing with a demand that "millionaire couples" are taxed on wealth rather than income. 

MattMattMattUK

MK62 said:

Millyonare said:

MK62 said:

kinger101 said:

MK62 said:

In the end, no matter what they do, some are going to be saying "ouch".......but  the government need to remember that there is a cost-of-living issue at the moment, coupled with an impending recession and many are already feeling the squeeze - the chancellor has little room for any more tax rises on the majority at this time.......which is why he might go more for spending cuts and other money saving measures, such as reliefs and allowances, which won't hit the majority directly in the pocket now.

I feel that's a circular argument though.  Freezing allowances will mean tax rises for the majority via fiscal drag.  E.g someone earning £15,000 getting a 5% pay rise from April would be paying £486 income tax this year (3.24 % overall) compared to £636 next year (which is 4.04%).  They're paying more tax, despite the fact their income has declined in real terms.

 

I wasn't really referring to the Personal allowance - it's already frozen until 2026, so all he can do is extend the freeze, which won't affect anyone's pocket now, at least not more than was already planned (unless he actually reduces it - but that would be unexpected and a major surprise).

I totally agree about this freeze though......and it's disproportionate effect on lower income groups.

For balance, it is worth noting that the "lower income groups" in the UK already pay just about the least tax in the entire industrialised world. It is possible to earn £1000+ per month and not pay a bean in tax. The UK tax system is already incredibly favourable to entry-level workers. By some international standards, believe it or not, UK entry workers are very under-taxed (not over-taxed).

It can be quite misleading comparing single aspects of life in various countries.....the cost of living (inc housing), benefit entitlement, healthcare provision, state pension provision/entitlement, indirect taxes, direct taxes and a host of other aspects can all vary widely.
A bit like saying the minimum wage is higher in eg Germany.....tells you very little on its own, unless you also take a host of other factors into account.

Whilst I somewhat agree, in the UK the lowest two thirds of earners have the lowest effective rate of income taxation in the EU (the top third have the fifth highest), this is largely due to the extremely large personal allowance (the largest of any advanced economy). Our VAT rate is around the EU average as a headline rate, although Germany for example has a headline rate of 19% which is lower than our 20%, they also have nearly no zero rated products and charge VAT at 7% on all food so the effective rate of taxation is actually higher than ours, their tobacco, alcohol and fuel taxes are all higher than ours. Most of the rest of Europe (ignoring tax havens like Monaco an Luxembourg) has considerably higher tax rates on all income levels and all parts of life than we do in the UK, our tax revenue as a percentage of GDP is the lowest in the EU etc. 

MK62 said:

 As to the personal allowance freeze, while its true that it will increase income tax for all taxpayers, it will increase it for lower paid groups at a faster rate, at the very time when such groups are being hit harder by high inflation......but we'll have to wait and see what the chancellor's whole package is on Thursday.

Freezing the personal allowance does not increase the amount for anyone earning more than £125k as they do not get a personal allowance. Everyone is being hit by higher inflation.