Abolished N.I - state pension system

QrizB

I would suggest that "the proportion of households that are net tax contributors" is of no direct relevance to the point you're now making.

BlackKnightMonty said:

Given welfare as a % of GDP is forcast to rise; levels of debt overall will rise.

That's only true if the tax take as a % of GDP does not rise, and all other spending remains the same as a % of GDP.

We know that (following the recent budget) the tax take as a % of GDP is rising, so one of those two assumptions is false. Your claim is unproven.

BlackKnightMonty

QrizB said:

I would suggest that "the proportion of households that are net tax contributors" is of no direct relevance to the point you're now making.

BlackKnightMonty said:

Given welfare as a % of GDP is forcast to rise; levels of debt overall will rise.

That's only true if the tax take as a % of GDP does not rise, and all other spending remains the same as a % of GDP.

We know that (following the recent budget) the tax take as a % of GDP is rising, so one of those two assumptions is false. Your claim is unproven.

No worries if you do not agree with my thesis. I’m not here to perform exhaustive analysis on this, or for you. I have shared my view and provided a lot of data on request. That is all I intended to do.

Qyburn

TheGardener said:

Sorry if I'm being dim and I have tried to find answers in existing threads...I heard the government wants to abolish N.I. and we all just pay into 'one tax pot'. If this happens - how will the state pension entitlement be worked out?

Easiest way would be to leave it unchanged. If you earn more than a set figure in a year then that year counts towards the pension. Currently entitlement is based on years anyway, not on the value of NI paid.

mark5

Minimum wage will rise again in April I’m guessing more income tax, NI and employers NI be collected from people having more taxable income so will offset some of the 2% NI reduction?

Linton

mark5 said:

Minimum wage will rise again in April I’m guessing more income tax, NI and employers NI be collected from people having more taxable income so will offset some of the 2% NI reduction?

Plus the ongoing rise in tax income as peoples wages rise broadly with inflation but the tax bands dont.

xylophone

Minimum wage will rise again in April I’m guessing more income tax, NI and employers NI be collected from people having more taxable income so will offset some of the 2% NI reduction?

And even those whose only income is state pension will become taxpayers if their SP is more than  around £242 a week.

There will be large numbers of pensioners on old basic plus additional state pension - there will be those on the new pension with a

 "protected payment".

Then those whose state pension plus small occupational pension takes them over the threshold. 

MattMattMattUK

Moonwolf said:

MattMattMattUK said:

SouthCoastBoy said:

That could be the point when you introduce means testing?

Also, abolishing NI is not likely to be practical, at least in a pure tax cut sense, if NI drops then Income Tax would likely need to rise proportionately, so we can have no NI, but then we would also need 28% starting rate of Income Tax. As we cannot afford the previous 2% cut or the new 2% cut, we certainly cannot afford a further 8% cut. 

Where do you get 28% from?

A simple 20%+8%, yes it would raise more revenue, but we need to raise more revenue.

Moonwolf said:
I reckon from my BOTE calculations rates would work closer to 25%/45%/55%. 

Were did you get 45% and 55% from? The higher and additional rates are 40%, which would then become 42% and 45% for additional, which would then become 47%. I am sure anyone rational would object to an income tax greater than 50%.

Moonwolf said:
This is because at the moment a lot of people don't pay NI on unearned income and would be brought into the tax fold.  This does seem fairer to me, why should I pay more tax on money I have worked to earn than someone who just gets more money because they already have it. Some will have earned it, some got it from other's labour and some were just given it because their great great great grandfather was a robber baron.

Unearned income is complicated, but there are valid economic reasons for things like capital gains being taxed at a lower rate and whilst dividends are taxed at a lower rate that is generally because they have already been taxed a profit first.  

Moonwolf

MattMattMattUK said:

Moonwolf said:

MattMattMattUK said:

SouthCoastBoy said:

That could be the point when you introduce means testing?

Also, abolishing NI is not likely to be practical, at least in a pure tax cut sense, if NI drops then Income Tax would likely need to rise proportionately, so we can have no NI, but then we would also need 28% starting rate of Income Tax. As we cannot afford the previous 2% cut or the new 2% cut, we certainly cannot afford a further 8% cut. 

Where do you get 28% from?

A simple 20%+8%, yes it would raise more revenue, but we need to raise more revenue.

Moonwolf said:
I reckon from my BOTE calculations rates would work closer to 25%/45%/55%. 

Were did you get 45% and 55% from? The higher and additional rates are 40%, which would then become 42% and 45% for additional, which would then become 47%. I am sure anyone rational would object to an income tax greater than 50%.

Moonwolf said:
This is because at the moment a lot of people don't pay NI on unearned income and would be brought into the tax fold.  This does seem fairer to me, why should I pay more tax on money I have worked to earn than someone who just gets more money because they already have it. Some will have earned it, some got it from other's labour and some were just given it because their great great great grandfather was a robber baron.

Unearned income is complicated, but there are valid economic reasons for things like capital gains being taxed at a lower rate and whilst dividends are taxed at a lower rate that is generally because they have already been taxed a profit first.  

Even just adding NI rates raises more tax but I don't see why after years of increasing inequality we aren't a bit redistributive.

https://www.tomforth.co.uk/incomeandinequality/

"I'm sure anyone rational would object to an income tax greater than 50%"  Why, it is 55% in Denmark, France and Austria, it was higher than that here in the 1960s.  

Grumpy_chap

MattMattMattUK said:

I am sure anyone rational would object to an income tax greater than 50%.

Like everyone with income in the range £100k - £125k

MattMattMattUK

Grumpy_chap said:

MattMattMattUK said:

I am sure anyone rational would object to an income tax greater than 50%.

Like everyone with income in the range £100k - £125k

That is the marginal rate, their effective rate is still is still only 37.6% at £125k, although I do agree that the marginal rate cliff edge should be managed, largely by the reduction of the Personal Allowance to £1,000-2,000 to bring it into line with European averages.