TAX ON FULL STATE PENSION APRIL 2027

GunJack

booneruk said:

MetaPhysical said:

But what's the alternative?

Fingers in ears. The masses clinging to the opinion that someone richer needs to pick up the bill. Ultimately kicking the can down the road and letting the bond vigilantes or the IMF panic subsequent generations into dealing with a much worse situation.

That is really not an option..... I'm just about old enough to remember being a kid in the 70's and the mess the country was in then , no way can we end up there again.....

ali_bear

As a reality check when it comes to progressive politics, please remember that we are starting from a place of high wealth inequality. It's been like that for nearly 1000 years. 

BikingBud

BlackKnightMonty said:

BikingBud said:

MetaPhysical said:

I watched an interview with Art Laffer. What a great guy and so articulate.  To go a large way to correct the distorted and perverse mess of the UK's income tax system that disincentives going to work for those not in work and causes people, our brightest and best amongst them to take less work or even retire when near certain benefit and PA thresholds and tapers his suggestion is a dramatically simpler system; all round, three easily understood bands; a lower rate, a middle rate and a higher rate.  and, controversially, no allowances and no NI.  He didn't give the rates and thresholds, that calculation the government would need to do.,

Everyone, billionaire or tea boy pays a new combined Income tax above age 18 from the first pound earned.  You pay, say, X% on everything up to the middle threshold of say A.  You then pay a higher Y% on everything above that until you get to the additional threshold, B.   You then pay an even higher Z% on everything above that.  Importantly, no tapers, cliff edges, PA withdrawals or allowances. 

People above SPA who have retired and have no way to go back to work and earn are exempt from Income tax completely until a certain number - he didn't give the number.  All benefits are means tested against the national minimum wage.  No one gets more benefits that push them above the NMW.  The bin man working hard doesn't and so benefits claimants shouldn't, no matter how many kids they have - that's a lifestyle choice you make and not the business of the tax payer to support.  If that's hard on you then tough - study more or improve your lot in life.  Tough talking and politically hard to implement I'm sure because of  people who will - rightly - say I've paid in my NI contributions all my life for my pension!  Desperate times call for desperate measures.  I think most people could stomach this if the rules were applied equally to everyone.  

Laffer says this is the only way to get the economy moving with a clear-to-understand income tax system that doesn't penalise work when crossing thresholds and incentivises people to work.

I also watched the Spectator piece.

But I feel in terms of people retiring early it is a little more than just accepting the quantum of tax that is being taken, it is a vote for not agreeing what the tax is being spent on.

Some will always need to work, so hitting higher rate thresholds and having to plug on, despite the tax take being higher, to cover mortgages, children, just fundamental costs of living will be unavoidable.

Others who may have got beyond those costs and now have enough income or reserve cash to cover all foreseeable costs will value their time and object to committing 40% of it to support the Government's spending decisions.

Trying to focus on the National optimal tax rate must take into account where that balance lies for the majority of UK population. Does it keep people in work, does it draw people back into work, does it inhibit self progression, staff refusing promotions due to increase wages leading to loss of benefits, child care and jumping up tax bands. 

So I feel it is very personal decision but starting by making the playing field much clearer, redrawing the lines, removing opaque legislation and ensuring everyone can understand their own optimum would be a massive step forward.

And we also need to get a balanced, well defined, well presented budget that covers an accepted set of obligations.

I just can't understand why that would be unachievable or intolerable to many. 

The challenge comes from fewer and fewer households being net contributors in terms of tax (receiving more in benefits and services).

in 1977 it was only 37% of all UK households which were net benefiters. Now the figure is 53.3%.

The challenge is that politicians will not face up to the reality.

Fewer households contributing is a symptom not a cause.

We need our elected representatives to have the mettle to correct the normalised freeloading attitude.

BikingBud

Cobbler_tone said:

GunJack said:

You're never going to have a tax system that everyone agrees with, but it undoubtedly needs to be reformed and drastically simplified in order to be as fair and equitable as possible. Yes the transition will be messy for a couple of years but it it needs to be done. 

Good luck with that. Most people would be content for the poor to be better off and the rich paying for it (well, the wealthy wouldn't be happy) but it usually the ones in between who carry the can. With the caveat of course that it would need to raise more tax than today.

No tax to NMW, then x% tax for all after that. Good luck establishing x. 
Blend NI/IC somehow to simplify things....that could be coming, along with closing the net on the means of avoiding tax.

Whatever changes are made will always be highly controversial, especially any big ones. 

But x does not define value for money so why should I buy it? 

I am not averse to spending I am averse to squandering, to wasting money with little if any benefit, eg paying over 10% of our tax on interest payments with no benefit to society or supporting >50% population who do not contribute.  

That's the whole point of the Laffer curve, some will work even when paying >90% tax, some will never work but if you do not understand the mood of the room then driving the tax rate ever higher will  result in a lower tax take overall. As he mentioned he is not interested in my, yours, anybody else's or even his own opinion regarding controversy of the change they do not matter the facts are there to be seen.

Hence rather than working full time on national revenue generating projects I decide that it's time to give the "broad shoulders" a rest. The exchequer now has another small void in the tax plan.

We grow carrots and cabbages we have something to sell and we achieve prosperity. We pay people for doing nothing and we drain the pot very quickly. 

Cobbler_tone

OldScientist said:

If I was a ruthless politician wanting to drastically reduce government spending, I would indirectly attack life expectancy - reduce expenditure on health (i.e, the NHS) and sickness benefits, allow more people to die younger with a knock on effect of eventually reducing state pension costs too. It is interesting to note that life expectancy projections in the UK have gradually been revised downwards over the last decade or so (although they still exceed those of the US) with a strong reduction of LE in poorer postcodes (as much as 10 years less than the average).

This happens anyway, if you have been unfortunate to deal with them where a life was cut short due to delays and ineffective diagnosis and treatment. On the flip side I am sure that many are kept alive, with bleak prospects at considerable cost. It's the double edged sword of medical advances and not what the NHS was designed for.
They are discussions for a whole different topic and a very hot potato! 

ClashCityRocker1

BikingBud said:

BlackKnightMonty said:

BikingBud said:

MetaPhysical said:

We need our elected representatives to have the mettle to correct the normalised freeloading attitude.

who are the freeloaders in your scenario?

ClashCityRocker1

BikingBud said:

Cobbler_tone said:

GunJack said:

We grow carrots and cabbages we have something to sell and we achieve prosperity. 

But it is the buying and selling of those carrots and cabbages as commodities that makes somebody very rich - and it ain't the farmer.

BlackKnightMonty

OldScientist said:

MetaPhysical said:

Be prepared to be here again next year ad infinitum.  Until spending is addressed and brought down we can tax everyone into the ground, confiscate every penny from everyone and it still won't be enough.  Too many people are living a lifestyle funded by the government to which they are not entitled.  Harsh?  Sure.  But what's the alternative?

The roughly half of households that 'take' more than they contribute is solely based on their income rather than their actual contribution. For example, someone working in a coffee shop on minimum wage ensures that the coffee shop functions and is able to be (hopefully) profitable. While the owner will claim all of the profit as 'their' contribution to society, their business would not run without those who are deemed non-contributing in a simplistic analysis. We might also remember the case of those working in retail on minimum wage (and others in the supply chain) who kept supermarket shelves stacked during the lockdowns whose contribution to national wellbeing far outweighed their salaries.

If we look at the big ticket items of government expenditure (e.g., see https://researchbriefings.files.parliament.uk/documents/CBP-8046/CBP-8046.pdf ) we see that

The state pension costs £140 billion per year
Sickness and disability benefits £70 billion
Education £120 billion
Health £200 billion (roughly half on pensioners?)

If I was a ruthless politician wanting to drastically reduce government spending, I would indirectly attack life expectancy - reduce expenditure on health (i.e, the NHS) and sickness benefits, allow more people to die younger with a knock on effect of eventually reducing state pension costs too. It is interesting to note that life expectancy projections in the UK have gradually been revised downwards over the last decade or so (although they still exceed those of the US) with a strong reduction of LE in poorer postcodes (as much as 10 years less than the average).

No, it is total taxes (all taxes not just employment taxes) paid versus all direct and indirect benefits and wider services received.

BikingBud

ClashCityRocker1 said:

BikingBud said:

BlackKnightMonty said:

BikingBud said:

MetaPhysical said:

We need our elected representatives to have the mettle to correct the normalised freeloading attitude.

who are the freeloaders in your scenario?

Perhaps a significant core within the >53%?

There are people that add nothing and take everything.

And as much as you might wish to argue the figure, the basis, the case or otherwise it's the perception of those that pay tax that counts. That's human nature.

BikingBud

ClashCityRocker1 said:

BikingBud said:

Cobbler_tone said:

GunJack said:

We grow carrots and cabbages we have something to sell and we achieve prosperity. 

But it is the buying and selling of those carrots and cabbages as commodities that makes somebody very rich - and it ain't the farmer.

I did draft a longer answer but I feel it better to apologise for drifting off topic and I leave it there, else we end up with a closed thread.