The problem is that different people have different ideas on what "fair" means. Unfortunately it is very common for "fair" to mean "People like me should pay less".
Liechtenstein to give UK tax information
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The problem is that different people have different ideas on what "fair" means. Unfortunately it is very common for "fair" to mean "People like me should pay less".
Personally I think it's fairer to have the person earning £20k pay £4k tax and the £100k earner pay £32k tax*. An extra £2000 a year is likely to mean a lot more to someone on £20k pa than to someone earning £100k pa.
* Assumes no tax free allowance, a basic rate of income tax at 20%, and a higher rate of income tax of 40% starting at £40k.
How is it fairer that one person pays a higher percentage. An arbitary 'I think they would miss it less' is not a good reason. £2k is £2k, the spending power is exactly the same.
Soldato
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Define 'going out on a limb' exactly what have they to lose?
This is money generally made in the UK, or money belonging to UK residents who hold the money elsewhere to simply avoid paying tax like us poor people do.
F&*k em all. They can move elsewhere, move their businesses elsewhere, make their money elsewhere if the UK govt hurts them too much, but at least force them to do so. You'll find most won't or can't move for one reason or another. Then they'll start paying their bills.
If they all jump ship and leave, great, we'll actually lose nothing, as the gaps will and must be filled. Opening opportunities for people willing to pay tax.
Lewis Hamilton lives in Switzerland.... He should be a swiss driver and treated as such, not worshiped as amarvelous british world champion who's so down in the dumps paying UK tax would just be so hurtful to the poor mans career.
erm but he lives in Switzerland!
Its one thing to live in the UK and actively hide your wealth abroad in order to avoid paying your fair share - actually re-locating abroad is a bit different.
tbh... I don't blame him - he's constantly traveling with his career, earns millions and if he doesn't spend much time in the UK any more why should he have to pay taxes here - he's free to chose where he resides.
Both people pay the same percentage at the same levels of income. The tax bands might be arbitrary, but that doesn't mean that they are wrong.
Adam Smith didn't think it was unfair to tax the wealthy proportionally more when he wrote The Wealth of Nations:
Adam Smith said:
The fact that they pay the same if you equalise their income is irrelevant, their incomes are not equal, and the taxation is not proportionate.
Arbitrary and fair do not go together.
You have confused tax rate with tax contribution. Under NIT (or indeed tax credits, or a variety of other systems), the wealthy make a greater net contribution than the poor, without the need for punative and unfair taxation rates.
Soldato
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Whats the big deal, its effectivly EUSD (European Union Savings Direcive) applied to Liechtenstein.
To think Liechtenstein is the first is perposterous. It happens the world over; Australia have exchange of information countries where if you a EOi Country you can receive enhanced benefit.
Italy have White list countries, and Portugal do not provide treaty benefit to countries which they deem to be tax havens. i could go on and on, and lets not forget the obma proposals.
It happens all over the world, its no big deal.
To think Liechtenstein is the first is perposterous. It happens the world over; Australia have exchange of information countries where if you a EOi Country you can receive enhanced benefit.
Italy have White list countries, and Portugal do not provide treaty benefit to countries which they deem to be tax havens. i could go on and on, and lets not forget the obma proposals.
It happens all over the world, its no big deal.
I'm with Dolph on all this
What about having income tax as a fixed percentage? If it was 30% then someone on £20k would pay £6k, and someone on £100k would pay £30k.
That sounds more sensible and fair to me than the current varying percentages.
EDIT: Actually there's a name for that idea isn't there?
I think there was discussions for a single higher rate. But then all the poor moan. The poor have more votes than rich, for all the difference that makes. Lose - lose situation as far as I can see.
The system applies equally to both people, it is perfectly fair. You can argue about where the tax bands start but there's nothing arbitrary about them, they are based out of necessity (e.g. expected expenditure) and principle (that the wealthy should pay proportionally more of their income in tax).
Dolph said:
I'll repeat the important bit: "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."
So under NIT the more you earn the more you pay in tax in proportion to your income, under the current progressive income tax system they would pay proportionally more, which Adam Smith thinks is perfectly reasonable for the reason he gave.
I don't see why people find it upsetting that the rich try to avoid paying a bit of tax.
They still give a hell of lot more back to the country than they take, be it via jobs, donations, spending or the tax that they do pay.
I'm not saying their all saints but your average rich person will give a hell of lot more back to the government that your average worker.
They still give a hell of lot more back to the country than they take, be it via jobs, donations, spending or the tax that they do pay.
I'm not saying their all saints but your average rich person will give a hell of lot more back to the government that your average worker.
Soldato
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Maybe the rich should stop be disproportionately taxed. No, no. That's a silly ideas isn't it. Sigh.
The system does not apply equally to both people because their circumstances are not equal. It is not fair precisely because it treats people in different circumstances in a different way. You could argue that if they were in the same circumstances they would be treated the same, but it's a pointless strawman.
And I'll point out that taxation in the current system does not exist in isolation of the benefits. Any system that involves wealth redistribution results in a greater proportional contribution of revenue being given to the state by the wealthy without random and arbitrary tax bandings. Smith talks about contribution and revenue, not income.
Ah the old strawman accusation, where have I misrepresented your position?
You know if the £100k earner doesn't like being taxed at 40% he could always ask his company to reduce his salary accordingly, if it's so unfair he'd presumably be happy with this?
Revenue is the same as income, contribution equals tax paid.
Soldato
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The Government will probably waste the money on something pointless as usual.
The claim that a system is fair when it treats two people in the same circumstances equally is a strawman in this case. That is not even remotely related to the discussion, which is that the system treats two people in different circumstances differently. You are substituting the discussion at hand for an alternative, and irrelevant, discussion and then using that to base your rebuttal.
Another fallacy, this is bordering on an appeal to ridicule. Make a ludicrous extension of the opponant's argument rather than actually addressing the matter in an honest faction.
Even if this is true (and having read Smith's work in the past, I doubt this, as he refers to income seperately), what relevance does it actually have to the matter at hand?
I understand the govt wants to be like Singapore (99% of transactions through card), therefore not a penny to go missing when dealing with tax obligations, however the way they go about it is really depressing.
For most real business people that earn millions it isn't an easy journey and they do pay their obligations, but to hunt down to the penny and eradicate all tax avoidance strategies really does leave a bitter taste on the people trying to succeed.
I don't include the billionaires that pay a few hundred thousand of tax a year, they seem to be exempt and better off - it's more the middle class that are being hounded.
And I just don't see the money being earned spent on anything good anymore, every service is failing and "needs" more money yet if you go on the front line you will see the money going in all the wrong directions and very little in the right way.
For most real business people that earn millions it isn't an easy journey and they do pay their obligations, but to hunt down to the penny and eradicate all tax avoidance strategies really does leave a bitter taste on the people trying to succeed.
I don't include the billionaires that pay a few hundred thousand of tax a year, they seem to be exempt and better off - it's more the middle class that are being hounded.
And I just don't see the money being earned spent on anything good anymore, every service is failing and "needs" more money yet if you go on the front line you will see the money going in all the wrong directions and very little in the right way.
Of course it's related to the discussion. Under a progressive tax system you pay different rates of income tax to ensure that the burden of tax does not fall unfairly on the poor, which a flat or negative tax does. In the original example, under a 30% flat tax system the low earner took home £14k a year, under a progressive system he took home £16k a year. Why? Once again Adam Smith said it better than I can:
Tell me again why that low earner giving up an extra £2k a year so the high earner can have it is "fair"? Do try and keep a straight face while doing so.
No come on, you're the one obsessed with fairness. Surely if it was unfair then people wouldn't put up with it and refuse pay rises? The reason that they don't is because they know that it's perfectly fair that those who take the most out of the system put more back into it. I pay the 40% tax rate now, and I think it's perfectly fair that I do, because I can remember a time when I used to earn less than £1.70 an hour and I needed every last penny. And before you say it, yes I know that under this wonderful NIT system I'd have to earn a certain amount before paying tax, but wait, isn't that certain amount arbitrary and therefore unfair?
You brought it up.
Under a negative tax system most of the poor get a net benefit, not a net contribution, how is that unfair on the poor? The only difference is that it's not unfair on the rich either.
tell me why it isn't? I say it's not unfair to expect equally proportioned contributions from all, provided that minimum levels of income are maintained. I support an NIT model because it ensures everyone gets a minimum level of income, and all income is treated equally. When you have ensured a minimum standard of living (or the potential of it), then taking away the same proportion of it is always fair and justified.
The proposal of negative income tax negates any concern about money being worth less to the person when they have it because if it's implemented correctly you have already ensured an acceptable minimum income before the taxation starts.
Your example quoted a figure way over the threshold, which is what made it an appeal to ridicule. Regardless of how unfair it is, someone on £100k still takes home more than if they got their pay dropped to £35k so they were under the threshold, they just don't get to keep a fair percentage of the income.
As for the amount of NIT being arbitary, it could be, depending on how you calculated it, but as everyone gets it, it can't be unfair.
I was talking about the whole referencing Adam smith idea.