Proposed change to the tax system, 30% rate for all....
- Thread starter Spit
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With ludicrous numbers made up to make the point seem obvious. That's not simply illustrating a point.
Are you seeing anyone saying "This is a good system because it will result in me paying more tax"?
Most people who are evading taxes now would still evade them under the proposed system, or under any system. They wouldn't voluntarily start paying far more tax. Some might, but it's very unlikely to increase overall tax revenue and very likely to reduce it. Maybe it would work if it became impossible to evade taxes, but that's hardly likely to happen.
Say, for example, an entity in the UK is currently running various tax evasion schemes and pays only 10% tax. They might or might not say it's because tax rates are too high - that doesn't matter. They could say they're doing it because they don't like squirrels or because it sometimes rains on Thursdays. It makes no difference to tax revenue.
The system changes to a flat 30% tax that is somehow impossible to evade.
So the entity has a choice - either pay triple the amount of tax they're paying now or up sticks and relocate to somewhere else.
That 10% figure is plausible. Glaucus' claim was that the new system would result in taxable entities choosing to pay almost 7 times as much tax as they currently do. That's just silly.
Soldato
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Angillion, I think you are referring to tax avoidance above, tax evasion is illegal.
That's actually the point of a few arguments towards taxing wealth (more than earnings) - as it encourages economic growth, spending & stops wealth accumulating in one area over generations (which damages social mobility).
If this was true, why did they indicate it would cost the government £50bill PA?, (which imply's massively reduced tax receipts?).
I'm sure we can all agree on one thing, taxation does need to be simplified - we also need to stop taxing people who are entitled to benefits (the amount of time & money wasted in administering this could be better spent elsewhere).
Indeed, and don't understand how people can't see this.
Earn £20k, pay 30% on £10k, which is £3k, or 15% of gross earning.
Earn £200k, pay 30% on £190k, which is £57k, or 28.5% of gross earnings.
So whilst the rich person earns ten times more and pays just under double the gross percentage, in absolute terms they are paying 19 times as much as the person earning 10 times less. Seems reasonable to me!
Earn £2 million, pay 30% on £1.99 million, which is £597k, or 30% of gross earnings. Earning 100 times what the £20k earner does, but paying 199 times the absolute amount of tax.
Soldato
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Thanks for that fascinating explanation but I'd guess those who support progressive taxation understand how percentages work.
Thanks for the sarcasm, but it proves that the people bleating about the rich not paying their way if there is a flat tax don't quite grasp things. Someone who earns 10 times more pays 19 times more tax, how is that not enough?
Well, for one because they have more than 19 times the disposable income.
Irrelevant, tax is done on gross earnings, not what is left over.
Should someone earning £20k a year with £5k disposable income pay more tax than someone earning £20k a year with only £1k disposable income due to higher outgoings?
Soldato
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Depends how you quantify fairness. Some people would say that 30% on 20k is a bigger hit than 30% on £1m in terms of impact on the person.
Conversely you could argue why make it a set percentage as you end up paying more the more you earn and wouldn't the fairest thing be we all contributed the same amount? The you could argue that people who don't use the NHS or the State school system should get to pay less because it's not fair they should have to pay for something they don't benefit from.
If I were to get into power tomorrow and introduce an emergency budget I'd set the tax rates like this (you'd obviosuly only pay the rates on the amounts over and above each threshold and not your whole wage)....
First 15k - Tax Free
15k-30k - 20%
30k-60k - 30%
60k-150k - 40%
150k-1m - 45%
1m-5m - 50%
>5m - 60%
NI - 10%
..and capital gains would taxed at the same rate as income.
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Do you not believe in equality under the law then? Would you also take different amounts of people's property based gender, sexuality, religion or other arbitrary factors?
Soldato
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The economy would crash from all the out of work accountants.
God help us when that bureaucracy shrinks...Oscar Wilde said:
Saying something is an arbitrary factor doesn't make it so. Your total income is entirely pertinent to how much you should be taxed. This isn't an equality issue lol.
When calculating disposable income people tend to use average living cost figures.
IE, person on £13k PA has 5% disposable income.
Person on £20k PA has 20% disposable income.
Person on £100k PA has 85% disposable income.
Living in a massive house & driving a big car is not including in "living costs" - it's using part of the disposable income to increase a persons standard of living.
Wage after tax - SUM(Average housing costs,Average food costs,Average transportation costs, Average energy costs, Average other misc expenses) = Disposable income.
An individuals disposable income is what they spend in the high-street, on luxury goods & services & on socialising (or a basic higher quality standard of living, a nicer house etc).
The basis fact is that most of the UK population have a small percentage as a disposable income after expenses & tax - this is what stagnates growth, damages demand, causes shops to close down, causes unemployment & further strains the welfare bill.
It's not like the extra money put to the bottom 90% would evaporate into thin air - it would get spent in the local economy, causing a massive increase in demand.
If I had a business I'd be all for increasing the spending power of my customers, as even if I did have to pay a little more in tax - at least I'd have a reliable customer base with money to buy my product.
This is a pretty bad argument.
People of difference races/creeds or sexuality's don't benefit from the system disproportionation to the rest of the population.
I find it hilarious you are trying to use "equality" to support a regressive tax system which leaves 95% of the population with hardly any wealth.
If you are going to use the "equality" card, what about equality of income?.
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It is an equality issue if you actually believe in actual equality, rather than equality for your pet causes.
There is no justification for unequal and unfair treatment based on income, jealousy and belief that the rich should be punished or the poor should be rewarded are not justifications, nor is an ideological belief in equality of outcome.
My preferred system is progressive overall, not regressive. NIT is not a regressive taxation regime.
Equality under the law means equal treatment under the law, equality of income can only be achieved by either treating people unequally under the law, or by taking away all economic freedom from everyone, neither of which I consider an acceptable outcome in any society that is free.
Soldato
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The equality argument is fallacious because the tax system is already equal (as was my proposal).
Someone who earns 80k a year pays the same amount of tax on the first 20k as someone who only earns 20k. You only pay the higher tax rate on the amount OVER the threshold, not your whole wage so it's not like someone who is on the top 45% rate is paying that on their whole wage (they're only paying on any amounts they earn over 150k). And at every stage down those people pay the same rate as tax as everyone else.
If you paid one rate of tax on your whole wage and that rate was determined by how much you earned (and a lot of people erroneously think it does work this way), that would be unequal in the way you describe but not current way it's done where where everyone pays the same rate at any given level of income.
Likewise if a cleaner suddenly earned 100k one year, they would be eligible to pay the higher rates on amount over the threshold they normally don't get to.
In short, there is no 'inequality' in the taxation system, every one pays the same rate as everyone else at any given point in the wage scale.
The only 'inequality' that exists in the current system is those earning the top rate also lose their free allowance which is unfair in that sense.
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That is not equality, apart from in the twisted minds of the left. It's the same kind of nonsense as 'Separate but equal' and should be discarded for exactly the same reasons.
Equal treatment under the law does not mean creating groups and treating groups differently, but claiming that each person within that group is treated the same so it's ok.