Proposed change to the tax system, 30% rate for all....

estebanrey said:
First 15k - Tax Free
15k-30k - 20%
30k-60k - 30%
60k-150k - 40%
150k-1m - 45%
1m-5m - 50%
>5m - 60%
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Ignoring the NI, this method would generate £13.5k more from someone earning £200k than the flat 30% tax would.

However, it also means that an additional £1.5k tax revenue is lost by putting the personal allowance up to £15k.

That means that just 9 people earning £15k a year would counter the extra £13.5k generated from that one person earning £200k, and there are far more people on the lower end of the payscale than up at £200k. Overall tax revenue is likely to be much lower than the flat 30%.
 
Dolph said:
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.
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How is it unequal when the tax laws apply to everyone and everyone pays the same rate of tax at any given level?

I don't think you understand the current system, I reckon you are under the misunderstanding that someone who pays the top 45% of paying it in their whole wage whereas other people are paying 20% on theirs..am I right?

Besides let's take your equality logic to it's conclusion. Do you think it's currently unfair then than Richard Branson and I should pay the same for a loaf of bread? Shouldn't he pay the same as me in terms of income percentage? I mean how far do you want to go with this logic?
 
estebanrey said:
How is it unequal when the tax laws apply to everyone and everyone pays the same rate of tax at any given level?
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Because you still tax income differently at different levels, discriminating based on income. That is unequal by definition, as not everyone earns the same, so you are taking a greater proportion of one individuals earned income than another.

I don't think you understand the current system, I reckon you are under the misunderstanding that someone who pays the top 45% of paying it in their whole wage whereas other people are paying 20% on theirs..am I right?
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No, you're wrong, I'm fully aware of how the system currently works, and still believe it is manifestly unfair to treat different levels of income differently.

That's why I'm a proponent of NIT, which combines flat taxation with universal benefits to create a progressive end result without discrimination or unequal treatment either in state support or taxation rates.

Besides let's take your equality logic to it's conclusion. Do you think it's currently unfair then than Richard Branson and I should pay the same for a loaf of bread? Shouldn't he pay the same as me in terms of income percentage? I mean how far do you want to go with this logic?
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Don't confuse voluntary product purchases with taxation, the two things are so far apart it just isn't funny. One is a voluntary transaction entered into between two individuals or companies by mutual consent, and the other is a forcible removal of property without consent.

This doesn't mean that taxation should be banned, before you start down that route, just that it should be strictly controlled to ensure it is applied fairly, equally and only in proportion to the necessary activities of the state, which should be provided in as efficient a manner as possible.
 
krooton said:
Ignoring the NI, this method would generate £13.5k more from someone earning £200k than the flat 30% tax would.

However, it also means that an additional £1.5k tax revenue is lost by putting the personal allowance up to £15k.

That means that just 9 people earning £15k a year would counter the extra £13.5k generated from that one person earning £200k, and there are far more people on the lower end of the payscale than up at £200k. Overall tax revenue is likely to be much lower than the flat 30%.
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You missed the bit in which he said.

"..and capital gains would taxed at the same rate as income."
 
Dolph said:
No, you're wrong, I'm fully aware of how the system currently works, and still believe it is manifestly unfair to treat different levels of income differently.

That's why I'm a proponent of NIT, which combines flat taxation with universal benefits to create a progressive end result without discrimination or unequal treatment either in state support or taxation rates.
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Sorry but NIT doesn't provide a flat rate of tax as it proposes that people below a certain level would pay no tax at all so all you've done is reduced the amount of levels to 2. Those that pay the basic rate and those that pay nothing so how do you square that circle in terms of your equality argument that everyone should pay the same rate regardless of income?

Wikipedia

In economics, a negative income tax (abbreviated NIT) is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government. Such a system has been discussed by economists but never fully implemented. It was developed by British politician Juliet Rhys-Williams in the 1940s[citation needed] and later United States economist Milton Friedman combined NIT with his flat tax proposals.[1]

Negative income taxes can implement a basic income or supplement a guaranteed minimum income system.

In a negative income tax system, people earning a certain income level would owe no taxes; those earning more than that would pay a proportion of their income above that level; and those below that level would receive a payment of a proportion of their shortfall, which is the amount their income falls below that level.
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From everything you've argued so far I don't see how that system fits with your idea of a flat rate for everybody (which isn't progressive by the way)

Dolph said:
Don't confuse voluntary product purchases with taxation, the two things are so far apart it just isn't funny. One is a voluntary transaction entered into between two individuals or companies by mutual consent, and the other is a forcible removal of property without consent.
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Which is why I used food as an example, hardly a 'voluntary' transaction is it? Unless you consider starving to death a viable option.

Furthermore, people aren't forced into jobs or particular vocations, they have a free choice so I don't see where the difference is anyway.

Dolph said:
This doesn't mean that taxation should be banned, before you start down that route, just that it should be strictly controlled to ensure it is applied fairly, equally and only in proportion to the necessary activities of the state, which should be provided in as efficient a manner as possible.
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So why shouldn't income tax just be a set charge, the same for everyone like the television license fee. Surely that would be the absolute in terms of equality, if that's your goal.
 
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These are somewhat rough, but based on ASHE stats from 2008:

75% of the salaried population earn less than £31k
15% earn between £31k and £45k
5% earn between £45k and £59k
4% earn between £59k - £118k
1% earn in excess of £118k

At the start of 2008 there was just under 30 million employed people.

22.5 mill earning less than £31k
4.5 mill earning £31k - £45k
1.5 mill earning £45k - £59k
1.2 mill earning £59k - £118k
300k earning £118k +

With 30 million employed people and a £10k personal allowance, that is £300 billion untaxed earnings.

Bump this up to £15k personal allowance, and you are looking at £450 billion untaxed.

Now lets say each banding earns it's average salary

22.5 mill on £22k, earning £495 billion
4.5 mill on £38k, earning £171 billion
1.5 mill on £52k, earning £78 billion
1.2 mill on £89k, earning £106.8 billion
300k on a max £500k, earning £150 billion

30% flat raises:

£1000 billion - £300 billion for £10k personal allowance = £700 billion
30% of £700 billion = £210 billion

estebanrey's staggered approach raises:

£1000 billion - £450 billion for £15k personal allowance = £550 billion taxable.

(22.5 mill x £7k) x 0.2 = £31.5 billion

(4.5 mill x £15k) x 0.2 = £13.5 billion
(4.5 mill x £8k) x 0.3 = £10.8 billion
Total of £24.3 billion

(1.5 mill x £15k) x 0.2 = £4.5 billion
(1.5 mill x £22k) x 0.3 = £9.9 billion
Total of £14.4 billion

(1.2 mill x £15k) x 0.2 = £3.6 billion
(1.2 mill x £30k) x 0.3 = £10.8 billion
(1.2 mill x £29k) x 0.4 = £13.9 billion
Total of £28.3 billion

(300k x £15k) x 0.2 = £900 million
(300k x £30k) x 0.3 = £2.7 billion
(300k x £90k) x 0.4 = £10.8 billion
(300k x £350k) x 0.45 = £47.3 billion
Total of £61.7 billion

Total revenue = £160 billion, £50 billion less than a flat 30% would generate. But it's ok because the top 300k earners will be paying 33% more tax than the flat 30%.

Keep in mind this is assuming that 99% of the salaried population are earning the mean salary within their banding, and that the top 1% all earn £500k.
 
krooton said:
<Garbage calculations>
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First problem - the assumption that the bottom 75% earn 22k.

Second assumption - that the richest earner in the UK is on 500k.

Third problem - You should be looking at the mode (not the mean) to calculate the most common salary (why people use the average for this kind of distribution is beyond me).

Finally - you can't look at the inflated average (increased by the top 1% of earners) - then cut off the people earning millions/billions to make it fit.
 
But then the PA should be high enough to live on, so you aren't taxed untill you earn more than average living cost. Then flat after that. It seems stupid to pay tax then claim it back in complicated ways. Creating costly pen pusher jobs.
 
Glaucus said:
But then the PA should be high enough to live on, so you aren't taxed untill you earn more than average living cost. Then flat after that. It seems stupid to pay tax then claim it back in complicated ways. Creating costly pen pusher jobs.
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I agree with the first part 100%.

No point taxing people who earn under a living wage.

Flat after that, well if lower incomes were a little higher (and we didn't tax em) - I'd also be happy with a flat tax after that.
 
I said somewhat rough :p

And I only just found stats for the top 0.1% (42k) of earners (mean salary of £780k)

Still, the proposed staggered approach will see the top earners paying a relative 40% tax on earnings, whilst giving the lowest earners 10% more of their earnings as disposable income (their relative tax is 6%) and reducing the tax revenue to the government by around 25%.
 
My own view on this is that the entire debate is pointless. I base this on sesveral reasons.
1) The very rich never actually pay the tax they are supposed to pay. Tax dodges, sharp accountants etc.
2) a 30% tax band would be great for me as I'm currently paying 40%. Therefore, it will never happen as all governments - pretty much since I started work - have only introduced changes that have cost me money in the long run.
 
elmarko1234 said:
I agree with the first part 100%.

No point taxing people who earn under a living wage.

Flat after that, well if lower incomes were a little higher (and we didn't tax em) - I'd also be happy with a flat tax after that.
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What is a living wage? The 30% flat proposal will see the first £833 earned each month not taxed at all.
 
checjb said:
2) a 30% tax band would be great for me as I'm currently paying 40%.
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Only on your earnings over £34k, £8-34k you only pay 20% on.

So if you earn £50k

£8k is tax free
£26k at 20% = £5.2k
£16k at 40% = £6.4k

Total tax paid is £11.6k, or 23% relative to your gross income.

Under the flat 30% idea:

£10k tax free
£40k at 30% = £12k, or 24% relative to your gross income.
 
I'm not against the idea of a flat tax in principle, I just don't think it would work or be fair in the current world we live in.

If individual wealth was perfectly linear, then I'd agree a flat tax would be fair but it's not. Someone with 10 million pounds will find it easier to retain their relative wealth than someone with £100. The person with 10 mil will have earned more than £100 in interest before the other guy's decided what to spend it on, hence slowing down his ability to become poorer naturally. If he spends nothing, he will be richer last week than he is this week.

Conversely someone who is poor and relies on loans will be paying interest which in turn impedes their ability to build wealth. If they spend nothing, they are still poorer at the end of the week.

Hence why we have a progressive taxation system that takes more of your relative wealth as your income goes up. Think of it as the leveller to wealth through interest.
 
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Spit said:
http://www.2020tax.org/

http://news.sky.com/home/business/article/16232022

There is a proposal to change and simplify the tax system in the UK. The highlights include:

Personal allowance raised to £10k.
Abolish National Insurance.
30% rate for everyone on all income streams, such as work, capital gains, dividend, interest, rents etc.
Abolish Inheritance tax and stamp duties.
Local authorities to set a local sales tax.

They reckon this will drastically cut the deficit in a 15 year time span. It has worked well in other countries that have adopted similar systems and it sure seems a fairer way of going about things to me. If people knew that 30% was all they paid then I am sure it would encourage a bit more get up and go!

What do you think?
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30% VAT GO FOR IT!!!!! ;)
 
estebanrey said:
You're making the assumption that 'the rich' aren't currently over paying themselves to compensate for the current amounts of tax they are paying and that if they had to pay less they may well demand lower base salaries, leaving a bigger share of the pit for everyone else.
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Not sure if serious?!

Edit: Local sales tax by each council is a completely stupid idea which will involve many more civil servants than PAYE.
 
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estebanrey said:
Angillion, I think you are referring to tax avoidance above, tax evasion is illegal.
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I'm refering to not paying taxes. Whether the method used happens to be legal or illegal doesn't really matter. It's a fairly arbitrary distinction (laws can change and have to be interpreted) based to a large extent on how good your lawyer is and both have the same effect on tax revenue.

The only difference in meaning is that "evade" more strongly implies deceit. Like, for example, paying yourself a high salary and pretending that it's a low salary and high dividends. Like, for example, nominally basing your company headquarters in a place that has lower taxes even though it's not really where your company is operating from. Many legal ways to not pay taxes are evasive.
 
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