Chancellor may tax older taxpayers more than younger.

D.P. said:
seems reasonable to me
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what seems reasonable? landlords are eventually going to lose most but not all of their tax relief. This with several other measures is to allow ftbs to compete with landlords.
As usual though its all a bit too little too late.

As for taxing the older generation more than the younger, he will probably do very little while making taxation more complex.
 
Freebird101 said:
. Never thought of this option but makes a lot of sense in having a baseline level of income that allows a comfortable level of living then a high flat rate of tax on income above that. Stops arguments about success being penalised with taxing people into the work house. Would be a danger of causing resentment between the tax payer and none tax paying classes but then I guess that exists already
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It could always be set at the average wage and adjusted yearly. That way half of all people would always pay tax, but the other half wouldn’t. At first glance I think that would help reduce any resentment because it would be very clear that youvre better off that an least half the population if you pay tax. It should also be plenty to live on too.
 
There are differences between countries though. E.g., in the US health insurance is not a taxable benefit, nor are a whole host of additional insurances:
https://www.nolo.com/legal-encyclopedia/employee-fringe-benefits-that-are-tax-free.html

transport passes, internet, phone services can all be tax free benefits.

Then there are also things like tax-free pension contributions, so if you have a cliff edge going form 0 to 45% tax you are much more liekly to try an max out your pension continue to get below the tax threshold. And then as you say, there is wokring hours and vacation. Iif you find that you have to pay early half your Friday afternoon's income in taxes you might just decide to stop working early and enjoy more free time.


Having lots of tax bands makes for a more stable system witho less unexpected events, e.g. when someone gets a payrise or a bonus and they are shocked to suddnely see nearly half dispear, instead with lots of tax bands the increase in amrginal tax is so gradual that people don't notice and don;t take action against that.

Rhis is the US marginal rates with 7 abnds:
https://upload.wikimedia.org/wikipedia/commons/3/3e/U.S._Federal_Income_Tax_Rates_2013.png

Being the US it is missing a higher rate at the top but in general you see a nice smooth effective tax rate.
 
neodude said:
I'm all for the Higher Tax-Free allowance and flat rate. Something like 24,000 tax-free and then 40% for everybody. Penalising people for being successful is unfair (even with a flat rate higher earners pay more anyway, the higher bands are just an extra kick in the nuts). The beer analogy always comes to mind when I think about how unfair it all is.
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What public services would you cut to pay for any significant tax cuts? Or would you go for a cull of the peasantry to reduce costs? There's much less need for the lower classes nowadays, so killing a lot of them wouldn't affect the upper classes. It's not like the past, when lots of peasants were needed for essential agriculture and manufacturing.

You're assuming that the current enormous differences in rates of pay are inherently fair. Why? Perhaps it would be fairer to stop having a society in which there is such an extremely large variation in rates of pay. Cap the variation to something like 500%, i.e. the highest paid job can pay no more per hour than the lowest paid job. Or take it to the obvious conclusion and pay everyone the same regardless of what work they do. That way everyone can pay the same amount of tax and nobody will be "penalised" by being paid a lot more. That sounds much less unfair. Nobody is being penalised at all. Utopia!



Higher taxes increase the score associated with higher-paid jobs and thus how "successful" the people with those jobs are.

Scenario 1: Person A is paid £100K gross and pays £27K income tax.
Scenario 2: Person A is paid £80K gross and pays £7K income tax.

A's post-tax pay is the same in both scenarios, but scenario 1 gives them a significantly higher score, i.e. makes them more "successful" in the way that you're measuring "success".

So even greater "success" could be achieved by much higher rates of tax...

Scenario 3: Person A is paid £500K gross and pays £427K income tax.

A is now being paid 5 times as much as before! A huge increase in success!
 
Tunney said:
Agreed. The full minimum wage starting at 25 is a nonsense. Age shouldn’t come into it.
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The issue is that without the scaling of the minimum wage young people would be increasingly overlooked for low skilled work due to their lack of work experience and perceived unreliability etc. Minimum wage at least gives employers encouragement to get them on the employment ladder.
 
Angilion said:
What public services would you cut to pay for any significant tax cuts? Or would you go for a cull of the peasantry to reduce costs? There's much less need for the lower classes nowadays, so killing a lot of them wouldn't affect the upper classes. It's not like the past, when lots of peasants were needed for essential agriculture and manufacturing.

You're assuming that the current enormous differences in rates of pay are inherently fair. Why? Perhaps it would be fairer to stop having a society in which there is such an extremely large variation in rates of pay. Cap the variation to something like 500%, i.e. the highest paid job can pay no more per hour than the lowest paid job. Or take it to the obvious conclusion and pay everyone the same regardless of what work they do. That way everyone can pay the same amount of tax and nobody will be "penalised" by being paid a lot more. That sounds much less unfair. Nobody is being penalised at all. Utopia!



Higher taxes increase the score associated with higher-paid jobs and thus how "successful" the people with those jobs are.

Scenario 1: Person A is paid £100K gross and pays £27K income tax.
Scenario 2: Person A is paid £80K gross and pays £7K income tax.

A's post-tax pay is the same in both scenarios, but scenario 1 gives them a significantly higher score, i.e. makes them more "successful" in the way that you're measuring "success".

So even greater "success" could be achieved by much higher rates of tax...

Scenario 3: Person A is paid £500K gross and pays £427K income tax.

A is now being paid 5 times as much as before! A huge increase in success!
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Why should there be any significant cuts? That would only be the case if there was a random arbitrary tax rate. The beauty of that system would be that the tax rate for the year can be calculated based on the requirement for tax through income tax without affecting the people’s ability to eat or survive - instead it just means that year they’ll buy a slightly cheaper car, or eat out less.
 
dowie said:
and a rich landlord can wrap up a bunch of properties in a ltd company and deduct all the mortgage interest he or she wants
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Except now the cash belongs to the Ltd company and you have to work out how to get the cash back in the hands of the individual(s) efficiently.
 
Pudney said:
Except now the cash belongs to the Ltd company and you have to work out how to get the cash back in the hands of the individual(s) efficiently.
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Is that generally an issue? I mean do people tend to find they're then paying more in tax via corporation tax, accountancy fees, tax on their dividends etc.. than they'd have done if they'd simply paid regular income tax on the rent?
 
dowie said:
Is that generally an issue?
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Yup. An annoying one as well, particularly where the owner doesn't distinguish between their own money and the company's money.

Edit to include your edit.

dowie said:
I mean do people tend to find they're then paying more in tax via corporation tax, accountancy fees, tax on their dividends etc.. than they'd have done if they'd simply paid regular income tax on the rent?
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What you have to bear in mind is that the income tax restriction for the individual still gives (eventually when fully phased in) 20% tax relief. So at the highest rate you have lose tax relief at 20%/25% in simple terms.

Corporation tax will have fallen to 17% at that point which is great. But then how do you get the cash out. Salary or director's fees are still taxed at 20%/40%/45% so you're probably worse off, and dividends are at 7.5%/32.5%/38.1% so you may be better off, but maybe not after additional compliance costs 17% CT and then say 38.1% dividend.

Of course if you want to grow a property business then a Ltd is great. Reinvest the profits and buy more. But if you want to live on the money it's massively more complicated and nuanced.

The above is all very simplistic and a Ltd can still work for people who live off the cash, it just depends on the numbers.
 
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Amp34 said:
Why should there be any significant cuts? That would only be the case if there was a random arbitrary tax rate. The beauty of that system would be that the tax rate for the year can be calculated based on the requirement for tax through income tax without affecting the people’s ability to eat or survive - instead it just means that year they’ll buy a slightly cheaper car, or eat out less.
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If there aren't significant tax cuts, the people complaining that they are being punished for being paid a lot will still be complaining that they are being punished for being paid a lot. I was replying to someone who was proposing reducing the number of tax bands to 2 explicitly and specifically for the purpose of addressing the complaints of the people who are complaining that they are being punished for being paid a lot. They were also specifying "a random arbitrary tax rate" (40% for the upper band) and not a rate varying annually on the basis of how much income tax revenue is required.

On top of that, increasing the 0% income tax band to £24K (as they proposed) would have course require an increase in taxation on wages above £24K in order to offset the loss of income tax revenue of wages below £24K and thus maintain the same amount of income tax revenue. So their proposal would, if anything, increase the amount of people who are paid a lot complaining about it.

Your proposal is different to theirs, but it also wouldn't do anything to reduce complaints from people who are paid a lot of money about how income tax is a punishment for being paid a lot of money.
 
There is enough ageism as it is between the Corbyn-voting millennials and the Tory-voting baby boomers. An age-related tax will probably increase that stigma.

Not sure what it'll mean for us 40-somethings generation stuck in the middle though :p
 
Thinking about it though, if you wanted to increase tax on the older generation I'd probably think about removing the exemption from NIC for those over 65 in employment or who earn trading income. You'd still keep pension income and investment income exempt so the average pensioner isn't affected. How much it would raise I have no idea but it would be a tax increase and fair in a way.
 
D.P. said:
There are differences between countries though. E.g., in the US health insurance is not a taxable benefit, nor are a whole host of additional insurances:
https://www.nolo.com/legal-encyclopedia/employee-fringe-benefits-that-are-tax-free.html

transport passes, internet, phone services can all be tax free benefits.

Then there are also things like tax-free pension contributions, so if you have a cliff edge going form 0 to 45% tax you are much more liekly to try an max out your pension continue to get below the tax threshold. And then as you say, there is wokring hours and vacation. Iif you find that you have to pay early half your Friday afternoon's income in taxes you might just decide to stop working early and enjoy more free time.


Having lots of tax bands makes for a more stable system witho less unexpected events, e.g. when someone gets a payrise or a bonus and they are shocked to suddnely see nearly half dispear, instead with lots of tax bands the increase in amrginal tax is so gradual that people don't notice and don;t take action against that.

Rhis is the US marginal rates with 7 abnds:
https://upload.wikimedia.org/wikipedia/commons/3/3e/U.S._Federal_Income_Tax_Rates_2013.png

Being the US it is missing a higher rate at the top but in general you see a nice smooth effective tax rate.
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None of that is really relevant to the UK though as they olwould all be taxed on the value assigned to them. I game the example of taxing discounts as that was about the only thing I could think of that isn’t included currently, but is being discussed in at least one country.

You’re right about pensions contributions, but that wouldn’t be particularly difficult a problem to solve as they are explicitly legislated for. Otherwise we’re back to holiday and time off. Obviously the US is attrocious for that, but for everywhere else I doubt there will be many complaints about having even more time off.
 
Angilion said:
If there aren't significant tax cuts, the people complaining that they are being punished for being paid a lot will still be complaining that they are being punished for being paid a lot. I was replying to someone who was proposing reducing the number of tax bands to 2 explicitly and specifically for the purpose of addressing the complaints of the people who are complaining that they are being punished for being paid a lot. They were also specifying "a random arbitrary tax rate" (40% for the upper band) and not a rate varying annually on the basis of how much income tax revenue is required.

On top of that, increasing the 0% income tax band to £24K (as they proposed) would have course require an increase in taxation on wages above £24K in order to offset the loss of income tax revenue of wages below £24K and thus maintain the same amount of income tax revenue. So their proposal would, if anything, increase the amount of people who are paid a lot complaining about it.

Your proposal is different to theirs, but it also wouldn't do anything to reduce complaints from people who are paid a lot of money about how income tax is a punishment for being paid a lot of money.
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Not that different, it’s a slightly higher rate of tax free limit and a slightly higher rate of tax for those above that limit. Generally a rate when specified is just plucked out of thin air on this forum, not literally the specific rate that person thinks is the best example.

The reality of the situation would be the only people paying more in tax would be those top 10-20% of earners. Yes, I’m sure some of those will complain, but it’ll be fairly easy to point out their complaints are unfounded as the tax is “only” on income for luxury items AND it’s a flat rate of tax over a living wage, not some arbitrary rate at an arbitrary amount like it is now.

With the current tax situation we have a ridiculous situation where people on minimum wage are being taxed on their earnings, while they cannot even afford to put a roof over their heads in some cases. We shouldn’t be taxing people on money that is needed to literally survive, but I don’t think it’s unreasonable to tax people on money that they don’t need, but make their lives more comfortable.

Edit: From a rough calculation the above example would yield half the population (those on less than 27k) would pay no income tax, those on 35k or less would pay less income tax than currently and those on 35k would pay more if the rate was around 50%.
 
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