Axe personal allowance and pay everyone £48 a week, says thinktank

[chaparral]

https://www.msn.com/en-gb/news/ukne...eek-says-thinktank/ar-BBUC4m4?ocid=spartandhp

The tax-free personal allowance, which rises to £12,500 in April, should be scrapped and replaced with a flat payment of £48 a week for every adult, according to radical proposals welcomed by shadow chancellor John McDonnell.

The proposal, from the New Economics Foundation thinktank, is for a £48.08 “weekly national allowance,” amounting to £2,500.16 a year from the state, paid to every worker over the age of 18 earning less than £125,000 a year. The cash would not replace benefits and would not depend on employment.

The policy idea has been welcomed by the shadow chancellor, John McDonnell, and the Green MP Caroline Lucas, and would mean that as many as 88% of all adults would see their post-tax income rise or stay the same, helping to lift 200,000 families across the country out of poverty.

Guys what do you think of this ?

Good or Bad idea ?

 

[Luckystrike123]

Well as the greens and labour party are leftist nutjobs I'd wager that it's likely a bad idea.

 

[Uther]

Dolph should be all for this but you know, Labour...

 

[aardvark]

so, anyone earning over 37.5k will be worse off

 

[Marmot]

No thank you

 

[Dis86]

so, anyone earning over 37.5k will be worse off

Which is only 12% of adults. Apparently.

 

[LabR@t]

Thank god, this will never happen.

LABOUR - spending money from the money tree.

 

[Ayahuasca]

Tours over boyo

 

[muon]

so, anyone earning over 37.5k will be worse off

How did you figure that out?

People on higher rate only would have to pay 20% on their first £12.5k like anyone else.

They don't get a £5k benefit from the personal allowance.

Someone earning say £100k today.

£12.5k @ 0%
£37.5k @ 20%
£50k @ 40%

With this plan.

£50k @ 20%
£50k @ 40%
-£2.5k

I'm not really sure what the proposal really achieves though.

edit:

Reading it more thoroughly, it also proposes lowering the higher rate threshold. So it would be

£37.5k @ 20%
£62.5k @ 40%
-£2.5k

In which case yeh it's worse if you earn more than £37.5k.

 

[Thecaferacer]

Only 13% of adults earn over £37.5k?

So it's trading one overly complicated tax system for another. I'm not expert on tax but I can't see why a flat tax system wouldn't be better that discourages tax dodging schemes.

 

[aardvark]

How did you figure that out?

37.5k becomes the new higher tax rate - so surely they will pay more t than they do now above that point - i haven't actually worked it out to be honest!

 

[muon]

Only 13% of adults earn over £37.5k?

So it's trading one overly complicated tax system for another. I'm not expert on tax but I can't see why a flat tax system wouldn't be better that discourages tax dodging schemes.

Because it lowers taxes for the better off? And therefore increases it for middle earners.

 

[Rroff]

But would we get a situation where prices just increase to compensate and that £48 is essentially worth less?

 

[meths]

How did you figure that out?

People on higher rate only would have to pay 20% on their first £12.5k like anyone else.

They don't get a £5k benefit from the personal allowance.

Someone earning say £100k today.

£12.5k @ 0%
£37.5k @ 20%
£50k @ 40%

With this plan.

£50k @ 20%
£50k @ 40%
-£2.5k

I'm not really sure what the proposal really achieves though.

edit:

Reading it more thoroughly, it also proposes lowering the higher rate threshold. So it would be

£37.5k @ 20%
£62.5k @ 40%
-£2.5k

In which case yeh it's worse if you earn more than £37.5k.

Doesn't it just mean that people who aren't in work get free money and everyone else is roughly the same?

 

[kindai]

Lmfao no.

 

[Thecaferacer]

Because it lowers taxes for the better off?

But in reality as people have seen, higher rate tax payers have been able to use schemes that mean they pay less than 40% and in some cases less than 20%. A flat rate system would equal out across the board and discourage aggressive avoidance.

Like I said, I'm no expert so don't know all the pros and cons of a system like that.

 

[Dis86]

But in reality as people have seen, higher rate tax payers have been able to use schemes that mean they pay less than 40% and in some cases less than 20%. A flat rate system would equal out across the board and discourage aggressive avoidance.

Like I said, I'm no expert so don't know all the pros and cons of a system like that.

Yup. My dad earns about 3 times what I do and yet pays less tax. All perfectly legal and with fully declared sources of income.

 

[muon]

But in reality as people have seen, higher rate tax payers have been able to use schemes that mean they pay less than 40% and in some cases less than 20%. A flat rate system would equal out across the board and discourage aggressive avoidance.

Like I said, I'm no expert so don't know all the pros and cons of a system like that.

Yeh the magic of higher rate tax payers avoiding 40% rates isn't true.

Most higher rate payers are on PAYE and work for large companies. Higher rate currently is £46.5k which is pretty normal for jobs in the middle of the corporate ladder.

It's only self employed workers that manage to set avoidance schemes up.

 

[Rotty]

what I would like to see sorted is the situation that screws me and the wife over

we both work full time but I earn 3x what she does

why is it right that we pay lots more tax than another couple on the same total but a 50/50 split of income?

 

[Raymond Lin]

Lmfao no.

No here too.

Without doing the maths you know they are not doing this to give you more money...they want more.