gaz316 said:
So the poll tax was fair?
4 people to a house over 18 all paying poll tax seperatly or 4 people to a house paying a share of 1 Council tax bill?
The principle of the poll tax was maybe not fair, but certainly fairer. But by definition, any tax that is different from the current one will hit different people in different ways, and that means that while some will pay less, some will pay more.
If you have four
wage-earning adults in a house, why on earth shouldn't they pay more than two, or even one, in a house? Why should a couple on a fixed pension pay the same as the family next door, in the same size house, where not only do they use more local services, but they have four incomes compared to two pensions? On what basis do you think property value is a fair way to determine payment for usage of services? Surely a far
fairer way is to base it on ability to pay?
Obviously, any tax system needs to make provision for those on low incomes, whether it's poll tax, council tax or whatever. But beyond that, what is inherently unfair about
everyone that uses services and has an income paying towards the cost of those services?
The current exhorbitant level of council tax has come about for one reason and one reason only - central government placed extra demands on local councils, while at the same time, cutting central funding. This means councils HAD to increase council tax. So, those two daylight robbers, Blair and the twerp next door, Brown, can sit smugly in TV studios pretending they know how to run the economy, and most people believe (or believed) in their competence because, after all, tax hadn't gone up, had it? Income tax rates are still the same as under the tories.
Of course income tax rates are the same! That's part of the conjuring trick. If Brown deflects a lot of costs (and the blame) onto local government, he can sit there with that nauseatingly smug grin and act like he's competent. Pay no attention to all the hidden taxes, ignore the shifting of tax from progressive tax to regressive tax (which is morally indefensible, by the way), and try to pretend there isn't a huge and growing debt mountain. Oh no, Brown is competent. Yeah, right.
And I'm the Queen of Sheba.
For those that don't know, the distinction between progressive and regressive tax is whether your
overall tax rate is higher (progressive) when you earn more, or lower (regressive) when you earn more.
An example .... let's imagine a simple tax, levied on everybody, of £1500. Let's call it, oh ... erm .... council tax.
If I have an income of £100,000, that's a 1.5% tax. If you have an income of £10,000, it's a 15% tax. So it's regressive. Any fixed rate tax will be, because the higher your income, the lower the
rate of that tax burden.
Income tax, on the other hand, is progressive. The more you earn, the more you pay and, though with limits, the higher the overall rate. I don't mean the rate at which it's charged, I mean the rate of the tax burden from that tax. They will be different, due to bands and allowances.
Our current income tax system is progressive, but only to a point. I very much doubt if many people are actually aware of the way the overall tax rate levels out.
If you earn £15,000, you'll pay about 21% of your total income in NI and PAYE.
If you earn £30,000, you'll pay 27%.
If you earn £70,000, that goes up to 34%.
So increasing your income from £15k to £30k increased the burden by 6% (21% to 27%).
How much do you think you have to increase that £70,000 by to get another 6%? What do you have to earn before you actually pay 40%? Remember, I'm talking about the total burden, not the top rate of 40% which is actually a marginal rate.
So, how much? £250,000? Nope, not enough. £300,000? No, still not enough. £350,000? Nope.
Shocked yet?
In round terms, £400,000. You need to be earning £400k per year before the overall burden from income tax hits 40%.
So, lets do that again, but this time, lets aim for a modest 1% increase in burden. What do you need to earn? Well, if you guessed anything below a cool £1.5m (yup, a mill and a half) you were wrong.
What about 42%? Suffice it to say if your annual income was a £billion a year, you STILL wouldn't be paying 42% in an overall burden from income tax/NI. Of course, with that income, you'd have far more complex tax affairs than just income tax, but that's the effect of income tax. It is aimed fair and square at YOU, Joe Public, not the wealthy. It is progressive, but only in a very limited sense, and beyond a healthy level (£70k or so), the progressiveness rapidly wears off.
But whatever you can say about the minimal progessiveness of income tax (inc NI which, itelf, is regressive), it is FAR more progressive than council tax, because that has very little bearing on ability to pay.
And that, gaz316, is why the poll tax was, within limits, fair ..... or fairer, that council tax. It is fairer because it relates to income, and hence to ability to pay, not to property value. It is less regressive, because it is more related to income, i.e. to ability to pay.
PS. For the purists, the figures I've given here were based on a paper I wrote (don't ask for whom) and related to the 2004/05 tax year. The figures will have changed marginally for the current year, but it's minimal and the principle is unchanged.
) C Tax will seem insignificant.
go on, enlighten me.