What level of taxation is "fair"?

[Dolph]

I know this. I was advocating that taxing the higher earners a higher proportion can be easily justified.

You haven't really explained how. It's an issue of equal treatment under the law, so how is it fair to tax one person's earnings differently from another?

This isn't to say you can't have a progressive marginal rate and fair taxation, but stepped bands can never be fair as they violate the idea of equal treatment under the law based on arbitrary distinctions (in this case, earnings, but if it helps to get the idea, substitute another arbitrary factor such as gender, race, religion if you prefer).

 

[arknor]

God I remember those days, you couldn't move in the high street for millionaires using cattle prods to force people into banks to sign up for loans they couldn't afford

i remember turning 18 and on my birthday recieving a barclays credit card application form saying i was garunteed to be accepted...

 

[scorza]

You haven't really explained how. It's an issue of equal treatment under the law, so how is it fair to tax one person's earnings differently from another?

This isn't to say you can't have a progressive marginal rate and fair taxation, but stepped bands can never be fair as they violate the idea of equal treatment under the law based on arbitrary distinctions (in this case, earnings, but if it helps to get the idea, substitute another arbitrary factor such as gender, race, religion if you prefer).

Everyone is treated equally under income tax. If stepped bands are unfair why does your NIT have stepped tax bands?

 

[Dolph]

Everyone is treated equally under income tax. If stepped bands are unfair why does your NIT have stepped tax bands?

Everyone is not treated equally under income tax. Those who earn more are forced to pay tax at a higher rate on their income, that's the direct opposite of treating everyone the same. You can argue that everyone who earns more pays more, but that completely misses the point as to what equal under the law actually means. It's like saying "well, we jail every <insert minority> so we aren't treating them differently, if they are part of the group, they get treated the same".

As for the NIT issue, it doesn't have stepped bands, it has flat bands and a flat payment, which results in a progressive marginal rate. Everyone is treated the same (ie fairly), in that all income is taxed at the same rate, and everyone gets the same state benefit. The progressive nature of the taxation comes from how the two interact, rather than arbitrary discrimination.

 

[Theophany]

But here is a graph for you. The Laffer Curve. The lowest levels of taxation reap low levels of government revenue. The extremely high levels of taxation also reap low levels of government revenue. There is a balance to be found, the question is where the sweet spot is.

Ah, the old Laffer Curve, as beloved by right-wingers everywhere. It manages to be both true and utterly meaningless at the same time. Because it has no scale. Yes, if you put taxes up enough, rich people go to more trouble to avoid them. But at what point?

Whoosh?

Whenever asked for my political views, my answer is that I am an economic liberal. So I'm not sure what the Right wing has to do with any of it, frankly.

Regardless, the point I made remains valid to the one I challenged. 100% tax would not work as people would avoid it. In the capacity that I demonstrated the curve, it was not meaningless. Next time, read the post and its context before mounting that exceptionally tall equine beast of yours.

 

[scorza]

Everyone is not treated equally under income tax. Those who earn more are forced to pay tax at a higher rate on their income, that's the direct opposite of treating everyone the same. You can argue that everyone who earns more pays more, but that completely misses the point as to what equal under the law actually means. It's like saying "well, we jail every <insert minority> so we aren't treating them differently, if they are part of the group, they get treated the same".

As for the NIT issue, it doesn't have stepped bands, it has flat bands and a flat payment, which results in a progressive marginal rate. Everyone is treated the same (ie fairly), in that all income is taxed at the same rate, and everyone gets the same state benefit. The progressive nature of the taxation comes from how the two interact, rather than arbitrary discrimination.

No, as I understand NIT for example, someone earning £8k a year gets paid an extra £2k by the government - that's a tax rate of -25%, which is a completely different tax rate to someone earning £100k a year. If everyone paying the same rate of tax is the only fair system, then it should apply equally to the first pound you earn and the hundred thousandth pound you earn. Fortunately even the most simple of right-wingers knows this isn't fair which is why madcap proposals like NIT have differing tax rates depending on how much you earn. There's no difference in principle between progressive income tax and NIT - just that NIT shifts the tax burden away from the rich and onto low and middle earners.

 

[Woden]

No, as I understand NIT for example, someone earning £8k a year gets paid an extra £2k by the government - that's a tax rate of -25%, which is a completely different tax rate to someone earning £100k a year. If everyone paying the same rate of tax is the only fair system, then it should apply equally to the first pound you earn and the hundred thousandth pound you earn. Fortunately even the most simple of right-wingers knows this isn't fair which is why madcap proposals like NIT have differing tax rates depending on how much you earn. There's no difference in principle between progressive income tax and NIT - just that NIT shifts the tax burden away from the rich and onto low and middle earners.

How do I get my hands on this free £2k? 'Cos I earn less than £8k and pay tax.

 

[Dolph]

No, as I understand NIT for example, someone earning £8k a year gets paid an extra £2k by the government - that's a tax rate of -25%, which is a completely different tax rate to someone earning £100k a year. If everyone paying the same rate of tax is the only fair system, then it should apply equally to the first pound you earn and the hundred thousandth pound you earn. Fortunately even the most simple of right-wingers knows this isn't fair which is why madcap proposals like NIT have differing tax rates depending on how much you earn. There's no difference in principle between progressive income tax and NIT - just that NIT shifts the tax burden away from the rich and onto low and middle earners.

The NIT proposal I put forward does tax from the first pound you earn for precisely that reason, the bit you don't seem to understand is how the government payment works as both a payment and an effective tax free allowance.

 

[kwerk]

No, no and no. None of that would ever work. Private healthcare and insurance, see the US of A. Cleaners, Labourers etc can't afford basic healthcare and if they are too sick to work they don't get paid so cant eat, pay rent etc. That's a slippery slope.

The prices are inflated already because the government has diluted them with tons of spending, a lot of it deficit spending. Cut the government out completely and allow the market to find the real value and see what healthcare costs then. If uyou get sick you should have already had health insurance and long term unemployment insurance.

1 year mandatory military service is useless in a system with 6 months *initial* training.

That's the point, military training like Switzerland. Something like 6 months of basic training then 6 months of specialist school, then on "stand-by" until you are 35 or whatever.

That's basically how student loans work now. A percentage of my wage is taken to pay it off.

No the university doesn't get paid at all until you start working. If you can't find a job with your art history degree the university makes 3% of your burger king wage. See how many useless liberal arts degrees are offered then. In fact there should be a lower limit. If you make under say £25k, the uni doesn't get paid ANYTHING. That way uni would be reserved for people who actually need it.

Why stop there? Private security, private insurance to cover yourself from fraud and untrained drivers. Need to go somewhere? Privately built toll roads. We can also drop the attempts to reduce dug abuse, cos that harms no one! Especially as you can afford your own security to protect yourself from there crimes to feed their habit anyway.

Drugs would be legal. In fact you can get £1000 of drugs if you'll get sterilized. You'll also get a bullet to the face if you try to rob anyone because guns are legal too. Infrastructure and property rights is the government's job. That government framework is required for business to work at it's full potential. If the government didn't do a good job business would move somewhere than can do a good job. Property rights goes all the way to the individual though. If you take it to it's conclusion even your body is your property, and if someone assaulted you, they are damaging your property. All crimes are ultimately property dispute. The police and government are not there to run social experiments designed by inept sociologists like they do now.

Seriously? Eugenics? When has that ever been moral. Or ever worked? On what basis would they get paid?

You get paid £1000 to get voluntarily sterilized. The goal is to reduce the number of people who operate in the impulsive short term and would rather have a grand now than kids later. In other words the potential low IQ persons, drug addicts, criminals. India already does this BTW. It's the most humane way to get rid of surplus (or useless) populations.

No, basically your replacing the current, albeit broken system, with no system at all. All for one and all for me. We would be back to the days of workhouses, children in factories and mines. Anyone that wants that is inhuman.

Well the only way it works NOW is by shifting the sweatshops and workhouses to the THIRD WORLD. How is that any more humanitarian?? And even with that slave labour we still run a massive deficit and massive consumer debt, which is a roundabout way of saying "let my grandkids work in a sweatshop".

It would be replacing inefficient debt funded ponzi schemes and graft with an efficient capital funded private enterprises. People would have jobs to do, surplus people would be sterilized.

 

[Jokester]

Yawn...

The value of the labour is always more than the wages (otherwise they wouldn't pay somebody to do it) - keep up.

So, wait your arguing that rich people are bad for not paying market value, but instead should just not give people jobs? I do seem to be having trouble keeping up with that one.

Demand creates jobs..., not the rich... I take it economics isn't your strong point?.

If there is no investment there is no demand as there is no product!

Do you really think the banks loan the money that the rich put into the account? - is that really how you think it works?.

Ultimately? It's everyones money rattling about the banking system that, via the fractional system is being loaned out. Just the rich are responisble for more of that money than you or me.

I never suggested such a thing, nice straw man argument.

Even purchasing a Sony TV from a shop in the UK is contributing towards the UK economy.

It's isn't a straw man argument - consumer spending does not benefit the UK economy 100% because purchasing foreign goods is ultimately not that great for the UK economy - given that we're now one of the most, if not the most, consumer indebted nation in the world due to our consumer spending on foreign produced goods and services. This is a flow of money out of the UK - we actually need foreign investment into the UK to counter act this.

Best argument ever, you should debate for a living.

Ah the old delete the actual argument and not provide a counter agrument trick. I suggest that you don't debate for a living

Please explain how somebody who is putting cash under the bed is extracting labour/goods or materials from the economy without putting anything back (being a parasite).

This should be good for a laugh.

It reduces money supply, ok in a tiny way, but it sucks money out of the economy. What would happen to the economy if everyone took their money out of the banks and stuck it under their beds? I wouldn't be laughing that's for sure.

 

[Nitefly]

You haven't really explained how. It's an issue of equal treatment under the law, so how is it fair to tax one person's earnings differently from another?

This isn't to say you can't have a progressive marginal rate and fair taxation, but stepped bands can never be fair as they violate the idea of equal treatment under the law based on arbitrary distinctions (in this case, earnings, but if it helps to get the idea, substitute another arbitrary factor such as gender, race, religion if you prefer).

I haven't explained my views at all up until this point, you are quite correct

Ultimately, there are three intertwining principles here that come into play here. Fairness, justice and necessity. On face value you could say that taxing people at different rates is unfair because 'everyone should be treated the same' (a pretty solid definition of 'fair' if there ever was one). But then, not every person has the same opportunities as everyone else, whether that be education, family support, or whatever else. Is that fair? Also, some people also work hard and contribute to society yet do no receive a high wage - is that fair either?

It's pretty clear that few things are life are truly 'fair', but there are things that can justify deviations from 'pure fairness'. For example, if we had a scenario whereby those on higher wages are paying less tax AND those that are earning low amounts (and society as a whole) are suffering as a result, that inequality would be viewed to some (including myself) as a social injustice. In reality, is is necessary for those that earn more to pay proportionately more tax [per pound earned] because otherwise this would could disproportional unfairness to those on lower wages (assuming we have threshold for a decent standard of living and a standard of society we wish to maintain). Ultimately, it is less burdensome and thus less unfair on those with higher wages to pay more tax than the alternatives.

From another point of view, you could argue that it is already truly fair. Everyone that earns a set amount will always be taxed the same. Everyone has an opportunity to earn a wage of any amount, yet they will always be taxed the same amount as an equal earner. Everyone can (within reason) choose their profession and a person can choose a profession that has a higher or lower wage. They will always be taxed the same as the people in the same boat as them.

I am more of an advocate of the former argument, but I think the latter holds some marginal weight.

That's what I think anyway

 

[D.P.]

I haven't explained my views at all up until this point, you are quite correct

Ultimately, there are three intertwining principles here that come into play here. Fairness, justice and necessity. On face value you could say that taxing people at different rates is unfair because 'everyone should be treated the same' (a pretty solid definition of 'fair' if there ever was one). But then, not every person has the same opportunities as everyone else, whether that be education, family support, or whatever else. Is that fair? Also, some people also work hard and contribute to society yet do no receive a high wage - is that fair either?

It's pretty clear that few things are life are truly 'fair', but there are things that can justify deviations from 'pure fairness'. For example, if we had a scenario whereby those on higher wages are paying less tax AND those that are earning low amounts (and society as a whole) are suffering as a result, that inequality would be viewed to some (including myself) as a social injustice. In reality, is is necessary for those that earn more to pay proportionately more tax because otherwise this would could disproportional unfairness to those on lower wages (assuming we have threshold for a decent standard of living and a standard of society we wish to maintain). Ultimately, it is less burdensome and thus less unfair on those with higher wages to pay more tax than the alternatives.

From another point of view, you could argue that it is already truly fair. Everyone that earns a set amount will always be taxed the same. Everyone has an opportunity to earn a wage of any amount, yet they will always be taxed the same amount as an equal earner. Everyone can (within reason) choose their profession and a person can choose a profession that has a higher or lower wage. They will always be taxed the same as the people in the same boat as them.

I am more of an advocate of the former argument, but I think the latter holds some marginal weight.

That's what I think anyway

In reality, is is necessary for those that earn more to pay proportionately more tax

I agree, and this is exactly what happens with a flat-rate tax system. People that earn income beyond a tax-free threshold pay proportionally more tax, in fact the increase in taxation is in direction proportion to the increase in income in linear and monotonic fashion.

 

[Nitefly]

Proportionately more tax per pound earned (I've edited the above).

This was really this key part of my post.

Ultimately, it is less burdensome and thus less unfair on those with higher wages to pay more tax than the alternatives.

 

[kwerk]

It reduces money supply, ok in a tiny way, but it sucks money out of the economy. What would happen to the economy if everyone took their money out of the banks and stuck it under their beds? I wouldn't be laughing that's for sure.

Interest rates would sky rocket and everyone would start making loans again.

 

[Dolph]

I haven't explained my views at all up until this point, you are quite correct

Ultimately, there are three intertwining principles here that come into play here. Fairness, justice and necessity. On face value you could say that taxing people at different rates is unfair because 'everyone should be treated the same' (a pretty solid definition of 'fair' if there ever was one). But then, not every person has the same opportunities as everyone else, whether that be education, family support, or whatever else. Is that fair? Also, some people also work hard and contribute to society yet do no receive a high wage - is that fair either?

It's pretty clear that few things are life are truly 'fair', but there are things that can justify deviations from 'pure fairness'. For example, if we had a scenario whereby those on higher wages are paying less tax AND those that are earning low amounts (and society as a whole) are suffering as a result, that inequality would be viewed to some (including myself) as a social injustice. In reality, is is necessary for those that earn more to pay proportionately more tax [per pound earned] because otherwise this would could disproportional unfairness to those on lower wages (assuming we have threshold for a decent standard of living and a standard of society we wish to maintain). Ultimately, it is less burdensome and thus less unfair on those with higher wages to pay more tax than the alternatives.

From another point of view, you could argue that it is already truly fair. Everyone that earns a set amount will always be taxed the same. Everyone has an opportunity to earn a wage of any amount, yet they will always be taxed the same amount as an equal earner. Everyone can (within reason) choose their profession and a person can choose a profession that has a higher or lower wage. They will always be taxed the same as the people in the same boat as them.

I am more of an advocate of the former argument, but I think the latter holds some marginal weight.

That's what I think anyway

See, the problem is, to achieve the first justification does not require stepped tax bands, you can have a progressive marginal rate without it as per the NIT system i support.

The second I just plain disagree with, it is a variant of the thinking behind 'separate but equal' which is a concept I have never agreed with.

In summary though, the issue is not a disagreement of purpose, but one of implementation. I agree with the first set of logic as to who should pay a higher effective rate, I just disagree that you need stepped bands and unfair treatment to make it happen.

 

[edscdk]

I see, so you think that the British Government is corrupt and by association all military personnel that follow that Government (which they actually don't as they are bound by domestic and international law rather than being the mindless slaves of the government, they in fact serve the country, not the government) are also corrupt....?

not corrupt, we are genetically programmed to follow, millions of years of evolution have crafted us to follow a leader / leaders... It may not have been a defence at neremberg but if our perceived authority figure / figures / power tells us to kill will probably will.....

 

[Nitefly]

In summary though, the issue is not a disagreement of purpose, but one of implementation. I agree with the first set of logic as to who should pay a higher effective rate, I just disagree that you need stepped bands and unfair treatment to make it happen.

If there was another alternative that I believe would achieve the same ends with equal to greater fairness and social justice in comparison with the current model, then of course I wouldn't be opposed to it. On face value, I find it hard to imagine such a proposal that takes account of the alledged 'unfairness against higher earners' that wouldn't pass a greater burden on the lower and middle classes, who already have less disposable income than the higher earners as it is.

If anything, it seems clear to me that it is the middle earners (£50-120k) that face the most 'unfairness' overall in the current system and probably any other system, including a flat rate (assuming there is a relatively large personal allowance).

 

[wildman]

i wasnt aware the unemployed pay tax (apart from VAT). i dont think you get the question

a flat tax is unfair as i dont think the people who earn millions should pay the same rate as those on min wage or low wages

How do you work that out ? A flat rate of 20% for arguments sake means someone on 20K a year pays 1/5th of their salary in taxation, someone on 200K pays 1/5th of their salary. The person on lower wage should get say the first 10K as exempt meaning they ony pay 1/5th of 10K, The person on 200K should get no exmetpion meaning they pay 40K tak while the 20K a year guy pays 2K tax. I see nothing wrong with a system like that

remember that this recession has been caused by greedy millionaires getting the poor to take out credit they couldnt afford.

That is garbage an you know it. These so called 'poor' were not held at gunpoint and amde to take out mortgages that leveraged them to the hilt or credit cards. They did it because they made a lifestyle choice which was way out of their means. The whole idea of living to your means is something that has been forgotten by everyone in the mad rush for semi detatched houses with 50 inch plasma Televisions and the latest in Gucci and D&G fashion items. So get of you moral high horse pretending that these people were forced to do anything. Its called free choice and they made a bad one.

i think its fair that the people who benefit the most from a capitalist society should pay the most tax too. they reap the biggest rewards.

From where I sit, I see the benefit ***** getting more benefit from this capitalist society than I do. I pay tax, NI, fuel tax, booze tax, all with money that gets taxed before I get it which I earn from hauling my arse to work in the mornings. These benefit scumbags don't actually pay any of those with their own money, they give nothing to society and take back as much as their filthy chav hands can hold on to.

we all know the wealthy can avoid tax and this has to be stopped. people earning millions paying less than 10% income tax due to loopholes needs stopping now! which wont happen as its all the tory's mates.

Jacking the tax rate up to insane levels to punitively 'punish' the rich will not raise more income as more people will simply offshore themselves. This is just a way for people to express their sentiments of jealousy and rage against those they see as being rich.

we also need to stop the scroungers but you cant blame people who are expected to work all week for maybe £20 more than they get on the dole, which they would lose anyway.

Agreed the benefits system is way to generous, albeit by design of the last Labour administration as a way of keeping them in power by buying the electorate

we need to pay less to the government overall, that way we have more to spend and society benefits.

I'll Agree with this

why should our tax money be spent on aid to pakistan/india when both seem to be getting our outsourced jobs too as well as spending millions on their armies and nuclear weapons programmes? there are lots of areas where we should just say no.

the multi-billion £ war in the middle east hasnt helped anyone here 1 bit. we went over for oil but in that time its doubled in price! another huge waste of cash.

I'll agree with this too. Charity starts at home, and while we have massive economic issues in the Uk we should not be funding some tinpot countries crack pot leaders personal nuclear arsenal.

 

[Amp34]

A person who makes millions from shuffling around money that only exists on paper benefits from our neoliberal, capitalist society far more than a person getting £45 a week.

A person who works 18 hours a day in a high stress job should benefit from society more than someone on benefits personally. One spends a huge amount of their time working hard, the other may spend their time watching TV at home... Stupid example is stupid... Or do you follow the school of thought that everyone that works in an office is lazy and overpaid?...

Almost every private service you can think of relies on public infrastructure. A chauffeur driven car won't go anywhere without a road. Private medical facilities would be nothing but a fancy bed and a DVD player if they didn't have an NHS building to put them in.

Or not. There are plenty of private hospitals that don't use NHS resources and buildings...

The rich are the major beneficiaries of our society. It goes to show how much the corporate media has warped everyone's thinking that they are actually seen as victims of the taxman.

Why do the media always warp everyones minds against the person that posts that rubbish... Media argue both sides, not specifically one side of the argument... From most of the national papers recently it appears to be the other way round most of the time... Angst against bankers, angst against directors, angst against higher rate tax payers in general.

 

[jaybee]

Bringing this thread backup. I just checked the allowances for higher rate tax payers over the last few years and now for the tax year we are about to enter:

Higher rate 40% income tax payer bands:

2009-2010 = £37,400+
2010-2011 = £37,400 - £150,000
2011-2012 = £35,001 - £150,000 (6.9% year on year reduction)
2012-2013 = £34,371 - £150,000 (1.8% year on year reduction)
2013-2014 = £32,011 - £150,000 (7.4% year on year reduction)

I don't think this is fair country wide. Someone earning £32,000 in say a poor Northen town you might consider a high earner and hence worthy of said higher rate tax. Somebody earning £32,000 in London. That's not a high earner. Above average perhaps but no way a high earner. Why should people that have worked hard and got a good wage, be taxed the same as someone earning £150,000? The answer is they shouldn't be, because it's not fair. Each year this higher earning tax rate is likely to eat into more peoples wages as the allowance gets cut and cut.
(I do understand that policing differentiating tax allowances for where you are "based" at work in a country is impossible).

People don't say it for fun. In this country it really does pay to be at rich or at the extreme end of earning well, or Poor (leeching benefits as a lifestyle choice). Average Joe's and people that work and get by, are the ones "paying" the most. We are paying in every ounce we put into earn more and to further our careers. We spend years working hard to gain that extra salary pay, only to be congratulated with higher tax rates when we get there.

Should we pay more tax, the more we earn? Possibly yes, but not with such a generic and outdated higher rate allowance. It should be heavily tiered and broken down more, so that people earning £150,000 should obviously pay a higher rate than someone who earns £32,000. Massive difference. Or, frankly why can we not all pay the same rate of tax? The very nature of a percentage rate will bring more tax in for higher earners so why do we need to penalize further than that?