[Closed] Removing 50p tax rate - seems to be a BBC campaign

What's the point of being rich if you can't change the world to suit yourself?

Not that I'd know 😥

EDIT: if it turned out that (say) the 20% tax rate was damaging the UK economy and more revenue would be raised if it were reduced, I wonder how much these people would be talking about it?

When the 20 economists signed their letter the other day

What is going on?

Ask yourself a question - "who benefits"?

In the film, All the Presidents Men, the whistleblower - deep throat - kept urging Bob and Carl to "follow the money"
The answers lies at the end of the money trail

Loads of people at the BBC pay the 50% rate. Hmmmmm......

the 50p rate - which affects about 310,000 people -

The only reason that it 'only' affects 310,000 people is that all the rest have already 'managed' their tax exposure...

And tbh its more about the fact that the government is taking half of what you earn - and more if you add in NI - come to think of it, at 40% you almost pay that too...

And tbh its more about the fact that the government is taking half of what you earn -

Good article in the Guardian by Simon Jenkins, Hardly renowned for his leftie tendencies

[url= http://www.guardian.co.uk/commentisfree/2011/sep/08/tax-winners-trickle-up-economy?INTCMP=SRCH ]our trickle-up economy[/url]
A good quote

[i]Whenever 20 economists put their name to a letter it is a near certainty that nonsense is being perpetrated.[/i]

I personally would be perfectly happy with this if it weren't for the fact that I instinctively distrust everything that George Osborne says or does.

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pearoast:
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I would rather all the folk who complain about paying their 50% rate would **** off to another country and take their selfish attitudes with them, WE DONT NEED YOU.

PS, someone here: http://somebeans.blogspot.com/2010/10/yields-from-income-tax.html

has taken the tax clalc thing on a step and dug out UK income distribution and hence tax yield:

[img] ?imgmax=400[/img]
[img] ?imgmax=400[/img]

Thanks binners - good article.

Stoner,

You seem to have forgotten to apply the effect of a good tax accountant to your effective income tax curve.

(obviously it only makes a difference to the right hand end)

The 50p tax’s sole purpose is to hurt a few people and fuel class warfare. Even those on low incomes who will never pay the tax will be worse off because of it. It is also a myth to believe that the “rich” do not pay much or enough tax in today’s Britain.

If you don’t believe me, take a look at the facts. There are 29.9m income tax payers (out of a population of 61.8m) who earn at least £7,475. Roughly 727,000 people have an income of at least £100,000 a year. Of these, 369,000 earn £100-150k; 157,000 earn between £150-200k; 158,000 earn £200-500k, 29,000 between £500k-£1m and 14,000 earn a £1m or more.

This implies that 358,000 people earn £150,000 or more; roughly 308,000 of these pay the 50p rate. Some of these will be non-doms, who pay full UK income tax on UK earnings (but also derive earnings from overseas, which are not taxed). These figures do not include capital gains.

A huge share of the tax take and hence of the money used to fund the NHS, schools and welfare is accounted for by a tiny minority on high incomes. The top one per cent of taxpayers (roughly speaking, those on £150k and above) will pay a record 27.7 per cent of the total income tax take in 2011-12, according to HMRC (they earned 12.6 per cent of total income, down from 13.4 per cent five years ago). This has increased from 26.6 per cent the previous year, 21.3 per cent in 1999-2000, 14 per cent in 1986-87 and 11 per cent in 1981-2. History tells us that cuts to the top rate actually increase the share of tax paid for by the rich; there was no need for Gordon Brown’s raid.

Another astonishing statistic is that the 14,000 people on £1m a year or more will pay £14.2bn in income tax this year. They will contribute almost as much to the exchequer as the total paid by the 13.93m people earning up to £20,000 a year, who will fork out £14.9bn. Those on £1m or more now pay 45.5 per cent of their income in income tax, up from 35.7 per cent in 2008-09 (they also pay national insurance).

'only' affects 310,000 people is that all the rest have already 'managed' their tax exposure...

Loads of people at the BBC pay the 50% rate. Hmmmmm......

bollocks....

mashie

take a look at the facts.

This implies...

See any problem here?

You seem to be forgetting that most rich people put great wadges of cash into their pensions and don't pay any tax on it untill later life. Or that they transfer wealth into their spouse's name or they invest it offshore etc etc. All things that lower level tax payers don't have the chance to do because they need their wages to pay the bills.

Right place you miss my point, I am merely supporting my argument for abolishon of the 50p tax because taxing the rich more is to the detriment of the wider economy

My view (as someone who doesn't currently pay the top rate) is that it's a pointless propaganda exercise left over from Labour. Raises a minuscule amount of extra money and simply serves to piss off the people, who as a proportion of the population, contribute the most.

A far more effective strategy would be to go after the people who "manage" their taxes so well they pay nothing. Who cares if some of them leave the country? We're not losing anything - I imagine their expertise in their particular field is not unique - and we stand to gain a lot. This isn't going to happen, and this, I suspect, is the direct result of too many people who do it having their fingers in the Conservative pie.

The reclaimed money could be used to abolish the 10p tax rate, which has to be one of the most unfair taxes we've ever had, something which deliberately penalises the poorest members of society. I'd be quite happy to see the threshold at which [i]I[/i] pay tax reduced in order to get rid of the 10p rate. Bloody Tories and their policies against the poor- oh, wait a minute... 😉

The proposal to abolish the 50% rate is usually supported by the concept of the trickle down effect of wealth.

Unfortunately it's quite apparent that these high earners have been focused on at plugging this trickle down and ensuring that they get richer a damn site faster the the general public. My experience over the past 10 years has moved me from a pro market view to a view that capitalism is unsustainable and currently broken.

I'm trying to remember these figures off the top of my head, but whilst average wage has gone up 29% in the past 10 years, CEO level wages have risen 183% and the value returned to the actual owners (shareholders/pension funds) of companies has fallen. For this reason we can't just look at what happened in the 80's and assume the same will happen without some other drastic measures taken to reign in this manipulation of the market from the top.

Abolish the 50% rate if you want. IMHO it's time to cap remuneration for all employees including the Exec levels of companies to a multiple of what their average employee earns. Huge profits should be reserved for those that risk only their own money (i.e. real entrepreurs) and should not be for those risking other peoples money.

Well then, lets see the "facts" that you mentioned then.

The longer this government is is power the more they begin to resemble nazis.

The total income tax paid by the STW forum members is [in the scheme of thing] minuscule
It is stifling the growth in shiny bike parts economy

Let's abolish all income tax for us for the good of the country

Billions of pounds raised by this tax. what contorted logic says that lower paid people must have wages cut but higher paid people need their taxes cut.

Top tax rate will raise [b]£12.6bn[/b] more in revenue, official figures reveal

Government's own projections favour 50p tax rate for highest earners as pressure mounts on George Osborne to scrap it

http://www.guardian.co.uk/money/2011/sep/07/top-tax-rate-george-osborne

I don't pay 50% tax, and am unlikely to! But I still think its not a great idea. The people that do usually employ a reasonable number of people, are often business owners probably paying corporation tax too, but will also be getting good tax advice so avoiding as much as possible. e.g. if you don't actually need the cash then putting it in a pension avoids the tax and guarantees future security... ...nice for those at the top, although I can certainly see that incentives for investing, and supporting the UK economy are worthwhile. I don't think that many will up sticks and move overseas but I can certainly see that some who are overseas at the moment will choose not to come here, and those who are already here will be looking for "loopholes" which actually end up moving a large proportion of their tax outside the UK system.

To me the bigger issue is the 40% rate. It applies at a level where many people do encounter it. They aren't the "super rich" they are just professionals doing OK in their career. When they move over the threshold of £43k (ish) suddenly increased salary makes sod all difference as half the money goes in tax/ni. What incentive is their for someone on 40k to move up the career progression to 50k when they will barely notice the change in take home pay. Worse still a household can earn more money, and get tax incentives (child care vouchers) if both parents go out and work full time earning say £25k per annum than if one works earning £50k... that is screwed up and a total disincentive for people who might aspire to try and build the businesses of tomorrow etc...

40 % tax rate are a small minority of top earners. It is 40% not 50% as NI has a ceiling

why should the poor have less money and the rich more?

Is 12 billion not worth having?

Personally I'm more concernd with the current positionning of the 40% tax threshold, or rather the way it is applied unfairly to different households, i.e. one earner on £43k starts paying the 40% rate whilst next door with two earners on £ 42k don't.

Same but even more pressing issue for households with a single income of £ 20000 vs two wage eaners on £ 10k each.

I get the impression the 50% tax was never about revenue and still isn't. It's a political tool being used by the two main parties to win votes in the name of "fairness".

what contorted logic says that lower paid people must have wages cut but higher paid people need their taxes cut.

TJ - I appreciate from the NHS thread that economics might not be your strongest subject, but you need to separate the issues here. The logic, far from being contorted, is actually the very basic economic concept of elasticity of supply. Ask yourself, why did New Labour not change the marginal tax rate bands at the start of their time in power. Because even they understood basic economics - at least for a while.

The logic around cutting higher rates of tax lies in the well documented (OECD etc) high labour elasticity of supply that exists among higher earners. So when tax rates fall, the share of revenue generated by top earners rises substantially. You 'normally' ask for evidence to support points so apart from the OECD I would point you to the UK experience in the late 1980's when top rate of tax was cut from 60% to 40%. This change created a large rise in revenues - hence New Labour kept this when they came into power.

This is the 'logic' that you talk about. You may address from a different moral argument - but even then the conclusion may not be what you think 😉

[i]40 % tax rate are a small minority of top earners[/i]

Eh?

And where did that 'gem' come from?

'Normal' people pay it now you know.

@mashiehood - excellent post sir. People don't like the uncomfortable truth, which is why your post will likely be ignored or derided unfortunately.

@poly - also agree with you wholeheartedly on the 40% issue - the threshold is set way too low in my opinion.

@tandemjeremy - ?

Personally I'd like to see these progressive tax rates abolished and introduce a flat rate across the board on all earnings, with punitive punishment for evasion and the abolishment of the laws that allow multimillionaires to pay little or no tax in this country.

For those that are frothing at the gash with their TAX THE RICH!!! loonybin politics, read and digest [url= http://www.sidesofmarch.com/index.php/archive/2011/04/25/beer-and-taxes/ ]The Tenth Man[/url] if it's too difficult for you to understand why taxing the wealthy at a punitive rate is not a good idea.

BR - its 10% of the top earners only pay 40% ie a small minority

Teamhurtmore - well the treasury believe the 50% rate will bring in 12 billion. There is no evidence for tax cutting increasing revenue, quite the opposite.

Poly - are you insane?

What incentive is their for someone on 40k to move up the career progression to 50k when they will barely notice the change in take home pay.

The insentive (by your very own maths) is a net increase in take home pay of about £5k. An extra £100 a week, that's a decent bottle of red every night if nothing else.

I would point you to the UK experience in the late 1980's when top rate of tax was cut from 60% to 40%. This change created a large rise in revenues

Obvioulsy nothing else happened during this period [ economic boom for example increasing GDP ]that affected tax revenues - I mean footballers for example did not get higher wages so ended up paying more tax as a result for example and would off course have left the country if they tax rate had stayed at 60%.
Odd you dont want to discuss early Thatcher when they did the same - cut taxes *...Why is that exactly? Surely the stats hold up then as well? Was the country not awash with increased money during this - why ever not if the theory is so robust. Your argument is rathe rrosey and cherry picked if you are as well versed in economics as you suggest.

TBH the economics can be used either way and it is just down to your morality . Some folk think it is unfair to tax people who earn 150K + per year and others think that this is a fairly sizeable earning which means they can afford the extra burden . However much we tax them they wont be poor. Personally I believe that tax should be used to redistribute wealth/income as I am certain the wealthy wont give it up without legislative action.

* i say cut taxes when obviously I mean reduce direct taxes to the rich and increase the burden on the poor by say reducing income tax and increasing VAT. Can you imagine a tory govt doing that again whilst growth plummets and unemployment grows

TJ,

Not sure who that was directed at. NI is not completely capped - so someone paying 40% tax is actually paying 42% including NI. Someone paying 50% is paying 52%. Also when you get to £100k income the personal allowance starts to get reduced (and the way it works you pay the higher rate on the reduced amount).

Is it ok to tax people beacuase they are a small minority? That strikes me as populist politics rather than logic: The masses will like this because we sting the "fat cats" and the "fat cats" can't really do anything about it because there are only a few of them...

However looking at stoner's graph above it looks like there is more than a "small minority" on 40% tax (taxable pay above £35k). At a rough guess I'd say its 20% of tax payers.

I'm not suggesting you get rid of a 40% rate. I'd even introduce a 30% rate for "mid earners" (someone on £35k ish - whilst I'm sure there will be plenty on here who would disagree, they are the people (and there are lots of them) who the current tax system seems to favour most. Especially if there are two in one household).

Poly - are you insane?

What incentive is their for someone on 40k to move up the career progression to 50k when they will barely notice the change in take home pay.

The insentive (by your very own maths) is a net increase in take home pay of about £5k. An extra £100 a week, that's a decent bottle of red every night if nothing else.

Not really insane. If I managed to get to the next level in my company my working hours and stress levels would increase significantly. Getting 60% of the increase in salary will not make a big enough positive difference in my lifestyle to make up for the loss of personal time promotion would involve. If I was to take home 80% of the increase I might think differently.

If I managed to get to the next level in my company my working hours and stress levels would increase significantly.

I'm going to have to ask for a paycut!

I don't personally believe that people are motivated by salary alone, moreover are not motivated purely by their take home pay.
I work in a global company which employs people from across the globe in it's head office within the UK. These are people paying the highest rate of tax who would actually be better off staying in their home countries... they still come here for their careers though!

Is it ok to tax people beacuase they are a small minority?

That's what people thought when higher rate tax was introduced as only the super rich paid it. In 1974 only 750,000 people paid it. Currently there are 4 million paying higher rate because incomes have risen faster than the threshold. People should be very cautious when agreeing with any new tax because it may just affect the super rich now but they could well find themselves paying it in the future.

If Osborne is serious about stimulating the economy he needs to cut taxes for all of us. However he would then need to cut public spending even more.

When people quote Mandelson saying. I'm intensely relaxed about people getting filthy rich" They usually don't give the full quote which ends- "as long as they pay their taxes" Problem is they didn't even when the highest rate was 40%. They find ways to avoid it. Get rid of the 50% rate- even the 40% rate but close off all the loop holes so millionaires actually pay the same % as the rest of us.

Right place you miss my point, I am merely supporting my argument for abolishon of the 50p tax because taxing the rich more is to the detriment of the wider economy

I'd keep it because it p*sses a number of people off, but its a point of principle, those who earn that kind of money will always end up taking home more in the end than those who are getting a real kick in the gonads for others economic mistakes.

Repeat tory mantra: we are ALL in this together. 🙄

I would also point out that that ditching the 50% at a time when the Government is withdrawing the 175 million a year it spends on subsidising half price coach travel for pensioners and the disabled may be seen as the wrong people being punished for others mistakes. But of course people who support the abolishion of the tax rate don't give a monkeys about that because Subsidies is Socialism and it doesn't affect them.

Everything thats happening in this country and beyond has to completely and utterly serve capitalism, and stuff that isn't currently such as the NHS will soon be privatised in one form or another.

I find it completely laughable that those defending these "high earners" to come and save them by offering a lower tax rate, when its these high earners that have continuously driven down the terms and conditions of everyone else. Serfdom is back.

I think there is a difference between wage and making money.

People will who make serious money and who create wealth and jobs (rather than footballers, celebs e.t.c who just earn a large amount) will mainly be making money on big deals which will be subject to capital gains tax. Their money they make that is subject to income tax is more spending money. That is of course if they pay any tax at all.

[i]I would also point out that that ditching the 50% at a time when the Government is withdrawing the 175 million a year it spends on subsidising half price coach travel for pensioners and the disabled may be seen as the wrong people being punished for others mistakes.[/i]

Most of the pensioners I know don't need the subsidy, along with their winter fuel allowances. Maybe better if taxes were actually spent where needed, rather than just spent.

The 50% tax was a clever bit of politics brought in in the dying days of the last government. Was never about raising substantial revenues, was all about setting a nice elephant trap for the Tories who would have to justify cutting it in the middle of a tough recovery......and here we are.

If it isnt raising extra money and is hurting the general economy then sure, get rid of it. Problem is it's very difficult to justify and presents Labour with an open goal. Me I'd be happy to see a whole bunch more of the low paid taken out of income tax all together by raising the 20% threshold. Do that at the same time as you reform benefits (by letting people coming off benefits and into work keep most of their state support for a while, ie the IDS plan) and we really are making work pay. Thats good for everyone, those folk at the bottom are the ones most likely to spend the extra money in their pay packets......people on over £150k will often just pay down the mortgage.

I like this government and want it to succeed. They need a full term to get NHS, education and welfare reforms through, I dont want a quick tax cut thats presents any chance of Ed Balls becoming Chancellor. Do those things first, cut taxes for the working poor and then cut the top rate in a couple of years, say to 45%.

+1 Mcboo. Osborne and Cameron have given Binky Balls an open goal. The rest of your post is spot as well.

Do those things first, cut taxes for the working poor and then cut the top rate in a couple of years, say to 45%.

It is a fair point to say that Lab set them up though especially saying it was temp. At some point it will be withdrawn but timing will be very difficult for them.
Politically it would be naive in the extreme to reduce it whilst everyone was feeling the pinch [ cuts, reduced growth , deficit level etc ] and the slogan is we are all in this together.

* I agree with trying to remove the poorest from taxation via a large personal allowance with quite high rates beyond that.

Someone suggested a mid-range tax of 30% for people earning 35k-ish.

Assuming one person earns 35k and their partner around 10k.

A combined income of less than the national average for two people but getting taxed harder?

Anyway, why does George Osbourne look like a corpse?

grantus poor example as tax is based on the individual rather than done as "households".
Currently child benefit is a very good example of this.

There is [b]no evidence[/b] for tax cutting increasing revenue, quite the opposite.

Mega-yawn. TJ, do you always fall back on this tactic?

OECD, Oxford Economic Papers (try around 1991) for starters. They have data from real experience of cutting tax rates in the UK and not pure modelling assumptions. The evidence is very real and clear.Then go to an economics textbook and look up elasticity of supply. It really is very simple and logical.

Better still, get your mtb and do something more interesting.

you like the government and you think they might do this - cut taxes for the poor first .. it highly unlikely a tory govt will do this to say the least*.

Well I have news for you chap. Raising the base rate threshold was part of the coalition agreement and was in the first budget. Lets have more of the same.

http://www.bbc.co.uk/news/10378577

Don't be a hater.

jonb - Member
I get the impression the 50% tax was never about revenue and still isn't. It's a political tool being used by the two main parties to win votes in the name of "fairness".

mcboo - Member
The 50% tax was a clever bit of politics brought in in the dying days of the last government. Was never about raising substantial revenues, was all about setting a nice elephant trap for the Tories who would have to justify cutting it in the middle of a tough recovery......and here we are.

I agree with these sentiments, I also think it increases wage inflation at the top as these guy's are savvy and will just argue their take home is going down, or like certain union leaders divert pay into the pension scheme.

I do agree that executive pay needs to be put in the spotlight, the FD and CEO of my company got bonuses for "performance" which they could have in no way influenced due to time served <3 mths. Coming up with a viable model to do it is the hard part.

When the top tax rate was 95% the rich had soemthing to moan about. At 50% I just don't see the problem. "To be fair, a tax system must be progressive", one of my economics lecturers.

But Edukator - you need to ask yourself whether a higher tax rate really is progressive. In the 1980's when tax rates were cut two interesting thing happened - (1) revenues went up and (2) the % of revenues coming from higher earners also went up.

Plus if you take HK now with its very low personal rate of tax, the highest earners pay a much larger percentage of revenues that they do in this country where the rate of tax is significantly higher.

So we have the one of the worst rates of tax in the world (TJ source KPMG) and we have lower percentage of high earners/total revenue than other countries. Our tax system doesn't work in progressive terms. That only happens when benefits are taken into account - and that surely is a poorly designed system? (TJ source ONS)

As Alistair Darling, the former chancellor, acknowledged yesterday: "In the long run you have got to keep your tax rates internationally competitive, which means something like the two rates we used to have."

So the last Labour Chancellor would like the rate dropped sometime, just not yet.

Anyway back to the OP - no this is not a BBC campaign. Why do you think an organisation widely believed to be too left wing by the Tories would do that? Or the Guardian who also covered it a lot.

punative (aka "progressive" ) tax rates increase tax avoidance as their is a greater incentive to avoid paying it. this ia aided by having a tax system as complex as ours.

Personally I think we should be trying to make tax accountants redundant rather than boosting their income

Why is it only with very rich tax avoiders do we think we should alter the law rather than increase enforcement/close loopholes? Should we increase speed limits and stop enforcing it because lots of people speed? legalise drugs? Prostitution? Gangs?
Saying people actively avoid tax and then using this as an argument to reduce tax is an odd argument. Why would these people still not reduce their burden doing the same stuff? Seems clear their moral conscious and responsibility to society is unlikely to be changed by a reduction. It would seem more logical to assume people avoid tax , if they can, whatever the rate.

Mega-yawn. TJ, do you always fall back on this tactic?

In the 1980's when tax rates were cut two interesting thing happened - (1) revenues went up and (2) the % of revenues coming from higher earners also went up.

and we have lower percentage of high earners/total revenue than other countries.

The problem is finding a truly progressive system to evaluate and see if it really does have the desired results.

As it stands it's the poor that pay the highest proportion of their earnings in tax when you consider all the different ways people are taxed. VAT, community charge, NI, income taxes, Tv licence, tax disc... .

I pay the higher tax rate, I'm happy to, I consider that it's my social obligation. For years when I didn't earn as much I always said the rich should pay more tax, so it would now be hypocritical of me to try and avoid paying it as I've had my money's worth out of the nhs alone.

As Edukator points out, the poor pay a higher proportion of their income in taxes than the better off, I can still live very nicely thank you and pay, so why the hell should I get out of paying tax by judicious use of an accountant?, so I don't bother...... which family and friends consider to be a bit daft to be fair.

I've forgotten what my original point was now and where i was going with it dammit........

Thank you for your contribution to social justice, krieger. If only the super rich with their trusts in the Bahalmas, their tax-exempt forestry, their Swiss bank accounts and their mates in government that vote the measures that mean they pay almost no tax thought like you..

Ta very much, I like living in this country,so I'm quite happy to pay my way, Still can't remember what my original bloody point was though.....I think you may have just made it for me.

In an ideal world income tax would not exist, instead VAT is where the revenue should come from. However we do not live in an ideal world, and i I don't see if you start reducing tax rates why not start at the bottom? which benefits everyone anyway....

For tadeuszkrieger

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So you're in favour of the tax that hurts the poor most replacing income tax, wrapan. I assume ypu are earning over £100 000 p.a. and are worth several million so you personally benefit from the system you propose.

Hmm, now, sorry, but I'm having difficulty remembering... Just who was it that scrapped the reduced 10p tax rate, and therefore increased taxation for the lowest earners...

Slipped my mind I'm afraid... any ideas anyone? I'm guessing it must have been the evil Tories, right ❓

Slipped my mind I'm afraid... any ideas anyone? I'm guessing it must have been the evil Tories, right

You are entirely correct that the previous Government were evil tories as well. Give yourself a gold star.

Oh, and the BBC, royal charter, answers to a government that is in the pockets of the super rich (and has been for years). What do you expect them to say?

FFS Junkyard - this is a mtb forum not an economic one. So excuse me for not quoting [b]every[/b] period of economic history here.

Let me start however by agreeing with you - you make valid general points about causation versus correlation, fair enough. And in this case, the real analysis is indeed complicated by the multiple factors involved and created a lot of debate among professional economists. So let me now argue from a position of trying to prove something and let my simply say that is is false that raising tax rates necessarily leads to either higher revenue or higher earners paying a higher proportion of overall tax revenues.

You are right that I quoted the 1980s because it suited my argument but my starting point was actually (1) that it was the most contemporary example and (2) I could remember the figures from when I studied economic history. You quote the Thatcher tax cuts - I do not know the actual revenue figures (sorry!!) but I do know that between 1981 and 1988 the % of tax revenues paid by the top 1% went up from 11% to 18%. Not as dramatic as the later cuts but the direction was the same.

Ditto, the Reagan years. The IRS analysis concluded from this period that "tax payments and the burden of the tax burden borne by the top 1% climbed sharply."

On the final point, yes I can answer that but let me throw the question back. The UK has one of the most penal rates of tax in the western world - ranked 83 out of the 86 economies studied by KPMG. Do we have one of the most equitable distributions of income (pre-benefits)?

Funny that, KPMG, a company that specialises in advising it's clients on how to pay the least tax claims Briatain has penal tax rates. But fails to mention that those using its sevices successfully manage to use the Britaish tax system to pay virtually no tax.

The problem is that a 50% tax on earnings over £150k is a relative drop in the ocean compared to the monies lost on the 10% tax band for low earners. There's a lot more of them than there are millionaires, see?

But income tax is only part of the tax burden as any fule kno and the very well off aren't going to suffer as much hardship resulting from things like VAT and Fuel Duty as those on lower incomes.

In 2007, 50p out of every £1 spent in Britain found it's way back to the treasury before the end of the year.

I don't know what my point is here, or where I'm going with these statistics other than to say that the supposed "trickle down" effect from the wealthy has proved to be utter bunk in terms of lower / middle class social mobility so I don't see why they shouldn't pay 50% on earnings over and above £150k which is frankly and obscene amount of money to earn anyway when the average salary is £25k.

So there.

You quote the Thatcher tax cuts - I do not know the actual revenue figures (sorry!!) but I do know that between 1981 and 1988 the % of tax revenues paid by the top 1% went up from 11% to 18%. Not as dramatic as the later cuts but the direction was the same.

The UK has one of the most penal rates of tax in the western world - ranked 83 out of the 86 economies studied by KPMG. Do we have one of the most equitable distributions of income (pre-benefits)?

kpmc- could you say which study - there are thousands there - quick google never heard of them and I would prefer to read before commenting. It might be tomorrow before i comment if you post a link as I suspect it is complicated.
the use of the word penal is interesting - how do you work out how much a tax system punishes you?

You started quite aggressively yet argued quite reasonably ...this is not the STW way 😉

Ok enough of the aggro (sorry!) Junkyard (and Edukator), but let's keep it real. I only quote KPMG data, the 'penal' bit was me. But lets not get too "conspiracy theory" here. All KPMG was supplying was ACTUAL tax rates - where better to go than a global auditor? No apologies there.

In this case I simply equated penal with high. Nothing more. No comment on types of tax and which are more penal and to whom 😉

As I said before, the whole debate comes down the the labour elasticity of supply and, as always, economists will argue to 'til the cows come home about the shape of the curve - as long as it suits their point!! We will not solve that here. But it is an interesting topic to argue "quite reasonably"!!! 😉

But it is interesting to note that in the US and the UK parties of all political pursuasion have "tended" 😉 to come back to a point of accepting that high rates of tax solve very little. Even JFK!

[i]i am not surprised the very rich prospered under a tory govt whilst the rest of us got shafted.[/i]

The very rich have prospered (benefitted from the tax regimes) under every government since the 70s, and everyone (including the rich) suffered under the high inflation that preceeded.

Labour/tory isn't the question, Junkyard, New Labour allowed the very rich to avoid paying tax (whilst increasding taxes that hit the poorest) more successfully than Thatcher ever did.

Junkyard - one final come back on point two.

Please go to the ONS website and read their analysis about income inequality in the UK. Please note the periods when income inequality worsens in the UK and when it gets better/stabilises (you dont need to go back hundreds of years :wink:) Then "correlate" (sorry, bad pun) with the party in power. It's quite illuminating.

Labour/tory isn't the question, Junkyard, New Labour allowed the very rich to avoid paying tax (whilst increasding taxes that hit the poorest) more successfully than Thatcher ever did.

This is very true. The statistics for social mobility bear this out. The top 10% earners are experiencing an average increase in wealth of 8 times that of the middle earning bracket which has been more or less moribund since the 1980s.

Those born in to low to middle earning families are less likely to improve their standard of living than their Victoria era equivalents.

95% was a very high tax rate and counter productive. 40-50% is not. "trop d'impot tue l'impot" (too much tax kills tax revenue) is true. It's a question of where you place "too much". That is a comparative thing.

While Holland allows musicians to pay very little tax, Switzerland has a system based on property values and various island are tax havens, there will always be tax refugies. In most cases I would argue they are "good riddance to bad rubbish" - the mony they take with them would only have festered in a off-shore trust if they'd stayed..

Basically everyone is saying that anyone who earns more than them should be taxed more, right

But RJ, everyone who earns more than me [i]does[/i] pay more tax than me. No?

That may sound self-contradictory, but it's the proportion of taxation to wealth and social mobility that's more of an issue don't you think?

Who said social mobility was a good thing? We all need people to serve us in Mcdonalds and clean our cars, for this we need the plebs, no? Or do you want your bin man to be earning 50k a year with an Oxbridge degree?

Let's take the current trend of social mobility across the upper, middle and lower income households.

Upper income households have the highest rate of social mobility of all. Even in these so called hard times, the top 10% of earners are still getting richer at the rate of 14% per annum.

Middle income households are experiencing nearly stagnant growth overall, which has remained this way since the early 1980s.

Lower income households income growth is lowest of all, eight times less than that of middle income homes.

Remember, this is solely by income... Is this fair? Tell me what you think. And what about the economic ramifications of stagnant growth for the majority of households?