Tax reform discussion thread

£1m a year in shares?

Shares, stocks or financial equities in general?
When do you impose the tax? On a specific day when equity values may be low (or high)?
How much fuel is a necessity to avoid VAT? Do I have to drive two minutes to the shops, do I need my CH at 25C?

Forget taxes, let's reform water supplies, energy supplies, farming subsidies, etc.

My 2p worth is that income tax and NI should not exist until earnings of £100k a year. 

I'm assuming you yourself are under that threshold? 😀

VAT shouldn’t exist on anything classed as a necessity. 

Jaffa cake anyone?

My 2p worth is that income tax and NI should not exist until earnings of £100k. At that point a rate of 51% income tax comes in 

This threshold is way,way too high and setting such a threshold is massively open to abuse. You wouldn't see many salaries of 100,001 would you because it would become 49000.49. That's why tax needs to be graduated.

One assumes it would be 51% of everything over 100k?

I’m not qualified

Apparently…

One assumes it would be 51% of everything over 100k?

Maybe that's what the op meant but it wasn't clear.

Either way it's still too high a threshold.

When do you impose the tax? On a specific day when equity values may be low (or high)?

They said "sold", not owned.

Agree with equalising treatment of incomes and a standardised rate.

UBI is also worth a look
https://en.wikipedia.org/wiki/Universal_basic_income#:~:text=Universal%20basic%20income%20(UBI)%20is,independently%20of%20any%20other%20income.

VAT-wise, you've pretty much just described how it actually worked in the UK between 1976-1979:
https://en.wikipedia.org/wiki/Value-added_tax_in_the_United_Kingdom

But there are also a myriad of other taxes too, such as Fuel Duty, Council Tax (which contributes a very low percentage of the actual Council spending) - needs a wholesale revamp IMO.

My utopia would be worldwide taxation system where every single bank transaction had a flat rate if tax applied and then the tax paid from the bank to the country where the "spender" is registered. When I say bank, I also include any crypto currency clearing house. I'd also apply a flat tax based on you property values.

Completely unworkable I know, but the only way I can see of making sure everyone and every company pays tax. There is an old adage about the richer you are, the less you pay tax as you can afford "creative accounting". That wouldn't apply here as, unless you leave your wealth alone and never spend any of it  you'd be paying tax.

Investing in equities carries risk which has been the arguement for lower capital gains tax compared to income. We want to encourage investment in productive activities.

I'd say the current system is too complex. It costs a lot to administer (government, people, companies) and is open to abuse.

The idea of a universal basic income is one that I'm curious about. It would also tidy up the benefits system.

It's not a situation to be resolved easily. One step would be a discussion around how we spend public money. Politicians promise lower taxes and better public service when that just isn't possible. But when there is a large collective pool of money how do you ensure it is handled responsibly and we agree where it needs to go (nurses vs. my local pub landlords new PPE company).

Some discussion around what wealthy is may also be worthwhile. 100k is a lot of money to earn. What's the median these days, around £35k? But then it's not just about personal income, it's about social care, transport networks, medical facilities, education etc.

Do we need to talk about how we use tax to influence behaviour as well. Outside of income it is added to activities we'd like to discourage as a society - sugar taxes, alcohol, smoking, fuel use etc.

Jaffa cake anyone?

That deserves more recognition than it got.

Tax avoidance makes for good headlines as it makes people pissed about the rich, however if only 2% of people earn over 100k (and those folks already pay 45% tax) there is nowhere near enough money there to pay for everything in the country with an extra 6% tax. You'd probably be dropping the countries tax take by 75%

The reason tax/ni kicks in at a low level is because paying a small amount of tax engages people in politics/makes them feel like they are contributing to society

What's the rationale for separating NI from income tax?

They said “sold”, not owned

They said both...

£1m a year in shares? £510k tax to be paid. Sold those same shares for a £1m profit? Another £510k tax to be paid

...or that's how I read it. Loophole there straight away 🙂

Left wing populism as bad as right wing populism.

That deserves more recognition than it got.

Why thank you. 😀

They should probably concentrate on wealth and self employment taxation, actual employee tax generally appears to bear the brunt of any “great” ideas and who already appear to be taxed quite well.

I seem to recall Malaysia(?) has their entire tax legislation down to 200 pages, ours is 20,000 and counting.

From my tiny corner of the Dark Side, we have way too much badly written legislation, with way too many (intentional?) loopholes, an entire industry built around exploiting the loopholes in and out of the legal system, and a national attitude that thinks "beating" the tax system is a good thing, rather than a loss to public services.

The fact that "we" collect just over 95% of taxes due amazes me. The fact that the government has refused to provide details of what resources HMRC needs to meet it's compliance goals, despite evidence that every £1 spent generates £18 in tax take, tells you where their focus is.

My tax reform proposal:
Section 1 -
1.0 Rule#1 applies and has precedent over any other consideration

Investing in equities carries risk which has been the argument for lower capital gains tax compared to income. We want to encourage investment in productive activities.

Asset ownership and investment are not the same thing, even though the language around it try to convince us otherwise.

MCTD:
I have very considerable doubts over that 95% figure of tax due being collected. My experienced perspective suggests we miss a great deal higher proportion than the carefully massaged figures that are reported currently.

However, respect sir, I salute your attempt to apply common sense to a system that will never contain significant common sense in our lifetimes.
Now, I'm off to see whether there are any 'cakes' lurking in the biscuit tin...

this is useful background

https://ifs.org.uk/taxlab/taxlab-key-questions/where-does-government-get-its-money

@Spin bravo.

Tax avoidence and evasion costs the country far more than benefits cheating - but we put10X the effort into chasing benefits cheats

Each person chasing benefit cheats brings far less money back than their salaries, each person chasing tax cheats brings in far more than their salaries

Income tax is only a small amount of the natins total tax take but making the starting point £100 000 is way too high.  so few folk have incomes that high

the worst anomaly is that at the highest incomes they pay a lower % in tax because of the NI cuttoff

Personally I would see income tax become a smaller part of the total tax take but move to carbon taxation

Tax avoidance makes for good headlines as it makes people pissed about the rich, however if only 2% of people earn over 100k (and those folks already pay 45% tax) there is nowhere near enough money there to pay for everything in the country with an extra 6% tax. You’d probably be dropping the countries tax take by 75%

Not if that 2% have 90% of the wealth.

This is where we have to discuss what tax is really for, government spending and the economic growth it drives is really paid for by "quantitative easing" taxation distributes the wealth created throughout society. The current tax system is allowing that 2% to horde all the money.

I do think 100k is too high, however I do think raising the personal tax allowance to say 25k could be part of a series of policies to start a fairer distribution of wealth. Much fairer than trussenomics attempt to redistribute even more up the wealth pyramid.

I’ll give that some thought once I’ve paid the 26.5% fractional rate for corporation tax before I’ve paid myself a penny.

And after that the tax on dividends goes up to 40% and is also subject to the loss of personal allowance - just like employees.

My 2p worth is that income tax and NI should not exist until earnings of £100k a year. At that point a rate of 51% income tax comes in. 

That's a very generous reduction in tax. How will you make up the shortfall you've created?

Income tax itself doesn't need much reforming, just the occasional adjustments that happen anyway.

What does need reforming is the way that unearned income (ie income that does not come from employment) capital gains tax mostly, is taxed at a flat rate, not a progressive rate like PAYE. Therefore, if you are fortunate enough to have earned, or been gifted though previous generations work, such a pile of cash that you can bang some away in investment opportunities (properties, Stocks etc) your tax liability is a lot less.

I'm not a tax accountant, so if I'm wrong, do put me right.

Also, all the other taxes we have, VAT, Duty etc, need a deep review. These taxes are paid the same by everyone, so, in essence are less of a burden for people on higher incomes. I would personally rather pay more in Income tax, but have cheaper stuff in the shops.

Don't get me started on Tax avoidance... The preserve of the rich.

Well played @spin. Can I have a coffee with that.

I couldn't do details - but I do feel we have a very complex tax system, that should be more progressive and simpler across every tax.

Big question - why do we still separate NI and Income Tax? Let's roll them into one.

I'm sure there's more if I scratch my head some.

Is there an example of a more equitable and simpler tax regime elsewhere in the world?

Tax avoidence and evasion costs the country far more than benefits cheating – but we put10X the effort into chasing benefits cheats

The government know that people who have gained a little extra through the benefits system, don't have, and can't afford, expensive lawyers to argue their case...

I'm answering my own question via Googleage.

https://taxfoundation.org/publications/international-tax-competitiveness-index/

I just got my annual tax statement and it tells me my tax was spent like this...

Health (22.8%)
Welfare (20.4%)
State Pensions (11%)
Education (10.5%)
National Debt Interest (7.6%)
Business and Industry (5.4%)
Defence (5.1%)
Transport (4.7%)
Public Order and Safety (4.4%)
Government Administration (2.3%)
Housing and Utilities, like street lighting (1.6%)
Environment (1.5%)
Culture, like sports, libraries, museums (1.3%)
Outstanding payments to the EU (0.7%)
Overseas Aid (0.6%)

I would like to be able to adjust these %s within certain thresholds. Clearly a minimum level on some topics like debt but I would want to tweak Defence down, Education up. Maybe that's just called a democracy where we pretend to choose who runs the country.

Oh and payments to EU, Overseas Aid - come on, that is not what we voted for! Is that where our £350 million a week to the NHS Brexit promise is going? 😉

the worst anomaly is that at the highest incomes they pay a lower % in tax because of the NI cuttoff

The highest incomes pay an effective tax rate of 47% that's higher than any other category excepting the odd 62% band between 100-120k.

You'll never get it right. I think all tax should be fair. To me that means we pay the same or better still acording to our need. But who defines all this? Transport Fuel taxes penalise those who have to drive. Sugar taxes penalise those who want to be fat gits. I would have several VAT levels. 0% for some things, basic foods, maybe ? A bit more for other foods, heating costs etc and a huge amount on luxuries such as virtually all electricals, new cars, take away food, booze and smoking, in fact anything that damages health and thus costs the health service more.
No VAT on basic bikes, stacks on the posh ones.

I think the step from 20% to 40% to 45% should be smoothed out some both by reducing the middle rate and increasing the top rate back up to 50%.

Anyone that avoids tax should be thrown in a pit of hungry tigers and their belongings sold off and the value redistributed where needed.

Anyone that avoids tax

The trouble with that is "avoids" is a wide net. Tax avoidance is any activity that means you pay less tax. A lot of these are intentional - I get childcare vouchers, cycle to work and pay into a pension, should I be punished?

I just got my annual tax statement and it tells me my tax was spent like this…

A nice idea, which will never happen, would be to allow us to decide where our tax is spent. Maybe even just a small fraction, lets say 20% of your tax burden, you get to pick from the list of the country's needs, NHS, Defence, Policing, Benefits etc etc... and allocate that portion of you tax directly to that.

Would send a clear message as to what the nation feels it should spend it's money on, and what we prioritise.

I get childcare vouchers, cycle to work and pay into a pension, should I be punished?

Punished is a very pejorative term.  I just want everyone to pay their taxes fairly.

The highest incomes pay an effective tax rate of 47% that’s higher than any other category excepting the odd 62% band between 100-120k.

Is that really so?  NI is a tax and has an upper limit so one you go over the upper limit for NI your taxrate goes down

Would send a clear message as to what the nation feels it should spend it’s money on, and what we prioritise

It's a nice idea but the trouble is the people who pay the most tax (in absolute amounts) thus control more of government spending, and so you'll likely end up with less being spent on things like services for the poor (as folks with high incomes tend to see less of the impact of that)

OP. I'm moreconcerned about the fact that you put the words " discussion thread" in the title of your discussion thread.

There's going to be DBAs across the country this morning grinding their teeth at the enormity of this transgression.

Sold those same shares for a £1m profit? A

Depends on how long you owned them for. Only a year then fine, owned them for 40 years you return may only be keeping rate with inflation in which case the person would be better off keeping the money in the bank if there is going to be a 51% tax.

Also I think the idea that only over say 100k threshold creates a us and them mentality it's their problem etc. I think the threshold is broadly right a he moment for when tax is paid.

Punished is a very pejorative term. I just want everyone to pay their taxes fairly.

Define fairly there are so many cases where a simple rules seems "fair" then a set of circumstances comes along that hugely and "unfairly" effects a group of scenario. These case are then added or tweaked as an exception. Now the law is more complicated. Now some people take advantage (happens at all levels people taking advantage of exceptions not ment for them). Simple it is not.

The highest incomes pay an effective tax rate of 47% that’s higher than any other category excepting the odd 62% band between 100-120k.

I think you mean marginal, rather than effective.

The effective rates are much lower. Not the group you are talking about but non the less illustrative: Last year I was in the high rate tax band ( or whatever 40% band is called) and paid around 11% tax overall. Which just illustrates how easy it is to avoid tax, even without the help of the highly paid accountants that the actual rich would employ.

I'm in. When do I get back my £30k back from last year? But more importantly why should I get my £30K back?

IMO, we should set the lower limit for income tax at something like 25k, with a minimum income guarantee of what ever 52*40*a living wage is (index linked to higher of RPI/CPI) doing some quick maths, this is around the £21700 mark.

I think NI goes away if there's a guaranteed minimum income as you wouldn't need to prove pension eligibility.

why do we still separate NI and Income Tax? Let’s roll them into one

Especially as it all goes into one pot along with VED, VAT, Insurance Premium Tax etc to pay out for NHS, Defence etc.

Unfortunately, governments have cottoned on to the loophole they can up NI to increase revenue and still claim they haven't put "taxes" up.

When I did my degree, Tax was one of the modules and covered some of the history of UK tax. Pre WWI, most people didn't pay any income tax, it was expanded to pay for the War debt.

I've seen a few articles about land tax. To my untrained (on matters of taxation) this seems like a pretty good idea.

Georgism seems worth further exoloration.

America was most prosperous in the 60’s, when the top rate of income tax was 91%. That’s where I’d start.

Though the problem now is that due to how much smaller the world is, especially from a financial standpoint, every country would have to do the same.

My 2p worth is that income tax and NI should not exist until earnings of £100k a year. At that point a rate of 51% income tax comes in

The problem with this is very few people earn over £100k, definitely not enough to run a country based on 51% of their income over £100k. People on the upper shoulder of the bell curve (i.e. above average but not into the 1% tail) in general seem to vastly underappreciate how well off they are compared to the ~80% below them*. And this give the illusion that actually they're 'middle' and therefore there's a lot of people earning £50k, £60k, £100k etc above them. Presumably it's down to being in a bubble where if you go out for dinner with friends most people probably do have "that one friend who's struggling" and "that one friend with two BMW's on the driveway" which gives the perception that whatever the reality is that you're both average, and that there's sufficient Peters above you to pay the Pauls below you, and you should pay nothing because you don't need to give or take anything. Ultimately it's always going to be that upper shoulder on the curve that collectively pays the most tax overall.

*a problem compounded by the fact that until you hit close to that average you're more likely to be living hand to mouth. Earn just a few percent more and suddenly you have disposable income. Being the 40th percentile makes you substantially better off than someone at ~60%.

I'd like to see an escalating VAT and corporation tax, and more "windfall" taxes. Make VAT on everyday stuff like £10 T-shirts 5%, then make it 30% on luxury equivalents like HebTroCo, the same way we differentiate between bread and chocolate. Make corporation tax 10% for companies with turnovers <£10million or where wages make up more than 50% of turnover, then escalate it to 40% for Starbucks, Apple, Amazon, Facebook, etc, where huge amounts of their 'costs' aren't the staff, it's paying some shell company in the Cayman islands for the right to use the logo or 10x the market rate for their special beans roasted in a tax haven.

And if companies egregiously flout the spirit of the rules, just impose a tax on them specifically. What exactly are Facebook going to do, withdraw their advertising platforms form the UK, starbucks aren't going to stop selling coffee because an arbitrary tax was put on "coffee profits repatriated to the Netherlands"?

I think the chart here explains it fairly well, although the actual figures and rates are slightly out of date (Sep22) the basics are still the same.

Look at the top green element which is take home pay.Over £125k, or between 50k and 100k you take home 58% of your pay, but there are anomalies such as between £100k and £125k where you only take home 38%.

Factor in the cackhanded reclaiming of child benefit that penalises high earners differently depending on how those earnings are divided between a couple, and also think that student loand repayments (which are in effect a tax) have a big impact for some as well, and the tax system is a mess.

My suggestions would be:

- merge NI and Income tax to make it clear that the tax rate over 12k is actually around 32% not 20%. This hasnt been done because people would be in revolt against such a high level of tax...

- sort out some of the cliff edge and bizarre impacts of polciies such as child benefot reclaim etc

- bring in taxation of housegolds, or drop polciies such as child benefit reclaim, student loan eligibility etc that use household income when it suits the government, and individual income elsewhere. I think Frnace taxes at the household for example

- be clear that student loan repayments are a graduate tex. That additional 6% of your income (and an additional 9% for masters and above loans) is just a tax that ends either when the loan is repaid or after a certain number of years.

- something about VAT that doesnt penalise the poorest in sosciety far more than the better off

Punished is a very pejorative term.

If you are the one struggling and have your childcare removed then it's going to feel pejorative just as for example taxing pensioners on benefits like bus passes will feel to them.

I just want everyone to pay their taxes fairly.

Except that is what you feel is fair and there are almost as many definitions of that as the population.

Income tax is only a small amount of the natins total tax take but making the starting point £100 000 is way too high. so few folk have incomes that high

the worst anomaly is that at the highest incomes they pay a lower % in tax because of the NI cuttoff

Tax avoidence and evasion costs the country far more than benefits cheating – but we put10X the effort into chasing benefits cheats

The biggest perceptual problem is people can't appreciate maths and can't tell the difference between someone earning 100k/yr and 10 million+ a year.
100k is a good income but its far closer to 15k/yr than it is to 10 million/yr

Most people on 100k are paying tax (though they may be using schemes for pensions / cycle to work etc) ..

Most people on £10 million+ are spending more per year avoiding tax than a 100k person is paying fairly.
and the same can be said for corporation tax....

Ultimately if we stopped worrying about middle income and instead got those spending more each year than most people earn in a decade on tax avoidance the truss-pie would be a lot bigger.

The real underlying issue/deception is the Truss-Pie isn't a single pie ... the Truss-Pie is the little pie for the little people not the huge pie that only the superrich can eat.

The plebs are instead fighting each other for their tiny slice of the tiny pleb pie... whilst the huge pie for the superrich is just ignored. Hardly surprising that most of our press owners are sticking their snouts into the superrich pie and laughing whilst they stir up the plebs to fight amongst themselves.

The real underlying issue/deception is the Truss-Pie isn’t a single pie … the Truss-Pie is the little pie for the little people not the huge pie that only the superrich can eat.

Reminds me of this...

[url= https://live.staticflickr.com/8246/8654976662_6f349fc6c8_c.jp g" target="_blank">https://live.staticflickr.com/8246/8654976662_6f349fc6c8_c.jp g"/> [/img][/url][url= https://flic.kr/p/ebP22y ]Blame poor people[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr

Ultimately if we stopped worrying about middle income and instead got those spending more each year than most people earn in a decade on tax avoidance the truss-pie would be a lot bigger.

£100 000 a year is not middle income or even anywhere close

Not a very good plan, most on over 100k are earning it using systems outside PAYE, putting that level of tax on shares and so on effectively kills the uk financial market and pushes it to the eu.

It’s as depressing as these emissions zones / clean air payments, it tends to hurt the poorer more, who can’t afford Euro 6 engines or EVs, I see it in our area just outside Bristol with lower paid workers now having to reroute, or bus in for the children’s hospital as they’ve removed that exemption recently

Ultimately if we stopped worrying about middle income and instead got those spending more each year than most people earn in a decade on tax avoidance the truss-pie would be a lot bigger.

Except the number of people earning £10 million is how many?

The number of people earning £1million is somewhere arround 20k. If you taxed them all 51% then you could fund about 7% of the NHS's budget.

Is their taxation "fair", probably not. Is it a distraction from the real conversations we need to have about taxes on more average ammounts, yup.

Median wage is still <£30k, modal wage is <£25k. £100k is so far up the curve that it disappears off the ONS graphs which cut off at 97% as it's taking off.

I think NI goes away if there’s a guaranteed minimum income as you wouldn’t need to prove pension eligibility.

What's to stop me working my whole career in sunny tax free Abu Dhabi before showing up at pension age to claim my UBI?

[edit: should have typed tailing off not taking off]

Apart from the Guardian, which mostly seems to exist to convince the well off that really they're actually struggling on the marginal rate between £100k and £120k, is the same as the struggle to get the minimum wage uplifted by about 30% to an actual living wage.

What’s to stop me working my whole career in sunny tax free Abu Dhabi before showing up at pension age to claim my UBI?

Mostly the fact that if you've spent a lifetime outside the UK and no longer have any ties here, why would you move back?

That and it's a very niche edge case, how many peoples jobs can actually be done remotely from a tax haven?

What’s to stop me working my whole career in sunny tax free Abu Dhabi before showing up at pension age to claim my UBI?

Don't think the UK has a UBI at present, pension wise you'd have to have the stamps, benefits wise you'd have to set yourself up in the UK and have no real savings or the likes, either way you'd be taking a hell of a step down.

Mostly the fact that if you’ve spent a lifetime outside the UK and no longer have any ties here, why would you move back?

The free health care. A lot of people move back as the get older as the health insurance costs rocket.

So the top 481000 people pay one third of all the income tax. The bottom 48 million pay a third too. Sounds like we're already hammering the rich quite hard.

£100 000 a year is not middle income or even anywhere close

Depends how you define middle as ... if you do it by median share of the pot then 100k a year is nowhere near the middle as those earning billions drag it so far off so its more like £2-10 million a year

if you do it by mode on numbers earning it then it's way above...

The question is if you/people want a punitive tax system or a fairly distributed one.

I'm switching from income to wealth just because numbers are easier ... Rishi Sunak has a net worth of $4.3 billion (declared) for example and he's not even really in the superrich category... but that's the same as 4,300 millionaires.

Rishi however would far prefer you concentrate your hatred on the 4300 millionaires and conveniently not distinguish them and stick them all in the same bucket even though he doesn't feed from the same trough.

If you look at the total pie for the UK then over half that pie is a few thousand at most... and that is just by going from declared wealth...

If we switch back to income then it's the same except those on say 100k are mostly PAYE and not hiding income but may take advantage of various schemes whereas Rishi (for example) will gladly pay someone £1M a year to reduce his tax by £10M.

The NHS consultant driving a Porsche and living in a nice house is far more visible to you for example but they are actually feeding from the same pie as you and I, they just have a bigger share of that smaller pie.

What you and most people are missing due to the press owners being superrich is we are fighting over the scraps... there is a far bigger pie but we don't even get to fight over it.
The 100k a year consultant gets upset and the benefits scrounger and the nurse at the consultant... and the superrich look down from their Olympus and see all is well.

So the top 481000 people pay one third of all the income tax. The bottom 48 million pay a third too. Sounds like we’re already hammering the rich quite hard.

No it doesn't, you figure doesn't mention how much wealth they have or earn compared to everyone else. If the bottom 48 million only receive 10% of the wealth generated, they are the group being hammered, with a big ****ing hammer.

So the top 481000 people pay one third of all the income tax. The bottom 48 million pay a third too. Sounds like we’re already hammering the rich quite hard.

Not necessarily 'hammering' them - it doesn't particularly say what proportion of their earnings they are losing and consequently how much they have left. Although it does surprise me that slice contributes as much as it does.

Also - what's the same table but with NI, which is tax by another name. How much do the bottom 2 bands contribute in NI compared to the top 2?

top 481000 income tax payers  pay one third of all the income tax

fixed that for you.

properly rich people are highly unlikely to pay much in the way of income tax. tTeir spending will be mediated through trusts and shell companies which are taxed at a much lower rate (assuming they aren't offshore and zero taxed in the first place)

the interesting thing for me in this is about 1/2 of government revenue comes from income and NI taxes, and about 20% from corporation tax.

To my mind that means there is an awful lot of wealth out there that isn't attracting any tax at all and more and more of it is moving out of reach of traditional tax gathering activities.

<div class="bbp-reply-content">

£100 000 a year is not middle income or even anywhere close

</div>

TJ you are right. But its also nowhere near making someone "wealthy". In most parts of the country you probably couldn't even buy a 3 bed semi (in a nice middle class area, etc, ,etc) on that income. And thats terrifying.

thisisnotaspoon

Except the number of people earning £10 million is how many?

The number of people earning £1million is somewhere arround 20k. If you taxed them all 51% then you could fund about 7% of the NHS’s budget.

Is their taxation “fair”, probably not. Is it a distraction from the real conversations we need to have about taxes on more average ammounts, yup.

Median wage is still <£30k, modal wage is <£25k. £100k is so far up the curve that it disappears off the ONS graphs which cut off at 97% as it’s taking off.

The thing is "income" gets very fuzzy because anyone earning £10M or more is paying a lot of money to specialists to reduce it and a not inconsiderable number in terms of the wealth they represent commute into the UK from places like the IOM so they can sleep outside so they don't even count, their private jet is owned by a company etc.

Just a quick copy/paste to excel... taking the top list
https://en.wikipedia.org/wiki/List_of_British_billionaires_by_net_worth

175.93 Billion from 17 people sounds a lot but when viewed as that wealth is the same as 175,930 millionaires and whereas your 20k figure for £1M income is probably not far off as most people earning that can't afford the top class tax avoidance or truly hide their income

The ability to both hide and divert actual income is largely a matter of the more wealth you have the better you can do it.
(by divert I mean your company owns the jet etc. and you are just taking a dividend but the company is paying for your lifestyle big items)
How reliable these rich lists are is open to questions as most of them it is in their interests to minimise what people know.

Apart from the Guardian, which mostly seems to exist to convince the well off that really they’re actually struggling on the marginal rate between £100k and £120k, is the same as the struggle to get the minimum wage uplifted by about 30% to an actual living wage.

Yet take the DM etc. and its about how benefits sponges are scraping an extra few pounds or some migrant is being given food and shelter ...
The living wage is another example... it's just all of these are from the smaller pot.

Mostly the fact that if you’ve spent a lifetime outside the UK and no longer have any ties here, why would you move back?

Because the UAE basically doesn't allow gästarbeiter to retire there and be a drag. There is a strong push to get rid of foreigners at 60. And it is very expensive to live there. (And rubbish, but that's just my opinion...)

I'm not suggesting there is a huge number of such people - but there are about 250,000 UK citizens living in Dubai alone...

Not necessarily ‘hammering’ them

Agreed.

Was it Marx who said "Receive according to your needs and contribute according to your means" or something like that?

Seems a pretty sensible proposition either way....

Depends how you define middle as … if you do it by median share of the pot then 100k a year is nowhere near the middle as those earning billions drag it so far off so its more like £2-10 million a year

That's not how averages work at all.

Mode - the most common number (this is generally the lowest of the three as the distribution looks slightly more like a wedge than a bell curve)
Median - the middle number, i.e. in a population of ~40million working people, what does the 20millionth person earn.
Mean - add the wages together and divide by the number of people (roughly GDP per capita)

20k figure for £1M income is probably not far off as most people earning that can’t afford the top class tax avoidance or truly hide their income

It's from the ONS/IFS (I was just googling for a figure).

My point was there's a lot of posters on here on very good incomes trying to kid themselves that there's this huge cabal of "others" above them. Yes 17 people having $170 billion between them is obscene, but in the scheme of things you could do a Stalin and disappear them, and only fund the NHS for a year from the proceeds. Taxing them is a great egalitarian idea, but ultimately irrelevant. Especially as you can only tax "wealth" once, then it's gone.

Taxing them is a great egalitarian idea, but ultimately irrelevant. Especially as you can only tax “wealth” once, then it’s gone.

Also quite tricky as Norway has found, they upped their wealth tax by a tiny amount and all their billionaires decided to emigrate....

https://www.theguardian.com/world/2023/apr/10/super-rich-abandoning-norway-at-record-rate-as-wealth-tax-rises-slightly

Was it Marx who said “Receive according to your needs and contribute according to your means” or something like that?

Seems a pretty sensible proposition either way….

Exactly. If people could look at this from the view of what they are taking (after tax) as we are all taking rather than what you are giving via tax.

On the stuff about who pays the most tax - you really need to include indirect taxation such as VAT in that.  From memory when you do then the poorest folk pay the highest % of their income in tax

Lots of dumb ideas in the OP. Assuming your planning on keeping the total tax take the same this

My 2p worth is that income tax and NI should not exist until earnings of £100k a year. At that point a rate of 51% income tax comes in. But to stop avoidance that tax is on everything. £1m a year in shares? £510k tax to be paid. Sold those same shares for a £1m profit? Another £510k tax to be paid.

won't work. I earn well above 100k and assuming that you mean a marginal rate of 51% I would be better off under those rules by several 10s of thousands of pounds.

£1m a year in shares? £510k tax to be paid.

I'm assuming you mean paid those shares rather than just having that value of shares. In which case those are already taxed as income and at that value likely at the maximum marginal rate which is currently 47% (including NI) so little additional would be raised.

Sold those same shares for a £1m profit? Another £510k tax to be paid.

Now treating capital gain as income is certainly something I agree with.

VAT shouldn’t exist on anything classed as a necessity. Fuel, energy, food, water… no taxes. Transport… no tax.

Lots of those are already zero or low rated for VAT. Food, water and public transport is zero rates , energy for household use is 5%. Only petrol/diesel attract high rates of tax.

Income tax is only a small amount of the natins total tax take but making the starting point £100 000 is way too high. so few folk have incomes that high

@tjagain this link would appear to contradict that. Income tax is single biggest source of tax followed by NI then VAT.

https://commonslibrary.parliament.uk/research-briefings/cbp-8513/#:~:text=The%20majority%20of%20receipts%20come,530%20billion%20in%202021%2F22.

Where do you think the majority of tax comes from?

Also this

the worst anomaly is that at the highest incomes they pay a lower % in tax because of the NI cuttoff

is nonsense. There is NO cut off. The marginal rate drops from 12% to 2% making the effective tax rates 32%, 42% and 57%. (ignoring anomalies like reduced tax free allowance and pension charges). My personal average direct taxation rate is around 44%

£100 000 a year is not middle income or even anywhere close

Depends how you define middle as … if you do it by median share of the pot then 100k a year is nowhere near the middle as those earning billions drag it so far off so its more like £2-10 million a year

You what. Doesn't sound like any definition of Median that I've seen

Someone up there ⬆️ (MCTD?) mentioned that only 95% of tax due is actually paid.

I propose that any business (or individual/employee) that, however tangentially, facilitates tax avoidance/evasion, MUST be licensed in the same country as they are providing advice on AND such license costs MUST be sufficiently high to recover a big chunk of that missing 5% tax AND profits on any such activities should be taxed so heavily (separate corporation tax if needed) that the remainder of the missing 5% is recovered.

In other words, reduce the incentives for creative accounting by those who pedal it...

(IANATL)

Feel free to critique!

gonefishing - that totally backs what I said - income tax is only a part of the total tax  take being 1/4 of the total

The marginal rate drops from 12% to 2% making the effective tax rates 32%, 42% and 57%

Eh?  top rate of income tax is 45% plus 2% NI = 47%

57% was typo sorry. It is as you say 47%.

You said income tax was a “small” part. It is the single biggest part and as you say about a quarter. That doesn’t meet my criteria of “small part”.

Fair enough.  1/4 is a small part to me being well less than half

the income tax and NI thesholds did not use to align at all so you actually had a lower marginal rate once you went over the NI top threshold