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America was most prosperous in the 60’s, when the top rate of income tax was 91%. That’s where I’d start.
Meaningless with out context.
Interesting discussion. I don’t think that there is that much more tax that governments will be prepared to squeeze out of higher and additional rate PAYE tax payers. Well except slowly reducing the point where tax bands start. Over the last few years the government has been able to get more tax back from self employed (IR35 rules and corporation tax).
So where to look to get back more tax? Yes maybe change rules on Trusts and other tax avoidance strategies. However let’s all remember that avoidance and evasion are very different. One is illegal and one isn’t.
I’d like to see more money paid for HMRC to clamp down on evasion. But government has to change laws to reduce avoidance schemes and I don’t see this government doing this. Especially corporate tax avoidance schemes.
As people have said indirect taxation and NI hits the poorest hardest and raising taxes
would be beneficial to removing VAT on more basic items and removing NI from the those struggling most.
Unearned income and gains should be taxed at least as highly as earned income, rather than treated highly preferentially as at present. Work hard and earn a good salary? Thanks, that'll be 45% plus NIC. Sit on your arse and watch your investments rise? Have an additional 12k annual allowance tax free, and tax is only 20-28% on the excess.
Inheritance is a huge source of inequality and should be more heavily taxed. No-one needs a million quid tax free in their 50s or 60s, especially as the vast majority of recipients of such large sums are already rich home-owners. A lifetime allowance for recipients of maybe 50k tax-free with any excess taxed at 50% would leave the large majority unaffected anyway and it's not like the super-rich have any need for the money which was mostly made on the back of the housing boom rather than through any particularly worthy actions.
As a further plus, it might encourage people to sell "the family house" so that someone else can live in it, rather than holding it as a vacant store of wealth that gets used twice a year and hollows out villages and towns around the country.
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
Wrong again. They line up exactly. At £50,270 your tax and NI goes from 20%+12% to 40% + 2%.
Pretty good thread this, lots of interesting issues.
I'd recommend watching some of Gary Stephenson's videos on how inequality is growing and subsidies to the wealthy.
I think my main thought is that lots of Western countries, certainly the UK and USA, are becoming more and more feudal - the way to have a high income is to own and rent seek rather than work.
This means being born rich will become more and more the means to becoming rich, whereas during the capitalist era it was only one of many ways.
Prior to capitalism amassing wealth was all about gaining, through fair means, or foul, lots of land and stuff. You can see it today with property, patents, copyrights, even domain names.
Who owns my music, Spotify. Who owns my movies, Amazon, Netflix, Disney. Who owns my flat, Natwest (for the next 30 years).
Vulture capitalism, Neo-feudalism, the Predator state, call it what you will.
Think about the covid bailouts.The government generated money, via the BoE, borrowed it, gave it to businesses, and now I have to pay off this national debt.. . It's a transfer of wealth from earners to owners.
Wrong again. They line up exactly. At £50,270 your tax and NI goes from 20%+12% to 40% + 2%.
Used to
Try reading rather than jumping in.
Used to
Try reading rather than jumping in
Should have quoted this
NI is a tax and has an upper limit so one you go over the upper limit for NI your taxrate goes down
As for used to -when was that? A quick Google suggests that in 2000 it was the same amount (other than a couple of hundred pounds, as one is a weekly rate and the other annual)
Also quite tricky as Norway has found, they upped their wealth tax by a tiny amount and all their billionaires decided to emigrate….
Not necessarily a bad thing though...
You what. Doesn’t sound like any definition of Median that I’ve seen
Perhaps not but it's mostly about perception of very large numbers.
If we randomly take an event happened "yesterday" in geologic time such as the evolution of hominids then something like the age range of homo naledi some 335,000–236,000 years ago sounds like a long time. Stick that on a linear scale from say 4.7Ga to today on a 1m long piece of paper and the 0.07mm wide line is practically invisible... assuming you find something to write with.
Now take something almost as recent .. lets take the UK downs and explain how the alpine orogeny uplifted these... but uplifted what? Even the chalk is recent in geological terms and now you're explaining how it was deposited in a shallow sea and yes where you are standing was under the sea "even longer ago than when the downs were thrown up".
To most people this is all "just a very long time ago", they see homo naledi as perhaps coexisting with non avian dinosaurs or if you say "no after that" then immediately after.. different things all occur at different rates and mechanisms...
These are the sorts of numbers we are looking at for wealth... but most importantly the mechanisms all change.
Your average citizen might scrape form week to week or month to month .. they don't buy and sell companies to asset strip.
if you do it by median share of the pot
Doesn’t sound like any definition of Median that I’ve seen
It's exactly how ... its defined from a sample.
That sample has to be defined...
The median density of "rocks" or "carbonates" or "limestones" or "sedimentary limestones, excluding pure evaporites" or sedimentary limestones <5% Mg ... or <1% Fe and are we including pore space or not?
If you want to extend that to permeability then RELATIVE to WHAT?
Median – the middle number, i.e. in a population of ~40million working people, what does the 20millionth person earn.
What do you mean by "working person" ?
What do you mean by "earn"?
(It’s from the ONS/IFS (I was just googling for a figure).
Or what do the ONS mean?
Take someone who wakes up in the IOM, fly's on a private jet (owned by a company they are the sole shareholder for) after being driven to the airport by a driver in a car (paid by the company) and does some deals in Manchester offices (owned by their company) with their food and everything all paid by their company.. before flying back so they are not sleeping in the UK and the next morning flying to Zurich where they transfer to their mountain lodge (owned by another company they own 100%) for 2 weeks ski-ing...
How would you/HMRC/ONS even determine "what they earn" ???
What I mean is the money they "spend" for "stuff" is not income like a normal person.
They aren't spending money they paid income tax on... the £1M or whatever they pay a year for someone to ensure they pay the absolute minimum of tax is probably less than they are declaring as their "income".
Take someone who wakes up in the IOM, fly’s on a private jet (owned by a company they are the sole shareholder for) after being driven to the airport by a driver in a car (paid by the company) and does some deals in Manchester offices (owned by their company) with their food and everything all paid by their company.. before flying back so they are not sleeping in the UK and the next morning flying to Zurich where they transfer to their mountain lodge (owned by another company they own 100%) for 2 weeks ski-ing…
How would you/HMRC/ONS even determine “what they earn” ???
What I mean is the money they “spend” for “stuff” is not income like a normal person.
They aren’t spending money they paid income tax on… the £1M or whatever they pay a year for someone to ensure they pay the absolute minimum of tax is probably less than they are declaring as their “income”.
Because none of that has any impact at all on the median.
Of working age people, 3.7% are Unemployed, and 21% are Economically inactive (i.e. unemployed but not looking for work). That's millions of people.
There are ~20,000 earing >£1million/year
And <20 billionaires
Your statement was
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
Which is factually incorrect by two to three orders of magnitude. Primarily because you've fundamentally misunderstood what a median is and how distribution shapes affect it's relationship to the mode and mean. The greatest reason to consider a median is because it automatically rules out edge cases like those 20 billionaires and millions of unemployed.
Whatever criteria you pick and choose the 'average' always comes out somewhere around £25k-£35k. Because the number of people on six figure salaries or who own obscene levels of wealth are miniscule by comparison.
Income tax
Straight percentage for income by any means. No NI. Capital gains or inheritance over 100k can be spread over 2years.
Personal allowance - 10k
Basic (25%) 10k to 50k
High (50%) 50k to 150k
Additional (60%) over 150k
Example: Bob earns 40k per year (10k tax free and pays 25% on 30k). He has 10k income from property and pays 25% on this. He inherits 200k and pays 50% on this by spreading the income over 2 years.
Bill is unemployed and inherits 100k. He pays 25% tax on this by spreading over 2 years
Ben earns 150k a year. He sells a property for 200k, gets a dividend for 20k and inherits 800k. He has to 60% on all this additional income.
Consumption Tax (VAT) for goods based on harm done. No VAT for services. Figures for illustration.
Petrol/Diesel - 60%
Alcohol/Tobacco - 50%
Plastic Tat / single use - 40%
Sugary processed foods - 30%
Current reduced rate and goods wholly produced within UK - 5%
Council tax - re value houses and make more progressive.
Wildly complicated, and impossibly simple.
Tax is hard, because there are always outliers and exceptions
Fuel, for instance. There is an argument that the cost of running the roads should be borne by fuel duty.
you want a big fat polluting truck, then you pay more purely by the fact that it uses more fuel.
Except there are people who are driving big fat trucks BECAUSE they dont do any miles, and thats how they afford it.
Similarly, If you put HGVs in the same situation, haulage costs would rocket.
Many people buy those pickups named after condoms because they are written off against business expense and they can claim the tax back.
And then you have red fuel for agriculture. Thats a tax avoidance.
a mnimum wage worker is forced to drive to work, where as a well off middle manager or consultant can "work from home".
you end up penalising people you didnt intent to. And there is always some clever dick playing the system to wiggle out of it.
What is simple is the "world" should agree to start holding the "mega corps" to account!
Amazon (for example, but it could be any other), pay the minimum they can get away with. Their staff are paid so low they get propped up by the tax payer benefits.
Their health deteriortates due to long hours or over work required to get by and when they are ill who pays to support them?
who builds the roads they move their goods around on?
The problem is that they are using loopholes left open by politicians who are paid to leave them open, or who leave them open for their own benefits.
ive lost my train of thought.
Heads on spikes. Its the only way.
Primarily because you’ve fundamentally misunderstood what a median is and how distribution shapes affect it’s relationship to the mode and mean.
try rereading what I wrote.
I'm talking about "the pot" not the people.. if you will then each earnings is a big bag of coins laid out and put in bins.
It's pretty meaningless to take each persons earnings without binning as £39,999.99, £40,000.00 and £40,000.01 are all different numbers.
Simply bin each band say £0-£1M and £1M to £2M up to £99,999M to £100,000M+ etc. and line all the bins up in order
Now take the middle bin... (50M) .. do it again and do it every 100k, 10k. Your median value will change with the bin range.
Of working age people, 3.7% are Unemployed, and 21% are Economically inactive (i.e. unemployed but not looking for work). That’s millions of people.
Yes but they sit in the lowest value bin and don't have much to tax anyway...
There are ~20,000 earing >£1million/year
And <20 billionaires
Where is that plucked from and what does "earning" mean in that context?
Do you think people with £100M income declare it as such or the money they spend is classed as "earnings"?
To you and me earnings is money that comes in that you get taxed on and can then buy "stuff" with.
To someone with £100M "income" is money that wasn't spent and hidden away they may have to pay tax on or in business terms its petty cash. This is what I mean by in that context.
If you want to buy some new wheels you earn money.. pay tax and buy wheels..
If say Simon Cowell (semi random) wants some new wheels he probably pays out of his petty cash BUT if he wants a new Lear Jet or Helicopter or Rolls Royce one of his companies will buy it.. thus reducing profits and hence corp tax (assuming the company is UK based) , he will use it and depreciate it.... and his company will replace it with something else.
A quick google and Irish Times article claims
Simon Cowell
The music tycoon is the sole shareholder of two British Virgin Islands (BVI) companies called Southstreet Limited, set up in February 2007, and Eaststreet Limited, set up in October 2007. The companies were set up at a time when Cowell was planning to purchase two plots of land in Barbados, where he holidays most years.
That's a celeb ... most of us have heard of but then how many other people essentially make tens and hundreds of millions we never heard of and manage their wealth invisibly through offshore companies so their wealth is never "income"??
how many other people essentially make tens and hundreds of millions we never heard of and manage their wealth invisibly through offshore companies so their wealth is never “income”??
Fairly irrelevant as they can live anywhere (taking their assets with them) and if you attempt to tax them at anything other than a very modest rate, they just move elsewhere....
Where is that plucked from and what does “earning” mean in that context?
Even lowering the nominal threshold to £0.5million makes it the top 0.1%
There simply aren't that many people in the country earning seven figure salaries* that messing around with their taxes specifically can make a difference to the overall tax take, 50% of half a million, of 0.1% of the adult population is a lot, but it's only a few tens of billions, not even enough to run a large government department!
Compared to the 'above average' demographic earning £50k-ish paying ~£15k-ish tax and made up of ~20million people (which back of an envelope maths tells us is nearer £300billion).
*incomes, earnings, however you want to define it.
That’s a celeb … most of us have heard of but then how many other people essentially make tens and hundreds of millions we never heard of and manage their wealth invisibly through offshore companies so their wealth is never “income”??
And lives in LA, and registers in a tax haven.
Simply bin each band say £0-£1M and £1M to £2M up to £99,999M to £100,000M+ etc. and line all the bins up in order
Now take the middle bin… (50M) .. do it again and do it every 100k, 10k. Your median value will change with the bin range.
What in the arbitrary nonsense does that tell you then?
What in the arbitrary nonsense does that tell you then?
That statistics can be made to support or not support any narrative?
You make a circular case to some extent firstly on "incomes" but then on what is meant to be measured.
If we start with this hypothetical pot and how much of that pot can be taken in taxes and used for the common good then you can start with the people or you can start with the pot.
Starting with the pot just makes more sense for the above goal and then drives how the data is binned.
There simply aren’t that many people in the country earning seven figure salaries* that messing around with their taxes specifically can make a difference to the overall tax take, 50% of half a million, of 0.1% of the adult population is a lot, but it’s only a few tens of billions, not even enough to run a large government department!
*incomes, earnings, however you want to define it.
This last part is the important part... the entire idea of a salary or income becomes increasingly irrelevant as net worth increases. Despite being in court for financial irregularity Trump flew to New York.. stayed in Trump Towers etc. with a presumably expensive legal team.
Do you think he paid a single cent of that trip out of his "salary" or "declared income"?
Have a dig, see if you can find his personal income (as declared to the IRS)...
When every major cost in your life is paid for by a corporation that pays less tax the more it spends and you can pay a team of people to run it ... the entire idea of "an income" is meaningless. Especially when one part of your organisation is selling services to another part..
So going back to how many people have 7 figure incomes... it completely depends how you calculate or define income.
If you were to say people who have £1M a year they can spend and it gets magically replenished there are far more than people who have £1M taxable income... move that to £10M and the gap increases etc.
Just wikipedia and to illustrate the difference in "income" that is declared as income and not.. and how UK/US is different to Norway.
Trump
From his television show The Apprentice, as well as subsequent related licensing and endorsements, Trump received $427.4 million from the show's beginning in 2004 through 2018.
Due largely to income received from the show, he paid a combined $70.1 million in federal taxes in 2005, 2006, and 2007. He paid no taxes in 2008. When he filed taxes in 2009, he declared over $700 million in business losses and, on that basis, he asked for a refund of his federal income taxes paid in 2005–2007. He was eventually refunded the $70.1 million plus over $2.7 million in interest. As of 2020, auditors are still considering the matter. If he is asked to return that federal refund, then, considering added interest and penalties, he may owe over $100 million to the federal government.
The New York Times said: "He also received $21.2 million in state and local refunds, which often piggyback on federal filings," and he may be obligated to return those refunds, too.[24]
So he got a "income/salary" from the show... this he then should have paid tax on but he magically got to declare $700M in losses .. because he is a company/corporation.
So back to tax-reform.... or first what are these people actually bringing to the country? If they all left tomorrow who cares, they aren't paying any tax worth counting or doing anything useful.
And lives in LA, and registers in a tax haven.
again then who cares if he leaves ??? Like Trump he's simply a drain on the economy. Unlike the golgofrinchan telephone sanitisers they don't even do anything useful and a great deal of what they do is actively negative.
So lets take good ole Simon .. if someone remakes one of those reality shows (are they still going?) and he signs a contract with a UK company then it's personal money and personal tax.
Surely its win:win for the country? If he doesn't then nothing is lost and surely some other loser celeb will eventually take the job and pay personal tax on it .. if he does then he gets taxed as personal income with no offsets or losses just like the rest of us.
Same goes for wealthy investers etc. ... sure give some money/investment then get taxed as personal tax. It's either a company in all senses in which case the investor doesn't get a personal jet etc. without paying for it as a taxable benefit or not. If they don't want to pay tax on earning don't invest... they won't be missed.
This is the "pot" I was referring to... there is the small pot that people who pay income tax pay into and the big pot of corporations. A good share of that big pot is not real corporations but shells for people like Trump/Simon etc.