France budget: Taxes favoured over spending cuts

(76 Posts)
breadandbutterfly Fri 28-Sep-12 19:44:06

www.bbc.co.uk/news/world-europe-19754016

Great to see one country brave enough to tax the rich instead of punishing the poor. smile

CommunistMoon Fri 28-Sep-12 22:23:52

Waving goodbye to 'the Rat-Man' (copyright Alain Badiou) was one of the few high points of 2012.

CogitoErgoSometimes Sat 29-Sep-12 09:07:35

I think you'll find the austerity measures are still pretty stiff, even with some increased taxes in the mix. The article mentions 'a freeze in government spending' on pensions for example. Still, if they go after companies with higher taxes, maybe we'll be able to lure a few of them over here.

niceguy2 Sat 29-Sep-12 09:24:21

Personally I think it's great. The more they tax their rich, the more likely they are to come to the UK and spend here! Viva la France!!!

www.telegraph.co.uk/news/worldnews/europe/france/9404209/Frances-proposed-tax-hikes-spark-exodus-of-wealthy.html

breadandbutterfly Sat 29-Sep-12 09:38:37

I'd be more than happy if we had similar policies here and our super-rich decamped to France or anywhere else. It would mean ordinary people could afford to buy a property in London again, thus improving the quality of life for ordinary people and making our economy much more flexible and competitive.

margerykemp Sat 29-Sep-12 09:49:20

Yes, there isn't trickle down effect of having rich French people in London. We should tax them too.

Clytaemnestra Sat 29-Sep-12 12:22:53

Wasn't it on Question Time the other day, that the richest 1% of the country provide 24% of the tax take?

Not sure it's that economical to get rid of them all if that is the case.

breadandbutterfly Sat 29-Sep-12 19:03:35

Don't know if that figure is true but assuming it is, yoiu have to question whether taxing the super-rich more highly = getting rid of them. And even if they do all flee to lower tax regimes, you have to question whether that is really such a loss - after all, most made their money not through their own hard work, but through others' work, of whioch they have expropriated the gains. Let's take bankers - if every single one involved in high levels in the banking world flees abroad (unlikely) will we really be that worse off? Most CEO jobs could be done as well or better by others who work in the companies. Many of the super-rich eg hedge fund traders etc are just parasites - if they bugger off that's fine by me. Most of these people 'invest' in property in the UK = making it more expensive for ordinary people; they spend most of their wealth on things that don't benefit the UK at all, like yachts and exotic holiday homes and any spare cash is stashed offshore so they don't pay tax on it.The trickle-down theory has long ago been disproved. Plus high inequality in society has been shown to have very detrimental effects on everyone in that society (yes, even those at the top), in terms of societal breakdown, poor physical and mental health etc. I'd rather live somewhere with fewer super-rich or where at least the super-rich there contributed as amply as they were able to.

Clytaemnestra Sat 29-Sep-12 20:02:20

It's not about the trickle down theory, it's about tax take.

Not the most ideal source, but the best I have in 30 seconds searching

The highest-earning 1 per cent of Britons pay almost 30 per cent of all income taxes according to this.

So forget trickle down, forget what they're spending the money on, even forget if they're using every loophole in the book to avoid tax - the tax that they ARE paying accounts for 30% of our total income tax income. Figures in that article say they pay 47 billion. Regardless of what they should be paying, that is what they do pay.

If you got rid of them all (or even half of them) then you have a huge hole in the budget. Either everyone else has to pay more tax, or you have to find another 20 billion plus in cuts. So, in answer to your question, would we be worse off if every single person "involved in high levels in the banking world" moved abroad - yes we would. Considerably. Bonus are taxed. Pay is taxed.

I'm totally in favour of shutting down loopholes. I'm totally in favour of everyone paying their fair share. But I can't believe that paying over half of the money that you earn in tax can be fair. I believe that it's been proved that once tax rates up to a certain level, tax take actually goes down. I just think tax rates should be set with the practical purpose of getting as much money as possible, rather than ideological taxes which end up being couterproductive.

Leithlurker Sat 29-Sep-12 22:34:57

How about we turn the issue on it's head then clytaemnestra. If the 1% did not earn as much and we use a living wage of £7.90 instead of a minimum wage of £6.90 ph. Then more people would pay tax. The one percent would pay less in tax whilst the people who were paying the least now contribute more. I would be all for that.

Clytaemnestra Sat 29-Sep-12 23:13:28

OK, how are we going to do that? Raise the minimum wage and, what, wage capping? I don't think wage capping is any more productive than tax raising past the point of tolerance. If you could earn double/triple/more if you lived in Hong Kong, why stay in the UK? How do you handle business owners who pay themselves in dividends rather than a wage - cap that too?

breadandbutterfly Sat 29-Sep-12 23:21:04

Also, the jobs of those who went abroad would not disappear - I am sure we could find plenty of replacement bankers of quite possibly higher calibre to step up and take on the job - even if they got only 25% of a million quid, say, as a bonus, that would still be quite a good sum in real terms...

So we wouldn't lose the tax take in most cases. Yes, there might be some company owners who moved abroad - but i'm not convinced they all pay tax anyway eg Philip Green. And the missing taxes of those who fled would be more than made up for by the taxes of those who stayed.

I agree on the whole that 75% is higher than you need to go - but 50% definitely isn't (contrary to George Osborne). We need a policy that focuses on increasing what we bring in in taxes and not just cutting spending; in the UK I think that will be as much about closing tax loopholes esp for non-doms as it will be about rises in tax rates per se.

Leithlurker Sun 30-Sep-12 04:41:10

And why not pay capping? Nobody needs an income of a million a year.

And as to your statement about earning more elsewhere then so be it, off they jolly well go then. Hong Kong etc will become swamped with ex british taxpayers.

You seem to be arguing for the status quo apart from being unhappy about all the tax that is being paid, to which I have provided a solution. Many people have now realised the status quo is no longer what we need or want.

So do you have a plan or are you just annoyed cos the plebs pay less tax?

CogitoErgoSometimes Sun 30-Sep-12 09:35:10

"Nobody needs an income of a million a year."

Nobody ever questions these kinds incomes when they are earned by footballers, film actors or 'celebs'. People who, let's face it, contribute very little to the sum total of human existence, have a very short working week and for whom the statement that their "jobs could be done as well or better by others" might have been invented. It's bizarre that the knee-jerk reaction to a CEO of a company employing thousands of people and/or generating millions in profits is to automatically assume they have zero skills, are easily replaced and are simply killing time while raking in the cash. hmm

Leithlurker Sun 30-Sep-12 10:51:03

I would disagree about no one raising the issue of footballers and celebs, many voices have asked over many years why people like simon vowel are paid more than nurses. Or how he can create a string of "new talent" that only serves to sell the idea of money and fame being the goal for young people to aspire to.

Your other point is also somewhat off the mark, I think you will find that people are not saying the ceo's do not work. What they do and how they do it is I am sure appropriate to the industry they work in. What people are saying is that in return for that work they should not be paid massive salaries that seem to reward failure, nor should they get so much that they are being paid an unrealistic wage for basically being a manager. Ceo, of any multinational company will not be taking every decision on their own, will not be dealing with every issue by themselves, will have a huge list of people that they delegate to. So they are being paid to carry the can. Also they should pay a high proportion of tax, if high tax payers want to move and pay less tax somewhere else, then they do that. No one is stopping them. Why should the country come to a halt if Barclys move somewhere else, just because the highest paid staff members want to move the company to another place where they pay less tax?

Leithlurker Sun 30-Sep-12 10:51:52

Cowel obviously

Clytaemnestra Sun 30-Sep-12 13:04:50

I'm saying that I believe in pratical taxation, not utopian idealogical counterproductive taxation.

You don't think it would be a big deal if everyone who earned over 1 million left the country. And if Barclays/HSBC etc buggered off too.

I'm saying it would mean that those high earners would drop the income tax take by 47 billion. Which we'd have to find somewhere else. So, do we tax the hell out of the middle classes to make it up? Cut services? What should we do to fill the hole in business taxes which Barlcays and HSBC pay? We can't just borrow another 47 billion pounds a year and assume it's never going to be paid back.

I believe in pragmatic taxation. That if you do a graph of % of money required to be paid in tax against tax actually taken, it's not a straight line, it's a bell curve, and we should tax at the top of that curve, in order to get the most money in. Because right now, the country needs money, not to shoot itself in the foot.

Incidentally I've said nothing about "plebs", I've said nothing about the lower rates of tax at all in fact, and to wade in assuming that that is my position on things and to throw a few cheap insults at me demeans your argument.

panicnotanymore Sun 30-Sep-12 13:31:46

There is a big assumption out there the big earners are all a useless waste of space screwing the country, avoiding tax and being utterly disposable.

Actually, although a few may be, the majority are extremely driven wealth creators, who bring a huge amount of business (hence tax income) to the UK, employ a lot of people, and pay millions in tax themselves. The are also very mobile as the way business works they can base themselves where ever they want. It would be political suicide to drive them out of the country.

As for house prices in London coming down if they leave - snort. Have a look at how many British resident nationals own the really big houses in London. Not many. We should be going after the non-dom non-resident overseas investors who don't pay UK tax anyway, but do buy up the property.

I earn fk all btw, so have no agenda here. I don't want the rich taxed at 75% though, I want them to stay, employ, spend, drive the recovery. We need them. If we get a few wealthy Parisians over - great. Their skills will be useful, they will bring jobs for the rest of us, spend money in our shops, pay tax on their salaries. Excellent.

Leithlurker Sun 30-Sep-12 15:58:14

So lets be pragmatic then, all the people earning over a milion will not leave the country so stop being disingenuous. A number will choose to leave and what we should have a tax policy to suit them when they are so small a percentage of the population of this country? That certainly taxes us back to feudalism.

Those that go will sell all their assets here so revinue will be raised and tax paid on profits, as well as those who purchase their assets. If they choose not to sell assets they will still be liable for some revenue even if only council tax.

Might have escaped your notice but firms like HSBC et al, are far smaller than they used to be so the number of employees reduced would be comparable to the health service cuts, or cuts in local council staff. They were seen as expendable so why not the thousands of people who are involved in nothing more than customer service, managing other peoples money, speculating on the stock market. Like nurses and ambulance techs, teaching assistants, bin men etc etc they do not actually make anything.

Pragmatically speaking any government would then have to make decisions on trident, spending on building up manufacturing, investing in sme's, stop throwing money at the banks under the guise of quantitative easing.

Pragmatically speaking this version of capitalism is bankrupt, not sustainable, dead parrot gov. So your idea of keeping things as they are to pander to the few who have the highest earnings is anything but bankrupt unless you like your society riven by poverty and need.

CogitoErgoSometimes Sun 30-Sep-12 16:43:57

Earned income is already at 50% for the top 1% of earners and 40% for those on £50k-ish which represents the top 10% of earners. Capital gains tax on the sale of assets & investments is rather lower but could be harmonised. The last time we had more punitive taxes on the very wealthy - the 1970's - quite a few individuals and companies relocated to more friendly climes but that's not the point. To meet the hefty public spending targets and costs of nationalised industries at the time we also had to endure a standard rate of income tax of 30%+ and the whole country ground to an undignified halt. Even in those days 'taxing the rich' didn't generate enough revenue to stop the gap. For spending to remain high, everyone will end up paying the price.

Leithlurker Sun 30-Sep-12 17:12:16

And your point is that we should stay as we are? Or maybe even drop the higher level of taxes? Fine that will go down well with the public I am sure. I heard some whiny assed person harping on that what Milliband should do is stop the banker bashing. Not sure how any one person, never mind a politician is meant to stop the public from bashing the people that they rightly blame for crashing the economy. It was not the poor, they hardly ever get mortgages, or credit cards, or bank loans, pay in to pensions, or hold shares.

Things are not going back to the way they were, you cannot put the genie back in the bottle

niceguy2 Sun 30-Sep-12 17:24:33

Also, the jobs of those who went abroad would not disappear - I am sure we could find plenty of replacement bankers of quite possibly higher calibre to step up and take on the job

What would actually happen is those high earners would move abroad and just do their jobs from there. With modern IT being what it is today a CEO/banker could just as easily work from an office in Luxembourg, Switzerland or even Hong Kong/NYC just as easily as from London. So we'd lose those jobs and more importantly the tax revenues.

And don't forget about the lost opportunities as the multinational's pass us by and set up somewhere else instead.

Like it or not the UK does not exist in a bubble. We compete globally. If our taxes are not competitive then people will either move or not come in the first place.

A number will choose to leave and what we should have a tax policy to suit them when they are so small a percentage of the population of this country?

We need to have a tax policy which suits the country the best. And the reality is that the rich do pay the vast majority of taxes. It's fact. We don't have to like it but that's the way it is. So if you continually tax said rich person who is already paying the lion share then at some point he/she will leave. Easily done when we're in the EU and part of a global economy. The loss of one millionaire will have a big negative impact on our tax revenues. What then? The only option which remains is we then must raise taxes on everyone else to offset the loss.....or make cutbacks.

Clytaemnestra Sun 30-Sep-12 17:26:26

I can't be bothered.
Keep banging the drum love. I'm sure that utopia is just around the corner.

breadandbutterfly Sun 30-Sep-12 17:54:45

If it was the case that high-tax economies always performed poorly whilst low-tax ones were on a sure road to success, could you please explain why Scandinavia, Germany etc are doing so well whilst Ireland, say, is screwed?

Low tax rates for high earners are good for high earners,yes,but there is no evidence they are good for the economy as a whole.

amicissimma Sun 30-Sep-12 18:08:43

The 2011-2012 tax tables (page 2) are an interesting read.

Approx 1/4 of all income tax was paid by just under 300,000 people (1% of tax payers) or just over the number of people Tesco employ directly in the UK. (I doubt they are the same people!)

33,000 people paid 10% of our income tax take. That's 0.1% or one worker in 1000, or just under half the capacity of Old Trafford football stadium.

High earners don't have the same ties to the country as most of us. If their children are at school here they are likely to be boarders. They tend to have properties elsewhere in the world and are used to travelling between them. To avoid UK income tax they simply have to make sure they don't spend 90+ nights here, which is probably a small adjustment. If only 16,500 of these people make that adjustment we have lost 0.5% of our income tax take - over 3/4 million pounds. Let's hope not too many of the rest of the 300,000 decide to join them!

This is only individual income tax. It doesn't take into account the fact that high earners spend more in restaurants, health clubs, shops, hairdressers, on taxis, on cleaners, gardeners, nannies, secretaries, lawyers, accountants etc than the rest of us.

There are also corporation taxes. Much of those tend to be paid by large companies with offices in many places. Somehow a decision has to be made regarding in which country a profit has been made, which is often a matter of paperwork, as in an international transaction it's not necessarily clear-cut. Favourable tax regimes can be a factor. (A point which has not been lost on the Irish.)

niceguy2 is right. The rich pay for us. We don't have to thank them. If we want to, we can resent them. To drive them away would be harder on the poor than it would on the rich.

Xenia Sun 30-Sep-12 18:28:11

Clyt is right. Why would anyone stay if 75% of what they earned was confiscated? I work from a computer. I can do that anywhere. I have property abroad. I don't expect the 75% who depend on me to be kissing my feet because I work very hard and earn a lot and am in the 1% who pay about a third of all this country's income (although a bit of gratitude rather than criticism would be lovely) I would not stay if tax were too high and many others would not.

I do like England but I am not so tied to it I would stay and I am not pretending. I work about 50 weeks a year and often 6 or 7 days a week and have for 30 years and I like my work but I won't do it if I only receive 25% of it or even less when NI if taken off and pension contribution and all the other things I have to cover because I'm not employed never mind childcare costs to come out of the 25% left to me.

My daughter was in London the other night with Frenchmen who are moving here - they are not prepared to pay 75% tax.

When the UK reduced top rate of tax to 40% years ago tax receipts went up. When miore of what y9ou earn goes to the state to spend on wars, pointless foreign aid, the EU and benefit scroungers people either leave or they just work an awful lot less.

Xenia Sun 30-Sep-12 18:29:04
CogitoErgoSometimes Sun 30-Sep-12 18:40:33

" Or maybe even drop the higher level of taxes? "

I've actually long supported the idea of flat rate of tax. Much higher personal allowance followed by a flat rate of 25% (or whatever) that is also replicated by CGT and tax on investments for everyone. Think the disappearance of thresholds would eliminate a lot of the incentives to move money around or hide cash (the way people are doing in order to retain the CB for example) and be far fairer than the current system. If we take a big axe to all the hundreds of exceptions and exemptions that would give specialist tax accountants a lot less work to do and a lot fewer loopholes to exploit.

CogitoErgoSometimes Sun 30-Sep-12 18:42:01

@Xenia your story of exiled Frenchmen in London makes me wonder if there won't be some tax equivalent of the Scarlet Pimpernel in future... rescuing the wealthy aristos from under the noses of the guillotine-wielding socialists. smile

Xenia Sun 30-Sep-12 18:49:14

I think the Frenchmen worked in finance and can work anywhere. London even has its own French MP I think that expats can vote for and there is a French school.

I certainly support a small state and flat tax and zero allowances of any kind as they distort things and make people take decisions based on tax consequences rather than because they are the right decision. We are moving to a £10k a year personal allowance although the downside is lots of [people then will pay no tax so just be net takers from the system and not feel bought into it which is not necessarily a good thing although on balance my preference. Even there if you hvae a family busdiness and say I put all 5 children into it and work them all in it we would have 6 x £10k annual allowance is £60k. Even allowances like that can lead to legal tax avoidance which is a distortion.

amicissimma Sun 30-Sep-12 18:56:38

"If it was the case that high-tax economies always performed poorly whilst low-tax ones were on a sure road to success, could you please explain why Scandinavia, Germany etc are doing so well whilst Ireland, say, is screwed?"

What an interesting question! I've been sniffing about on the internet (huge pile of ironing needs doing!).

I've discovered that it's complicated. The point at which higher rates kick in varies hugely and some countries, such as Sweden, have all sorts of components to their taxes. I've tried to stick to income tax, the top rate. My sources were tax rates.cc and Wikipedia's list of countries by GDP according to the IMF and World Bank.

The 5 richest countries in descending order are:
USA: 35%
China: 45%
India: 31%
Japan: 40%
Germany: 45%

Then, as you mentioned Scandinavia,
Sweden: rank 33(IMF), 32(WB): 57.7%
Norway: 46(IMF), 45(WB): 40%
Denmark: 52, 49: 51%

A small selection of high taxers, or low GDPs:
Ireland: rank 56, 54: 41%
Finland: rank 53 (both): 51%
Latvia: 100, 95: 26%
Brunei: 150, 146: 0%

It's hard to know what to make of the above. I'm sure these figures don't tell anything like the whole story.

Xenia Sun 30-Sep-12 19:28:57

Roger Moore (James Bond) in today's Telegraph writes about why he moved to Switzerland in the 1970s with his family. I am old enough to remember the 70s when it was not worth saving due to inflation of 20%, 18% and 22% in 3 years in a row and tax rates were ridiculous. He says the tax rate on unearned income was 98%. I remember my father paid 65% on his NHS doctor salary with an additional 15% on top of that for interest on his savings - in other words the fakirly modestly paid doctor's interset on small building society savings were in effect being confiscated. Moore is one example of how people do genuinely move when rates get too high. 98% is ridiculous. 75% is unacceptable. Above 40% is pretty dire.

breadandbutterfly Mon 01-Oct-12 18:44:17

amicissima - surely you can't expect little old Sweden to have a bigger GDP than China! Hardly comparable population sizes... - or even the USA. Please compare like with like.

I think you'd agree that Sweden's standard of living is higher than in China or indeed the USA, on average. More useful to compare GDP per capita...?

breadandbutterfly Mon 01-Oct-12 18:51:06

Xenia - I'd agree that 75% is too high, as I said above - but 40% is waaaay too low. My DH is a higher-rate taxpayer and we are hardly loaded and certainly not so that we can afford to employ tax accountants to exploit loopholes etc - so if we on our relatively meagre income can afford to pay 40%, yet still be regarded as having an incentive to work, then those earning 10 or 100 or 1000 times our earnings can easily get by on a much higher tax rate without considering themselves hard done-by.

What matters is how much disposable income you have left after paying for necessities - someone earning 100m can get by on a lot less than 60m - and in fact feel very well off on 60m. Anyone who feels 'poor' on 60m a year is deluded and should be locked up for all our sakes - or be forced to spend a week living with an ordinary family and get a sense of perspective. hmm

Xenia Mon 01-Oct-12 18:58:56

Hardly anyone earns those sums as income the UK or indeed on the planet. Mosto f the 52% tax/NI payers (or 60% or whatever it is when you lose the personal allowance) are £150k plus and not much plus.

The point is about disincentives. If most of what you earn on top of some sum is taken away you don't bother to earn it here. Why would you? We aren't charities.

Xenia Mon 01-Oct-12 18:59:21

In fact in my view the fairest taxation system is a capped flat tax say 20% until you pay say £50k tax a year and 0% on all income over that .

somebloke123 Tue 02-Oct-12 10:31:58

There are few "laws" of economics that can be proved almost mathematically, but one that definitely can is the fact that if you raise tax rates for the rich too far then the total tax take will go down.

Just look at the two extremes:

1. Tax rate = 0%. The government doesn't tax people's income at all, so the total tax take is zero, obviously.

2. Tax rate = 100% At the end of the day's work your employer gives you a wad of cash for your efforts. As you exit the building the tax man is standing there. He makes you turn out your pockets, and he takes all your wages. Total tax take is zero, equally obviously. People won't work for nothing.

There must be a stage as tax rates get heavier at which the tax take goes down.

When Nigel Lawson abolished the top rate of tax (60% IIRC bringing it down to 40%(?)) not only did the proportion of tax taken from the top 1% of earners not go down, it actually doubled.

It is actually counterproductive to have a top 50% (or even 45%) rate of tax.

I know that the previous Labour government agreed about this or they would have introduced the 50% rate much sooner than they did. In fact they introduced it very late on, essentially as a booby trap for the Tories, who they knew would find it politically difficult to remove it.

Paradoxically, the best way of "soaking the rich" is to simplify taxes and avoid imposing on them rates which are too onerous.

Xenia Tue 02-Oct-12 11:16:41

I certainly agree with somebloke.

I am not a communist (I am a free market libertarian wanting a capped flat tax) but we need to add the gloss that some countries have taken 100% or almost - in a communist state you work and are provided with everything. I just started reading a book about North Korea which is interesting (although I am not suggesting any country on the planet has ever managed pure communism).

In the 80s we had 15% VAT. We do have higher sales taxes now so even if we got top rate tax down to 40% and abolish national insurance over that level so we had a top tax NI rate of 40% people are still paying a lot of tax on air fares, petrol and other stuff unless they don't spend much or only buy food.

There was one suggestion we might be able to abolish CGT, IHT, stamp duty and reduce income tax if we put VAT on everything.

amicissimma Tue 02-Oct-12 18:16:51

"amicissima - surely you can't expect little old Sweden to have a bigger GDP than China! Hardly comparable population sizes... - or even the USA. Please compare like with like."

Eh?

You asked what I thought was an interesting question and I quoted some data freely available on the internet to address that. It was you who referred to Scandinavia, which was why I included those countries.

I stated no 'expectations'. I just provided some raw data. Personally I don't draw any conclusion from it. My personal opinion is that there are huge number of reasons why one country might be 'wealthier' (I mean, for the sake of this thread, in financial terms) than another. Looking at just GDP and taxation, and nothing else doesn't seem to show a relationship between the two, as far as I can see.

breadandbutterfly Tue 02-Oct-12 19:36:28

AllI'm asking you to do is to compare two countries of similar size. Denmark is fairly similar to Ireland - Denmark has a top tax rate of 51.6% acc to Wiki. Not sure about Ireland but am guessing it's a lot less.

Remind me whose economy has collapsed?

breadandbutterfly Tue 02-Oct-12 19:40:11

Xenia and somebloke - don't think anyone on this thread is arguing for 100% tax or even 75% - but 40% top rate as the Tories would like is just a joke.

Of course someone who earns 400K should pay a higher rate of tax than someone who earns 40K - because the guy on 400K can spare it. Anyone who really can find no motivation to work if he can "only" keep 240K a year is just greedy.

CogitoErgoSometimes Wed 03-Oct-12 08:42:48

There's no 'of course' about it. If everyone pays the same % of their income to the treasury, that's surely much fairer? At the moment the hue and cry goes up when it's discovered that a wealthy person who derives their income via dividends, profits and other non-PAYE sources making full use of legitimate exemptions has only paid 20% but the rest of us are paying 40%. If dividends, profits, PAYE and all the rest were all taxed at a flat 25% or 30% that problem would never occur.

flatpackhamster Wed 03-Oct-12 09:59:20

breadandbutterfly
Xenia and somebloke - don't think anyone on this thread is arguing for 100% tax or even 75% - but 40% top rate as the Tories would like is just a joke.

40% is not the top tax rate. The top tax rate is 51%. That's 40% income tax and 11% National Insurance.

NI is not hypothecated. It doesn't get put in to a special pot for the NHS or pensions. It's all bundled together so that today's taxpayers pay for yesterday's pensions (also known as a Ponzi scheme). So NI is simply another income tax.

Of course someone who earns 400K should pay a higher rate of tax than someone who earns 40K - because the guy on 400K can spare it. Anyone who really can find no motivation to work if he can "only" keep 240K a year is just greedy.

As Cogito points out, there is no 'of course' about it.

somebloke123 Wed 03-Oct-12 10:11:16

breadandbutterfly:

I didn't argue for a 100% tax rate. I was just making the point that at some point raising tax rates further will result in the total tax take going down, not up.
It's slowly throttling the goose that lays the golden eggs to try to make it lay more.

If a 40% top rate is just some Tory joke, how come the Labour government kept it for the vast majority of their 13 years in power?

When Lawson abolished the top rate, essentially reducing it from 60 to 40% the tax take went up.

Xenia Wed 03-Oct-12 18:33:29

49% is a joke. It's too high. 20% flat tax for all capped at £50k a year would be very fair indeed.

We can at least agree that 40% is a joke. More seriously 40% has been the rates for a very long period. I certainlywould resent even giving 42p in each £1 to a state to spend on wars, a load of sexist soldiers we don;t need, foreign aid (ie corruption) never mind a mass of benefits claimants and scroungers adn the 50% who never pay tax but like most people I could just about live with 40% as long as keep all the allowances there are which the state wants you to use to reduce the 40% like pensions but I would much rather lose all allowances and pay a straight 20%and I might well move to a state with a 20% rate in future particularly when the children leave school whichi s not very long. I can work anywhere.

breadandbutterfly Wed 03-Oct-12 22:23:26

Sorry,i repeat - once you get beyond the point where you have enough for yourself and your family, more than you could possibly need - once you have enough to buy pointless yachts - or indeed islands - then you have more than you should have and should give a fair whack of it back to help fund others in society and to help fund services in society that benefit or have benefitted you when younger - roads,eucation, health, pensions, police etc etc

no man isn an island - even if you no longer use state education or healthcare you almost certainly have used them in the past, and use teachers and doctors and nurses trained at the state's expenses. The security of your home is thanks to the police,prisons,judiciary etc etc - I could go on.

No man is an island (even if they own one) - we all rely on the state to create a pleasant, safe society for us to live in and should contribute to that as we are able.

niceguy2 Wed 03-Oct-12 22:31:22

Bread. Very few people earn 400k as a salary. Those who do are probably either running their own business or have very specialised skills which cannot easily be found.

Either way, increasing taxes for them just because "they can afford it" is simply going to dissuade them from earning. Your entrepreneur who has had to take big risks, mortgage his own home and spend less time with his wife & kids. He's going to have less incentive to take risks & work hard if the government are just going to take his money.

I've experienced this myself years ago when I was just over the HRT limit. Work offered me a bonus of £100 if I'd work one Saturday. Of course in reality I only took home £58 after NI & HRT tax. Throw in petrol and lunch and it was more like £50. I decided against doing anymore Saturdays since I'd rather spend the time with my family than have £50 but a 1 day weekend. Like you said. As a HRT I don't NEED the money. My point is that the tax rate was a big enough disincentive to stop me from working. The losers are of course myself and the treasury who cannot tax money I haven't earned.

MrJudgeyPants Thu 04-Oct-12 00:50:39

breadandbutterfly "Of course someone who earns 400K should pay a higher rate of tax than someone who earns 40K - because the guy on 400K can spare it."

That sounds like theft to me. Besides, what about the poor buggers who earn significantly less than that but are still faced with a huge tax bill?

"we all rely on the state to create a pleasant, safe society for us to live in and should contribute to that as we are able."

Not all of us by a long chalk. Many of us have cottoned on to the fact that government agencies are largely incompetent, inefficient, self-serving bureaucracies who, if they can be circumvented in any possible way, should be. For example, many of us pay into the system but rely on private healthcare / dentistry, many of us put more faith in the baseball bat by the side of the bed than in the combined efforts of the police and the judiciary, many of us look to city hall with their 5-a-day advisers and outreach coordinators and simply cannot see how these people would possibly earn in a living if they weren't sucking on the states teat. Most of us would never dream about organising a private whip round to pay for an illegal invasion of a far away country. Few of us would dream about taking money from the poorest in this country and spending it on foreign aid to countries with their own space program or on duck houses or on playstations for illiterate prisoners or on a world class sports day.

The state is a cancerous tumour that erodes the freedoms and dignities of the people of this land. It throws us into penury and justifies itself with handouts of your own money for crap you neither asked for, want or need. We can see the effects of this system writ large across Greece, Spain and Ireland where the people are fiscally hobbled by a vanity experiment gone sour. It can only be fixed by the systematic dismantling of the state; of returning independence to the demos of responsibility to the demos and, finally, of returning power to the demos.

Xenia Thu 04-Oct-12 09:12:35

Yes, tax is theft philosphers argue.

Also lawful avoidance is morally right because the state spends money badly so the less you lawfully give it the better.

Obviously there are a range of views on this thread but the difference between b&b and others shows that well - the idea that no one should have more than he needs - to each according to his needs etc. That is communism and I don't agree with it. I have chosen to live in a capitalist society. Anyone on the thread who wants those who work very hard to give most of that back to the state to feed benefits claimants can go to a country which follows confiscatory tax principles.

I do believe in a welfare state but I think a small state with an acceptance that say £50k a year tax is the most anyone soudl pay regardless of income or 20% flat tax which is not capped I suppose I coudl live with, is better and fairer and more right.

I remember someone I know saying once tax tipped over 50% recently including NI that relaly did tip the balance - they woudl do no extra work. If 60% went to their children/family that was juust about okay. Whjen it was most of what they earned that Sunday working for in that case the state then better to spend the Sunday playing with the children.

TheCraicDealer Thu 04-Oct-12 13:40:56

breadandbutterfly "Of course someone who earns 400K should pay a higher rate of tax than someone who earns 40K - because the guy on 400K can spare it."

Sorry to come back to this again bread, but that statement is not strictly speaking correct- the higher your income, the higher your out-goings tend to be. Most of us cut our coat according to our cloth.

Say you're a businessman (or woman- it is 2012 grin ) earning 400K a year and the government introduce 60 or 70% taxation on your income. Out of that 400K you might have been employing a gardener or cleaner who in turn is paying tax on what you pay them. You've probably got into the habit of saving, the interest rate on which is taxed. You may have bought an expensive property to live in, plus a little bolt-hole somewhere down south for the holidays- you would have paid stamp duty on these when you bought them. These things are all luxuries which a high income affords you but which might be cut back on if you're paying more directly in tax, so the tax man will never see the tax you've paid indirectly on these things. And if you're wise, you'll take yourself off and pay no income tax whatsoever.

Xenia Fri 05-Oct-12 10:36:28

Indeed you could argue they should pay a lower % as they have paid so very much more tax than someone on a lower income. I think half of people pay no tax and 75% take more out (tax credits, benefits, housing benefit) than they pay in so only about 25% are net givers to the system and we are increasingly made to feel very unpopular. Those 1% who oay 25% of all tax feel even more criticised. It was nice to see an article in the Times this week praising one man who pays about £20m a year in income tax rather than just on about how much peoplem ust be tax dogers if they choose to give money to charity rather than spend it on women, men or fast yachts.

CogitoErgoSometimes Fri 05-Oct-12 11:12:25

"once you have enough to buy pointless yachts "

I suppose everything you buy is strictly functional and utilitarian? hmm That 'pointless yacht' has been built & fitted by craftsmen, sold generating a profit for a company employing sales staff, delivered by more people and will be berthed at vast expense in some marina manned by yet more people. If you're jealous of rich people just say so but it's not really a sound reason for taxing someone so that all they have left is the same disposable income as everyone else.

Xenia Fri 05-Oct-12 11:42:31

I certainly think people can spend their money on whatever they like. I am not a yacht fan but there is no reason spending on a yacht rather than a charity or school fees or a cottage is any better or worse. I was just making the point that the rich who give to charities have got a bit fed up that this Government has suggested they do it to evade tax when in fact mostly they do it because they are good when they might well have spent it elsewhere. I'm not rejalous of rich people at all. I get villified on here for mentioning I have a private island and a big house, not that I go round in real life showing off about it. I come from the position that once someone pays a fair amount of tax it is up to them what they spend their money on and that fair amount of tax could be 20% flat tax and no more.

I believe unfairness is fine and that we are all born either happy, sick, ill, pretty, genes to be tall or short, nice or nasty, high IQ or thick as a plank and that is how our species has survived by its differences and survival of the fittest and thus it is wonderful if some people earn a lot more than I do and not a problem if some earn a lot less. I believe the test we need is absolute not relative poverty and as money does not make people happy it does not matter at all if someone has more money than someone else and the poor can be just as happy as the rich.

CogitoErgoSometimes Fri 05-Oct-12 14:10:59

(breadandbutterfly mentioned 'pointless yachts', not you Xenia.)

Xenia Fri 05-Oct-12 15:34:20

I could well have been me although I rather like the fact that one of the biggest yachts in Europe is owned by a female hedge fund owner. Good for her.

breadandbutterfly Fri 05-Oct-12 17:17:10

I think you make the mistake of thinking everyone is as greedy as you are - Scandinavia and Germany work just fine with higher tax rates - people there don't all down tools (or mobiles or whatever) just because the tax rate is higher.

cogito - i am jealous of rich people's security but not at all of their yachts or whatever - if I had millions I'd still dress in cheap clothes because designer stuff doesn't look any better to me and I can't see the point. I care if my shoes are comfy not if they have some stupid branding on and would avoid expensive stuff for its own sake every time.

I'm not knocking people who give to charity - even if they just do it to be tax efficient - but I am absolutely knocking someone who thinks that 'they' have earned millions on their own. No-one has - someone who sets up a company selling popuar widgets, say, doesn't make that on his own - he owes that success to the people who design the machines, the marketers, even the people who work in the widget factory. They should all share in that walth. I'd much rather see a John Lewis model, where the wealth that is earned is shared among all those who contribute towards it.

I don't think many people would call John Lewis communist though i daresay to some on this thread it is - I'd call it the acceptable face of capitalism.

Abitwobblynow Tue 18-Dec-12 15:08:46

'Great to see one country brave enough to tax the rich instead of punishing the poor.'

And how is that working for them now, Bread?! smile.

There are certain facts of life that even lefty right-ons cannot prevail over. And that is, if you tax capital, capital moves.

There are two other facts of life that lefty caring right-ons also don't like acknowledging. So here they are, in a right hook and an uppercut:

1. People don't get rich because they are 'privileged'. It is a result of hard, hard, hard work. Work at school, college, taking risks or starting at the bottom, working 12 hour days. IT DOESN'T JUST HAPPEN. 'The only place where success comes before work, is in the dictionary' - Vidal Sassoon.

2. If you too stupid to work at school, too undisciplined to hold down a job, and too immature to sustain a committed relationship or NOT get pregnant, YOU WILL BE POOR. AND NOBODY DID IT TO YOU EXCEPT YOURSELF.

[The two biggest mistakes built into the welfare state, are that benefits accompany babies. And that working gets punished. It goes against human long term self-interest, it is the cause of a lot of actual misery and it is plain wrong.]

These are the hard truths that politicians are too wimpy to spell out. Face it, why should 1. work that hard, to have to give away most of their effort to subsidise 2.?

Why should they? THEY WON'T. THEY NEVER HAVE, AND THEY NEVER WILL. Because, actually, it is unjust and goes against the ancient law that will NEVER be countermanded, 'what you put in is what you get out'. They leave, to places that don't have stupid lefty pie in the sky entitlements, like Hong Kong and Singapore.

grimbletart Tue 18-Dec-12 18:30:15

If the Government gave everyone, say £10,000 when they were, say, 18 as a start in life and to do what they liked with, what do you think would happen? My bet is that some would stick it in a bank, some would look around for an investment and try and grow it, some would use it to maybe start a business, some might give it to good causes and some would blow the lot on a holiday or a car or food and booze. There must be scores of permutations.

People are all different with different motivations, creativity, energy, foresight and even risk-taking attitudes.

No amount of Government trying to socially engineer society will produce what some perceive as fairness because no one can agree what fairness is. Some on here think it is not fair that some have a lot more than others who may work really hard doing vital jobs, while the opposite argument is that it is not fair to punish people who have the energy and drive to become the country's financial engine and create jobs for those who are happy to have someone else provide them with a job.

The best we can do is to set tax at a level that maximises tax take without alienating those wealth makers who already punch way above their weight in tax terms. Anything over 50% is, I believe, legalised theft

CoteDAzur Tue 18-Dec-12 19:05:58

"There must be a stage as tax rates get heavier at which the tax take goes down"

There has been a lot of work published in this theoretical highest tax rate at which tax revenue would be maximised. It is called Optimal Tax. Latest study I read about places this rate at about 33-35%.

France's new 75% tax rate is the work of an ignorant government with mob-appeasing tendencies. Anybody with a single semester's worth of Econ lessons could tell you that such a tax policy is pointless and indeed counterproductive, with lower tax revenues the most likely result.

claig Tue 18-Dec-12 21:01:11

' I certainlywould resent even giving 42p in each £1 to a state to spend on wars, a load of sexist soldiers we don;t need, foreign aid (ie corruption) never mind a mass of benefits claimants and scroungers adn the 50% who never pay tax'

But then how on earth would the country be able to subsidise windfarms? This is not about an extra penny in the pound here and there, this is about "saving the planet". wink

Electricblanket Tue 18-Dec-12 22:58:28

I read Gerard Depardieu's rant yesterday, and totally agreed with him! (and I've always thought him a bit of an ogre) I think it will turn many away, I'd go if it were me.

Cozy9 Wed 19-Dec-12 20:43:08

France is a madhouse. Hollande is disaster for the country.

Abitwobblynow Thu 20-Dec-12 09:51:05

Grimble, I believe in the concept of a universal benefit.

The problem is, we can't afford it (people simply do not understand what a patronising unfair CON the welfare state is, and they really do not understand who actually pays for it).

Britain could have afforded it once, during the North Sea Oil boom (as well as set up a Singapore-style forced pensions savings central fund). Give everyone a set amount of money, and it was up to them how they lived their lives (best way).

But unfortunately that vicious evil uncaring woman Margaret Thatcher was persuaded by the Tory wets and wasted most of it - on welfare payments to the poor.

adeucalione Fri 21-Dec-12 17:16:26

The number of people declaring incomes of over £1 million in the UK fell from 16000 to 6000 after the 50% tax rate was introduced, with the amount of tax paid falling from £13.4 billion to £6.5 billion according to HMRC

Since the announcement that the top rate would fall to 45% from next April, the numbers are back up to about 10,000.

So it doesn't matter whether you think they are greedy bastards or not, when the tax rate is perceived to be unjust the rich take steps to avoid it - they move abroad, reduce their working hours or delay payments; so if it doesn't raise revenue, why do it?

The 75% rate will be a disaster for France but will ultimately serve to remind the UK electorate of why we should never vote for a socialist government.

adeucalione Fri 21-Dec-12 17:26:27

So no, I wouldn't say that France is 'brave' I would say they are 'thick as bricks', and understand that the exodus to Belgium is already underway.

Even with the restrictions on pension contributions for higher rate tax-payers, there are still ways to minimize personal tax paid, for example, VCTs.

I think some of you are being very naive to think that people who work harder, are more highly skilled, and just smarter, should not try and minimize paying almost criminal amounts of tax, as in France's case, and to a lesser extent the UK.

GiveMeSomeSpace Sat 22-Dec-12 09:11:01

Brave enough to tax the rich

Chortle

More like dumb enough to hold on to inflexible political and economic ideologies, no matter what. The French scorn and bitterness towards the success of others will continue to stymie the nation for generations to come. But that's their choice.

losingtrust Thu 03-Jan-13 15:32:17

I am totally against raising super tax on the rich. Again close down the loopholes but personally I would rather have lots of millionaires paying 45% of their income than nothing. Btw I am nowhere near but would rather have their tax to support the normal working person in this country than elsewhere.

losingtrust Thu 03-Jan-13 15:39:03

Bread. Your theory on Scandanavia is worth considering. The tax rate is higher and they have free universities etc but they also demand much higher salaries as the cost of living is so much higher. It is very protective certainly in Sweden so very difficult for other EU members to work there and unemployment is higher than you think. As a company looking to invest in a country, it is not one that would spring to the top of the list. Higher taxes often have a knock on effect of the attractiveness of companies to invest and with investment comes jobs.

losingtrust Thu 03-Jan-13 15:49:52

Plus Scandanavia is far richer in natural resources, generally have small populations against land/resources etc. the total population of Norway is like that of Birmingham. You cannot really compare Ireland that country Ireland which is a completely different country and affected greatly by the Euro. Scandanavia kept their own currencies. Was in Copenhagen yesterday btw. Lovely country.

losingtrust Thu 03-Jan-13 16:11:03

If you look at the history of tax in Sweden they have reduced their tax rates with more normal being 50% whereas in the UK the rates would have been higher with 50% plus Ni at 2% for high earners. Wher did bjorn borg live when rates were higher. France are treading a very dangerous path and I have seen many execs at my French-run company already becoming resident in the Uk. Perfectly possible to live in London and commute to Paris by euro rail when required.

MoreBeta Thu 03-Jan-13 16:20:15

If I paid 75% tax I would leave the country.

With the internet it is so easy to do business from anywhere on the planet.

That said, I DO think people who choose to live in the UK should pay a fair share of tax and not just enjoy the benfits of our society and pay nothing or very little.

I also think companies that operate here should pay a fair share of tax. There is a social contract that has been broken by multinational firms and wealthy individiuals in recent years and that is where the 'unfairness' stems from.

MsAverage Sat 05-Jan-13 00:42:27

Besides, there are plenty of tax mechanisms to make money stay when people go. American-style geography-blind taxation. Russian-style triple tax rates for non-residents. Thailand-style tax bites on transfers out. Not sure would all of them work within EU, but there is a lot of space for manœuvre.

Sparrowp Fri 11-Jan-13 00:50:22

The recent economic research found the optimal tax rate was between 45 - 75%.

The 75% rate in France applies only to incomes of over E1million a year. Earn anything below and you pay the same tax as everyone else. I think 1 million is quite a substantial sum, certainly a massively rewarding sum and certainly enough to enjoy the highest standard of living.
It would be churlish not to contribute a little more of your earnings over that level to the country that gives you so much.

Agree with breadandbutterfly

niceguy2 Fri 11-Jan-13 12:32:27

I suspect you'd think differently if you were facing paying 75% of your income.

It's easy to say "Oh well if I earned that much then I'd happily pay it."

The problem with such a tax rate is not so much whether or not someone should pay it. That's for the government and law to deal with. The big problem is that it puts people off working and taking risks.

Let's say I started a business which over the years grew and grew. Now I'm lucky to earn over 1m a year. I can only do that by employing a lot of people. I'm happy. Except now if I want my business to grow, I have to take risks but only get to keep 25% of the reward. I'm already pretty wealthy. So I would probably decide it's not worth it. So the result is that I do nothing, earn no more and create no new jobs.

That's why France is on the verge of panicking and they're basically using national pride as the reason why their citizens should pay up.

Factor in that under the EU, anyone can move freely and set up somewhere else then such a punitive tax seems just ridiculous.

adeucalione Wed 16-Jan-13 12:44:16

sparrowp - i'd be interested to read about the recent economic research which found that the optimal tax rate was 45-75%, do you have a link?

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