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50p Tax band

(9 Posts)
newwave Thu 08-Sep-11 22:40:34

This must stay it should even start at £100k.

However if the Tories remove this it will be a HUGE political own goal, what a win win situation for non Tories.

niceguy2 Fri 09-Sep-11 00:02:56

Why does it have to be lowered to £100k? How much additional revenue would this net the govt?

I agree though that removing the 50% tax band would be a HUGE political own goal. That's why they won't do it......yet.

CogitoErgoSometimes Fri 09-Sep-11 08:02:50

It was introduced as a temporary measure so it has to go eventually. Agree with niceguy2... it won't be just yet for political reasons. Personally, I've always preferred the idea of a flat rate of tax rather than the system of thresholds we have. Something like no tax for anyone earning <£15k and 25% for everything over that. Simpler, fewer loopholes and we wouldn't get these grey areas at the thresholds when it's almost better to turn down the pay rise.

jackstarb Sat 10-Sep-11 13:30:44

Are those asking for a drop in 50% threshold not aware that people earning just over £100k already pay a marginal rate of income tax of about 60%!

Due to the loss of their personal allowance.

ttosca Sat 10-Sep-11 19:45:34

The 50p tax is kind of a red-herring. It's better to have it than not have it, but two things should be considered:

a) Most wealthy people aren't wealthy through their work income. You don't normally get very rich by working really, really hard. They are wealthy through inheritance, property and investments.

b) Even if the govt is gaining revenue from the 50p tax on > £150K, that won't solve our economic problems. Our economic problems stem from lack of demand. We have a demand-side problem; nobody has any money to spend. There are no jobs. People are living a precarious existence. Many people are tens of thousands of pounds in debt. Wages have stagnated for three decades and haven't kept up with the cost of living.

We're not going to get out of this economic situation until the majority of the population is able to spend again. Unfortunately, these crises are endemic to Capitalism: Capital seeks to produce more and more while driving down costs and wages. The end result is overproduction and an inability for people to buy the very things they produce.

jackstarb Sat 10-Sep-11 23:53:30

Ttosca - Good post. It's not often I agree with you - but you make some excellent points.

I think many people confuse 'wealth' with 'inc

jackstarb Sun 11-Sep-11 00:12:30

Oops.

I think many people confuse 'wealth' with 'income'. They are different. If you tax income heavily you risk stalling social mobility. However, taxing 'wealth' is not easy. I'm not sure about the balance between 'income' rich and 'wealth' rich.

I also think seeing the problem as one of demand is interesting. I guess the question is what is the correct level of demand. It was definitely over-inflated before the economic crash. At it's current low rate it's causing severe problems. Keysians would say - just inflate demand & solve the problem. But then that's still using a capitalism solution.

I'm not sure that I agree with you that the eventual aim of capitalism is over-supply. Though it is a [short run] consequence. I thought it was communism which aimed for an abundance of goods.

ttosca Mon 12-Sep-11 18:05:53

jack

Thank you for the compliment, but it's not many economists have the same idea.

We haven't learned anything from this recession, and hence we're looking towards ideologically driven solutions like public sector spending cuts, which are more likely to have the effect of choking demand in the economy and prolonging the recession rather than fixing it.

There are two ways to get the economy going again: stimulate demand, including spending which creates jobs, and economic policies such as tax cuts for the poorest 20%, or otherwise a top-down approach, which sees tax breaks to the rich and big business in the hope that it 'trickles down'.

The 'trickle down' effect is a myth, and this solution will not work unless there are enough people with spending power to buy consumer goods and services. This can be done without raising wages - we could create another bubble again. All we have to do is give people cheap access to credit even if they're not credit worthy, and give potential homeowners dodgy mortgages which they won't be able to pay back.

Then we'll be back to square one, where people are on low wages and maintaining their standard of living through borrowing. The bubble will, of course, eventually crash again. The next time, the repercussions will be worse.

ttosca Mon 12-Sep-11 18:06:24

Thank you for the compliment, but it's not many economists have the same idea.

Ooops - meant to say: "Its not my idea. Many economists have the same idea." ;)

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