To think that taxing high earners even more would actually be a bit unfair?

[bubbleymummy]

I hear this suggested a lot on mumsnet and I really disagree with it. High earners are paying a huge contribution in tax already - thousands and sometimes 10s of thousands more than a lot of people who are clamouring for them to be taxed even more! Why should they be punished for having a highly paid job? How would you like handing nearly half your income over to the government? I think we should be thankful that we do have high earners who are already making a significant contribution. We would be a lot worse off if we drove them away with higher taxes!

I'd rather they just cracked down on all the legal tax avoidance scams - look at footballers as an example - earn millions, pay tax on tiny amounts because they run all their earnings through a company.

Out of interest huddspur, why do you think this is the case? As novice says, most food is VAT exempt, rent and mortgage payments are, as are childrens clothes. Fuel is at the lower rate of 5%. It is luxury goods which are generally subject to VAT. Not at all disagreeing with you - just interested.

All of us can think of things we would rather spend our money on than tax. The money I spend on tax would go towards extra sailing lessons for ds, a second holiday or towards dd's horse obsession. Heck it may even fund a dirty weekend away for dh and I.

But for those lower down the income they could spend their tax money on food, books to help their children learn or turning the heating up.

Oversimplistic possibly but it is born out of experience.

and I have written exempt again when meaning zero rated!

thinkingaboutschools this explains it
www.taxresearch.org.uk/Blog/2011/01/04/why-vat-is-regressive/

The view that VAT is regressive and hits the poorest hardest is contested

Out of interest huddspur, why do you think this is the case? As novice says, most food is VAT exempt, rent and mortgage payments are, as are childrens clothes. Fuel is at the lower rate of 5%. It is luxury goods which are generally subject to VAT. Not at all disagreeing with you - just interested.

Have a good hard think about what else is heavily taxed and you'll have your answer.

Thanks - I do understand where you are coming from. I suppose it depends on what people are spending their money on and whether it is subject to VAT.

mercibucket

The Conservatives have cracked down very heavily on tax avoidance schemes in their Finance Bill 2011

www.hm-treasury.gov.uk/d/disguised_remuneration.pdf

This makes EBTs basically obsolete and EFRBs much less tax efficient.

Labour never closed this massive loophole.

Coincidentally, I ran into this article about Norwegian tax rates and the implications for entrepreneurs today.

One thing that struck me is that income tax rates there don't sound that high (looking at the combination of income tax + social security contributions), though the VAT equivalent is 25%. But I think because wage rates are much more equal, many more people pay higher rate tax, if that makes sense, giving a higher tax take as a % of GDP, which then funds much better state services - which then makes paying tax seem a better 'investment'.

huddspur i think that's wrong. I think an increase in fuel duty would diproportionately affect the poor, but not an increase in VAT.

Norway not a good example. GDP per capita is about $84k. Second highest in world. They have small population, loads of oil (and herring!) and a big sovereign wealth fund to put all their unused oil money into. They can afford to pay everybody well and take only 25% in tax.

UK GDP per capita is only $35k. We're simply very poor in comparison to Norwegians.

sorry meant 50% not 25%

Well this will have me reducing to four days a week and the DH will spend more time in continental Europe. Happy to pay current rates but will NOT pay more. DH's business will end up transferring its UK operations abroad and that will make about 20 support staff redundant.

siasi, the Norwegian tax take isn't only 25% - VAT is 25%, income tax around 50% top rate.

Agree that their GDP is higher (though I'd be interested to know what the purchasing power equivalent of average income is, given Norwegian price levels), but there are definitely interesting lessons to be learned from them I think. After all, surely we want to know why their economy is so successful - it isn't only oil (and we had North Sea oil bringing in serious tax revenues in the 80s too, of course, though it wasn't, unfortunately, invested in a sovereign wealth fund).

xpost there, siasi

Takver

Corrected it to 50%

PPP for Norway is $53k vs Uk at $35k. Its 4th highest, UK 20th. Using IMF numbers.

The difference is 50%. That creates a vast amount of spare disposable income

Most interesting thing about the top 5 GDP per capita countries (in nominal or PPP terms) is that they are all small.

Perhaps their major advantage is that their is less bureaucracy in a small country. National and local interest are easier to manage.

I guess my argument spinning out from the Scandinavian examples would be that a more equal society (more equal - not totally equal, I"m not arguing for communist absolute equality) is likely to be more effective at providing a good education and environment for most citizens.

Therefore, more citizens will be able to make an effective contribution to society, and society will as a result generate more resources for all.

Effectively, more citizens will be the 'lucky' ones who are able to work hard and effectively.

Of course, there is a great deal of history behind us, we can't simply 'cut and paste' a scandinavian economy over the british experience. But still, it is useful to return to them as successful examples of high tax/high benefit economies.

Sorry, this has drifted a bit far from the OP.

Norways economic strength is its vast oil and gas deposits. This is getting more and more valuable as the global demand for energy increases.

"tax should be based on the value of the land/ house(s) you own "

• what mama says. We already pay that.

I find it quite shocking that some people don't even seem aware of what taxes there are in this country.

Of course we pay council tax.

I was flying a kite to see if anybody agreed with the idea of Land Value Tax as an alternative to income tax.

Its one of the ideas the liberal party sometimes toy with.

I find it quite shocking that some people don't even seem aware of what alternative to income tax there are, but are never discussed in this country.

for those who 'shockingly' have never heard of it......

en.wikipedia.org/wiki/Land_value_tax

If we want to take the Scandinavians as an example, unfortunately we do have to take Norway out of the mix for the reasons mentioned. Their economy is oil and gas dominated (far more than the Uk ever was even at the ht of North Sea reserves). They are like a mini-Saudi without the repressive social agenda.

Land tax as an alternative to income tax? Really?

Hi I agree with those that earning more paying more but then I also think it should be more about anyone earning over and above 70-80k

lets face it if your a family and there is only one earner in the house then 40k is nothing really. I am not a high earning but I know the costs of having a family my weekly food bill is around 150-200 a week so 40k is not high earnings at all.