..to want to say to those who are whinging about the 50% tax rate

[vic77en]

..that they should fuck the fuck off?

At a time when lots of people are really struggling with high inflation, 20% VAT, high unemployment, lack of living wage etc etc.

If you're earning above the 50% threshold you are well off and can afford it.

I used to earn enough to pay 40% tax (this was before the 50% rate came in and I was nowhere near the 50% threshold) and did not begrudge paying this. If NI and VAT were factored in, over 50% of my income went in taxes. I still had high disposable income.

Rather than giving their views airtime, there should be a massive PR exercise on the benefits to all of us of living in a civil society where there is an economic safety net, NHS, free education (for under 18's at least still...)

AIBU or not?

Swiss public discourse is increasingly racist and xenophobic, according to Amnesty International in its annual round-up of global human rights abuses.

'"Besides for every national we lose a 'foreigner' comes along with a better work ethic to work and pay a decent share of tax."

If only the person moves, that would be true, but what often happens is that the job moves with the person
'

It's not even always true!

DH would gladly jump at the chance to take a few contracts from the significant 'names' in his industry, he's neither lacking a work ethic nor a 'foreigner'.

Posie, when did I say I would rather live in Switzerland? If you would like to make more informed comments, you might want to read up on the migration of the uk financial services sector to other jurisdictions and the impact on the uk economy. Oh and in case I need to spell it out for you, the financial services sector contributes the biggest amount of taxes to the Exchequer and that's why Osborne is concerned.

I spent time there visiting and I think moving country to somewhere less tolerant has to be for more than £20k when your income is about £200,000.....

Yeah, but Europe is almost certainly going to get less tolerant, and Asia more so, purely as a result of economic failure/ success. May as well beat the rush.

I'm not loopy, but the dog-eat-dog, greed-inducing, nasty and confusing system we have now is. Cogito - the incentive for working harder is that you can still earn twice as much as the people that don't, I think this is enough of a scale. Besides, you are assuming the only reason anyone works is because of money and their own selfishness. Well, don't judge everyone else by your own standards. If you took away greed as the motivating factor for working, people would want to work for the benefit of society and their children, for wanting to live in a better environment and because to sit around doing nothing is not at all preferable to doing a job that you enjoy. I enjoy work, I can't be the only one. I think people should be paid for their time in a fair way, I can't be the only one.

No you didn't and I didn't say you did.

novice. I'm not ignorant about tax nor where it comes from, save your patronising tone for your employees.

Perhaps you could enlighten us all with actual, not predicted or projected or implied, facts about who has moved and directly link that to 50% tax, not minimum wage, not property rental, not general location and cheap staff......Simply 50% ONLY.

Another economist looked at the issue this way. Ok so he is American but interesting nonetheless....

Bar Stool Economics
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."

Drinks for the ten now cost just $80
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay! And so...

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

I remember reading the above but in a simpler format. I agree with the sentiment but those who need to read it the most are those the least likely to.

YANBU

First of all it's not half of all of your earnings as many have pointed out. That would be a madness.

Secondly it's a progressive tax compared with VAT which is not (ie everyone pay 20% VAT regardless of what they earn).

Thirdly the latest on this is that the 50% tax is that it will raise more revenue.

Fourthly it's not just tax that keeps businesses here - plenty of other factors too. So I'm not buying the whole "we're leaving" argument. Especially as many entrepreneurs will not be paying income tax, so won't be affected. Did we see a mass exodus when the tax was introduced...?

HBB But it's not enough of an incentive. I'd much rather do nothing and get £25k than have any job and get £50k. What you'd end up with would be everyone doing nothing officially and working on the black market

Also, you'd still need tax. Atm, 25% of people work for the government. Those people get paid from tax.

Did we see a mass exodus when the tax was introduced...?

No, but you wouldn't be likely to. When the tax was introduced it was supposed to be temporary.

Actually, what is more likely than a mass exodus is just that you'll see a fall in higher paid expats coming to the UK. Companies will increasingly not put regional or global positions in the UK.

eg If HSBC moves it's HQ back to HK (likely), then the global roles will mainly be in HK not London.

Posie, I tend to come over as patronising when people talk over emotional shite at me without any due account of the facts.

The fact is that every UK company that has moved hq over the last 2 years has said that 50% tax was a factor. Can't remember off the top of my head but WPP, Shires and Henderson all said it. The govt reacted by reducing corporate taxes and has a plan to reduce even further over the next few years. But that is only some of the issue that business has. Is that factual enough?

The hedge fund industry has seen key players that have moved to Switzerland, Jersey and Ireland. Is that factual enough? The English schools and some of the cantons are full and that's actually been a key factor in slow down in moves there. I appreciate that's an anecdote but its still a truth from peoeple I know who have investigated a move there.

Given that the economic growth globally is destined to come from the BRIC countries ie not the UK/Europe or US, the race is on now to untap some of this wealth by moving key individuals to those countries. If you're looking at China then Hong Kong (16% tax rate) and Singapore (18% tax rate) is where a lot of financial services organisations are beefing up their operations by sending high earning individuals there who are happy to not pay 50%. Fact.

Only read op... shoot me

Those earning enough to have to pay this are clearly more fortunate than those who are unemployed or in another struggling group of course. And they nknow it.

Most people like the fact that we are in a civilised society where the rich pay for the poor to be kept above the poverty line.

However, sometimes this doesnt happen and the taxes are spent on utter bollocks by utter pricks. And also, when I worked my absolute behind in to the ground to acheive a 4k payrise and instantly lost 2k of it... yes I was pissed off.

I don't know what the answer is but I can see why the complaints.

Iggly.

1. We know...it's been said many times before.

2. Noone is arguing it's not. But regardless of long sophisticated sounding words like progressive/regressive the fact is that it discourages people from either settling here, encourages people to leave and these are exactly the types of people we need to retain.

3. See above. You can always raise revenue. The key question is "At what cost". Most people agree that the extra revenue raised is peanuts in the grand scheme of things and serves little use other than a political gesture by a dying government.

4. Correct but contrary to popular believe, there are not legions of rich people sat idly counting their wads of cash. It only takes a few to leave to have a disproportionate effect on the economy. Let's take the previous poster, novice as an example. He/she says they earned £700k, that's about £340k of direct taxes we'd lose. A person on a good salary of say £30k is paying about £7k a year. Therefore Novice is contributing 48x as much and taking nothing out (except perhaps CB until 2013). In other words. The loss of 1 person like Novice would mean we have to replace them with 48 Mondeo man's earning £30k each. And that's just the direct taxes.

What about all the money we lose because they are now not buying the nice cars, jetting off on holidays, shopping for clothes. All the stuff which us little people rely upon for our livelihoods?

Sure....50% most won't leave. They don't have to all leave. Just a few and it dramatically lowers our tax revenues.

TheDevilsAdvocaat, that's so interesting. Niceguy very true.

Agree with the Bride, why would HSBC senior execs pay tax at 50% when they can pay tax at 16%? Oh and HSBC is another company that is reported to be influenced by the 50% rate when thinking of location. As in my earlier example, its not the key driver for them in thinking of relocating to HK but it is a significant contributing factor.

HBB - never was an MN nickname more apt.

I think that it needs to be clarified whether this actually raises any revenue at all, and if it doesn't then clearly it should be scrapped.

I am also in favour of a flat rate.

Not sure if I missed it, but has anyone pointed out that high earners aren't necessarily the richest people in the UK. My DH earns enough to put him in the top 2% of income but we are not in the top 50% when it comes to wealth. (And yes, we are very lucky, and yes, we are happy to pay the 50%).

Wealthy people pay more of their tax as capital gains tax, which I believe is capped at 28% in the UK. Consequently, they can have lower marginal tax rates than high earners. So someone who has got £5 million in investments is likely to be paying less tax than someone who is earning £200,000. (PLEASE NOTE- I have not actually done the math on this, just trying to make a general point).

So I would say that YABalittleU. Surely, you'd be fucked off if people richer than you were legitimately paying less tax (a lower marginal rate) than you.

Alibaba. Doubt the tax consultants would scream. Most would probably still retain work in another area or something.

And I personally agree a uniform flat rate with a generous tax free allowance would be fairest. But two reasons mean this will never happen:

1. Politics. It doesn't play well with the less well off in society who can vote and passionately believe the rich should pay for the poor. And the signal this would send would be political suicide.

2. We'd all be instantly aware of how much tax we are actually paying. Right now in order to work out how much tax you pay you have to be some sort of financial wizard. Setting a single rate of say 30% would instantly have those at the lower end of the spectrum complaining bitterly about value for money whereas at the moment only well paid people can complain about HRT and they can be shouted down using nice posh sounding words like 'progressive'

YABU the 50% rate is higher than most countries top rate and is the highest top rate of the 7 countries in the G8. Having a tax rate higher than our main international competitors is not sensible and is potentially barrier to international business which is becoming more and more important.

AliBaba, I believe that hmrc will report in Feb/March 2012 (after filing season) that it has raised revenue, principly because lots of people have just coughed up. What it wouldn't show is where for example US companies who are expanding globally choose to base themselves in Singapore/HK/Switzerland etc rather than the UK. When US financial services companies expand they always send over their key people to over see it. Those people don't want to pay 50% tax in the UK when they pay 40% tax in the US. They end up being compensated so it costs the company money. Given that, they would choose elsewhere.

niceguy if you're a millionaire I very very much doubt that you would pay income tax on much of your earnings. More likely you pay capital gains tax (much lower), tax on dividends etc etc. Plus hold monies offshore. So it's a bit simplistic to the 50% rate is the only dampener.

Also in the context of "we're in this together" it would be absurd to cut it. The argument of it being inefficient doesn't wash. They didn't apply the argument to child benefit - it's cheaper to give it to all than to try and introduce arbitrary limits.

We are a top rate household and we have had to curb our expenditure as a result of the increase to 50%

My DH is planning to down-shift jobs in a couple of years time - because he really cannot continue at his current pace until retirement.

When I say down-shift - I mean trying to get a job with a 10 hour day and a reduced likelihood of having holidays interupted so that he can get a proper rest, rather than the silly hours he works now and every holiday being interupted by conference calls and so never being able to switch off.

For him to down-shift we really need to save every penny for the future as any future job will pay considerably less.

Our saving every penny means less money is being spent now - on childcare - on going out - on things - on everything.

Good luck, ButHeNeverDid. My DH tried down-shifting. Hated it.