AIBU to think that most people with children who

[Hedgeblog]

say the phrases in regards to paying taxes such as

"I pay your wages mate (to anyone who works in the public sector)" or "I don't want MY taxes to pay for benefit scroungers" etc. are totally mistaken.

In fact the majority of people in the country barely cover the state costs of their own childrens education let alone their NHS bills, tax credits, child benefit, subsidised rail fares etc through their own taxes.

It costs the state 5K to educate 1 child of school age per year, add in NHS costs and you get the picture.

I hear this expression quite often it really grates on me. I know our society doesn't work on a zero sum basis but really unless your earning over #50K are in good health and don't have kids stop spouting on you pay everyone's wages!!

Sorry RealTillyminto - I need to learn to read properly !!

it is late..... night all!

I actually have some sympathy with some of the higher earners. Certainly those on HRT will find that what at first may appear like a large salary to others doesn't actually go very far when you take into account the cost of living. I'd like more tax to be taken off big businesses than HRT payers. Only in a world where profit is worshipped over and above life is it right that a company announcing record profits can put its prices up during a recession that has seen a historic decrease in most people's standards of living.

However, certain posts in this thread have a very self-congratulatory tone that smack of privilege and inability to accept that those on lower incomes also work very hard, have significant responsibility and a great deal of stress. I think that sort of tone may be why some of you attract more anger than you justly deserve.

Ecnomic value is not the same thing as someone's worth. Jordan, for example, probably has more money than anyone on this thread. Does that make her more 'worthy'? Does the shit-hot divorce lawyer really deserve the 6-figure salary any more than the elderly guy down the road that gives up all his spare time to run a soup kitchen for the destitute?

And how does one get to be such a high earner? It's not all down to talent and hard work. If it was, we'd see a lot more social mobility since we know that intelligence and dedication are preserves of the upper classes anymore. It's down to contacts, opportunity and a fair bit of luck, and the most influential factor over all these things is of course money. If you're born into it, it's easier to retain it. That's not to say the top earners don't deserve their wealth. They do as they have to have talent and dedication to maintain their position no matter how fortunate their start. But the point is that the son of the single mother on benefits down the road may well be able to do that job to the same degree of ability but will never have that opportunity.

So, bearing all that in mind, there is something rather distasteful about the tone of 'we are keeping the entire country with our taxes'. If you think it's so great, give it a go on benefits or a low income. Some of these posts smack of the notion that someone's value is akin to their earning capacity. Personally I think this 'cost of everything, value of nothing' approach is in no small way responsible for the mess we're in today.

SunshineAndBooks - I was going to agree with you re corporate taxes, and then I wondered whether it would actually make much of a difference to the treasury if we were to tax corporate profits more highly? I would have thought that that simply means that less money goes to the shareholders - who would then pay tax on less.

Also, wouldn't it make UK businesses automatically less profitable, all things considered, than foreign companies, so you'd have even more of an incentive as a shareholder to invest in overseas companies?

Like your summing up of the relative chances of people becoming high earners - seems pretty fair to me. Isn't there some statistic (I tried to look this up but couldn't find it) that in order to set up a successful new business UK, you basically have to have another income to fund you?

Sunshine,
I don't think anyone is saying that, in fact all the posters on here who say they are high earners seem very much supportive of the tax system. What people are saying is that high earners should not recieve the abuse they get simply for being high earners.
In fact a few posters have pointed out they often hear the "I pay your wages" line from people on benefits. I have never heard a high earner say this ever. IME it is always middle or lower earners.

"Then what about VAT ? 20% of their take home pay would be about £3400"

But nobody spends all their income on VAT-able goods. For example, some food, books and newspapers, children's clothes are zero-rated. And heating fuel VAT is 5%, IIRC.

The majority of people in the UK went to state schools and many of the top 10% also went to universtiy and had their fees paid and a grant. Even if their parents chose private schools a state school place was available for them.

I think its silly to think of parents paying for their kids education. The reality is that someone paid for our education and we return the favour by paying for the education of today's children.

If corporate tax rates are too high, many businesses will simply relocate - taking thousands of jobs with them. Not feasible for all companies, granted - but it will make the UK a less attractive place for investors.

reallytired - by your logic, anyone privately educated should not feel obliged to pay towards the education of the next generation because there is no "favour" to repay.

I think the OP's point was that there is no such thing as "free" education/NHS or whatever in the UK - just because no-one is presented with a bill, does not mean there is no associated cost. In other words, someone has to pay ("the taxpayer") even if it is free at the point of use. And so, for most people in the UK, the benefits they receive from the state are worth more than the finiancial contributions they make in the form of tax.

bradbourne I used to think very similarly, and I think a lot of politicians do too - hence the fear of tackling big business.

Then I had some very interesting discussions with some very interesting people.

It's important not to undersell the uniquely attractive traits of the UK. THere isn't much to choose from between European countries TBH and with the current economic situation there's a lot of potential to band together and apply some rules that could apply across the whole of Europe while still allowing each country a great deal of autonomy. America has it's own problems and tends to attract businesses for reasons that don't conflict with them wanting a base in Europe. China could certainly be a threat, I grant you, but where else are they going to go? Many of the other global economies have neither the political stability nor the logistical infrastructure for these big businesses to really go there, whatever they may threaten.

I agree with Sunshine on the attractiveness of the UK, I don't think we as a country are charging multinationals a high enough rent for being here.

But couldn't you move the legal location of the business without moving all the people? So you leave some people in the UK to deal with the timezone issue, and hire a new set of people in the US or China, etc. It's presumbably just a case of when the cost of staying in the UK outweighs the costs of upping and moving. By the time you've got offices around the world, deciding you're going to grow some and shrink others may well seem like a fairly easy choice to make.

China? Thailand? India? Australia? Canada? Scandinavian countries? Ireland? Switzerland?

I accept that it is not always feasible to relocate, but comparitively high corporate tax rates will make the UK less attractive as a place to base and run a business.

I accept that it is not always feasible to relocate, but comparitively high corporate tax rates will make the UK less attractive as a place to base and run a business.

Yes, but our timezone, location and language, althoigh of nocost to provide, are of value. Our legal, banking, relatively safe political and physical environment,access to a lot of high quality services, educated people etc have a value - and a cost that needs to be recouped.

By the way I think if the MNCs paid their correct existing taxes that would be a very good start.

We are a high end location, there is no need to charge low end rents.

I would have thought that the west coast of the US and Canada, for example, has the same advantages of timezone, location, language, environment etc. Or you could move to a European country with nearly the same location, timezone and legal environment, and hire well educated people who speak
English fluently, plus at least one other world language.

Of course, one alternative to relocation is to arrange a company's structure so most of its profits go through an overseas offshoot - where the overseas country has a lower corporation tax rate. It's legal - and the government can do nothing about it. This is what the likes of Vodaphone, Arcadia and Kraft do - and the Exchequor loses out on £millions of taxation revenue as a result.

Thing is, company directors are responsible to their shareholders - not to a particular country. If they can save their company money by arranging their affairs so as to minimise tax, then that is what they will do - indeed, it is their duty to do so.

"Yes, but our timezone, location and language, althoigh of nocost to provide, are of value. Our legal, banking, relatively safe political and physical environment,access to a lot of high quality services, educated people etc have a value"

And these things will be taken into consideration - along with the tax rate. Finacial considerations are, for most companies, the bottom line. Why do you think so many companies have HQs in Switzerland, Luxemburg, the Channel Isles etc? Clue: It's not just the nice scenery and the chocolate.

Why do you think so many companies have HQs in Switzerland, Luxemburg, the Channel Isles etc? Clue: It's not just the nice scenery and the chocolate.

It was a smallproblem untilthe last decade - it's also no accident that large countries are increasingly cracking down on these areas, and changing HQ qualification rules....

But the point is that companies will always seek to minimise their tax liability as far as possible - if corporation rates in the UK are high, companies will have the motivation to try and get around it - possibly by relocating, possibly by investing elsewhere in the first place, possibly by arranging their structure to allow for much tax liability to be offshored.

I think it's a bit more top heavy than that, doesn't something like 80% of all tax revenue come form 10% of the country. That would lead me to believe that 90% of the country are actually not paying their way.

That makes a hell of a lot of sense and proves that benevolent mill/factory owners dabbling in charity as anthropologists (Tending their sheep and chattel) are still alive and with us today.

Rich people are generally people who have made money using poor people as labour and giving something back shouldn't be a duty or a sacrifice it should be a law.

The timezone thing depends on the business but generally, if you're a multinational, it's good to be in a timezone where your Head office can routinely talk to it's operations easily without always having to do "middle of the night" scheduled conference calls.

If you're in London you can talk to Asia 8am your time, and NY 2pm your time, and west coast US 6pm your time. If you're in NY, it's suddenly harder, because Asia is now 13 hrs behind. If you're west coast US it kind of works, but the problem is that your 8 hr difference with Asia puts you on different days. They're already in "tomorrow" when you're talking to them.

Also in financial markets, London has an advantage because it has trading overlap with both the Asian and US marketss

Is that why Eire did so well until its recent disasters?
Efficent time zone, low taxes?

Places like Switzerland, Luxembourg, Leichtenstein and the Channel Isles have the same or similar timezones to the UK - and much lower taxes.

I think Ireland was doing very well until recently primarily because of the favourable taxation regime which encouraged foreign direct investment but there are other things at play - English speaking population, tax relief, work permits for non-EU nationals and a skillsbase strengthened by the sheer number of IT companies based in Ireland - Microsoft, Dell, IBM, Intel, Facebook, Zynga etc.

As a couple DH and I do pay a lot more in than we take out, and have done for years (I think the year we had DS we probably broke even with the state), but I'd never say "I pay your wages" to someone, it's just rude (unless you are stating a fact and they are actually work in a public sector payroll), and misses the point, I don't need the safety net now, I can't be certain I won't need it in the future. It's like travel insurance, I really hope I never have to claim but I'm not prepared to travel without it.

intersting brad.

With regards to making corps pay more tax I was saying just that to an economist friend recently and he pointed out that one of the problems with that, is that if the corps make less money then their shares don't do well.

So what I thought?

Then he pointed out that huge swathes of shares are now owned by pension funds. So if those shares perfrom badly, those funds are in trouble. And given that most of us have pensions and that the public sector ones are often guranteed by the state, there is no way the state can risk share prices.