To think everyone should pay the same income tax?

[bigch]

It seems unfair that the people who payed thousands for university, work full time to earn a higher wage or have their dream job are contributing more of a percentage of their income to the system than those who just wern't bothered or decided to have a lower key job.

20% of 100k is a lot more than 20% of £18k and they don't even use the same services such as public school, benefits, ect.

Not rich myself, decided to become a flight attendant because it was what I wanted, but my more hardworking richer friend shouldn't be paying more for my lazy ass to live, I do it fine on my own.

It may be the case that the wealthy don't use public health care or education but that doesn't mean they don't benefit from these services. When a wealthy businessperson hires employees, she needs them to be able to read, and for them not to have died of preventable childhood diseases. We always think of the personal benefit to these services, but they also exist to benefit society, so I don't agree that the wealthy (who may chose to give up the personal benefit) shouldn't have to fund them.

Furthermore, things you don't think about every day -- such as that having a solid court system is one of the ways we protect property rights. Even if a person doesn't actually get involved in a lawsuit, the existence of the court system provides protection for all her property. Same is true for the banking system, etc., and the rich benefit from these things more than the poor because they have more property to protect. Police, fire and national defense are more visible examples.

Here is an article from The Economist from 2005 "The Case For Flat Rate Tax".

It counters some of the oft-peddled misconceptions about what it means (and does not go in for any politics of envy). It has real examples going back to 1994, from a number of European countries, of how it works; and examples from a number of places where it doesn't.

bbface, it's not a phrase for any specific thing, I'm just describing any wealth that's locked away (in cash or especially in an asset) and not being circulated or invested in business as less useful to the economy than work that actually creates new units.

There's a balance to be sought between how you tax them. Obviously if you started taxing wealth at 100% that wouldn't work because (aside from the moral questions) it would also affect the amount of work people did, if they worked because they were hoping to acquire wealth. At the moment there are just such huge disincentives to work, and hardly any disincentives to keeping wealth sitting around.

YABVU and incredibly snobby about "lower key" jobs. I've been to university and don't think that I deserve to pay less because of that fact. The more you earn,the more you should pay.

And by the way,you don't need to have been to university to earn a high salary. Shocking I know!

YABU, obviously.

the most biscuit-worthy thread I've come across for at least two days...

From each according to his ability, to each according to his need.

I would support tackling the companies whose tax avoidance makes the money lost to benefit fraud look like change lost down the back of the sofa. I would also support the proper taxation of those on £150k+pa who use accountants to end up paying less tax than those on £80k.

And I want VAT removed from heating fuel. It is completely unfair to tax essentials as the poor lose a much higher % of their income to it than the wealthy. It's the fecking candle tax all over again.

I think the guy working outside in all weathers has a harder job than someone in a suit at a computer all day.

The OP said 'public school'. Are you a republican?

this thread cant be serious, your wage is not an indicator of how hard you work, some people are just very fortunate, the more you earn the more you should pay you will still be a damn site better off than those earning less than you.

Mitt Romney doing under cover work maybe?

YABVU

Everyone should not pay the same amount of income tac, or the same rate of income tax.

Teapot has already said it better than I can:

Teapot13 Fri 26-Oct-12 08:37:17
"It may be the case that the wealthy don't use public health care or education but that doesn't mean they don't benefit from these services. When a wealthy businessperson hires employees, she needs them to be able to read, and for them not to have died of preventable childhood diseases. We always think of the personal benefit to these services, but they also exist to benefit society, so I don't agree that the wealthy (who may chose to give up the personal benefit) shouldn't have to fund them."

No rich ambitious person could function for 5 minutes, let alone earn money, without relying on an infra-structure provided by underpaid and modestly paid workers who in their turn would not be able to do their work unless their needs were met.

Or are people seriously suggesting that the wealthy do not need a sewage system, functioning roads, rubbish collection, medical care, teachers for their children, people to produce their food, people to sell their food?

Show me one person who is able to live their wealthy life-style relying entirely on other wealthy people. They'd have to hold their shit in for a start...

Has anyone bothered to point out to the OP yet that until recently nobody 'payed [sic] thousands for university'?

Quite a big hole in her argument there...

(Unless her 'neurosurgeon friend' only left school a couple of years ago...)

YANBU.... There's a really sound case for upping the personal allowance and then charging a flat rate for everything else.... income, dividends, sale of assets etc. The more thresholds, allowances and exemptions there are the more scope there is for tax avoidance. A simplified system would generate a lot more tax as it would be far less open to abuse.

Tuition fees came in in 1998, so to be fair there's a good ten years' worth of graduates who paid them.

Cogito, I don't think "simplification" is really a valid argument when applied to the income tax bands. The bit of tax law that says "the basic rate will be x, the higher rate will be x" is the simplest bit of legislation in the whole stack of it. It's about ten lines long, and practically impossible to get round in and of itself. It's the reliefs and exemptions that allow it to be misapplied that are the problem. Get rid of them, and you get rid of the problem. You could have a thousand tax bands if you wanted, they would only be as avoidable as all the exemptions and reliefs allowed.

The 20%/40% threshold itself causes a few problems for those a few thousand either side. Look at the Child Benefit example. There's a quite a lot of discussion how people can bring their declared income below the threshold by making extra pension payments or receiving vouchers. The fact that Capital Gains Tax and Income Tax are at different rates means it becomes an incentive to take income in the form of shares or other assets rather than straight pay. Admittedly the 1% of the population that has vast wealth will still pay accountants vast fees to move money around so that it works hard and attracts the least tax but a flat rate of Income/GGT would have quite a large effect all by itself.

YANBU. I think it would be a novel, envigorating idea in one of the longest periods of recession we have had, and would discourage tax avoidance. It would also save money in collecting it, and I have a strong suspicion that the actual tax intake would increase.

I'm a higher rate tax payer, and I work part-time, it is a disincentive to work more hours because after NI, I'd get less than half of what I earned on top of my current hours. So for that part of my working week, I'd be earning what someone without my skils and experience was earning. Whats the point?

Interestingly on that one, CGT and Income Tax used to be at exactly the same 10/22/40 rates in the 90s, so avoidance by reclassifying money wasn't a problem then. I think it was actually Labour (of all people) who staggered the rates and thus made avoidance a possibility. Returning to the old position would achieve exactly the same as a flat tax rate.

Taking salary in vouchers and making pension payments, of course, are both things that enable you to avoid tax full stop - whether or not they help you get below a specific threshold. So, while it's true that they may help you avoid more than if no threshold was in point, they are the vehicle that helps you avoid tax. They exist, and can be legislated on, independently of tax bands.

Sorry OP, I think this is nonsense. I speak as someone on normal rate tax, whose husband is in the higher-rate tax band, though we are not super rich.

People on lower incomes use a much higher percentage of their take-home pay for necessities like rent/mortgate, food, clothes. People on higher incomes may pay a higher percentage of tax, but still have higher take-home pay than those on lower incomes, and also a higher proportion of this is free to be spent on luxuries - or luxury versions of the basics - rather than necessities.

"They exist, and can be legislated on, independently of tax bands."

True but I think the tax bands focus the mind, as with the CB issue. The minute there is a financial advantage to stay under rather than over a particular sum of money, people will do what they can to stay under.

Just realised the OP was suggesting we all pay the same amount rather than the same percentage. Obviously that's a pile of crap... :) ... but someone earning £100k today gets to keep 64.8% of their income, £50k you keep 71.5% and £25k you keep 78%. The lower the income, the greater the % you get to keep at the moment and, of course, once it gets to a particular limit things like Tax Credits start to apply.... which is a whole other conversation about thresholds providing incentives to behave differently

I think the "focussing the mind" thing is exactly why I'm suspicious of arguments about things like flat tax rates. I agree people obsess over income tax bands; I just don't think that's where the big gains are to be made, either in simplifying the tax system or making it fairer (which may, I hope, come to the same thing). I don't want to see the fixation on income tax bands encouraged and perpetuated, because that fixation only ever helps one rather small, rather wealthy class of people.

It reminds me of the biscuit illustration - a banker, a low-paid worker and an immigrant sit at a table with a packet of ten biscuits. The banker takes nine biscuits and says to the low-paid worker "Watch out for the immigrant, he's after your biscuit!" While we're all arguing over what the income tax bands should be, because those are the taxes we're all familiar with, the state of wealth taxes go unquestioned and largely unreformed. People make an almighty fuss about the 50p tax band, but don't get excited about the CGT exemption that means a developer only has to "live" in a house they've done up for a few weeks to avoid a massive tax bill when they sell it, and that the inheritance tax threshold is about twice the average house price. It puzzles me, it really does.

Mmm, biscuits...