Give everyone £48 and scrap the tax free personal allowance

[Cherrypi]

Sounds like a great idea to me. What does everyone else think?

www.theguardian.com/politics/2019/mar/11/scrap-tax-free-personal-allowance-and-pay-everyone-48-a-week

Why tax people extra and make the government pay people out again? It’s not free to collect taxes or pay benefits or even a UBI. Think that HMRC advertise it costs 0.55% of tax to collect tax. That’s for all taxes on average. Income tax is vastly more complex than VAT and is a more costly tax. But take 0.55% as the assumption- if you collect £2,500 off 9 and a quarter million tax payers, that’s around £23 billion pounds. So it’s gojng to cost £127 million pounds just to collect the money.

Then there’s the cost involved in paying it. Why? Why incur the cost for what ends up as a zero sum? You’re adding costs and creating additional financial burdens to an economy for basically no good reason.

And if you’re talking about paying people who don’t pay any tax anyway, then you’re talking about finding around £80bn in costs, with around £23bn in increased tax take. That means further tax collection. And as plainspeaking has said, there is zero evidence that it actually encourages additional economic activity.

I like this idea!
I actually think the tax free personal allowance is far too high and think it should be low or even zero.
To get £48 per week back would be great!
At the moment I think the threshold is too close to NMW.
It means that once you cross that line suddenly you have to pay tax. You might get an extra hour or two of work but only see 70% of the pay (NI as well as tax - less if you pay into a pension!). If you factor in that for those extra hours you might need childcare, suddenly you are actually worse off! Similar for the higher rate band... Someone earning £15,000 per year takes home a LOT more than half of someone on £30,000 per year who takes home a lot more than half of someone on £60,000 per year.
And EVERYONE earning would pay tax. Brilliant.

only that will happen wherever there's a borderline though.

I would rather the tax free personal allowance was higher.

if it was all taxed at 20% that would be awful for anyone on a low income.

So what about pensions? Will they have no tax-free allowance either?

What about taxable benefits such as contribution based ESA/JSA? Presumably they’ll be taxed at 20% as well.

Talk about bribing people with their own money....

Also, if there’s no tax free allowance then how will HMRC ‘claw back’ underpaid tax?

How will HMRC process taxable benefits such as company vehicles and private medical insurance if there’s no tax code.

This sounds more and more stupid the more I think about it.

So, let's get this straight:
Person A earning £9999k a year gets £48 which they don't need a week.
Person B working 40 hours a week min wage and paying most of that out in childcare now has to pay tax, leaving them with even less.
Person C who has no intention of ever working, yet can work, now gets £48 extra on top of all their other benefits.
Monumentally shit idea.

Silly idea. Yet another reason to stay jobless rather than working.
THIS ^

From a purely administrative point of view I would guess that people with a single source of income of more than the personal allowance would continue to get the personal allowance instead of this. It's just a different way of paying the same amount of money.

This is why I no longer vote Labour.

And anyone on benefits would have their benefits reduced by this amount, so the only advantage for them is that it gives them some unsanctionable income.

🙄 stupid idea!!!

Nah I personally think I should be able to give all of my tax free allowance to my husband I’m not using it

So with no effort or work you could get £48 a week on top of any existing state benefits.
It's the shittest idea I've heard yet.

Let’s face it, this is all about ‘buying back’ the student vote from the Remain parties.

From a purely administrative point of view I would guess that people with a single source of income of more than the personal allowance would continue to get the personal allowance instead of this. It's just a different way of paying the same amount of money.

Apart from the fact that they’ll then be paying 40% on anything over £37,500.

The increased tax will ‘fully fund’ this allowance. WTF will then fund all of Labour’s other lavish spending plans? Will workers be paying 40% on anything over 30k?

So if we are giving it to every adult, how is it being funed ? For anyone working, it's cost neutral, because they'll be paying an equivalent amount of tax on the currently tax-free band. Higher rate tax threshold is tied to the 20% band, so if that starts lower, so does the higher rate, and that presumably will fund the payment to people currently not earning enough to pay tax.

So little incentive for anyone to earn more than £37.5k really. Really? Doesn't seem to stop people wanting to increase their earnings above £50k or whatever the current higher rate threshold is.

Dreadful idea . Reward everyone regardless of effort? I'd have more sympathy with this argument if reward currently went hand in hand with effort. But some people put in an awful lot of effort for little reward, while others reap big rewards on a lot less effort.

So, let's get this straight:
Person A earning £9999k a year gets £48 which they don't need a week.
Person B working 40 hours a week min wage and paying most of that out in childcare now has to pay tax, leaving them with even less.
Person C who has no intention of ever working, yet can work, now gets £48 extra on top of all their other benefits.
Monumentally shit idea.

Person A already gets £48 pw in the form of the zero income tax band. They'll actually lose money under this proposal because more of their income will be in the 40% band.

Person B will neither gain nor lose - their extra tax will be compensated for by the £48.

Person C - I suspect in due course benefits will reduce to take account of the fact that they have their £48pw.

Person D on minimum wage who is working on a zero hours or low fixed hours contract, desperately trying to get more hours will at least have a guaranteed £48 pounds a week.

Person E in £200000 pa will lose out because they'll be paying 40% tax instead of 20% on an extra £12k or so, but not getting £48pw to compensate.

So it's basically transferring money from the highly paid to the poorer section of society. Which may be more effective than "trickle down"

So it's basically transferring money from the highly paid to the poorer section of society. Which may be more effective than "trickle down"

I earn 56k, my DD earns around £40k. We'd be worse off under these proposals despite having high costs of living (we live in SE), childcare for two children and already a reduced entitlement to child benefit. We may be considered 'highly paid' but it's not reflective of our standard of living. My company have not had a cost of living increase in 4 years although I have had a couple of promotions so I have seen my income go up.

I've been a lifelong labour supporter until recently; they no longer represent the hard working everyday Joe.

So under the proposal, those who earn more than £37,500 will pay 40% income tax rather than 20% on their earnings from about £37.5k pa to £50k pa; so that people who earn below £12.5k will benefit.
Apart from increasing admin costs, that will seriously reduce work incentives, for both groups! The lower earner now faces a 20% rate from the first pound earned ; and there will be part-time working parents for whom 80% of wage does not cover childcare costs.
Similarly for someone on 40k and therefore also paying 12% NI, the effective tax rate would be 52%! They may be better off to work part time.
And if enough people reduce their hours and earnings, the policy won't be self funded.

they’ll then be paying 40% on anything over £37,500.

I missed that bit. It doesn't necessarily follow that abolishing the personal allowance should mean the higher rate threshold gets reduced, but apparently that is part of this particular proposal

This is why I no longer vote Labour

Same here

For anyone working, it's cost neutral, because they'll be paying an equivalent amount of tax on the currently tax-free band. Higher rate tax threshold is tied to the 20% band, so if that starts lower, so does the higher rate, and that presumably will fund the payment to people currently not earning enough to pay tax.

Annnnd yet it’s NOT cost neutral because of the cost of collecting and distributing the money. The cost of just collecting the money would be £13.75/person. So straight up there’s a loss of £9.75/head JUST TO COLLECT THE MONEY- if you presume there is a similar cost to pay the money, then you’re talking £22.50 loss per person to collect and pay the money.

There are approx 30 million tax payers, of which approx 5 million pay the higher rate including around 400,000 paying the highest rate. So 5 million people paying an additional 20% on the lowered 40% bracket equates to another £2,500/person collected as well as another £625/person on the highest rate. That makes, after a £22.50 loss/person, another £12.75bn collected. Once again at a cost of £140 million to collect and distribute. So that leaves £12.61bn left over. To fund approx 30 million getting paid £2,496/year. Which is a cost of approx £75bn.

You’re about £61bn short of change there.

If you want more tax to distribute as benefits why are you increasing tax to pay out to everyone £2,496? That’s just stupid. If it’s about redistributing money then just our and out tax more and increase benefits. That way at least you’re not wasting money paying money back to people it’s not intended to assist. But given as the top 1% already pay 28% of all income tax, I’m not sure just how redistributive you imagine income tax should be.

I think the personal allowance is too low. I think people on NMW should not have to pay tax so the PA should be 37.5 x NMW x52 whatever that works out to be.

I would then lower the HRTT and additional
Rate thresholds to compensate.

But given as the top 1% already pay 28% of all income tax, I’m not sure just how redistributive you imagine income tax should be. I wonder what proportion of income the top 1% receive?

Yeah. That's great.

So people like me, in the middle earning 26k. But a single parent already struggling with childcare cost, cause I earn a little bit too much to get any help dont get any benefit.

While people who dont work do.

I have been considering fucking off my career and working part time (career suicide in my work). Because I would get more UC. There would barely be a difference in my bank. Save money on petrol and everything else.

No point struggling with money now and building my career, so eventually I will be ok for money. What's the point.