To think it's depressing that everyone seems to think after this recession we should just return to exactly how things were?

[kake]

Does anyone else get this sense? What I mean is that everybody is lamenting this recession, quite rightly as it's awful, and I feel for everyone who has lost their job or is struggling.

But on the other hand there doesn't seem to be an acceptance that in some ways this has been at least a little bit caused by complete over-consumption in the good times and that we need to change our ways a little bit. Or a lot. When people talk about house prices especially, the consensus always seems to be that if there's any talk about a recovery that must be a positive thing, with the implication that we should be getting back to stupidly inflated house prices as soon as possible.

I find it depressing, as someone who didn't buy partly because we couldn't really afford it but also because we were really cautious and didn't want to overstretch ourselves. But now we're seeing a lot of friends who did somehow being rewarded as their mortgages have been slashed.

I'm also someone who wishes that taxes had been much higher for what I consider to be well paid people (and that would include my DH!) during the boom, so that there hadn't been such a disparity in income in this country then. It's a shame that higher tax levels in future will have to pay off debt not contribute to the national benefit! If I mention this to (well paid) friends they look at me as if I'm mad, although they are people who in principle I think sort of do believe in equality, just not if it affects their/our pockets. My view is that as satisfaction with income is largely relative (ie it matters more to people apparently that they get paid more than their neighbour than their absolute wealth), then if everybody is taxed more at higher income levels, then we'd all be in the same boat and it wouldn't make much difference.

But I feel like I'm STILL swimming against the tide, just when I would have thought more people would begin to feel like this. We have lots of friends who work in the banking sector for example who've been through a bit of a rocky time but now seem to be out the other side and better off than ever and sort of with no lessons learned!

It just seems ... so wrong! Or maybe I just got out of bed on the wrong side. And this post isn't as articulate as I would have hoped!

Thanks for that ABetaDad - very interesting and certainly explodes a few myths.

40% of the entire tax burden in this country is paid by just 10% of taxpayers.

Kake I absolutely agree with you. And I think the more we talk about this on here the better, since no doubt we are being watched by various policy people in the main parties.

LeninGrad - I do think income inequality and especially wealth inequality has damaged UK society.

The difficult balancing problem is that we have to provide incentives for real wealth creators to create businesses etc but at the same time produce a system of taxation that does not, for example, impose an effective 90% marginal rate of tax on each extra pound of earnings of the very poorest people as is the case in the UK right now.

To do this I do think we need zero rate of tax for all earnings up to say £10k for adults and say £5k for children with those allowances transferable to say the working parent if say the other parent stays at home to look after children. That way a family of two parents and two kids could earn £30k without paying tax and on only one person earning an average wage. We would need a cut in wasteful public spending and a 50% tax rate above the tax free band.

I believe I am right in saying that France has achieved something like this through a series of allowances that means many ordinary families pay little tax. Not surprisingly, France has a lower Gini coefficient and is a 'fairer society'. However, the problem is that France has imposed punitive tax rates on French business owners who have all decamped to Belgium or London.

It is a tricky problem to solve but I do think the UK could do more to move to a high basic allowance and flat tax system as I described above.

That's really interesting Abetadad, especially about France. I guess one of the problems with tax and economies is that it's incredibly complex and needs to be carefully explained to people, including me and I would say that I am reasonably intelligent and interested! At the moment I think as soon as a (Labour especially) government starts talking about tax, intelligent debate is drowned out by people shouting don't take my money, even when those very same people might be better off as a result of the changes. The only 'acceptable' way to talk about tax is in terms of cuts across the board, just as the only 'acceptable' way to talk about house prices is with approval if they look like they are going up.

So now Mr Darling's found a crystal ball to tell us all when it'll be over.

He's soooo confidence-inspiring.

kake....trust me...it will all be back to how it was...people have short memories.

i'm lucky...my house has only lost £50,000

Just watched the budget - I am aghast at the appalling mess and missed opportunities.

The Pound Sterling is collapsing, the stockmarket is off and the Gilt market is in chaos.

I have never written a swear word on the internet but I am tempted.

what do you think they missed doing?

Sterling is tanking by the minute, I hate to say I told you so but Inflation here we come, the house price crash could well be off

Well, the following measure were idiotic:

Raising alcoohol duty but NOT equalising of tax on units of alcohol to tackle binge drinking culture was silly. Beer is taxed far too low per unit alcohol compared to wine and spirits.

Reintroducing the fuel duty escalataor on petrol/diesel is bad (I say that as a non car driver) as small business will suffer.

Tax at 50% on income is OK but should have been kicking in at £50k but with a big tax free band below that for lower income groups who are really struggling.

Massive subsidy to useless wind farms is a waste that would have been better spent on building a proper broadband network in the UK so people can properly work from home and not have to travel to work.

Subsidy to the car industry for scrapping cars - goes completely against their stated 'Green Budget' objectives. We need less cars not more!

They will do anything to keep house prices buoyant.I think inflation is inevitable.The £ is as you say tanking

Most earners over £150K will find a way to avoid the top tax band. It will be interesting to see if it actually yields as much as the Darling thinks it will.

If you're a PAYE taxpayer, there is no way of avoiding it.

how will they avoid it? it's taken out by the employer.

think it raises less than £1B a year, in any case.

Really confused. How will this cause inflation, and why will that prevent a house price crash? Aaaaargh, I don't understand any of it.

ABetaDad - while you are right that (technically) fewer people pay "income tax" in France than in the UK, all workers are nonetheless subject to "national insurance" (lots of small deductions) at around 20% of income.

And the tax deduction system creates others sorts of lifestyle disparities. For example, domestic servants are generously tax deductible, meaning that there is a large servant class, and that many not especially affluent middle-class families have domestic servants.

Oh, currency devaluation = inflation? But government won't be able to put up interest rates to control it as we're so indebted it would mean mass default? Is that right? So, still not sure how that might affect house prices. Goodness, this topic is going a bit off the point now we're on to the budget. Sorry!

Bonsoir - thanks for that. I was hoping you would come back on what I said as I wa snot sure. It was something I read on a blog elsewhere.

From what you say the tax on lower earners is about 20% and middle income families get a lot of tax deductons. Is the tax system better than the UK do you think if you are on low / middle income?

I guess it is worse if you are a high earner?

The car scrapping thing is very irritating for those of us who paid a hefty price for their cars new a few years ago ...my 5 year old car (50 000 on the clock) has been devalued by this. I expect many 10 yr old cars don't need to be scrapped and people who have an old car probably can't afford to buy brand new anyway.

What is going to happen to the old cars being scrapped? Are 100% of the materials going to be recycled or stuck in landfill.

Isn't the car thing to do with getting environmentally unsound cars (usually the older ones) off the road to help the environment?
But yes, the downside of that is cars piled up alongside our landfill.

My car is 8 years old, and I still consider it to be quite new! Will it automatically become a banger in two years?