to think a flat tax of 25% for all on everything would be much fairer?

[peapodlovescuddles]

51% is ridiculous. People shouldn't be penalised for working hard their entire life (and I know this will be controversial) and being much better than average at what they doI know the economy is in trouble but surely alienating the richest portion of society is a stupid idea?
£150,000 isn't a ridiculous salary, there are plenty of middle class professionals who aren't living a lavish lifestyle earning that much.

Right - I will put my hands up to being inconsistent in my use of terminology.

Now I am just waiting for Swedes and Quattrocento, in the same spirit, to acknowledge that they do not understand how money actually works and that (in Qusattrocento's case) she loused her figures up royally, to imply that top bracket tax earners paid 90 quid a year each, and we will all be quits.

I am rubbish with statistics and have no experience, as yet at working them out...but aren't there 19 countries that pay a higher personal tax ythan the UK....
like I said I am thick and am not really getting it....

Clearly, it's not the case that people who earn huge salaries automatically work harder than anyone else. I know a care worker who rarely has any time off, works most weekends and earns £15,000. Compare this to another acquaintance, who works in IT for four days a week and earns £160,000. Who works harder - the person who has a difficult, stressful, emotionally draining job, or someone who sits at a PC typing all day?

I agree with the person who said they can't understand how it's possible to earn £150,000 and still not have a pretty decent existence.

Not sure I agree with a 50% tax but reasons why not agree are nothing to do with who works hard and whatever else, it is because some of those people paying it are genuinely doing something to help the economy and I therefore believe that they should be entitled to keep a little more of their salary (I am talking about true entrepreneurs here, who create jobs) also, the more people earn, the more they spend and therefore this also acts as a stimulus to the economy.

I don't think anyone can argue the who works harder argument successfully. Nowadays, most people have to work their arses off one way or another.

Following on from Ali's point about entrepreneurs who create jobs - I know I keep going on about Richard Murphy but I did think he made an interesting point about people who threaten to leave the country:

'So let?s get real: these people were entrepreneurs. They?re not now. Now they?re the rich seeking to preserve their wealth. That does not mean they are the basis for building economies now. They?ve done that. And like all those who leave they do so because they?ve become risk averse ? not because they?re risk takers. Their behaviour indicates a desire to preserve, not to risk.

It?s time we learned something I appreciated a very long time ago from working day in, day out, with real entrepreneurs who ran real businesses ? that not one who was any good at it did it for the money. They do it because they?re driven to do something they believe in well. Tax makes almost no difference to that. And a 50% top tax rate will certainly have no impact at all on real entrepreneurs. Not least because their money will all be made in companies ? and you might notice they don?t pay 50% tax.

So let?s stop the nonsense on this issue and face reality. Reality is entrepreneurs need safety nets to cover their risk. The state provides that for them. Most are happy to pay for it. It?s only the wealthy who aren?t. And very, very few of them are entrepreneurial any more.'

Have no idea at all whether this stands up to scrutiny but I did enjoy it

Many people who aren a lot will continue to earn a lot. These taxes don't hit entrepreneurs because they mostly make their money when they serially sell businesses and then they pay capital gains tax at 10 or 18% and can afford to structure their affairs to live outside the tax regime or have the busienss in the name fo 8 family members or whatever. It hits those mostly on PAYE who are very high salaried earners, high paid civil servants (he he he he) and the like -basically wage slaves.

But the perceptoin of this is part of the issue. If we are seen as a countr which chops and changes the rules with no stability for years (which is how we are now seen) then you lose people's trust.

51.5% now, 60% next, 65% next. Pensions and tax allowances to go. Presumably no ISA tax relief for anyone over £50k next etc etc etc

I think you are overrating Richard Murphy PW - enticing piece but sloppy thinking - as the big X says, we encourage entrepreneurs in the UK - they pay naff-all in taxes. Then when they become wealthy they sell off bit by bit and emigrate ...

Can we bring a sense of perspective back to this thread? Under the new regime, someone earning £200k a year is going to be £5k per year worse off than they were under the old regime.

Now, I accpet that £5k is a lot of money - but in take home terms we're talking about (very roughly)£120k so, while you object to the principle, how hard is that extra £5k - £100 a week - really going to hit you?

If it was you, would you really move to Switzerland on that basis alone?

Note - that 120k take home is on the old regime, not the new one, and is based on playing it straight down the line - none of the imaginative dodges to which everyone on more than 40k a year resorts, if you believe this thread.

I don't think that's true about entrepreneurs not being motivated by money. Most will drop ideas if they aren't profitable. They are serial fortune hunters and will move from idea to idea, seeking to maximise their fortune with each new idea. That doesn't mean they won't then go on to do some very good things with their fortune but to say they don't care about the money is facile.

PW - There are a lot of very well respected tax professionals whose research support the existence of the Laffer curve. You seem to believe everything RM says is fact because it's convenient to do so, because it fits in with your political ideology when in fact the bulk of evidence from tax professionals suggest RM is wrong.

Another aside - in both calcualions I have already allowed (very roughly) for NI contributions, so take home really does mean take home.

There is something very depressing about having a tax rate of 50% or above, however minimal the effect on your take home pay. I absolutely hate the idea of the state having a bigger pecuniary interest in me than I have in myself.

Thta's exactly what DH said Swedes. He's a lifelong labour supporter, and has never begrudged a penny of his taxes, nor sort to use any fancy scheme to reduce them.
But he said that giving over 50p in a pound felt like it had gone past the tipping point.

Yes, it's depressing - that's why they call it "tax" and not "FUN-TIME!"

But that isn't really the point, is it? The point is, what is the best solution to the country's need for money? How can we pay what we need to pay without penalising people who can't afford it, especially if doing so would create costs to the state further down the line?

There's an argument to be had as to whether this 50% is going to be effective or whether, far from leaving, the disgruntled rich are going to stay and vote in a taxation-averse government. But that's not really got much to do with what's "fair" and even less to do with how the money gets spent and what on.

Paying 51.5% tax/NI means you recover less and the poor suffer. That's the simple point. The fact you annoy the higher paid and they also leave the country is just another consideration but the fact it doesn't really work in recovering extra revenue is pretty important fo the poor and it sends out a message that we penalise you if you work hard, just as if you saved for old age you now get 0.5% interest on your savings and if you saved nothing you get your income made up to £200 a week by the state. Such dreadful m essages to give out to people.

What is fair? That people pay less tax as they earn more.

"Paying 51.5% tax/NI means you recover less and the poor suffer. That's the simple point." In what way do you recover less? You might not recover enough extra to make it worthwhile, but that's different.

"we penalise you if you work hard" - no, we ask you to contribute proportionally more if you earn huge sums of money. Not the same thing at all.

"Such dreadful messages to give out to people." God, yes - I dread to think of my daughter growing up to believe that helping the poor, weak and vulnerable is a good thing. They'll be shutting down the workhouses next.

"What is fair? That people pay less tax as they earn more." I would love to argue with you on this but I can't even see how it's meant to make sense so I don't know where to start.

Once people's needs are met then I don't see why some people who are capable of earning a lot more shouldn't keep that. I don't see any fairness in taking more away from people just because they earn more. I'd like a capped flat tax with say a maximum tax contribution of £50k a year even if you earn say £300m. I don't see what's unfair about that.