What do you think of the 5% tax hike for those earning more than £150k - good or bad?

[soapbox]

????

According to Nobel prize laureate James Tobin, "'Laffer Curve' idea that tax cuts would actually increase revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981."

Tobin, J. (Summer 1992). Voodoo Curse. Harvard International Review, 14, p10, 4p, 1bw.

Some may remember George (H) Bush and his famous voodoo economics quote (or even remember the reference to same in Ferris Bueller's Day Off.)

From Wikipedia, but, you know, he did say it. So idea that lower tax == higher overall tax take is not uncontroversial.

Love, Tech, enjoying the debate from afar.

Honestly ducky YOU ARE DOING MY HEAD IN ...

"the fact is the people you are claiming are not contributing enough are the people who look after the rest of us and enable us to have decent well paid jobs"

Will you please read my posts? Please? Before talking nonsense? WHEN HAVE I SAID THAT THE LOWER PAID ARE NOT CONTRIBUTING ENOUGH? I HAVE NEVER SAID THIS. THIS IS IN YOUR HEAD

Wilf made a point which is frequently and erroneously made that the poor pay the greater share of income tax. I pointed out that this is not true. It is an academic debate.

Swedes no need for such drastic action - just stick the excess in your pension fund, which of course is tax free!

Wilfself, where are you getting the figures to back up "90% of all people earn LESS than 50k a year and contribute 78% of the tax burden "?

According to HMRC the top 10% in terms of income are paying 53% of the total income tax take, which would imply that the remaining 90% are paying 47%.

This table also shows how the average tax rate suffered increases as income increases.

People who earn less actually pay a greater proportion of their income in tax. We aren't just paying income tax here guys, we are paying VAT, customs and excise, council tax, NI, fuel duty and a whole host of others.

They also get a worse deal on everything pretty much. For instance, it's poor people who can't pay the utilities on direct debit and get a lower rate. It's the very poor who are forced to have meters and pay a MUCH higher rate.

Soapbox - Oh we already do that. But it's a bore that you can only invest 100% of your gross income in your SIPP. And I fear we will be very soon at the £1.6M limit - daren't look to be honest, just in case we have nowhere to divert earnings.

You didn't QC, but you were part of a debate including this post to me from mamakin:

Wilfsell - i mentioned in my post most low earners are in receipt of some kind of benefits so yes of course they contribute but not on the same scale as the high earners. And yes they're a minority but many of them earn considerably more, therefor contribute considerably more. People who are earning millions for example.

And seriousone's point that:

Yes, WIllself, it is a pyramid: It's a small number of highly paid people paying for lots of other people. Many of those DO work, and work hard, but (beneath that) there are lots more who sit on their arses (or worse, when THEY work DO expect every penny for them selves but still expect 'their' benefits)

Your own response to me in this context was:

it remains an ECONOMIC FACT that the higher the tax rates, the less tax gets collected.

So in the context, I think I'm perfectly entitled to interpret your responses in the light of those. I am not disagreeing with you on the facts. I am disagreeing with you on the interpretation. I agree with you that 50k is wealthy compared to most of the population, and that - as you say - 19k is 'average'. But that this somehow demonstrates that the 'rich' (which in this context means those earning over 150k, since that is what we were talking about) are propping up the rest of us with their taxes is laughable.

Good. It means everyone has to tighten their belts together, instead of it just being the poorest people.

But of course the tiny percentage of people who earn a comparitively huge amount of money pay most of the tax. Of course they do. That's just so obvious.

Because all teh rest could not afford it. You cna't take money from people when the money isn't there.

I do not understand what that argument is all about.

And I can hardly credit that in today's reeling economic climate, people still talk of market forces dictating what people's earning worth is as if that really is a true reflection of what those people and their jobs are worth.

Someone asked further down the thread why this measure will not be introduced until 2010. The answer is because it is a political stunt to appease the majority not affected.

Those affected will manipulate their earnings (by various perfectly legal methods) so that they are not affected.

For instance, it's poor people who can't pay the utilities on direct debit and get a lower rate. It's the very poor who are forced to have meters and pay a MUCH higher rate.

My Mum was on income support 3 years ago and in a council property with a metre, I went mad, got it changed over to DD and she saved a fortune, it's not poor people that have to have metres it's those who cannot manage their finances to ensure that a DD gets paid every month that have to have metres.
My Aunty still has one now because the only way she can budget is if she physically takes the tenner to the shop and gets a card to put in the metre, mad but true.

Ladymuck

That's what I was looking for!! I supplied Wilf with some data which stacks up with this (see link below). The data was quite old - back to 03/04.

If you read the thread carefully, you will see that Wilf has problem with measures of central tendency.

OK ladymuck, I am guilty of taking QC's original source at face value [hands in academic credentials and gives back PhD; joins job queues at job centre]

I merely applied the income percentiles stated by the National Statistics site to her/his original figures.

I ought've checked my facts. Perhaps the HMRC are right...

I do not have a problem with measures of central tendency you cheeky mare: I was quite correct in my application of the income levels.

Your original data was wrong matey.

Why is the introduction delayed? Because there will be an election before it gets introduced. As I noted earlied I'm far more worried by the £10bn to be found in "value for money savings in public spending". How does that hole get plugged?

Good-ish but not good enough. Lower start point and 50% would have been better.

Hi Pointy

You're wondering what the argument is? Wilf made a point which is frequently and erroneously made that the poor pay the greater share of income tax. I pointed out that this is not true. It is an academic debate.

I'm interested in the point that Tech made -that's something to think and read about.

Wilf - as for trying to lump me in a-la-ducky with people who are arguing some quite unpleasant views, that's lazy thinking. Hope you do better than that at work!

Which reminds me, I had better get back to mine ...

I'm enjoying this thread.

I think it's a good thing. I no longer have to carry the guilt of being a top rate taxpayer.

What a shame we've had to wait for 11 years and total financial meltdown to get progressive taxation from a Labour government though.

I've just finished my work. I won't be paid for it.

why am I considered so worthless? (that's sort of a sheep noise) Why can't I have the rare and valuable brain and talent of a banker? then I would deservedly be paid many several thousands

But we haven't got this tax increase have we. It's not being implemented until 2010. Labour donit really want to do it. They just want to be seen to be doing what they think they ought to be doing. It's a stunt with an election in the frame.

Wilf just had her triangle the wrong way up.

The top earners should pay more tax I think.

Well I think that they're testing the waters. Once they get it into public thinking that it is really a good thing (and of course by linking it to fat cat bankers it is going to be even more popular), then the next discussion will be about the starting point of the new top rate (and indeed the rate itself).

But the prebudget report itself strikes me as a misfire. The VAT change may not even get passed onto consumers. The threat of tax increases in 18 months time is not going to persuade people to start spending now. Bringing forward capital spending may help the construction industry for a while, but that is a fairly transient workforce.

Do you think it is a stunt by Gordy so that he WON'T get re-elected, so that some other poor sucker has to pull the nation out of the pit into which he and Blair have sunk it?
Or is that a bit too conspiracy-theorist?