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Tax simplification........Yet a tax cut for the wealthy is still a tax cut for the wealthy.

16 replies
OP posts:
niceguy2 · 05/08/2011 15:44

Economically I think a 50% tax was always a bad idea. It was merely a political stunt implemented by Labour to flank the Tories. Opposing it would make them look like they were protecting the rich. Endorsing it would have alienated core Tory supporters. As a way of raising money it is/was poor and arguably there are many better ways to raise money.

That said I think now is not the right time to cut the 50% rate as it does indeed send out totally the wrong signals.

Riveninside · 05/08/2011 15:49

I read cutting the rate to 45% would lose the treasury some 750 million. Thats a huge amount of monet to lose and would easily pay for EMA, suretsart etc etc

Tortington · 05/08/2011 18:19

balanced post there niceguy

OP posts:
EdithWeston · 05/08/2011 18:31

Riveninside - no idea whe the £0.75b figure on revenue reduction comes from.

But it won't cover the (previous) annual SureStart cost (£5b pa).

Tortington · 06/08/2011 07:47

is that how much sure start cost?

OP posts:
scaryteacher · 06/08/2011 19:35

If there were to be tax simplification so that everyone could understand the rules, there might not be so much tax avoidance and evasion.

imright · 06/08/2011 20:28

Surestart cost 3billion in 2007.// The billions it cost were criticised by a report, that said it on the whole it was a waste of money, as it did not bring in the groups it was intended for. I can agree with that, I used them, but the poor ethnic minority groups did not use them, mainly due to cultural differences. The Mail also carried a piece about the cost and the waste. //

edam · 06/08/2011 20:30

scary - tax simplification that was carefully drawn to avoid giving the wealthy an unfair advantage would be good.

Funny how £750m is peanuts when it's the cost of a tax break for the wealthy, but jolly significant indeed when it's the cost of benefits or services for ordinary people or the poor. £750 million would keep a lot of youth workers in jobs where they help vulnerable young people make something of themselves instead of being drawn into crime or a lifetime in poverty. That would be an investment in society that would pay for itself many times over. £750m tax cut for the wealthy would do fuck all for the rest of us.

EdithWeston · 07/08/2011 00:19

The total raised in income tax (according to is £146 billion. So this reduction in the planned increase is going to make a drop of less than 0.5% of income tax revenue (and income tax is only about a quarter of Govt revenue).

So in terms of total budget, it actually isn't that big. It may be symbolically important (if you do well, we'll tax you until it hurts), but let's not fall into the trap of thinking that this measure - yielding as pointed out by a poster above about £0.75b - is enough to 'save' EMA or SureStart.

I'm not trying pro or anti this sort of cut (don't know enough about the well-documented unintended consequences). I am trying to point out it is a drop in the ocean. As even with current cuts, we are still borrowing at record levels.

edam · 07/08/2011 13:30

It's big enough to pay for a load of youth workers, and nurses, and social workers, and Sure Start Centres, and lots of things. Or to avoid some of the cuts to the NHS - it would pay for a lot of the hip replacements that are being postponed leaving people in pain and increasing disability. It's not trivial.

edam · 07/08/2011 13:31

Or to keep about six large acute hospitals going for a year (last time I checked the annual budget of the average hospital, might only be five or so given inflation).

noddyholder · 07/08/2011 13:34

It is unbelievable(or maybe not tbh) that they think it brings in so little it is not worth it! What ever happened to all in it together eh? This tax rate is a contribution and anything is worth contributing to the mess that is our economy today. I think now is the time to really get harsh and tax rental income on btl ,second homes,multiple cars etc.

EdithWeston · 07/08/2011 16:43

Edam: you have lost some decimal points! The annual budget of Guys/Thomas hospital is just over £0.9billion.

BTW if "we're all in it together" perhaps all income should be taxed at 50%?

scaryteacher · 07/08/2011 22:43

You already pay car tax per car, and tax through the fuel prices and IPT through the insurance prices, so cars are already taxed. Taxing those who own more than one car would hit those in rural areas where two cars are necessary as there is either no or insufficient public transport (two buses a day perhaps, one out, one in and neither going in the right direction). Not everyone lives in a town.

LemonDifficult · 07/08/2011 22:50

There is an economic theory called the Laffer Curve that supports the theory that at a certain point raising taxes actually brings tax receipts down.

If tax is at 5% then no one bothers to avoid paying it, they just accept it. When tax is at 50% then those who can make arrangements to take funds out of the country/put the money where it won't be taxed do so. High tax also acts as a disincentive to work, therefore becomes negative for overall productivity.

LemonDifficult · 07/08/2011 22:52

Oh, sorry, that was explained (sort of) in the article!

Fifty percent tax is too high for anyone's earnings, top or bottom.

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