Nick Clegg - a nice idea could be better though.

[MrPants]

I'm referring, of course, to his suggestion that the personal limit for Income Tax should be raised to £10,000.

I've got a better idea though - how about reducing Income Tax AND National Insurance (for both employers and employees) for all minimum wage jobs to zero. After all, if the state has declared that you may not sell your labour for less than £6.08 per hour because any less than that is considered slave labour, it seems a bit rich that the government can still extort (with threats and menaces) around 11% of the fruits of your labour off you.*

Here's a thought, why not set the personal limit tax threshold to whatever the minimum wage is multiplied by a 40 hour week multiplied by a 52 week year? This way, everyone earns around £12,500 tax free - which, if my memory serves me rightly, is around about the number mentioned for a minimum living wage. Also, the threshold will vary each time NMW is changed.

* I still not in favour of the NMW though.

I'd support that as long as it applied to everyone equally and there was a flat rate tax and NI for everyone earning over that amount. The current 20%, 40% & 50% creates unfairness, disincentives and leads to all kinds of dodges and loopholes as people try to stay out of the next band up. If everyone got the first £12,500 tax-free and everything after that was taxed at (number out of the air) 25% flat I think the revenue would gain.

Abso-fricken-lutely! AMEN to that!!!

It's a trick I think Clegg and the LDs are missing, actually. They've got rather hung up on the £10,000 personal allowance part of the argument when I think they could do some serious good if they broadened that out a more general wide-ranging simplification of the tax system. We've got so many exemptions, special cases and different rates applicable, and all changing at every budget, that not even the best tax accountant can keep up with it all. It's too much. My flat 25% tax example. If you work that same number out to corporation tax, capital gains tax, unearned income, (VAT even, there's a thought) instantly scotches all those situations where it's better to declare profit rather than income or take share options rather than a cash salary.

I have a dream..... new-look tax regulations that take up no more than six sides of A4. :) There you go Nick. You can thank me later.

I like that idea OP, makes perfect sense

CogitoErgoSometimes How about taking that idea one step further and accepting that all taxes (even VAT and corporation taxes) are ultimately paid for by an individual somewhere - whether in the form of lower paid workers (NI & Inc Tax), smaller dividends for shareholders (Corp & Cap Gains), higher supermarket bills (VAT) etc, etc, etc.

If those seperate taxes were abolished and all government sponsored theft revenue was collected from an all encompassing income tax with a nice healthy personal limit and a flat tax above that level, there would be a much simpler system that would fit on the back of a postage stamp, and wouldn't discriminate against those who can't afford a decent accountant.

The current system of taxing the poorest in our society, syphoning the money through a layer of tax collectors, then syphoning off yet more money by letting the poor beg for a handout, before syphoning off still more money through the benefits assesment system before giving back to the poor a pittance of money similar to that which they've just confiscated is utter madness.

The personal allowance has dwindled in value over the years though, and even the increase to £10k does not restore it to its value (as %age of average wage) that is had a while ago.

If it were raised to the MNW 40 hour week level, it would achieve the aim of OP, without necessitating the costs and upheaval of a new system.

Edith I am the OP! I think an all encompassing flat tax would be better for the UK.

sorry MrPants - I seem to have responded to the first part of your post, without taking proper note of the second: on which we seem to be in total agreement!

It is all rather a money-go-round, it's true. And it needs a serious rethink both on what is collected and what is distributed. Unlike yourself I support a tax on consumption rather than simply income.... bit like duty on alcohol and fuels etc., if you don't use it, you don't pay for it. But, as we can see with the upcoming storm on the Universal Credit and the hoo-hah about the CB change, whenever you go for any radical long-term simplification of these systems someone will always point out that, because of the maths, there's a minority who are worse off short-term. The ultra-simple flat-rate tax system that we're all cheerfully talking about would be slapped down on the basis that it 'penalised those on average earnings!!' and was a 'a tax cut for the government's wealthy cronies!!'. And then there would be amendments and dispensations and compensations and allowances and we'd be back to something the size of a telephone directory.

The tories might have been brave enough to push it through if the economy wasn't so shaky but I can't see it at the moment.

I know where you are coming from about consumption tax but I don't think that VAT is particularly fair. It discriminates against the poor and those with large families. Likewise, only taxing luxuries (alcohol and fags - fuel isn't a luxury IMO as cutting duty on petrol / diesel would be as effective a fiscal stimulus as any other I can think of off the top of my head) leads to a smugglers charter.

In a libertarian utopia, all tax would be voluntary - in the real world, I think it needs to be income based. Under a flat rate of 'all encompassing' income tax there is the ability to see just how big the tax raid is by the state and, by knowing how big the problem is, do something about reducing it. Even if that means reaching for the piano wire and lamp post treatment

Cleggs comments infuriated me. His manifesto stated the personal allowance would increase for all tax payers up to those who earned around 100k. Now the personal allowance has been increased for basic rate tax payers only and he is proposing a further increase for basic tax payers only. Meanwhile the higher rate tax band is being brought down.

Higher rate tax payers have also lost the small tax credit they were entitled to and are about to lose child benefit.

All the three main parties are doing is taking more and more from people earning 40 to 60k and giving the money back out to those who earn less than 40 k to the extent that soon people earning 40k will have less disposable income than those on say 32k.

Communism?

Yes, the 'tapering' thing is not good. It penalises yet more people in the HRT bracket on top of existing sacrifices and I'd be warning Nick Clegg that those 'broad shoulders' they're relying on are getting a national case of sciatica. People are already trying to avoid tax and keep benefits by staying under the threshold and coverting salary to childcare vouchers etc. What message is it giving?.... 'Work harder, advance your career, give us everything extra you make'? Thought that was the Labour party's trick. :)

Transferable personal allowances would be great as well if one partner doesn't work.

I think they are rowing back on the cb as it affects the independent taxation principle. In theory, I could not know that dh is higher rate, and he could not know that I get cb.