Budget 2021: How much will it cost the UK and how will we pay?

[Nick]

You are very fond of inventing straw men and attacking me for saying things I didn't say.

I never said that poor people pay more tax than rich people. What I said was that taking all taxes together, not just income taxes, the [HIGHLIGHT]proportion[/HIGHLIGHT] of their incomes paid in tax is not markedly different between the top decile and other deciles.

If you want to attack what I said I suggest you actually try and do that instead of attacking something you imagined I said but didn't. Lol

Firstly I have not attacked you, I said what you are saying is rubbish: only you can change that fact.


Finally you have twigged and adjusted what you're saying, now you are talking about proportion of income being taxed. Obviously there will be very little difference as we are all subject to the same rules which are based on percentages.
I assume you will now concede and retract your view that lower paid people pay the same amount of tax?

[patman post]

It is because the top 1 percent earn vastly more.

In any case you have yet to acknowledge that taking all taxes together, not just income taxes, the top decile do not pay a markedly higher proportion of their incomes in tax than other deciles

The argument is proportions when it serves the purpose, but actual amounts when proportions run counter to the assertion. 

Along with most people and, I suspect, you, I see nothing wrong in the higher paid paying more tax. I also see nothing wrong in increasing the tax levels and thresholds as the higher paid rise up the pay scales. That happens and has happened for decades.   

But the realisation kicked in years ago that allowing people to keep two and a half pence in every pound they earned over an arbitrary amount (£20K then, equivalent to approx  £200K now) didn't encourage high earners or investment.   

But in the '70s the top rate was still 83%!

High earners have more discretionary spend, and spend more, and thus pay more VAT and other duties.   

Why let jealousy stifle ambition?   

To my mind it's better to have more people on higher pay, spending more, and doing more to keep the economy running and people in employment rather than expecting them to fund increased handouts and welfare for growing numbers of under privileged, who really should be catered for by more efficient management of all public services (eg, education, health, housing etc)...

[srb7677]

Correct, and I won't be acknowledging it cause it's utter claptrap.
Rich and poor only applies to people, not business. And people are subject to just 2 direct taxes: Income tax and NIC's, VAT is applied to most products so all individuals pay it. Are you saying people with lower incomes pay more tax than the higher earners?

I'll ask again: Where is your evidence to back up this ludicrous notion?

You are very fond of inventing straw men and attacking me for saying things I didn't say.

I never said that poor people pay more tax than rich people. What I said was that taking all taxes together, not just income taxes, the proportion of their incomes paid in tax is not markedly different between the top decile and other deciles.

If you want to attack what I said I suggest you actually try and do that instead of attacking something you imagined I said but didn't. Lol

[Nick]

It is because the top 1 percent earn vastly more.

In any case you have yet to acknowledge that taking all taxes together, not just income taxes, the top decile do not pay a markedly higher proportion of their incomes in tax than other deciles

Correct, and I won't be acknowledging it cause it's utter claptrap.
Rich and poor only applies to people, not business. And people are subject to just 2 direct taxes: Income tax and NIC's, VAT is applied to most products so all individuals pay it. Are you saying people with lower incomes pay more tax than the higher earners?

I'll ask again: Where is your evidence to back up this ludicrous notion?

[srb7677]

No one was talking about % disposable cash, we were talking about tax burden. You can try and obfuscate all you want but the bottom 50% of earners pay less than 4% into the exchequer where as the top 1% pay a third. Answer that!

It is because the top 1 percent earn vastly more.

In any case you have yet to acknowledge that taking all taxes together, not just income taxes, the top decile do not pay a markedly higher proportion of their incomes in tax than other deciles

[johnofgwent]

"f**k the poor and needy," replied my lad. "I am making telephone numbers!"

The problem is while he is focussed there, politicians are preparing to screw him. I made the same error

[Nick]

Such figures often do not take account of National Insurance contributions where most of us pay 12% but the wealthy only pay 2% on most of their income. And they almost never take account of indirect taxes like VAT or duties on fuel, nor of council tax, which proportionally take a much bigger percentage of poor people's incomes. Taking all taxes together, the proportion of incomes paid by the top decile is not markedly different from that of other deciles. And of course few of the wealthy ever pay anything like the headline rates of income tax anyway, since there are numerous loopholes there for their benefit which their accountants exploit.

No one was talking about % disposable cash, we were talking about tax burden. You can try and obfuscate all you want but the bottom 50% of earners pay less than 4% into the exchequer where as the top 1% pay a third. Answer that!

[Streetwalker]

Such figures often do not take account of National Insurance contributions where most of us pay 12% but the wealthy only pay 2% on most of their income. And they almost never take account of indirect taxes like VAT or duties on fuel, nor of council tax, which proportionally take a much bigger percentage of poor people's incomes. Taking all taxes together, the proportion of incomes paid by the top decile is not markedly different from that of other deciles. And of course few of the wealthy ever pay anything like the headline rates of income tax anyway, since there are numerous loopholes there for their benefit which their accountants exploit.

A bit off topic (sorry ) but your post reminded me of an old UKIP policy promoted by our mate Nigel . It was to do away with NI and have a taxation policy rising by % on income . I cant recall the exact details but it was certainly favourable to low and middle incomes .
If only more people were paying attention the working classes  could have had a right result .

[srb7677]

You need to understand how tax works Steve.

The 50 people who earn a million between them only pay a combine income tax of £75,000.
The single rich guy who earns a million pays £388,500 in tax. So the guy who earns 50 times more pays 260 times more tax. That's before we add NIC's to it, which will add another £100k on top.
Any post from you stating the rich need to do more just shows your ignorance, and as Pat has already said, the top 10% earners pay over 60% of the tax revenue.

Such figures often do not take account of National Insurance contributions where most of us pay 12% but the wealthy only pay 2% on most of their income. And they almost never take account of indirect taxes like VAT or duties on fuel, nor of council tax, which proportionally take a much bigger percentage of poor people's incomes. Taking all taxes together, the proportion of incomes paid by the top decile is not markedly different from that of other deciles. And of course few of the wealthy ever pay anything like the headline rates of income tax anyway, since there are numerous loopholes there for their benefit which their accountants exploit.

[Nick]

After all someone on £1 million earns as much as 50 people on 20k. So the fact that he pays 50 times as much in tax is not at all unreasonable.

You need to understand how tax works Steve.

The 50 people who earn a million between them only pay a combine income tax of £75,000.
The single rich guy who earns a million pays £388,500 in tax. So the guy who earns 50 times more pays 260 times more tax. That's before we add NIC's to it, which will add another £100k on top.
Any post from you stating the rich need to do more just shows your ignorance, and as Pat has already said, the top 10% earners pay over 60% of the tax revenue.

[srb7677]

^^^
The political ideology you mention mostly gets voiced by supporters motivated by either greed or jealousy or both. Those who genuinely believe such simplistic ideology are living cloud cuckoo land...

We on the left are not motivated by jealousy or envy - that tired old canard - but by altruistic motivations of social justice and equitability. You may regard us as misguided but try for once not to do what you always do and misrepresent our motivations. And as for greed, that mostly lurks on the political right in my experience.

Wanting a better deal for the poorest and desiring to shield them from additional costs, at the expense of the better off - those who already have most - paying a little more is hardly any definition of greed.

[patman post]

^^^
The political ideology you mention mostly gets voiced by supporters motivated by either greed or jealousy or both. Those who genuinely believe such simplistic ideology are living cloud cuckoo land...

[grumzed]

Steve, there are significant problems in having too much progressive taxation no matter how you cut it. The higher earners already pay more tax in proportion to their income; to make a significant contribution to the exchequer the tax rate for higher earners has to go up by a large amount. Such a system was tried under Harold Wilson's government and it had the effect of the most wealthy moving to the USA, or elsewhere, and taking their spending power with them. There is also significant progressive taxation already: something like 40% of adults in the UK pay no nett tax and also the top 1% of earners account for 1/3rd of the total tax revenue; these are the people you do not want to chase away - see link to report in the Guardian (not known as a right wing paper). Yes, it is possible to fiddle about at the edges with the numbers, but the nett effect is minimal.

There is some political support for such severe progressive taxes but these are generally driven by ideology rather than the viability of the economics.

https://www.theguardian.com/business/2019/nov/13/richest-britain-income-tax-revenues-institute-fiscal-studies

[srb7677]

Steve, The tax taken is a percentage of a person's annual income beyond the personal alowance and there is already a higher percentage above a particular threshold. You can further increase the tax taken from the more wealthy by either lowering the threshold and/or increasing the rate above this. Or re-introduce a further "surtax" at a higher income. A problems with these methods, as was found out in the 1960's, is that they do not raise that much more money because there are much fewer people at these levels of earnings (see link) but it also drives the more wealthy to avoid these taxes and in many cases simply leave the country. Basically there is a limit to a progressive tax regime at which point it can have detrimental consequences and actually does not raise as much as you may first think.

I hope the link works as it is a long reference. If it doesn't there are plenty of similar graphs of income of people vs numbers of people.

https://www.google.co.uk/search?q=uk+population+income+distribution&tbm=isch&source=iu&ictx=1&fir=P5hmwlzjuY69NM%252ClUrxoE3B6RXBPM%252C_&vet=1&usg=AI4_-kTHEnpBlSbUvRONHwcaHXbPFf3H9g&sa=X&ved=2ahUKEwi94sycgJ_vAhWtUhUIHY7uBjcQ_h16BAgKEAE#imgrc=ZKvugzwVw8t09M

There may well be fewer rich people than poor. But their incomes are vastly greater which tends to counterbalance that. After all someone on £1 million earns as much as 50 people on 20k. So the fact that he pays 50 times as much in tax is not at all unreasonable.

In fact, once higher income tax rates kick in, to some extent counteracted by considerably lower rates of NI on higher earnings, and taking into account tax thresholds, the person on £1 million probably pays considerably more than 50 times what the person on 20k pays. This too is not unreasonable. It is not unreasonable to tax luxury incomes at a higher rate than incomes mostly required for basics and essentials. Nor is it unreasonable to exempt from tax a basic initial amount which mostly gets spent on the essentials of living.

Higher tax rates on income taxes are however to a large extent countervailed by indirect taxes like VAT and fuel duty, or excessively regressive taxes like Council Tax, where lower earners pay a much larger proportion of their incomes than higher ones. Taking all taxes as a whole the wealthy do not pay a markedly larger proportion of their incomes in tax than the rest of us. They do have the broadest shoulders though so they can reasonably be expected to shoulder a little more of the burden for covid. Perhaps this is best achieved not by increased tax rates on their incomes but by taxing assets so that it is their non income taxes - where they pay a lower proportion of their incomes than the rest of us - that increase.

Closing the loopholes which so many exploit would be good too. Very few wealthy people pay anything like the headline rates of taxes anyway because of these.

[grumzed]

Steve, The tax taken is a percentage of a person's annual income beyond the personal alowance and there is already a higher percentage above a particular threshold. You can further increase the tax taken from the more wealthy by either lowering the threshold and/or increasing the rate above this. Or re-introduce a further "surtax" at a higher income. A problems with these methods, as was found out in the 1960's, is that they do not raise that much more money because there are much fewer people at these levels of earnings (see link) but it also drives the more wealthy to avoid these taxes and in many cases simply leave the country. Basically there is a limit to a progressive tax regime at which point it can have detrimental consequences and actually does not raise as much as you may first think.

I hope the link works as it is a long reference. If it doesn't there are plenty of similar graphs of income of people vs numbers of people.

https://www.google.co.uk/search?q=uk+population+income+distribution&tbm=isch&source=iu&ictx=1&fir=P5hmwlzjuY69NM%252ClUrxoE3B6RXBPM%252C_&vet=1&usg=AI4_-kTHEnpBlSbUvRONHwcaHXbPFf3H9g&sa=X&ved=2ahUKEwi94sycgJ_vAhWtUhUIHY7uBjcQ_h16BAgKEAE#imgrc=ZKvugzwVw8t09M