Why do rich people pay more tax ?

Indeed, but it's comfortable enough. Perfect? No. But compared to many places around the world, I'll put up with it. Yes, I'd love taxes to be lower, but I'm fairly happy with the status quo. Yes, it is true that chosing labour, lib dem or tory here gets only minor variations on how life is, compared to choosing between (if they could), say, Mugabe and Tsvangirai.

The thing is we do have a fairly open system. If you genuinely believe that things should be different, stand for election.

 

Having different tax bands does seem a flawed concept to me as, surely, the point of a percentage tax rate is that you pay more the more you earn which is sort of fair in some ways. Making people pay tax at an even higher rate because they earn more does seem very unfair and, as has been said, hardly encourages people to better themselves career wise.

I know some harp on about ability to pay but that concept doesn’t always work i.e. the things you buy – cars, houses, food, drink aren’t based on your ability to pay they cost the same for everyone.

Where there seems to be a big flaw is that we tax the really poor and then make them claim some money back via income support or whatever – why not just let them keep more or all of their money i.e. set the personal allowance to £10K – obviously this would let us all earn the first £10K of our wages tax free but you could set the actual tax rates to take account of this. The whole point though would be that people on low wages wouldn’t have to go through the hassle of claiming income support etc. and the cost of administering this would disappear.

It should also be possible for a non-working spouse to pass his or her tax allowance on to the working partner. As it is, if you have a couple earning £25K each then they pay less tax than a family with the same income but where only one partner works.

I’m definitely of the opinion that you get better economic growth by letting people keep more of their income. Whilst some may save more, in general if people have more in their pockets then they will by more things and services and that helps the people making those goods or providing those services.

Yes indeed I believe in small government that, whilst looking after the genuinely needy, lets the people keep more of their own money so that they can decide what to spend it on. Unfortunately at the moment the present bunch seem dead set on taxing us to the hilt only to squander billions on woefully inefficient public services.

And don’t let me even start on Stamp Duty….

Matt.

 

Don't let me start on it either. Two months ago I paid nearly a grand. Now, I wouldn't have to.

 

A grand! Bloody hell, we're looking at moving later this year and will end up paying anywhere between £9K and £12K in Stamp Duty!!

And all because New Labour not only doubled the 2nd band percentage rate from 1.5% to 3% but then neglected to increase the £250K thresh-hold in line with house prices. If they had done so then you wouldn't hit 3% until around £600K.

I mean, in '97 £250K was a lot for a house - it bought you a small mansion. Nowadays in many parts of the country you are looking at a pretty average dwelling.

Matt.

 

In fact, 'flat tax' is becomingly increasingly popular worldwide. It has already been adopted by Hong Kong (1947), Estonia, Latvia, Lithuania, and Slovakia, (all EU members). Russia, one of the G8 countries has also adopted flat tax and, apparently, the US is interested.

Generally, the rate is set anywhere between 13% and 33%. It is reckoned that a flat rate for the UK would be around 20%.

There are many benefits. More tax is generally collected, there is less evasion as the lower rate encourages payment and it's much cheaper to calculate and to collect. The only real losers are accountants and tax collectors.

Check out the section entitled "The British case for a flat tax" at The Adam Smith Institute

 

If my parents had to pay 20% tax they would have to put up their prices, thus either go under or other peoples disposible income will be reduced.

 

The rich should pay more tax. Just look at America extreme wealth and poverty, make pregnant women wait in a waiting room in advanced labour. Let a child nearly starve because his dad cannot find work for more than 6 months (Detroit).

There is a saying; Capitalism survives through ignorance and poverty. I have nothing against a surgeon earning more than a tradesman; he should also pay more tax. IMO a surgeon should earn more and pay less tax than a film star – sports star, as the surgeon is helping people; but imagine the tax system then.

 

As a physician, I couldn't agree more. I can't really see a need for a higher rate tax band, but there you go.

Having said that, there are perfectly legal ways of avoiding paying any higher rate tax at all.

 

I take it then devil you don't agree with the rest?

 

'there are perfectly legal ways of avoiding paying any higher rate tax at all.'
Pray tell us how many of them are available to people on PAYE?

Bob

 

"Pray tell us how many of them are available to people on PAYE?"

You need to consult a tax planner. You can get PAYE higher-rate tax refunded in full at the end of each financial year.

 

Flat tax is essentially a right-wing libertarian idea and goes along with "small government" and "every man for themselves" with a minimal (government) social saftey net. I can see why it's an appealing idea but IMO it inevitably plays to peoples selfish instincts and leads to extremes of inequality that are fundamentally destructive for any society.

Multiple rate taxes (the rich pay more) is essentially a left wing idea, the intent being that the rich can afford to pay more so they should and, in doing so, their wealth is to some extent being redistributed to the poorer parts of society via social benefits etc. I can see why a lot of people think this is unfair but IMO, if done properly, leads to lower levels of inequality and a much more healthy society as a whole.

I'm not a supporter of flat rate tax (surprise, surprise ) but I don't really want to get embroiled in another political debate so I'm not going to say much more. One thing I will say in favour of multiple rate taxes is that there are many other (often stronger) motives for working harder or "doing better" than earning more money.

For example, within the next 12 months I will almost certainly be moving 100% to Portugal and getting a job here where I can expect to take a 75% pay cut in relation to what I'm earning now. Even taking into account the considerably lower cost of living in Portugal it will still be a significant income reduction but I know I'll be a hell of a lot happier

Michael.

 

Its like one of Maslow's motivation theoryies says, "in a western world money should not be the prime motivation factor of a job".

In other words although money is a motivation factor, we all need to feed the family etc, however most of us would get very bored if the government gave us £800 a week to live on, so you could set at home everyday doing nothing.

This one thing I always object to city workers just doing it for the money, yes they may have their swanky flat and their fancy merc, but are they happy?

My dad did the same too, he was earning the modern day equalivant of about £25k in a management level job, but he got really sick of red tape and managers managing managers he got really stressed and left, he now works for himself doing somthing quite a lot more basic, he earns less with the pension he gets from his work but he is a hell of a lot happier.

 

"This one thing I always object to city workers just doing it for the money, yes they may have their swanky flat and their fancy merc, but are they happy?"

Why do you object to other people doing as they please?

 

If it does please them then fair enough, but often they have the attitude of thinking they are great, when really they are not happy. Its very complex to explain on here, but another forum I frequent you get a lot of LSE students going on about how wonderful they are and how they are going to earn so much money, while basicaly turning thier noses up at other universities and jobs.

There is a reason why you should never say you're doing it for the money in a job interview. In my experience if you are in somthing for the money you're not going to get anywhere, becuase you need a genuine passion for the subject or job to be able to cope when things go wrong, otherwise you will end up being very stressed and even depressed. In the end my dad was just doing it for the money, i.e he hated the job but had no choice becuase it paid the bills.

On this forum you often get questions like "which of these jobs will make the richest, investment banker, doctor, accountant or lawyer, to be this a bit of twisted logic.

I guess however I have always known what I am passionate about from an early age so the idea of people doing somthing purely for money seems odd.

Of course if you're passionate about somthing that pays well you have struck gold

 

Oh I know that money doesn't make you happy: that's hardly hot news. Happiness is derived in other areas. OTOH, poverty does make people unhappy.

A good work/life balance is difficult to achieve.

 

There are a lot of people in poverty that are happy though, they have a very simple life style, such as travelers, I agree that poverty can cause unhappiness though. These days though you shouldn't need to live in poverty at least in the UK, becuase the tax bands mean that we can collect enough money from the rich to be able to keep the the poor out of genuine poverty.

I think I will he happy doing a £25-£30k a year job eventualy, but anything more than then you start to get into very stressful jobs and I would end up probably dying of a heart attack before I am 40.

 

Unfortunately, a 25-30k a year job doesn't get you very far in the housing market, especially if you have no deposit and you have £8k-£10k in student loans to pay off...

 

The point about flat tax rates is that they are so much more efficient and that more tax can be collected overall, not less.

Also, the threshold under which no tax is paid should be significantly raised, which would help those on low incomes.

 

I think this is a rather "romantic" view. Ditto for the "Robin Hood" view of soaking the rich.