The 50p tax rate : Tue Mar 06, 2012 10:23 pm  

Nobody in the press seems to question the mantra that cutting the 50p tax rate would be good for jobs, so I will.

We are told there are only 300,000 such taxpayers. However, nobody says who these people are other than that are entrepreneurial wealth creators. Well if we take out:

- top footballers / other sporstmen;
- TV / media "talent" (sic)
- top civil servants;
- many doctors;
- thousands of partners in leading accountancy firms;
- ditto in firms of solicitors;
- other leading professionals eg surveyors, architects, etc
- a few barristers;
- thousands of investment bankers

then just how many are we left with? Not many I guess!

Aside from the odd nanny / gardener who are those I list likely to employ with a tax cut!? In fact, I would go so far as to say that if you increased the top rate band you would create MORE jobs. The reason is that in the leading professional practices reasonably well-paid staff are screwed into the ground so the average partner can take his 0.75 million. If they were paying penal tax on that, they would not worry about how much they earned so much but would employ more staff instead.

So abolish employers NI and increase top rates of tax dramatically. The above types won't go en masse and if they did there would be plenty willing and able to take their places. A few Michael Caine-type individuals going offshore are no loss - you still get to see their crap output, wherever they live. For the few genuine entepreneurs they can be encouraged to stay via favourable capital gains tax treatment for business disposal (preferably more favourable the more they sell out for). As to all the mega-wealthy foreign wealth creators leaving - no chance. They live here as a safe haven and also because of the favourable non-domiciled tax regime - ie they have no need to pay income tax anyway.

Re: The 50p tax rate : Wed Mar 07, 2012 2:15 am  

Some analysis by the IFS: http://www.ifs.org.uk/budgets/gb2012/12chap9.pdf

Some analysis by the IFS: http://www.ifs.org.uk/budgets/gb2012/12chap9.pdf

Re: The 50p tax rate : Wed Mar 07, 2012 7:13 am  

As I said previously, I would dearly like to know of ANY true entrepreneur who is working under PAYE

Re: The 50p tax rate : Wed Mar 07, 2012 9:00 am  

cod'ead wrote:

As I said previously, I would dearly like to know of ANY true entrepreneur who is working under PAYE

I suspect footballers will be the same, image rights, limited companies etc will reduce their tax bill considerably.

Re: The 50p tax rate : Wed Mar 07, 2012 10:22 am  

cod'ead wrote:

As I said previously, I would dearly like to know of ANY true entrepreneur who is working under PAYE

I thought this was about overall income, not just schedule E earnings?

Re: The 50p tax rate : Wed Mar 07, 2012 10:25 am  

rover49 wrote:

I suspect footballers will be the same, image rights, limited companies etc will reduce their tax bill considerably.

Surely income from image rights would increase their income?

Limited companies only really reduce the tax bill significantly if income is not taken from them and eventually extracted efficiently as capital gains (which might not prove possible if masses of cash / investment assets are accumulated in them).

Re: The 50p tax rate : Wed Mar 07, 2012 10:55 am  

Dally wrote:

I thought this was about overall income, not just schedule E earnings?

Do you seriously believe that "The Dragons" are paying anything even approaching 50p?

Vince Cable's pisspotical "Mansion Tax" would raise around 4/5ths of buggerall, simply because those in the big houses will find ways to have them re-valued.

If we were to introduce Land Value Taxation that could lead to a radical and more equitable overhaul of many of our taxation systems

Re: The 50p tax rate : Wed Mar 07, 2012 11:58 am  

cod'ead wrote:

Vince Cable's pisspotical "Mansion Tax" would raise around 4/5ths of buggerall, simply because those in the big houses will find ways to have them re-valued.

If we were to introduce Land Value Taxation that could lead to a radical and more equitable overhaul of many of our taxation systems

The Mansion Tax is the most stupid idea in history, in its most simple form. It would become exceedingly complex to administer for virtually no tax take. There are so many potential anomolies it is ridiculous. It would catch the long term resident in certain areas of London, who mave have bought a house 30 years ago for £60,000 which is worth over £2 million simply because the area has become trendy and they may have gradually improved the house over their modest earning working lives.

The rich on the other hand could afford to sell their big house and maybe buy 5 at £1.9M in various desirable parts of the country. They may also have a £10m share portfolio, own a £30M office block, have a £20M buy-to-let portfolio, have £5M cash in the bank but by residing in a £1.9M mansion in a rural area they wouldn'y get taxed. Hilarious stupid idea from Britain's most iditiotic people - LibDem politicians!

[DaveO]

Re: The 50p tax rate : Wed Mar 07, 2012 2:01 pm  

The idea high rates of taxation for the well off is a disincentive or some sort of drag on wealth creation is nothing more then right wing propaganda.

As Warren Buffet has said in the US the wealthy need to make significant contributions over and above the average person as opposed to using legal avoidance schemes to end up paying a lower percentage of their income in tax than is the norm.

It's a moral issue as much as anything. People seem to forget the 50p rate comes in only after you have already earned a very high salary which has only been taxed at the lower rates. So some banker having to hand over £500K out of a £1m bonus in tax ought to be thinking how nice it is to get £500K not that they pay too much in tax. The glass half full view if you like.

Alas I think the morality we had as a nation whereby we all contribute based on a progressive taxation system and just accepted that as a fair way to handle it has long gone.

You can see how the selfish mentality has taken over at all ends of the income spectrum when you see how popular points like "Why should the postman pay the students fees" are swallowed hook, line and sinker when in fact a postman paid about £40 a year out of his income tax (which has not suddenly landed back in hos pocket as a rebate anyway) towards the old tuition fee block grant in tax. The rich moan about the 50p tax rate, the less well off about things like student loans and child benefit being given to people better off than them.

Ultimately it is what the Tories want. The state will provide nothing and you will pay for what you use and making thwe 50p tax rate seem like some sort of onerous imposition on the high earners is just part of the master plan toward that end.

Re: The 50p tax rate : Wed Mar 07, 2012 2:48 pm  

I'll tell you what really hurts - being self employed and not getting your tax demand until after your accounting year is finished, then realising that your going to be in the higher rate tax bracket and will get a lump sum demand unlike PAYE taxpayers who spread the cost out through the year.

Its definitely an "ouch" situation when the demand flops onto the doormat and I'd guess that it causes more moans and whinging than when applied to PAYE clients.

It only happened to me once, then I employed my wife to take the excess profit as salary