In a series of videos I am exploring the changes to the UK's tax system that are required to tackle the problems that growing inequality in the UK is creating.
Having explored the background to this issue in the first three videos in this series the first tax I look at that is in need of reform is income tax. In this video I explain why I think that we need higher rates of income tax and what the gain would be from having them. I also explore the commonly claimed argument that this will reduce the amount of work that the wealthy will do and suggest that this is just a myth.
A summary of all the videos in this series is now available on the Tax Research wiki, here.
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The biggest barrier to fairer tax is the Global Race to the bottom in corporate and individual tax rates. Its relatively easy for the wealthy to hold their assets and income streams in companies that only attract corporate tax rates, which conservatives eroded from 28% in 2010 to just 19% today.
This is why the American led international agreement to a minimum 15% rate in G20 countries was so important. this rate still needs to go up, and we also need an international wealth register which all countries co-ordinate to build. So new #GlobalPartnership is just as critical to tax justice, as it is to fighting #ClimateChange, #GlobalPandemics, and #EconomicMigration.
Of course I am not arguing against raising tax rates nationally where we can, but the international work needs to continue in parallel if we are to avoid much of the benefit bleeding away through offshoring.
You also make the vital point that means tested benefits (eg UK Universal Credit) always create big disincentives for the unemployed to take on more paid work. The answer is of course to abandon means testing (except for those with special needs) and simply pay every national citizen an unconditional #BasicIncome. All personal tax allowances would then be removed (greatly simplifying the tax system) and the effective tax rate for increased working will simply be the basic rate tax. The great irony is of course that wealthy people always argue that Basic Income would create disincentives to work. In fact the opposite is clearly true – that the biggest disincentives are inherent in any “targeted” system of means tested benefits.
You over simplify in very many ways a complex problem
Higher marginal rates exist for a few people e.g. those claiming child tax credits who’s income is between £50k and £60k and those who’s personal allowances are reduced as their income increases from £100k.
There’s no reason why we can’t have higher rates more widely. I completely support what you have said