I've just noted the dangers that occur when a majority are oppressed by an elite.
Who will get angry? Well, note this from this morning's Guardian, reporting the Institute for Fiscal Studies:
Analysis from the Institute for Fiscal Studies today reveals that changes in April will drag 750,000 people into the 40% tax bracket. Meanwhile, little-publicised tax credit cuts will push the marginal rates of 175,000 working parents up above 70%. In theory, effective tax rates in Middle Britain could reach 83%, the rate that Labour levied on Britain's top earners before 1979.
And when UK companies are being offered tax rates as low as 8% you honestly think people are going to say "yes, of course we're all in this together?"
No they're not: and they're not going to be quiet about it either.
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But this isn’t an argument that companies should be taxed more to make up for the discrepancy. It means that ordinary people should also be taxed less. Everyone benefits from low taxes. When Tesco saves a proportion of its hefty tax bill through smart planning, I congratulate them. Tesco has done far more to benefit the life of the average Brit (through good service, availability, choice and value) than countless wasteful, arbitrary government agencies.
@Joseph
So wehat are you getting rid of?
Health?
Pensions?
Education?
Law and order?
Roads?
Health and safety?
Financial regulation?
The fire service?
Tell me more
Health: private health care based on a system of compulsory insurance would provide better services in several areas than the NHS does. In a private system, the patient is the source of funding – if they’re not satisfied, the health care provider would perish. In the current system, providers must satisfy government statistics which leads to perverse incentives e.g. GP’s just want to deal with you in a 10 minutes slot – if you haven’t got cancer or heart disease they don’t really care.
Pensions: many public sector pensinos are based on unaffordable final salary models, which as the private sector has found, leads to massive holes. Those existing need to be funded, but new schemes should be brought into line with private sector.
Education: vital to facilitate social mobility, but not necessarily throwing money at a system that guarantees success. The grammar school model based on selection didn’t require extra funding, just a different philosophy.
Law and Order: vital obviously. No arguments here, though one does wonder whether less money could be spent on prisons?
Roads: vital, but why not have tolls to pay for things like motorways which are only used by some of the population? I don’t drive.
Health and Safety: some is needed, but most recognise that a lot of it is pointless. Tort law and insurance should deal with most it.
Financial Regulation: the FSA is an overgrown monster enforcing countless EU directives which increase the costs of running public/listed companies. Some necessary, but not to the extent that we have.
Fire service: vital obviously.
Why is it that low tax economies can provide all these things (and often more)? Hong Kong for example. If you’ve used its public transport system you will know what I mean.
Also, how about the welfare state – by the far the largest area of government spending at £194bn. We’ve talked about pensions above, but unemployment benefits and social housing should be drastically reduced. People think of tax as a way of getting greedy bankers to pay more to help the poor, or a way of equalising society.
What it does is heap a massive burden on ordinary hard-working people who’ve never used the welfare state; many of whom will have had to pay for private health care when they found the NHS lacking (I count myself).
High taxes are immoral.
Progressive taxes violate the principle of isonomy and are only justified to the extent that they compensate for the disproportionate effect of VAT on the poor.
How about large annual allowances e.g. up to 15k allowing the poorer to go about their business unmolested by the state, scale back welfare, scale back dependency, foster ambition.
I’ve just seen this:
“Prevent anyone earning more than £100,000 a
year claiming more than £5,000 a year in tax
reliefs above their personal allowance”
What happens when Mr. Hardworking self-made small company director decides to sell his shares after 20 years thereby making a large capital gain? Would they not be entitled to Entrepreneur’s Relief? Or would you make them hand 28% of it back to the government? Or should we allow him to keep 90% of what he had made, considering the large amounts of corporation tax, income tax, employees’ PAYE etc. that he has already contributed? Or the jobs that he has provided?
The problem with this country is that the majority of the electorate is an employee. They think like employees. Very few understand the risk and responsibility of being economically independent. Those who do should be rewarded not penalised, as it is they who innovate, employ and provide the services from which everyone benefits.
“Change the legislative basis for interpreting UK
tax law so any action contrary to the spirit rather
than the letter of tax legislation can be challenged
in court.”
Excuse me, what about the rule of law? Certainty as to how one is likely to be treated by the authorities is essential for any individual or business to be able to plan its affairs coherently. I’d rather companies were able to conform to legislation as plainly interpreted rather than be challenged by an arbitrary authority claiming that they have broken the ‘spirit’ of it. Positively Orwellian.
@Joseph
Except this is exactly the basis of the UK Code of Conduct for Banks
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_030008
@Joseph
28% is generous
And will not stop a single genuine entrepreneur
I know
I have been one
@Joseph
What a load of utter contemptuous nonsense
I though “I don’t drive’ summarised all the arguments – in a word what you’re saying is you’re extremely selfish, don’t care about anyone else, think their ability to access services is a matter of considerable indifference to you
Candidly nothing you have written is worth responding to
It’s just small minded right wing drivel that an credible person will dismiss as such
“I though “I don’t drive’ summarised all the arguments – in a word what you’re saying is you’re extremely selfish, don’t care about anyone else, think their ability to access services is a matter of considerable indifference to you”.
You’re right that “I don’t drive” is a theme. It stands for asking those who use something to pay for it, and allowing those who don’t not to. It’s not small minded/right wing to argue that the individual should be free from the shackles of taxation and an over-bearing state to make his own choices, take his own risks, enjoy the rewards of his own efforts: it’s liberal. Yes, liberal in the sense of liberty from coercion. I believe in economic freedom; i’m not an hysterical right winger.
And 28% is generous? Frankly we can’t agree on that point.
A Code of Conduct is not legislation. I wish government agencies would relinquish the role of legislator and leave it to the democratically elected.
I do agree with you though on alleviating tax for the poorest, but at the same time, I would reduce benefits.
This is one question/observation that Richard seems to never want to address. Hong Kong may not be the best example; however places like Switzerland, Canada or Israel certainly score better than the UK on all aspects of public services, and with much lower taxes.
Why?
@Joseph
This is your last comment
You clearly believe there is no such thing as society
Some of us, thankfully, do
And thankfully those who do have democratic power
@Million Dollar Babe
Because it’s such a crass question it’s not worth answering
You want me to say Switzerland has low tax rates?
And Israel (a tax haven)
And you think the UK and Canada are directly comprable? Have you noticed some differnmces?
If not – go do your homework
@Richard Murphy
Canada (and Australia and NZ) have a lot in common with the UK, both economically and socially (language, population, political system, GDP, wealth, trade orientation, etc). They are not DIRECTLY comparable, but close enough. If there are fundamental differences that you think make comparisons completely irrelevant, I suggest you highlight them.
As for Israel being a tax haven…. I have read a lot of nonsense written about Israel, but that is a first!
@Million Dollar Babe
Which shows how little you know then
You probably also think NZ isn’t a tax haven
Richard, although I enjoy and admire some of your work I do find your attitude rather typical of someone suffering from a case of “ideological blindness.” The debate surrounding what is a reasonable tax burden through looking at real-world examples is not “crass” and is most definitely worth answering. Taking the debate to its moral backbone, i.e. where does taxation become morally unacceptable and once that threshold has been agreed, how can we accept this uncomfortable reality and raise necessary funds to support public spending.
As a general rule I would propose taxes on consumption to be the most morally justified method of raising tax. If one chooses to consume (in a world where consumption has clearly run out of control), then taxes should be high. Direct taxation in my opinion is justified up to a certain threshold. As citizens in a supposedly civilised society we should all contribute through our income, I agree with the notion that the richer should have a higher burden than the poorest. However, the level at which this country deems acceptable (we are talking in the 40-50% thresholds) is morally repugnant. The ideological blindness that ignores the majority of reasonable economical forecasting that a 50% threshold actually leads to no increase in overall tax revenue is astounding. This debate is valid and important – we should all contribute instead of burying our heads in our sandbox of ideological values.
@Fernandez
I’m not being ideologically blind
I have a bias tro the poor – openly and clearly stated
And almost all regressive tax systems (the Nordic countries excepted because tof their exceptional beenfits system) are heavily regressive
That’s immoral
It’s immoral to say the poorest are immoral for consuming all their income too
So I’m not being ideologically blind – but I am saying you are immoral in stating your argument as you do – because there is no morality in making the poor pay the highest proportion of income in tax whilst deliberately ensuring they stay poor – which is what you propose
And you’re also blind for believing that there is any evidence that higher rates of tax do not yield extra revenue – when there is little such evidence
Joseph, Million Dollar Babe, Fernandez… this thread reads like Troll Central. All we need now is Timmy Worstall, Giddy Fawkes, Georges and “Alex” to turn up and they can have a tea party.
On the subject of high marginal tax rates: George Osborne gets worked up about a top income tax rate of 50% but seems very relaxed about middle class earners being on a maximum top rate of 83% – as IFS has pointed out. In my book that’s double standards.
@Howard
Of course the possibility exists that you have precisely named them
But you’re right – the trolls are out
And those I’m blocking are throwing minor tantrums off line too
Which reminds me – those who want to get one aren’t best advised to complain saying ‘Look young man….’
At 52 that’s just straight patronising
It was at 22 as well
@Howard
I fail to see how my observations can be considered trolling material (some of the other posters’ stuff is much more extreme).
All I did was to point out to examples of nations with lower tax regimes than the UK, and with generally better levels of public services. The countries I used as examples are fellow “western” Commonweatlh members, a fellow member of the EEA, and Israel, where many British people live either permanently or part-time, and whose political institutions and public services (i.e. most;y health system) are directly inspired by the UK’s very own.
This is not trolling. This is the basis for a discussion which this country should be having.
@Million Dollar Babe
“I’m not as much of a troll as him” is not an argument
Nor is saying that states with wildly different geography / natural resources/ traditions and electorates can be directly compared on tax an argument. It is just polemic
You’re dangerously close to the spam list
@Joseph, Million Dollar Babe, Fernandez, on the subject of high marginal tax rates, listen to this:
http://michael-hudson.com/2011/01/why-america-had-a-90-income-tax/
@Richard Murphy
“Nor is saying that states with wildly different geography / natural resources/ traditions and electorates can be directly compared on tax an argument”
You haven’t actually explained why not. And I disagree that the countries MDB makes comparison to are “wildly different”. Each country will have their own competitive advantage which outweighs a disadvantage, but as MDB says, they are essentially of the same Western democratic traditions when considered in the grand scheme of things.
If all you can do is say that these differences are so “big” or “obvious” (without elaborating further) that they render meaningless comparisons on what an appropriate tax burden or system of economic organisation could or should be, then I think that’s a shame.
@Harry Waterman
OK – let’s put it this way
I can spend days answering – and have no time to do so
Or I can say that if you don’t take those other facts into account – and it’s quite clear they aren’t being taken into account when this claim was made – then the claim is obviously trite
So it’s not a perfect answer – I agree
But it’s all I’ve time to give
@Richard Murphy
This is a perfectly sensible answer to give. Everybody has a day job.
But the issues raised here are real. You are perfectly entitled to chose to follow your intution that there are certain factors in play (“different geography / natural resources/ traditions and electorates”) that help to explain the differences in performance between the UK and the other countries used as examples. But intutition is not a substitute for actual scientific research.