50% tax rate for high earners - VOTE


#1

Do you favour a 50% tax rate for high earners?

  • Yes, 50% for earnings over $170k
  • No, it’s a bad idea.

0 voters

Here’s an experiment, lets see what Democracy players think on some issues:

The Liberal Democrat party in the UK are in favour of a higher rate of tax (at 50%) for people earning over £100,000 a year (approx $170k).
Are you in favour or opposed to this policy:


#2

in favor, they’ll still have a large sum of money after they’ve payed their taxes…


#3

As long as the progressive tax still ensures that those who earn more do earn more (and don’t just end up paying more in taxes) then sure.

Just gotta make sure that the tax isn’t counter-productive. If people want to earn less to pay less taxes so that they can earn more, then there is something wrong with the taxes.

So far as I know, this won’t be counter-productive and people with that amount of money will still live very wealthy lives.

Also, although I know it can’t be trusted: I am going to go from a lifestyle where my parents can pay for everything to where I am going to have to live on a 600 euro budget. I think I will be much happier on the 600 euro budget, despite that I probably won’t be able to afford a car, a big house as I have now or most other expensive luxuries until I get a job. Honestly, I do believe I might end up happier with a 600 euro budget.

Whether that’s because it’ll be my own to spend and save or because it’ll just be more practical (just having too large a room can be very annoying, as can having too much money) I don’t know.

I hope people understand what I am trying to say.

Either way, I am probably going to end up paying a minimum tax of 40 and somewhere around 70-80 as a maximum, so 50 really doesn’t seem that much to me.


#4

i dont think taxes in the UK should be changed around the Wealthy. They should only rasie enough to cover lowering taxes for the low earners


#5

I wish I had a room so large it annoyed me! :wink:

Although I presonally believe progressive tax smacks of the idea that earning a lot of money is somehow “immoral”, I agree that 50% isn’t a huge rate.

I did a quick check of HM Revenue site and it looks like there are three tax bands of 10%, 22% and 40% that kick in at £0, £2,021 and £31,400 respectively. statistics.gov.uk say that the mean income for the top ten percent of earners in GB is approx £33,800

So by the looks of it, this new tax will collect bugger all additional revenue
as it will affect a very small prportion of people, and if those people can’t find an accountant that will reduce their taxable income to under £170k then they deserve to pay a tax for being lazy.

I did vote against the tax in this little poll but I have to credit the Lib Dems for picking a populist policy that will probably cost more to implement than the revenue it will raise.

Bravo! :laughing:

I don’t reckon the taxes need to be raised, but that savings should be made in other areas, such as the public service administration or the military, which I think in modern democracies is a huge waste of resources, but thats just opinion.


#6

There are some amazing statistics on all kinds of things in different countries to be found here:
nationmaster.com/


#7

I’m always slightly puzzled by the suggestion that taxes are inherently punitive. Most states in the U.S. don’t charge sales tax on prescription drugs, but do on non-prescription medication; whatever distinction is being drawn here is certainly not a moral one…as far as the state is concerned, it’s all just revenue.
I think the better way of looking at it is to say that this policy is based on the premise that individuals who derive a greater financial benefit from their society have a proportionally greater financial obligation/interest in supporting it

(I voted “in favor,” needless to say)


#8

I’d be interested to hear peoples views on inheritance tax. Occasionally, people in the Uk get very upset about it, especially as now house prices are so insane, that passing your house on to your kids incurrs the tax.
Personally I’m fine with the idea of this tax, as it helps to prevent a situation where a tiny percentage of the descendents of the wealthy own virtually everything. We already have that to some extent in the UK. The Duke of Westminister is the wealthiest land owner in the country, for example.
Are people for / against inheritance tax?


#9

Inheritance tax only really works when there is a large gap between the rich and the poor. The smaller that gap gets, the more unfair an inheritance tax becomes, as it essentially begins to leave everybody much poorer.

So although I am generally in favour of a mild inheritance tax, the real bugger becomes where to place the limit. How big a house can you inherit? How much money? Can you inherit a car?

It’s really the limit thing that gets difficult. And then it also depends upon society as it currently is.


#10

I was guilty of a little hyperbole before, and I don’t think that Robspierre and his cronies are in the Tax Office planning new ways to squeeze the bourgeoise :laughing:

I think most taxes are fair, eg your example about non prescription drugs, but progressive income tax is the one that bothers me a bit.

If my greater financial benefit is derived from society, I agree that I should pay a larger share of my income to support it. However, one third of my tax bill goes to public health and welfare, neither of which I use. Someone with a lower income paying less tax than me might say the same thing about farming subsidies, or even the rebates that the government gives to people like me that utilise private health (The government here rebates 30% of your insurance premiums)

I agree that there are public goods that everyone should contribute to, such as infrastructure, and welfare (yes even welfare for single mothers, I’m not heartless :slight_smile: ) and taxation offers an efficient way to do this, but I think the justification for progressive income tax is flawed - your income is a pretty arbitrary link to the benefit you receive from society.

Like I said before, I think the government spends too much money in the wrong places, and there is no need to raise taxes (or lower them - it only makes it harder to raise them again in the future :slight_smile: )


#11

I dont think people support progressive taxes because you get more from society if you earn more, but because you can afford to give more.
Thats not to say this is neccesarily right or fair, but that is the thinking behind it as I understand.


#12

I’m pretty sure, though I might be mistaken, that the properties in London that the Duke owns were leased out by his ancestor Sir Thomas Grosvenor in the middle ages for 400 year terms, ensuring that the properties would remain in family control essentially forever. And I guess because he’s a Duke the inheritance is all passed to the eldest son. They would have a world of trouble trying to get similar lease terms ever again, and his descendents will keep splitting the pot until they are just a lot of distantly related wealthy people, rather than some guy that own half of London. A pretty special case I think which doesn’t justify a tax.

You pay taxes all your life why should you pay them when you’re dead!


#13

170k is a LOT of money. That rate is only charged on the earnings above that amount right? So I have no problem with that.


#14

Heheheh. This thread shows how little folks understand taxes. I suppose that’s how the tax people like it. 8)

The 50% proposal basically means that anything that anyone earns OVER £100,000 in a year will be taxed at 50%.
The first £100,000 will be taxed in the exact same way for everybody, irrespective of total earnings.

Here’s an example:
A person earns exactly £150,000 per year. They will pay the following taxes (using 2 year old tax data - lazyness :slight_smile: ):

Payable Rate On
Lower tax band £202.00 10% £2,020.00
Basic tax band £6,463.60 22% £29,380.00
Higher tax band £45,542.00 40% £113,855.00

You will note that the right-most column adds up to 145,255.00, which when you add the personal allowance (tax free sum) results in you getting exactly 100,00.
(the left money column shows how much tax they’d make in total) - totaling 52,207.60 paid in tax.

Now compare that to to what happens if you implement a 50% tax band at 100k:

Payable Rate On
Lower tax band £202.00 10% £2,020.00
Basic tax band £6,463.60 22% £29,380.00
Higher tax band £25,542.00 40% £63,855.00
Very High Band £25,000.00 50% £50,000.00

Total tax paid on that one: 57,207.60
So you’d only be paying £4,000 more in tax in this case study.

Basically the only people this is going to go NEAR affecting is the very VERY big earners (CEO’s of large corporations) - but remember, the top few percent of people earn the most money!!! Rest assured it will make money (and the cost to implement should really be negligble).

Note the “average” salary in the UK is about £24,000. I’m not sure which method of averaging that represents (mean, medium or mode), but I can tell you that it’s a long way blow the £30,000+ bracket where higher taxes begin.

Onto the inheritance-tax point:

Well SOMEONE has to be the wealthiest. :slight_smile:
Can’t have everyone being equal now or we’d all be red pinko evil commie types. :smiley:
I’d state that this tax limit should raise with inflation (just like income tax limits do). Ah here we are:
hmrc.gov.uk/cto/customerguide/page15.htm
Yep the threshold has been increasing over time.

They even give you a full six to seven months (minimum) to figure it all out following the death. They’re not heartless money grabbing accountants after all! :confused:

One other point about taxes in the UK. Don’t forget that you pay 17.5% toward just about anything you buy. Good old VAT. I do love Stealth taxes


#15

except food and childrens clothing as I recall. And possibly books. Not sure about books…


#16

mmm that reminds me cliffski,

can you set up VAT free sales on your website for us overseas customers? I’m pretty sure goods purchased in EU for overseas use are VAT free.


#17

You shouldnt be charged VAT in that case I don’t think. I guess it takes it from your address, or maybe from the credit card data?
Its all handled automatically by the credit card company (Plimus).


#18

I think that is a very good idea, if they got that much they better be sharing with everyon else :slight_smile:


#19

Well currently here in Ontario (largest province of Canada) the most a person could be taxed in income is 40.15%. There are also social security payments (Pension and Employment Insurance) but these cap off to like $2000 and $730 respectively (something like that) which would be a bit more than 1.5% for a person making $170k anyway. (social security premiums here seem to punish the middle-class IMO)

So 50% for rich people would be a bit much but I do think its deserved IMO. However my fear for this would be that a brain drain would happen as a result. Here in Canada we used to have a brain drain problem with people fleeing to the United States because they didn’t like our taxes (and our weather). Thankfully we have that under control now. So basically I think that income tax should definately leech more off the rich but not to the point that they flee the country and thus screw us over. That would be my only worry.

Personally I believe that economical stratification and inequality are necessary in a successful society however not to the point that many people have to be forced into poverty in the process. For eg. I feel the United States is too stratified. Basically there should be a difference in income in order to promote productivity and hardwork (what point is there to get an education to become an engineer if a factory worker is going to make the same as you right?) but I do feel that unemployment and poverty should be kept under control.

As for Inheritance tax, I’m against this. But this may be because i’m biased in that my grandfather just left his estate to his children/grandchildren and I got a $20k cut out of it. :laughing: I think the government should stick its nose out of inheritance… especially with regards to people in the middle-class bracket. My grandfather worked hard for that house and the state shouldn’t take that away from him. I know when I’m on my death bed that I would rather my future generations benefit rather than the state. If it gets to the point where there is a aristocracy and a bunch of people are poor then I would believe the tax is necessary. Otherwise I don’t like the state meddling into inheritance… I’m a middle-class citizen and $20k isn’t going to make me an aristrocrat anytime soon. :laughing:


#20

I am against such a high rate because i am in favour of making opportunities for the creative, productive and innovative. Also, such high earners represent only a small percentage of the population that changing the rate from 30% to 50% would not have such a big impact. The other option IMO would be a tax deduction for everyone who is making a very large profit (everyone who has increased his profit by 20% gets a 10% tax deduction) in that case people would not strive for lower profits in order to pay less tax but would be stimulated to try and improve his business. That would probably have a positive effect on the economy. Only such a deduction would justify such a high tax rate.