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Low taxes
So now as they smell blood Sunak and co are lining up their leadership challenges.
And -guess what- we hear from them, how they believe in low taxes. Like it is some fundamental article of faith.
Like they did pre the 2019 election...and then had to break that promise , though making sure it hit the low-paid more than the gilded classes. It wasn't breaking the promise that was deplorable, it was making the government a hostage to fortune 2 years earlier.
Why do they do this? Do they think higher taxes deter entrepreneurs? In 22 years of consulting work, with many smaller firm clients, I never once heard levels of taxation mentioned in any planning for the future. And if you look at European countries more prosperous than us- for example, the Scandis, Denmark, Germany, they all have higher taxation rates so that hasn't snuffed out business.
And at the personal tax level, I wonder in reality whether people fundamentally object. Most people I know would be happy to pay more if they knew it would be spent well- for example on healthcare, education and social care.
This is a seam Starmer should be mining.
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Originally Posted by bensherman
And at the personal tax level, I wonder in reality whether people fundamentally object. Most people I know would be happy to pay more if they knew it would be spent well - for example on healthcare, education and social care.
This is a seam Starmer should be mining.
Tax is a disincentive, whereas subsidy is an incentive.......When I left school, tax at the higher rate was an unbelievable 19/6d in the pound , that is to say 97.5p was taken away in tax from every pound you earned.
It had a big bearing on my choice of career, since any mug who set out to earn big money, would simply see the results of all their hard work vanish in tax. I therefore gave up any ambition I might have had to try and 'get rich' - and resigned myself to a middle-income profession.
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Originally Posted by The PNP
Tax is a disincentive, whereas subsidy is an incentive.......When I left school, tax at the higher rate was an unbelievable 19/6d in the pound , that is to say 97.5p was taken away in tax from every pound you earned.
It had a big bearing on my choice of career, since any mug who set out to earn big money, would simply see the results of all their hard work vanish in tax. I therefore gave up any ambition I might have had to try and 'get rich' - and resigned myself to a middle-income profession.
You are then the exception that proves the rule.
I used to do talks on motivation for senior managers. I used to ask them if they thought taxes were too high....95% thought they were. Then I asked them how many could tell me how much tax they paid last month. Very few could.
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Originally Posted by bensherman
You are then the exception that proves the rule.
I used to do talks on motivation for senior managers. I used to ask them if they thought taxes were too high....95% thought they were. Then I asked them how many could tell me how much tax they paid last month. Very few could.
I remember the days when we had a deep-sea fishing fleet. It was common for trawler deckhands to take three months off every year (usually the months with the worst weather) to keep their annual earnings below a particularly punishing tax-rate threshold. I.e. they considered it not to be worth their while to earn more, as the taxman would only grab even more.
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Tax revenues as a percentage of GDP for the U.K. in comparison to the OECD and the EU 15
Originally Posted by The PNP
Tax is a disincentive, whereas subsidy is an incentive.......When I left school, tax at the higher rate was an unbelievable 19/6d in the pound , that is to say 97.5p was taken away in tax from every pound you earned. It had a big bearing on my choice of career, since any mug who set out to earn big money, would simply see the results of all their hard work vanish in tax. I therefore gave up any ambition I might have had to try and 'get rich' - and resigned myself to a middle-income profession.
The highest rate of income tax peaked in the Second World War at 99.25%. It was then slightly reduced and was around 90% through the 1950s and 60s.
In 1971 the top rate of income tax on earned income was cut to 75%. A surcharge of 15% kept the top rate on investment income at 90%.[17] In 1974 the cut was partly reversed and the top rate on earned income was raised to 83%.
etc. etc.
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Originally Posted by sandGroundZero
Tax revenues as a percentage of GDP for the U.K. in comparison to the OECD and the EU 15
The highest rate of income tax peaked in the Second World War at 99.25%. It was then slightly reduced and was around 90% through the 1950s and 60s.
In 1971 the top rate of income tax on earned income was cut to 75%. A surcharge of 15% kept the top rate on investment income at 90%.[17] In 1974 the cut was partly reversed and the top rate on earned income was raised to 83%.
etc. etc.
I lived through Harold Wilsons 'Big Squeeze'....Company bosses were closing their businesses down left-right-and-center, due to the 19/6d in the pound top rate. Even the Beatles joined the other high-earning pop groups in emigrating if I remember well, due virtually all their earnings being taken off them.
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Originally Posted by The PNP
I lived through Harold Wilsons 'Big Squeeze'....Company bosses were closing their businesses down left-right-and-center, due to the 19/6d in the pound top rate. Even the Beatles joined the other high-earning pop groups in emigrating if I remember well, due virtually all their earnings being taken off them.
Don't know whether you simply don't know or try to create the impression of the poor hard done by high earner, true there have been changes in tax regimes, BUT as regards income tax everyone at all times has been entitled to a personal tax allowance, then income fell into banded earnings, you appear to either believe or promote the idea that high earners paid top rate tax on all their income, this is simply untrue.
Never forgotten my Dad's comment during a discussion on top rate tax, none of those debating this where in the top tax rate band, yet some were bemoaning the high top rate of tax.
My Dad's response to this, "I wish I was liable to the top rate tax, because I would be earning a hell of a lot more than I am now"
Of course long before anyone hit the top tax rate, they would be high earners anyway.
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Originally Posted by silver fox
Don't know whether you simply don't know or try to create the impression of the poor hard done by high earner, true there have been changes in tax regimes, BUT as regards income tax everyone at all times has been entitled to a personal tax allowance, then income fell into banded earnings, you appear to either believe or promote the idea that high earners paid top rate tax on all their income, this is simply untrue.
Never forgotten my Dad's comment during a discussion on top rate tax, none of those debating this where in the top tax rate band, yet some were bemoaning the high top rate of tax.
My Dad's response to this, "I wish I was liable to the top rate tax, because I would be earning a hell of a lot more than I am now"
Of course long before anyone hit the top tax rate, they would be high earners anyway.
True, the first few pounds everyone earned were not taxed (personal allowance). All earning above that were taxed in bands, i.e. as with the system we still have. But the big earners, the big bosses/company owners were hit so incredibly hard, they were packing up shop and leaving - putting lower earners in their employ out of work, ultimately damaging the economy.
It also made the notion of expanding a lesser business a complete non-starter. Since you knew the taxman was waiting to gleefully hammer you, if you became too successful. As for wishing to be liable for top rate tax. Those who were liable would have said: 'be my guest, go pay 19/6d in the pound on your own paypacket for a week and see how it feels mate!'.
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Originally Posted by The PNP
True, the first few pounds everyone earned were not taxed (personal allowance). All earning above that were taxed in bands, i.e. as with the system we still have. But the big earners, the big bosses/company owners were hit so incredibly hard, they were packing up shop and leaving - putting lower earners in their employ out of work, ultimately damaging the economy.
It also made the notion of expanding a lesser business a complete non-starter. Since you knew the taxman was waiting to gleefully hammer you, if you became too successful. As for wishing to be liable for top rate tax. Those who were liable would have said: 'be my guest, go pay 19/6d in the pound on your own paypacket for a week and see how it feels mate!'.
Don't forget I was around at that time, no-one REPEAT, no-one paid the higher rate tax on all their earnings, got to say in spite of the screams and whines from the ultra wealthy, very few businesses if any closed their doors due to tax constraints, sure there were a number of top earning mainly entertainers, who left the country to of course maximum publicity.
Most small businesses who were encroaching higher tax would we more likely to invest in their business, replace older machinery, refurb buildings, all of which would improve without increasing profits and of course keep them out of the dreaded high tax band.
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Originally Posted by The PNP
Tax is a disincentive, whereas subsidy is an incentive.......When I left school, tax at the higher rate was an unbelievable 19/6d in the pound , that is to say 97.5p was taken away in tax from every pound you earned.
It had a big bearing on my choice of career, since any mug who set out to earn big money, would simply see the results of all their hard work vanish in tax. I therefore gave up any ambition I might have had to try and 'get rich' - and resigned myself to a middle-income profession.
97.5% on every penny you earned?? I don't think so.
Just be yourself, no one else is better qualified!!
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Originally Posted by Nick2
97.5% on every penny you earned?? I don't think so.
Spot on. Labour, as always, clobbered the better off, often hard working and wealth creating individuals who helped make the country great and who, eventually, would rightly say enough is enough.
Politicians don't create wealth, nor do governments who rely on direct and indirect taxation for the means to pay for public services, only those in the private sector who actually create the wealth to pay for them.
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Originally Posted by The PNP
True, the first few pounds everyone earned were not taxed (personal allowance). All earning above that were taxed in bands, i.e. as with the system we still have. But the big earners, the big bosses/company owners were hit so incredibly hard, they were packing up shop and leaving - putting lower earners in their employ out of work, ultimately damaging the economy.
It also made the notion of expanding a lesser business a complete non-starter. Since you knew the taxman was waiting to gleefully hammer you, if you became too successful. As for wishing to be liable for top rate tax. Those who were liable would have said: 'be my guest, go pay 19/6d in the pound on your own paypacket for a week and see how it feels mate!'.
First of all nobody has, or expects to, propose a 95% rate or anything like it.
A case in point. The funds being raised for the as yet unspecified social care could have been raised in a far more effective and fair way by adding a 60% rate at over £150k income.
And I repeat that in 22 years of consulting, where I worked with probably 8 or 9 smaller , growing companies for extended periods, not once do I recall rates of personal or corporation tax being considered in future planning.
Hard to imagine, perhaps, but if you earn £150k a year the idea that next year you might see £5k less in net earnings is not such a big deal. Especially as people in that level probably also have other forms of reward anyway.
I do believe that far more people than is realised would vote for higher taxes if they could be assured of what that money will be spent on.
No, of course, Sunak has let it be known that he plans to drop income tax before the next election. Nonsense.
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Originally Posted by bensherman
First of all nobody has, or expects to, propose a 95% rate or anything like it.
A case in point. The funds being raised for the as yet unspecified social care could have been raised in a far more effective and fair way by adding a 60% rate at over £150k income.
I wasn't suggesting a sky-high rate of tax be brought back. Just pointing out an extreme example of how taxation can be a disincentive to hard work/wealth-creation and if not applied in moderation, can damage economies.
Personally, if I was Chancellor I'd explore all avenues of raising funds, not just income tax. E.g. with the #Climate Crisis in mind, I'd consider raising the tax level on fossil-fuels, in particular petrol and diesel. If doing so reduced non-essential car usage, then so much the better.
Then there's alcohol, which is way too cheap anyway imo. I'd rake in the £billions, from a series of swingeing increases in 'booze tax'.
Last edited by The PNP; 04/12/2021 at 11:27 AM.
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I didn’t think it would be long before the **** turned this thread into a “hammer the motorist” debate.
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Originally Posted by The PNP
Tax is a disincentive, whereas subsidy is an incentive.......When I left school, tax at the higher rate was an unbelievable 19/6d in the pound , that is to say 97.5p was taken away in tax from every pound you earned
The tax rates that you are referring to are marginal tax rates, this is the tax rate that only applies to income over the top threshold. This is not the rate of tax that people actually pay.
You have a progressive tax system, in which earned income is divided into tax brackets, and differing tax rates are applied as income rises. You need to calculate the effective tax rate, which is the rate that is actually payable. To do this you have to add up all of the taxes payable in each tax bracket. Take this total and calculate it as a percentage of your total income. This is the tax rate that you are actually paying.
If you have unearned income, dividends/investment etc., this may be subject to a surtax which will increase the marginal tax rate. I know this happened during Wilson's 1974 term, resulting in a 98% marginal tax rate, but I don't know if this was the case in 1966. For some reason I think that the marginal tax rate in 1966 was 95%. What year did you leave school?
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