What are they talking about "granny tax"

[HeadingNorth]

There is no evidence that reducing the 50p tax will bring in more revenue whatsoever.

 

I didn't ask you if it would. Would you answer the question I asked instead of the one that you want people to think I asked?

[davyboy]

I'll assume that you know all taxpayers have a personal allowance, an amount (about £8000) that they can earn without paying any tax. Tax is only charged on your income above that figure.

 

Historically, if you were a pensioner, that allowance was higher than it would be for non-pensioners; the announcement yesterday, being called the "granny tax," is that this higher allowance is to be removed and pensioners will only get the same allowance as everyone else.

 

How does this affect you personally? Well, it means that when your reach retirement age you will keep the same allowance you already had, you won't get a bigger one.

 

However, that extra allowance tapers to zero when your pension,state plus private, reaches about £28K.

I'm not certain of that's the corrrect figure but it's in the right ball park.

The extra pension when you hit 80 is 25p/week!!!

[poppet2]

What's your chief requirement for a taxation system? Should it maximise returns by being low enough to encourage economic activity and high enough to take advantage of said activity?

 

What figure do you consider to be low enough and for whom, the rich or the poor?

[HeadingNorth]

What figure do you consider to be low enough and for whom, the rich or the poor?

 

I'm not enough of an economist to work that out for myself; I rely on professional economists, who have been pointing out for years that the increase in a top rate of tax from 40%, to 50%, brought in very little money if anything. (Some argue that it brough in less than nothing!)

 

Obviously a top rate of tax of 100% will bring in no tax; no employer would pay his workers more than £150,000 a year if every penny above that would go to the government anyway.

 

Equally obviously, a top rate of tax of 0% will bring in no tax. Somewhere in between there must be a maximum figure. My question is, do we actually want to discuss where that maximum figure might be, or do we just want to tax rich people because they're rich?

[poppet2]

professional economists, who have been pointing out for years that the increase in a top rate of tax from 40%, to 50%, brought in very little money if anything. (Some argue that it brough in less than nothing!)

 

Well of course it brought in less than nothing because those who were suppose to be paying that rate were evading it. Does anyone really believe that reducing the tax rate from 50% to 45% will change the mindset of these people for the sake of 5K for every £100K that they earn?

[HeadingNorth]

Well of course it brought in less than nothing because those who were suppose to be paying that rate were evading it. Does anyone really believe that reducing the tax rate from 50% to 45% will change the mindset of these people for the sake of 5K for every £100K that they earn?

 

If the raise was enough to make them start avoiding tax, then the fall will be enough to make them stop.

 

On the other hand, if the raise wasn't enough to make them start avoiding tax, it would not have been bringing in "less than nothing."

[poppet2]

If the raise was enough to make them start avoiding tax, then the fall will be enough to make them stop.

 

No it wouldn't and this is why. People who are high earners and evading tax have become use to paying small amounts such as 10% as a result of tax evasion. If the top percent of high earners have become used to paying such pitiful amounts, it stands to reason they are not going to change the habit of a lifetime as a result of a 5% reduction.

 

This was the case under the Thatcher Government who reduced the high earners tax burden from 60% to 40%. The Caymen island were still awash with tax evaders from the UK.

 

Why should those who were dodging tax at 40% decide to start paying it at 45%?

[poppet2]

George Osborne said as much that the rich weren't paying the 50% tax, which is the real reason he reduced it.

So he should darn well make them pay it and go after them like he goes after benefit cheats or makes disabled people who can't walk, jump through hoops.

[Guest sibon]

Germany have a basic rate of about 30%, a top rate of 45% and a VAT rate of 19%. As the most succesful European economy, we might well look at what they do.

[HeadingNorth]

Germany have a basic rate of about 30%, a top rate of 45% and a VAT rate of 19%. As the most succesful European economy, we might well look at what they do.

 

There's considerably uproar just when we cut the top rate to 45% and keep the basic rate at 20%. How do you think people will react when told that the poorer taxpayers are going to have to pay half as much again as they already do?