50p Tax band for high earners - good idea or not?

[I1L2T3]

So the one policy the proves you wrong was all Lib Dem and everything else was all Tory.

 

I thought the country was run by a coalition??

 

Not a Tory policy. In fact Clegg is having to work pretty hard to stop the Tories claiming all the credit for it.

[tinfoilhat]

It's bound to be divisive (on several levels: social, political, economical, personal), as we're talking about personal direct taxation, not VAT or the corpo tax rate

 

The facts of the matter, as I see them (IMHO, personally, AFAIC, <etc.>):

• Labour was at the helm for donkeys' and was happy to have it at 40% for just about all them years.
  
• The world economy caught a bad case of the s**ts, and Labour pushed it to 50% at the same time as corporate tax rate income entered a death dive and bankrupcies and redundancies were shooting for the stars. Did any high-earner say "well f*** that for a game of soldiers, see ya"? A fair few did in 2008-2010. No figures ready at hand, but out of 10 high-earning colleagues in 2008 in Dublin (which followed the same policies as GB Labour to begin with), 8 had emigrated to NZ, AU, CA <etc.> by mid-2009.
  
• The ConDems went at the helm shortly after that and 'mitigated' the rate at 45%: still 5% more than pre-crash, but on the good side of "confiscatory" (anything north of 49.99% ).
  
• Things look to have stabilised a bit since, the 45% rate is still in force, and <were it not for Balls' latest bit of leftie populism> noone has batted much of an eyelid about it since.

'My' conventional wisdom would therefore be - let sleeping dogs lie, concentrate instead on remaining tax evasion/avoidance mechanisms and try to strike a happy balance for UK-based corporations.

And on that I can certainly fully agree

 

But it seems beyond them. Even the most revered saint Vince cable hasn't got a clue how to plug the gaps and billions in tax avoidance and he's in a position to at least find out if not actively change it. But oh no, he actually went on telly and said I don't know how to stop pisstaking (I added that bit) corporate tax avoidance. Well thanks very much Vince. What exactly are we paying, and your 650 mates to actually do? We need to pay these clowns top money to get the best people? I wouldn't pay them in rusty washers.

[truman]

Is having the top rate of tax at 45% better or worse then Brown's scrapping of the 10p tax rate? Didn't that hurt the low paid more than the top rate of tax being lowered?

[I1L2T3]

No you haven't. You just made a blanket statement. A specific policy? Have in work benefits been cut? I don't know as I'm not eligible and I might have missed it on the news.

 

It's a blanket statement yes, but then there is a blanket attack on people in benefits. It may not always be manifested in policy but the rhetoric certainly supports what I am saying.

 

Where it has been implemented in policy you have:

1. HB rules changes

2. Council tax benefit changes

3. Benefits cap

4. Conditionality rules for UC, for people that have been moved onto that. More people will be impacted if it ever gets rolled out, particularly part-time workers who will be paid benefits conditionally on looking for more hours of filling their time up to 35 hours a week with job search activity.

 

---------- Post added 27-01-2014 at 14:09 ----------

 

But it seems beyond them. Even the most revered saint Vince cable hasn't got a clue how to plug the gaps and billions in tax avoidance and he's in a position to at least find out if not actively change it. But oh no, he actually went on telly and said I don't know how to stop pisstaking (I added that bit) corporate tax avoidance. Well thanks very much Vince. What exactly are we paying, and your 650 mates to actually do? We need to pay these clowns top money to get the best people? I wouldn't pay them in rusty washers.

 

It is absolutely beyond the skill of the current main parties.

 

The easiest place to start would be personal taxation. For people on PAYE it's probably the most simple part of the taxation system.

 

The interesting thing about the 50p rate is all the argument over it detracts from the real issues in the tax system. While people endlessly bicker on threads like this about changes that make a difference of maybe 1% in tax revenue (either way) it takes attention away from where the real problems are with the system:

 

- Evasion

- Aggressive Personal/Corporate avoidance

- Poor collection rate

- An underfunded HMRC lacking teeth

- Tory changes to corporate taxation rules that institutionalise avoidance

[chalga]

What exactly are we paying, and your 650 mates to actually do? We need to pay these clowns top money to get the best people? I wouldn't pay them in rusty washers.

 

You are paying them to employ accountants,who are themselves no doubt paid by public money,to help draft tax laws which said accountants then advertise to potential tax avoiders as insider knowledge on how to stop money coming from them and into the public coffers.......allegedly.

 

http://www.theguardian.com/business/2013/apr/26/accountancy-firms-knowledge-treasury-avoid-tax

[I1L2T3]

You are paying them to employ accountants,who are themselves no doubt paid by public money,to help draft tax laws which said accountants then advertise to potential tax avoiders as insider knowledge on how to stop money coming from them and into the public coffers.......allegedly.

 

http://www.theguardian.com/business/2013/apr/26/accountancy-firms-knowledge-treasury-avoid-tax

 

If you read private eye you will know all about the revolving door between HMRC and business. The top firms make a play on having ex-HMRC people working for them.

[cuttsie]

There are a lot of assumptions in there. The biggest one being that Ineos were paying the proper amount of corporation tax, which doesn't seem very likely given the rest of their conduct. The real reason Ratcliffe moved Ineos' HQ to Switzerland was that the company owed a £350m tax bill that HMRC wouldn't defer. The firm is indebted to its eyeballs; an estimated £10bn as of the end of last year, mostly borrowed from RBS, Lloyds and Barclays. He needed approval from 80% of Ineos' creditors for the move to happen, which they duly provided because they stood to lose the billions if the company went belly up, in the process allowing Ratcliffe to dodge over €100m per year in corporation tax.

 

The other assumption is that relocating Ineos' headquarters is actually a big loss to the UK economy. The trouble with Switzerland is that although you pay very little income tax, everything else is taxed up the wazoo. It makes sense for the super rich to live there, but for anyone from (I'd say) Associate Director level down it doesn't stack up economically. I do a lot of business with Swiss pharma firms and I know I could get a job out there that would more than double my salary, but also that my costs of living would go up by even more.

 

So bearing that in mind, would Ratcliffe really relocate a large head office to Switzerland, knowing he'd have to pay each employee a gret deal more than he pays them in the UK? The answer is no. In reality, the new Swiss HQ is just a shell for tax purposes. It has a staff of 20 whilst Ineos' main office continues to employ 150 people in Lyndhurst.

 

The trouble is, businesses and businessmen are competitive animals and they will loudly oppose anything that will make life even a little harder for them. They'll grumble and they'll threaten to leave, but very very few actually will because the UK continues to be an attractive place to do business and they although they'd never admit it, they will pay a lot to continue doing business here.

 

Even when they make grand gestures like Ratcliffe has, they often prove to be hollow on closer inspection. Take Pfizer, who a few years ago ostensibly pulled out of the UK and closed down their British HQ in Sandwich. On the face of it, that looks like a disaster for the economy. In reality, the work Pfizer was doing here still needed doing and they were still going to pay for it, it's just that now they're paying third parties to do it on their behalf. Companies like Quintiles and Parexel did very well out of Pfizer's withdrawal and Icon even took 50% of it on the condition that they also took on 50% of the workforce at Sandwich.

 

Beware grand gestures, especially when they're from corporate snakes like Jim Ratcliffe. Britain is a great place to do business and we need to have faith in that by making sure businesses are paying the right amount for the privelege of operating here.

Switzerland is home to most of the Worlds dodgy accounts and accountants with many current and ex dictators as their clients.

On top of this the Worlds biggest drug companies ply their trade from that Country holding the World to ransom while at the same time refusing to release life saveing drugs to the poor and underdeveloped Countries at a reasonable cost.

[GazB]

I suppose anyone who earns this amount has surely done something to get it. Professors and lawyers etc, who have spent many years learning their professions have done nothing wrong for the privilege of earning a decent salary, for the unskilled to be envious of, and for the government to come along and take it from them in tax. I don't earn anywhere near that figure, and that's my problem for not doing better in education or on the employment ladder in general. It always makes me laugh when I hear people say "they can afford it", but their private expenditures are nobody's business but their own.

 

We have to make it worthwhile for entrepreneurs to earn more money, so that they are encouraged to set up businesses and employ people and generate income for the UK. If we tax them at a punitive rate for purely political reasons, they will either up sticks and leave for a more favourable country who wants to have these people or they will find ways of avoiding/evading tax if they feel it is worth employing tax experts to do so.

The total tax take will fall. We will all be worse off. It is one of the most stupid, envious and nasty things that the lefties suggest.

 

I agree with both of the above points. In my opinion a percentage is a percentage; they should not pay an increased percentage just because they earn more.

 

Sends out a good message; "The more successful you are, the more we'll tax you".

[Supertramp]

It's a blanket statement yes, but then there is a blanket attack on people in benefits. It may not always be manifested in policy but the rhetoric certainly supports what I am saying.

 

Where it has been implemented in policy you have:

1. HB rules changes

2. Council tax benefit changes

3. Benefits cap

4. Conditionality rules for UC, for people that have been moved onto that. More people will be impacted if it ever gets rolled out, particularly part-time workers who will be paid benefits conditionally on looking for more hours of filling their time up to 35 hours a week with job search activity.

 

The interesting thing about the 50p rate is all the argument over it detracts from the real issues in the tax system. While people endlessly bicker on threads like this about changes that make a difference of maybe 1% in tax revenue (either way) it takes attention away from where the real problems are with the system:

 

- Evasion

- Aggressive Personal/Corporate avoidance

- Poor collection rate

- An underfunded HMRC lacking teeth

- Tory changes to corporate taxation rules that institutionalise avoidance

 

 

Housing Benefit rule changes? Is this the bedroom tax? It means people get the amount of HB that is applicable to their circumstances rather than the house they live in. So if their circumstances mean they need a one bedroom flat then they get enough money to rent a one bedroom flat. It's not great now but hopefully will even itself out if people move around into a house that meets their needs. I know there are outliers who will have it bad for example people who need a spare room for when their kids come round but I am sure that can be fixed.

 

Benefit cap - that's a great idea in my opinion. £350 a week for a single person is 55hrs at minimum wage. I don't see how you can argue against it.

 

Council tax changes - Is this letting councils decide what discounts apply? Then not really the govt.s fault if they reduce the discount available. they could give a bigger discount but bet they won't.

 

Universal credit conditionality on part time workers is another good idea, if you are working part time and the state is funding you because of that then you should indeed be working to rectify that and searching for more or better paid work.

 

I definitely agree with your other point, there are far greater inefficiencies in the tax system and we are wasting time and effort talking about a 50p tax rate.

[wellyman]

There are a lot of assumptions in there. The biggest one being that Ineos were paying the proper amount of corporation tax, which doesn't seem very likely given the rest of their conduct. The real reason Ratcliffe moved Ineos' HQ to Switzerland was that the company owed a £350m tax bill that HMRC wouldn't defer. The firm is indebted to its eyeballs; an estimated £10bn as of the end of last year, mostly borrowed from RBS, Lloyds and Barclays. He needed approval from 80% of Ineos' creditors for the move to happen, which they duly provided because they stood to lose the billions if the company went belly up, in the process allowing Ratcliffe to dodge over €100m per year in corporation tax.

 

The other assumption is that relocating Ineos' headquarters is actually a big loss to the UK economy. The trouble with Switzerland is that although you pay very little income tax, everything else is taxed up the wazoo. It makes sense for the super rich to live there, but for anyone from (I'd say) Associate Director level down it doesn't stack up economically. I do a lot of business with Swiss pharma firms and I know I could get a job out there that would more than double my salary, but also that my costs of living would go up by even more.

 

So bearing that in mind, would Ratcliffe really relocate a large head office to Switzerland, knowing he'd have to pay each employee a gret deal more than he pays them in the UK? The answer is no. In reality, the new Swiss HQ is just a shell for tax purposes. It has a staff of 20 whilst Ineos' main office continues to employ 150 people in Lyndhurst.

 

The trouble is, businesses and businessmen are competitive animals and they will loudly oppose anything that will make life even a little harder for them. They'll grumble and they'll threaten to leave, but very very few actually will because the UK continues to be an attractive place to do business and they although they'd never admit it, they will pay a lot to continue doing business here.

 

Even when they make grand gestures like Ratcliffe has, they often prove to be hollow on closer inspection. Take Pfizer, who a few years ago ostensibly pulled out of the UK and closed down their British HQ in Sandwich. On the face of it, that looks like a disaster for the economy. In reality, the work Pfizer was doing here still needed doing and they were still going to pay for it, it's just that now they're paying third parties to do it on their behalf. Companies like Quintiles and Parexel did very well out of Pfizer's withdrawal and Icon even took 50% of it on the condition that they also took on 50% of the workforce at Sandwich.

 

Beware grand gestures, especially when they're from corporate snakes like Jim Ratcliffe. Britain is a great place to do business and we need to have faith in that by making sure businesses are paying the right amount for the privelege of operating here.

 

I'm not really sure why you wasted such a large period of your life typing all that.

 

Do you think UK tax revenues are lower as a result of Ineos moving its tax base out of the UK and the 15 or so staff you mention paying their income tax, VAT and other taxes abroad, as well as their domestic and private expenditure? It's not a difficult one to answer?

 

---------- Post added 27-01-2014 at 15:56 ----------

 

Switzerland is home to most of the Worlds dodgy accounts and accountants with many current and ex dictators as their clients.

On top of this the Worlds biggest drug companies ply their trade from that Country holding the World to ransom while at the same time refusing to release life saveing drugs to the poor and underdeveloped Countries at a reasonable cost.

 

How very libelous!