50p - top rate of tax: keep or get rid?

[Deano's Invisible Pants]

BBC News - High 50p tax rate damages UK, say economists

According to HMRC, the 308,000 people who are eligible for this tax (1% of the population) collective contribute 28% of the country's income tax revenue. The number of payers, however, are said to be dwindling due to the flight to less punitive tax regimes and lower incentive to earn.

Do the political / social cohesion / emotional arguments for keeping this tax outweigh the economic reasons for scrapping it?

 

[seagullsovergrimsby]

scrap it and close all the loopholes , that way virtually all of those 1% will be paying the right amount of tax instead of avoiding paying what they should be in the first place.

 

[bhafc99]

Morally it should be kept. Practically, there's no point doing so – these people will always find ways to dodge it.

 

[Biscuit]

Keep it and strengthen it. While we have Premiership stars earning £200,000 a week and a wealth of extremely (read: sickening) wealthy individuals it should stay and they should pay their way. Equally scumbags who are capable of work and don't feel the need should also be forced to pay their way.

If those that pay it are contributing 28% of the country's income tax revenue than how can we even be thinking about scrapping it?

 

[cirC]

If the 50p band costs more to administer then what is the point.

 

[Westdene Seagull]

Intrestingly the article states what was hoped to be collected by the extra 10p over £150k but doesn't tell us what was really collected.

Personally I believe higher tax is a disinsentive to work - once you hit £150k why would you attempt to earn more if half of it has to go to HMRC ? 40% is more than adequate. It would be better to put more effort into preventing tax evasion, benefit abuse, making tax calculation and collection simpler and getting services to the tax payer in a more efficient way.

 

[binky]

It should go.
It is a tax designed to punish those who have managed to do well for themselves, indiscrimitaly aimed at everyone over a certain "earnings" limit with no intelligence as to how those earnings are derived.

It's a manifestation of the politics of envy.

It also represents the wrong way of looking at governance.
We should not be asking the question, how can we raise more money for the government to spend?
Rather we should be asking the question, what are the essential services a government should be responsible for, such that we can minimise the spend?

 

[larus]

High tax rates actually generate less revenue, as people get more creative in avoiding tax. As seagullsovergrimsby says, scrap it but close the loopholes. It's the real high wage earners that are getting away with it; not those earning say £150k-£500k pa. It's the ones earning millions by paying virtually no tax.

Morally, it's wrong to take half of what someone earns as tax. However, it's far worse to expect someone in the South East to survive on the minimum wage.

The high tax call appeals to the left-wing as it's a battle cry which the masses like as someone else is paying for the services which they want.

 

[parks]

Morally it should be kept. Practically, there's no point doing so – these people will always find ways to dodge it.

Says the man in Dubai not paying any UK tax at all....cock.

 

[Gully]

Scrap it and raise the allowance you get before paying tax to make it far more attractive for people to get off benefits and into a job. This may sound a little simplistic but if you end up with a lower income for being in work than out of it then why would anyone want to bother. More people in work means less on benefits and more paying tax, ergo more money available to improve things like public services, hence more people in work, etc, etc.

 

[Kalimantan Gull]

The same people who move their money overseas and take salary as capital gains rather than income and whatever other loopholes there are - will keep doing it whether the top rate is 40% or 50%.

If you earn a million and pay £400k in tax or £500k in tax - is that extra 100k going to be the difference between keeping it in England or moving it overseas?

 

[CheeseRolls]

Interesting that at a time when there is active discussion amongst high earners in both the USA and France around whether the wealthy should in fact pay more tax, in this country we seemed to be resigned to high earners justifying the opposite.

With the notable exception of our illustrious Chairmen there is also a noticable lack of wealthy philanthropists in this country. Cutting the rate for me, just sends out the wrong message.

 

[Codner pharmaceuticals]

Go Swiss and make it a straightforward % of earning for everyone.

Most 200k a week footballers won't be paying much more than 2k of tax a year due to legal tax minimization schemes.

A flat rate of 30% would probably increase the numbers paying and the numbers prepared to pay.

 

[sten_super]

High tax rates actually generate less revenue, as people get more creative in avoiding tax.

There are plenty of studies which show this, but very little evidence of at what level increased tax rates suddenly change from being a revenue earner to a revenue loss. It likely depends upon the tax regimes of neighbouring/alternative countries and the costs involved with moving. It's certainly not simply a case of saying that the 50% tax rate has caused a drop-off in total tax revenues.

I'm fairly ambivalent about the 50% tax - but I find it odd that it's a group of economists, rather than 'champions of industry' that are heralding this as a problem. It also goes somewhat against the attitude shown by some in the USA and France which has seen some of the 'super rich' indicating their willingness to pay more tax as a short term measure to 'help out'.

 

[Lord Bracknell]

If the 50p band costs more to administer then what is the point.

It keeps a lot of highly paid accountants and finance experts in employment. They are the BACKBONE of the nation. They put the GREAT into Great Britain. Take away their work and we will ALL lose the benefits that the economy gets from their massive bonuses.

Or is there something I'm not following closely enough? Maybe they should just get their massive bonuses for doing bugger all?

 

[Randsta]

Who cares those who earn enough to pay it have ways to avoid paying it!

 

[Pavilionaire]

The focus needs to be on growth, and a 50% top tax rate is a "barrier to entry" for some mobile entrepreneurs. Also, with all the red tape surrounding business, many top earners will think "is it worth the hassle?" when considering starting up businesses.

Don't forget National Insurance either - those that derive their £150K plus from sole trading will find the government actually get 52% and the trader 48% on the excess profit over the £150K mark. Whilst most people in business at this level will be incorporated as limited company the fact is the government are taking at least half and sometimes more, and that's a real turn-off for job creation.

 

[Giraffe]

People paying 40% already pay significantly more than those not on the 40% bracket. There is already an injustice in this, so yes the 50% should definitely be scrapped.

 

[Pavilionaire]

Just as significant as the 50p rate of income tax is the withdrawal of child benefit in 2013 for someone with 2 kids earning £45,000.

My friend's employer just offered to give him a pay rise from £40K to £45K. This would take him into the Higher Rate tax threshold. He'd suffer tax and Class 1 NI on the extra £5,000 of around £1,850. He'd also stand to lose c. £1,750 of child benefit. So, of the extra £5K he'd get around £1,400 - so 28%.

The costs to his employer of paying that extra £5,000 - including Employer's Class 1 NI - would be £5,690. This means the employee gets less than 25% of the benefit, while the government is better off to the tune of £4,290. Now THAT is f***ed up.

 

[Bold Seagull]

The costs to his employer of paying that extra £5,000 - including Employer's Class 1 NI - would be £5,690. This means the employee gets less than 25% of the benefit, while the government is better off to the tune of £4,290. Now THAT is f***ed up.

It's f***ed up that youth centres are closing every day, people are struggling to meet simple living standards, and the majority of the deficit reduction strategy appears to be crippling those that are well below both the 40% and 50% tax brackets. If the figures that you have are correct, then that is the bitter pill they will have to swallow as we all strive to get out of this mess. If he doesn't want the extra £1400 in his pocket, tell him not to take the pay rise.

In fact, tell him to go see the troops being made redundant after putting their lives on the line for under £25k a year, or the nurses, or police officers. Now THAT is f***ed up.