We're All In This Together .....

[Lateralthinking1]

Let's also not forget (as you either seem to do or choose to omit mention of) the various government sponsored tax avoidance schemes such as ISAs, pension contributions and the like

"Government sponsored" as in "legal". Anything else as in "clearly should be taken to court".

I would very happily blow the whistle where appropriate.

[teamsaint]

ah um ... as Olson argues you can have a straight 10% [or whatever] but within a week the Doctors will be claiming that they should receive a different treatment and within a month fifteen special interest groups will have made such claims and by the end of the year everyone in the society will be arguing for progressive, regressive, flat, allowance quanta etc etc etc this scheme should be supported by tax, that should be discouraged etc etc ...

we are not and never can be all in this together .... most of us for most of the time are in a kind of placid non protesting hubbub whilst the disagreeable greedy bastards are grabbing all the money .... and actually now most of us have an uneasy feeling that our placid reliance has been misplaced there are quite a few greedy disagreeable bastards we would like to throw in jail eh .....?

[there is a positive correlation between being "Disageeable", as measured by Big 5 personality instruments, and income ... the more disagreeable have higher incomes all else being equal ... the rest of us probably find such self aggrandisement distasteful no .... ?]

But the various interests are part of the reason for the shambolic system in the first place.
AS AH pointed out, there is avoidance on a genuinely industrial scale. (footballers bonuses being paid offshore, for instance).
Fairness is unbelievably difficult to achieve in taxation, so I tend to feel that decreasing overall rates , and emphasising simplicity is a good direction to go in.
In addition, I have to say that the liberal policy of increasing the personal allowance substantially is a really good thing. In would increase it to the level of the minimum wage, and as AH suggests, amalgamate NI charges, which incidentally, if you assume that the NI cap was removed, would hit high earners by increasing their marginal rate, or allow a reduction of the top rate to, say, 40 %.

[teamsaint]

Actually compared to similar countries we don't pay very much tax at all
I think the "we all pay to much tax" statement is part of the "script"

We pay well over 40 % of our income to the government. The (super)rich are the ones getting away with it. Marginal rates of income tax(including NI) are disgracefully high for many people, especially those on very modest incomes.
Marginal rates of over 30 % (worse if you include withdrawal of benefits) for those on £300 a week, compared to a top rate for the very highest paid of 50%. Not good.

[MrGongGong]

I'm no tax expert
but what do they pay in Finland ?

[teamsaint]

I'm no tax expert
but what do they pay in Finland ?

Wiki has marginal rates at 46 %.

Thats a very high rate, but as we know, its only part of the whole tax/benefits/allowances system.

Marginal rates are very important, but they are, as I suggested with the personal allowances point, only part of the equation.

high marginal rates of tax are damaging......but so are benefits cuts to very vulnerable groups.

[Lateralthinking1]

It is miniscule compared with the 83% plus in the late 1970s. Even under Margaret Thatcher it was 60% or 50% so you are both some way to the right of her. Enoch Powell or Rick Santorum. That sort of area.

Actually, you both disgust me on this.

The sooner we get back to something at least in the region of 70% for the top rate, the better.

And everyone who has an income should pay tax. Even if it is tuppence. It means having a stake in society. Responsibilities and rights.

I have never fiddled tax in my life. Those who do cheat people out of their health and welfare. It must be a borderline area whether advocacy of law breaking is a good thing on here.

[MrGongGong]

I think that we have a mindset (encouraged by politicians) that regards Tax as some kind of "legalised theft", people believe that somehow their money is being stolen from them , this is positively encouraged by the rhetoric of government ("we need to crack down on people claiming disability benefits" etc etc )......
surely what we need to do is to change the way we think about this ?
I have very modest earnings
I am more than happy to pay tax

My children had free education
I've just had a major operation paid for by the NHS
I'm more than happy to pay for others to be treated well and not stigmatised


If we were all a bit less greedy and a bit more generous we would be much happier
If we stopped thinking that somehow there is a conspiracy to "get one over us" things would be much better.

(this is not to say that we should be complacent but rather think differently..........)

[Lateralthinking1]

Legalised theft or unpunished murder by proxy?

.....and then that extended uncanny silence from those who normally dissect every clause!

[gradus]

The D of H arrangement is reported as going back many years to when tax wangles, sorry - arrangements of this kind were acceptable and became part of the way things were done. It was and perhaps still is not unknown in companies too.
Pre the current dire state of the economy the arrangement continued to be applied probably on the basis that if you don't ask the question you won't get the wrong answer - I can just guess at the state of panic when somebody asked who had cleared the arrangement.
I daresay several of the people concerned have other employments/contracts and that was the rationale for allowing the contractual terms that have been exposed.

[Lateralthinking1]

gradus - That sounds about right. Increased by New Labour. Quelle surprise!

The two stories running on this thread are in fact the question and the answer.

Q. How do you stop cancer patients from dying even sooner than expected as a result of stacking shelves at 50p an hour?

A. Stop their killers by getting them to pay their taxes like normal decent people.

[handsomefortune]

there was a really depressing r4 prog on the cuts. this revealed that the her majesty's customs and & revenue and dw&p would be cutting the very depts that deal with large scale evasion ..... they will instead apparently be putting all their efforts into bullying small businesses etc

what a total mess, which i assume is presumably 'convenient' .....for the powers that be, at least.

[aka Calum Da Jazbo]

there are many more small to medium so the pay back for bullying is high .... fair or not they just want the ££££

and it is not really very much to do with tax per se ..... the level of inequality is very high; top cats mega rewards for failure whereas a socially disadvantaged young adult has to obey the letter of the diktat in Tesco for no pay for months to be even considered for inclusion in the working poor .... the ghettoising of the land will disadvantage the children and the sick ..... this is all the result of profound idiocy by the establishment repeating the austerity of the early thirties ...... the billions of taxpayers money that is being squandered by quantitative easing for the banks and the gilt market is a scandal ... far better that a million lives be ruined than that the pillars of property should lean over eh .....

[Lateralthinking1]

Hmmm hf. Small businesses are a part of the unspoken dialogue here. In the public sector, our tax was deducted at source. Supposedly we had job security. Small business isn't adequately supported by Government. I accept that. But then it says "If the big players can do what they like, I will also do it my way. This helps to keep me afloat".

As it turns out, public sector job security was a myth. I was allowed £65 pw in benefit from January to July 2011 and then nothing. That nothing will continue. I worked hard through the self-assessment form this January for the first time. Paid tax on that benefit! I didn't do so thinking that others would be justified in flicking their hair nonchalently and saying "to hell with it".

I agree that DWP choosing to tackle small businesses is cart before horse but the cart's also on the road and it needs a licence. Beyond that, don't expect great logic from them. Coming soon to a town near you - the closure of the Job Centres.

[ahinton]

I agree with you completely about "government sponsored tax avoidance schemes".
If these were swept away, overall rates of tax , both direct and indirect, could be slashed, to the benefit of everyone.

Maybe so, but there would be another downside to this; the government continues to try to encourage saving and, if the incentives to do so such as the tax reliefs given on pension contributions and the tax-free status of ISAs, it would be hard to do this and would also likely encourage some of those people to invest offshore.

My assertion that complexity is the rich man's friend is really connected to the point about government avoidance schemes. In the main these schemes can be exploited by the (very) well off. EG, a 40 % top rate of tax is a lot less painful if you can get that 40% straight back whilst saving for your pension.

True in principle, but that can't be done any more to the extent that was the case before the present government took office; 40% tax relief on pension contributions has been slashed so that it can benefit only those whose 40% liability is relatively small.

It seems to me that complexity arises for two main reasons. This first is government meddling, they just can't resist making little changes for whatever reason. The second reason, I suggest, is that through complex tax rules its possible to make the system look much tougher on the super rich than it really is......the maze of allowances, reliefs, and off shore status regulations play right into the hands of the rich and their advisors.

I agree wholeheartedly with the first part of this but don't buy the second. The principal thrust of tax policy is not that of a PR exercise to hoodwink the less well off into believeing that the régime is tough on the wealthy and, as I mentioned before, the more complex the tax rules, the more that wealthy people have to pay their tax advisers to find their ways through the various mazes in order to avoid as much tax liability for their clients as possible. A much simpler tax régime would mean that these advisers would have far less work to do in order to achieve the desired results and this would benefit the wealthier taxpayers to the extent that they'd then be liable for far less in professional fees for tax avoidance advice.

Perhaps the biggest tax dodge of all for wealthy people with considerable amounts of cash to invest is that of the offshore insurance bond in which Britain allows up to 5% p.a. to be taken as "income" for up to 20 years free of all tax on the grounds that these payments are treated for tax purposes as repayment of capital, but whilst these are usually sold via financial advisors, the cost the the investor is usually far less than is the case when they have to pay a brace of legal and accountancy advisers for constantly ongoing advice to ensure that their actual tax liability is reduced to the barest minimum - in other words, it's generally a whole lot cheaper to deal in tax-free products than to seek advice on other ones that by nature generate tax liability. Of course, the funds within such investments are taxed, but if one invedsts offshore they are not, apart from a very small withholding tax, so the investor's opportunities for tax-free growth are greater.

One problem that tends to get people worked up about all this is the attitudes about have and have-nots and I suspect that this is perhaps where it all goes sour and entrenched positions are established that become very hard to dislodge while successive governments only ever seem to meddle, as you say, on the peripheries rather than undertake fundamental reform of taxation policy. If, as I suggested earlier, NI was abolished at a stroke as one part of a general tax simplification policy and the employed and self-employed payers of it have it absorbed into their income tax liability and the employers were somehow to be obliged by law to reinvest the savings by employing more staff who would then each pay more income tax, there would be massive savings to the taxpayer in that the staff and other costs currently borne by HMRC (in other words, by the taxpayer who funds HMRC) and perhaps some of the HMRC staff who would be made redundant as a consequence (the one obvious financial downside of such an exercise) might be able to pick up some of those new jobs generated by the employers who are no longer liable for employers' NIC1; the benefits for the nation's economy arising from the consequent reductions in unemployment should speak for themselves. I suspect that, in such a climate, less of the poorer in society would be quite so exercised as they are now about wealthy people paying expensive advisors to help them reduce their tax liabilities.

Not being an expert of taxation, I'm not sure what additional measures might be beneficial, but I submit that this one, if handled properly, would likely make many people of all levels of wealth and poverty feel less aggrieved about the sheer amounts of taxpayers' money that are currently wasted just on the day-to-day operation of the tax system; again, the less that this costs the taxpayer, the less incentive there would susequently be for so many people to try to avoid tax, because some tax rates could be reduced to cover those immense savings.

[ahinton]

there are many more small to medium so the pay back for bullying is high .... fair or not they just want the ££££

and it is not really very much to do with tax per se ..... the level of inequality is very high; top cats mega rewards for failure whereas a socially disadvantaged young adult has to obey the letter of the diktat in Tesco for no pay for months to be even considered for inclusion in the working poor .... the ghettoising of the land will disadvantage the children and the sick ..... this is all the result of profound idiocy by the establishment repeating the austerity of the early thirties ...... the billions of taxpayers money that is being squandered by quantitative easing for the banks and the gilt market is a scandal ... far better that a million lives be ruined than that the pillars of property should lean over eh .....

I agree in principle with all of this except that the payback for such bullying is not high at all; the bullying itself costs money and the more SMEs that its results put out of business altogether the less payback it will generate.