This morning's Independent is reporting that the next big Tory proposal is going to relate to the tax threshold of the higher rate of income tax, something that Brown has consistently allowed to drag in order to ensnare more middle income people and boost his coffers.
Now the obvious reaction of the Labour Party to such a policy will be to scream that it is a tax break for the rich middle classes. The problem they have with that argument now though is that there is a large group of people who pay higher rate tax who are by any stretch of the definition "rich".
Now they may say that someone on £40,000 a year is earning almost double the national average and should pay higher tax. But what if that person is in their early thirties, married, with a kid and a mortgage to pay? By the time they've spent on their outgoing they'll be lucky if they have much left to save or spend on luxuries.
Yet the current tax threshold system says that they are, in some way, rich. Of course, they could probably apply for tax credits. They could, if they wanted to, fill out a long form telling Brown the minutest details about their income and savings and be handed back some of their money, but why should they do that?
Why should they have to detail their life to the Government in order to be given their own money back? Why should they become beholden to the state for their material survival when they are earning enough to survive already if the tax take was just reduced a little?
Isn't the purpose of a tax and welfare system to help those that actually need help, rather than using the former to entrap ever greater numbers in the latter? There is a powerful case today for raising the threshold for higher rate tax to put it more in line with reality. It would also be very popular.
8 comments:
The bands should be fixed in terms of median income. So if you earn less than half median income, say, you don't pay any tax, then you don't pay higher rate tax until you earn three times median income. Those thresholds would be increased in line with median income not CPI.
Flat taxes would be nicer though.
There are so many supposedly 'rich' people about today, who's bills are so high that they can't afford the basic luxuries of many of the poorer, who simply rent.
Admittedly, it could be argued they've gone for too big a house, and it's their own fault. But human aspiration is human aspiration, I suppose.
There is no differential made as to whether income which is earned from capital invested and put at risk, or income generated through an employment contract.
That would not matter if income tax was lowish say - total including Nat Ins - 40%. But with the limit on Nat Ins removed, income tax is now about 64%.
If capital gain is made, tax was recently lifted from 10 to 18%. Even at 18% there is a far more incentive to invest in short term quick buy and sell gains, than get involved in longterm business building.
Britain has been forced by Brown to become a nation of gamblers. Anyone who actually wants to work would be well advised to emigrate.
I'm not sure about the practicality of the median income scheme. I like the principle, but the median is a constantly moving target and taxation would be hard to administer unless the median was fixed at a specific point for a certain length of time, which rather defeats the object. Otherwise you would have people earning very close to the 0.5 and 3 x median points whose tax would effectively change from day to day as the median fluctuated with various pay settlements.
I do feel that the lower point at which you start paying tax should be increased substantially. Anyone earning say £15000 or less shouldn't pay tax at all. Going through the hoops of claiming it back via tax credits is unwieldy and shouldn't be necessary. Especially when even the administrators can't get it to work correctly: reports like this one have been constant virtually since it was set up http://news.bbc.co.uk/1/hi/business/6679341.stm
I don't object to tax per se; I accept that it's necessary for governments to run central services. But I strongly object to paying for things like the MPs' expense gravy train (as so amply demonstrated by Ed & Yvette Balls, amongst others), the massive EU subsidy, and over-complicated non-working rubbish like tax credits, the asset recovery agency, the NHS computer system, and putting Al Gore's pseudoscience propaganda* in schools. And all the multifarious other ways of wastefully squandering our money in which this corrupt spinning-top of a government indulges.
* I don't disagree that the rate of climate change has speeded up and that human influence is part of that, but Al Gore's film is not a good way to present it. The film is sentimentalised, over-exaggerated, deliberately panic-inducing, and in places just plain wrong.
"I don't disagree that the rate of climate change has speeded up and that human influence is part of that, but Al Gore's film is not a good way to present it. The film is sentimentalised, over-exaggerated, deliberately panic-inducing, and in places just plain wrong."
So that's why he got that prize then!
Well my proposal would have the amounts fixed each year in the Budget, I don't propose it to change daily that would be a bit complex...
Dizzy; practically everyone is a 40% income tax payer already, but they don't realise it - I've discussed this very recently:
http://theylaughedatnoah.blogspot.com/2007/10/secret-taxation.html
As the fat labour lump on QT extra failed to grasp lowering the tax rates will actually increase the revenue generated, as there will be less incentive to take tax avoidance measures.
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