UKC

I see loads of posts here calling for “the rich” to be taxed even more. “The poor” shouldn’t be have to suffer the cuts, etc. I couldn’t disagree more, so here’s my perspective.

I happen to make just enough to pay 50% marginal income tax rate. My effective marginal tax rate on the last £100£ that I earn is around 62%. 50% of that is strictly income tax, rest are contributions to national insurance etc. Given that I never use the NHS anyway, and am very unlikely to ever see a penny back from my pension contributions, it’s another form of taxation as far as I’m concerned. On top of that I pay VAT, council tax, road tax, congestion charge, airport taxes on the numerous trips that I make, capital gains taxes and income taxes on whatever savings I manage to make after all this money has been taken away from me. I’m just about to pay another hefty tax (stamp) on the home purchase that I’ve been planning (and saving money for). I make just enough to fall into the 50% band, but am nowhere nearly “rich” enough to say that these other fixed charges (council tax etc) are diluted in my overall earnings to the point of being irrelevant.

I estimate that from every £100 gross that my employer pays me, I have to give back around £80 to the state (62 + 17.5 standard VAT + all these other taxes that I’ve mentioned). To pay me £100, my employer must have already paid 28% tax rate.

So my firm makes £139, pays £39 (28%) in corporation tax, I pay another £80 in various other taxes just to be able to spend £20. That gives around 85% marginal tax rate.

I also happen to come from an Eastern European country. For years, our effective tax rate was close to 95%. You would graduate from university, start a job as, say, an engineer on the equivalent of $30 a month. 20 years later, you would still be on $30, well maybe $32. Whatever value add you created, whatever innovations you came up with, no matter how hard you worked, any value add would be taken away by the state and “redistributed” (to communist party crooks and whoever managed to lobby for their case loudest – heavy industry representatives, mainly). No-one would argue that this was a terribly inefficient, initiative-killing, incentive-lacking system. It’s been tried all over the world, in countries at various stages of economic development, on various continents and with various cultures (various cultures of work, most importantly). It never worked. No-one did their job, no-one cared. You never saw the profits of your hard, honest work, all incentives were removed. Countries went into ruin. If you don’t remember Easter Europe in the 80’s, witness Cuba these days, for instance.

So 95% is clearly too much. So for any of you yelling that i-bankers and “the rich” should be taxed MORE, I ask one simple question. If 95% is too much, and 85% isn’t enough, what is the sweet spot? Can you please give a specific number in your answer please. Thanks.

In reply to rockdude111:

There is also an argument for the rich having more disposable income to buy things with, because their purchases contribute towards demand to which manufacturers respond resulting in employment for others.

The wheels of commerce must turn to create a healthy society.

In reply to rockdude111: theres also a recognised tipping point at which tax becomes so high people work harder to avoid paying it and so tax receipts actually go down, not up.

were probably not far from that now.

In reply to rockdude111:

I suppose my response to this is that
1) You earn over £150k, so you're not going to get much sympathy here about how hard pressed you are, However, if anyone wants to organise a whip round ....
2) When people talk about taxing the rich more, I don't think they are talking about people under PAYE; its more extremely rich business men who have off shore accounts and numerous other tax dodges whilst ostensibly living in Britain.

In reply to Trangia:

The wheels of commerce must turn to create a healthy society

Simplistic bullshit - you'd need to define 'healthy society' as opposed to 'healthy finances' and then explain why commerce pushes a society towards health.

In reply to MttSnr: I do earn (just) over £150k. My question wasn't about sympathy, though. It was about being rational and what the right amount of tax that "the rich" pay should be.

In reply to rockdude111:

You are only taxed at 50% on the the money you earn that is over 150k. All the rest of the money is taxed the same as the rest of us paupers.

I don't care how hard you work, attitudes like yours are as big a problem in our society as much as the ASBO wielder is.

In reply to Removed User:

You seem to have totally missed his point and not understood the fact that his marginal tax rate is much higher than 50%. However, he is being a bit disingenuous because he can (currently) get most of his tax back through things like pension contributions and so on.

In reply to rockdude111: The point you fail to grasp is that a lot of the taxes you are citing, apart from income tax, are also paid by the poor out of far less disposable income.
I pay tax on standard rate on my pension, despite paying into the pension fund all my working life and while I don´t claim to be poor, I accept that taxes on income are neccessary and I am quite happy to pay the rate required of me. Many rich people or people like yourself on very high salaries do nothing but moan about paying tax. Try living in the real world!

In reply to MG:

In addition, he could live in a smaller house like me , buy less expensive things, as you say make more pension contributions.

In reply to rockdude111:

>My question wasn't about sympathy, though. It was about being rational and what the right amount of tax that "the rich" pay should be.

150k a year. Nice work fella. Though it's hardly small change to what "the rich" earn is it? I imagine they should pay as much as everyone else, which if you've travelled a bit you will see is hardly value for money.

Regards

D

In reply to Al Evans:

Did you read his post or did you just see the words "rich" and "tax" and start typing?

In reply to Al Evans: So what is your answer to his question? I would say that we currently have it about right at 50% plus other taxes minus relief on pensions etc. If anything the top rate shoudl come down again to 40%. There is a lot to be said though for a stable tax regime.

In reply to rockdude111:

Well most of the taxes you mention are paid by everyone: VAT, council tax, road tax, congestion charge, airport taxes, NHS. Most of these are likely to be a larger percentage of ones pay when you earn less because they're fixed rates.

You're clear that you make JUST enough to pay 50% income tax it sounds like you are in an unfortunate position there. That doesn't make your argument apply to all rich people though.

If anything there's an argument that we all pay too much tax as a nation and certainly the money for Trident, new aircraft carriers and sending troops all over the world is complete waste of most people's money. There's also the argument that bailing out financial institutions is a waste but I guess that's one for another thread.

In reply to RupertD:

I read his post and stand by my answer, the rich should pay higher rates of tax than the poor who have far less disposable income to live on after their taxes.

In reply to stp:

As a contractor I get paid by the hour, so if I work hard long hours I get paid more. Why should the govt get a higher proportion of my rate for the 50th hour I've worked that week? If I was getting taxed at 85% for example there would be absolutely no incentive for me to work when my incremental tax was at that level .. BTW I'm nowhere near £150K pa

In reply to Al Evans:

Which they do. Quite a lot higher The question was how much higher is right?

In reply to stp:

But you only pay 50% tax on the portion of your income that comes into the 50% tax band?

In reply to rockdude111:
Some weird planning there.

Have you not heard of salary sacrifice schemes? Simple way around the issue.

My fathar once paid 90% tax in the Uk in the early 70's. The tax was later dropped after a year or two as it was counterproductive. Governemtns forget these lessons.

In reply to MG:

It should be graduated (as it is but not enough) so after 50% there should be a 60% band etc etc, and it needs to be constantly reviewed as general salaries increase over tyhe years.

In reply to Al Evans:

So you think there should be (effectively) a limit on how much people can earn? In which case what about the OP's other point that people will simply go elsewhere and take jobs and investment and tax revenues with them?

In reply to rockdude111: You won't get much sympathy on here. Not many people on #150k plus spend their days chatting on internet forums.

In reply to Al Evans:


Why? Is this an ethical stance or for the practical purpose of increasing government revenue?

Presumably if ethical its cos you are into income redistribution cos poor people don't earn enough.. why not adress that issue by increasing the minimum wage rather than approaching it arse about face.

If into raising additional govt revenue.. all the research shows it is counter productive.

In reply to rockdude111:

Totally agree. UK tax is all out of proportion.

I have been offered a job in the UK but it's unlikely I will accept it because after all the various taxes I calculate I would be worse off by GBP1500+ per month (not even taking into account bonus payments).

Why should the government decide how most of my money should be spent?

In reply to MG:

I think it´s just a bullshit frightener by rich b******s.

In reply to Al Evans:

Read my post above.

In reply to JimR:

I have no problem with that, but it needs to be paid for, hence requiring higher taxes for those that can afford it.

In reply to Al Evans:

You honestly think people won't chose to live elsewhere if the government prevents them from earning more than a certain amount? Why are you so resentful of the rich?

In reply to SARS:

And you think you are that great a loss to the UK economy?

In reply to Al Evans:

Hmmm.. a well reasoned argument, have you thought of getting a job advising Osborne .. I suspect you'll fit into his team.

In reply to Al Evans:

Al, I remember as a child my Grandad gave me and my sister five pounds each as a gift for doing well at school.He had a 10 pound note and a 5 pound note. He gave me the fiver and my sister the tenner. She gave him 5 pound coins in change. In my youthful stupidity of money and maths (I was about 6 years old) I started crying that my sister had ten pounds and I only had five and it wasn't fair, much to the amusement of my parents and grandparents.Even after 5 minutes of explaining I was convinced I had been done.

Your grasp of finances/taxation remind me of me when I was 6

In reply to Al Evans:

The job I do is considered to be socially quite useful. I pay high taxes and I am generally an all round nice guy . So yes.

In reply to MG:

I´m not resentful of the rich, I am resentful of their often uncaring selfishness and attitude to the poor and the countries welfare as opposed to their personal gratification. I think I´m trying to say ,greed.

In reply to Al Evans:

Of course when he is multiplied by thousands it is a great loss. Not just in terms of the tax revenue he will now pay somewhere else but the in terms of the loss of tax revenue from all the jobs that his presence would have helped support.

In reply to Michael Woods:
Well said
If I was on £150k+ I would be far too busy standing upon the deck of my replica pirate galleon, sailing up the Thames and throwing bread at the proles on the riverbank to watch them scrabble in the dirt.
Either that or partying with Rod Stewart. I bet he can party.

In reply to SARS:

I stopped drawing a salary from my second job when the marginal rate went up to 51% (52% from next April). My employer can reserve for the future payment, so no corporation tax is due and I'll not draw the salary until the marginal rate is restored to 41% or when I cease full time work. Previously I happily paid the 41%. The net effect of the increase for me was an incentive to review and restructure my income so as to pay less tax.

The tipping point for me was when direct taxation took more than half the next pound I earned.

I pay PAYE so have bugger all flexibility compared to many.

It is important to consider NI and Income Tax together when pontificating over marginal rates.

In reply to Al Evans:

Talk about predjudiced. Imagine replacing "rich" with "blacks" in that sentence.

In reply to Al Evans:


Um, I for one would like to see a simpler system not a more complex one.

For what it's worth, which isn't much, I think 50% is about right. Despite being caught at the current level I'd support a lower threshold to around £100k provided that there was a cost-neutral rise to the personal allowance and those were made transferable. Given the state of the UK's finances, I'd leave that threshold in place for a few years too.

In reply to MG:

He's completely predjudiced and talks cr*p.

In reply to MG: Personally I don't think 'rich' people moving else where is exactly a problem. A huge number of graduates in this country are unemployed currently and are stuck in a position of too inexperienced to work in industry but (in the view of employers) over qualified to work in a normal job.
If the people who threatened to move away did they might actually be doing everyone a favour, as there are plenty others capable of filling jobs.
Also did the government not realise that whilst increasing the retirement age may plug a whole in pensions people at the bottom are having to go on the dole in order to survive due to all these older folks staying in their jobs longer.
And one final thing before I end my rant (sorry about that but this subject gets me quite wound up) but jobs like teaching don't earn that highly, so this idea of people in banking buggering off cos they aren't being paid huge sums of cash is just ridiculous. There are always people willing to do these kinds of jobs despite and not because of the rates of pay they earn.

Again sorry for the spiel.

In reply to edinburgerboulderer53:
>

Your young and naieve so your views are forgiven. In my industry there is a very definite shortage of experienced candidates in the UK (and globally). Hence why I have recruiters contacting me daily about new positions in places from UK to Sydney to Hong Kong.

In reply to MG:

How could I possibly do that, one is a situation of race the other a situation of attitude?

In reply to SARS: And the thousands of unemployed wouldn't be capable to fill an entry level/graduate job while employing from within for more senior jobs. I sincerely doubt that is likely, and if it is accurate I'd worry about people doing their current jobs. (insert comment about why we're in this mess in the first place)

In reply to Al Evans:

Being rich isn't an attitude.

I really don't understand your viewpoint. Most (I know not all) people who have money have it through a combination of hard-work, ability, and taking risks with their own livlihood. The economy needs people like that more than ever since we are never going to make a living as a country from metal bashing as previously. Therefore resenting them, taxing them absurdly, and accusing them en masse of being selfish and indifferent to the poor is a really short-sighted thing to do.

In reply to Al Evans:

Wrong .. both are attributes of a person.

your attitude to either attribute is either prejudiced or its not.

In reply to rockdude111:

Fair enough, although the argument for progressive taxation was won in this country a long time ago.

There is something called 'society' and taxation monies bind it together.

Regarding incentivisation, ytou are already paid more than 6 times the average wage in this country - how much more financial incentive do you require?

In any case, as Maslow makes clear, beyond a certain point, wealth ceases to be a motivator.

In reply to rockdude111:

I want to live in a country with American taxes and German services. That'll do me. Failing that I know where Terminal 5 is, I can get that fabled flight to the country that will let me keep all my money and isolate me from my responsibilities to society. I just need to talk to my employer about it.

In reply to Chris James:

Just a small point , wealth is not income... and Maslow's theory is neither prescriptive or descriptive for individuals.. its a general motivational theory.

Have you heard of hygeine factors, on could argue that retainind a certain proportion of earned income is a hygiene factor ie it is an absolute to be satisfied.

In reply to JimR:
What I'm not clear on is the point at which an ordinary slightly dull person who works hard and strives for promotion becomes a greedy bloodsucking capitalist bastard. Is it at £51k or £73.4k or where? Do they wake up one morning with fangs and horns or is it a gradual transformation as in "the fly"?

Maybe Al can help ?

In reply to stp:


In what way is that a waste of money, given that the taxpayer is now sitting on a decent profit through its equity stakes in those financial institutions?

In reply to Al Evans:

Al, why did you retire to Spain?

Was it partly that your UK pension would go a bit further due to the cost of living being a bit cheaper in Spain? I'm not saying it was, just asking the question.

If it was, can you not see the similarity between that and moving abroad to somewhere you will pay less tax and hence have more disposable income.

In reply to SARS:

What do you do?

In reply to JimR:
wealth is not income... and Maslow's theory is neither prescriptive or descriptive for individuals.. its a general motivational theory.

Yes, I have heard of Herzbergs hygiene factors. However hygiene factors only come into play in their absence - i.e. pay is a hygiene factor and demotivator when you haven't enough to live on. Since the OP is on 6 times the average wage of this country then it is difficult to argue that he has a lack of pay.

I pointed to Maslow's Hierarchy of Needs as the OP was talking about the disincentive of high marginal rates of taxation, so I though motivation was relelvant. I realise that wealth and income are not synonymous but they are evidently quite closely linked for most people.

In reply to Chris James:


True .. but not the whole truth

A hygiene factor is a factor which can be a source of dissatisfaction but not necessarily of satisfaction.

So losing a partic proportion of your pay through tax is never going to be a source of satisfaction, but at certain levels it will be acceptable, at other levels it will be unacceptable.

That is why i describe the boundary between acceptable and unacceptable as a hygiene factor

In reply to Postmanpat:

>What I'm not clear on is the point at which an ordinary slightly dull person who works hard and strives for promotion becomes a greedy bloodsucking capitalist bastard. Is it at £51k or £73.4k or where? Do they wake up one morning with fangs and horns or is it a gradual transformation as in "the fly"?


It happens slowly. For example I got on a bus the other day and the conductor didn't clock me. I had a warm fuzzy feeling when I left that bus. It felt good to avoid paying £1.70 for the ride into town. I recommend that feeling to everyone. (insert learing vampire smiley of your choice)


Regards

D

In reply to rockdude111:

8/10 a good troll

In reply to fxceltic:
were probably not far from that now.

Actually I think we are above it, all though in reality it is going to be a sliding scale with increasingly low earners falling into the bracket where 'avoision' becomes worth while.

In reply to doz generale:



He has posted twice - so either not a troll or a spoiled one.

In reply to MG:
Therefore resenting them, taxing them absurdly, and accusing them en masse of being selfish and indifferent to the poor is a really short-sighted thing to do.

Thats the pont isn´t it? It´s your definition of taxing them absurdly as opposed to fairly considering the staus of the rest of the population which are usually concerned in making them rich in the first place. The CBI said that implementing a minimum wage would bring down the private sector, it didn´t, neither will putting up tax rates for those earning well over the national average.

In reply to teflonpete:

It was the weather, I don´t understand the rest of your point? What has it got to do with fair tax in the country you pay them to?

In reply to rockdude111:

Your 85% effective tax rate is way out. Your employer gets a corporation ax deduction for anything it pays you and therefore doesn't suffer the 28% tax charge you add into your figures. The effective tax rate taking into account employees and employers NI is about 57%, which is still lower than many other countries.

In reply to lucashc:

then when you spend it on petrol you pay c&E + VAt
Beer C&E +VAt
other things VAT

the companies that take your money pat CT (if they make a profit)
etc etc etc
so I suspect the overall tax take from the wage packet is not far off 85%

In reply to rockdude111: Your starting premise is surely wrong as you are not comparing like with like. In your example of E Europe there is no benefit to earning more because the system doesn't allow you to earn more, in the UK you can earn more but the benefit of doing so is reduced the more you earn but crucially you do still see some benefit (plus of course your starting position is hardly bread line!).

Accepting that you are right about having an 85% marginal tax rate, surely that is only the amount above £150k?

In reply to Al Evans:

You have previously stated that the cost of living came in to your decision. This means that you have made a decision about where to live based on how much money you will have available, yet up-thread you claim the idea of people moving abroad to avoid high tax is absurd. Why is your behaviour likely to be different to that of others?

In reply to lucashc:
. The effective tax rate taking into account employees and employers NI is about 57%, which is still lower than many other countries.

Effective tax rate perhaps yes. Effective marginal tax rate, i.e. the actual incentive to make any additional effort, I would argue is close to 80% in my own contributions only, closer to 90% if you include the taxes paid by my employer.

Think 50% income tax + 17.5% VAT + national insurance -> surely more than 57%?

In reply to Reach>Talent:

It's the laffer curve; generally thought to be around 60% of GDP (although different studies put it at different points)

In reply to rockdude111:

First rule of taxation, as demonstrated to some extent by part of the OP:

you can only get money from people who have money.


The sweet-spot depends on the financial stream being taxed. Sometimes it will be tiny, as in the case of the bank levy and sometimes 20%% and sometimes 60%. Going beyond 60% on incomes is getting near the limit.

If you think the rich need incentive then the folk at the bottom need even more. Millions of them need to have disposable income to buy the goods and services sold by the businesses run by the rich people or it all goes to he11.

Don't give me the 'I never use the NHS' line. When you crash your car or get lung cancer you WILL use it and you will be grateful for it.

In reply to rockdude111:

It's an interesting problem. I was looking at a distribution of earnings in the UK the other day and it's a very odd one. It seems that people who earn "more" don't just earn a little bit more, they tend to earn a lot more. The tail of the distribution stretches all the way from the relative poverty of those on 150k to those on 150M, 1.5G etc. The reward vs effort curve therefore must have a very strange shape unless someone has worked out how to work more than 24hours in any given day. Is the effort required to earn 300k significantly more than that required to earn 150k? I don't know.

In reply to JimR:

Even if you spent the full net 43% on beer, VAT and duty would being it up to about 70%. Far less if spent on other things or saved.

In reply to JJL:

Didnt realise there was troll etiquette!

I think the OP is someone else. Quite an odd post for someone only just registered.

In reply to rockdude111:

I'm pretty much with Mr Evans on this. But I also think that the OP has totally missed the point(s).

The first issue is that the % level of taxation is not the point. If the OP runs a business then he should understand that there is a need to balance income and expenditure. If we have a given level of expenditure then the country needs to bring in income to cover that cost and taxation needs to be set as appropriate. Governments need to decide what services they should offer to their citizens. I think that offering things like education and health care to all benefits everyone - even those who choose to pay for BUPA and Eton. Increasing the health and education of the whole population benefits everyone.

The second issue is that personal taxation can be progressive or regressive. Governments can choose to increase the divergence in affluence across the population or reduce it. I think that reduced differentials lead to a healthier society and I think that the evidence base supports me in this view.

The way I see it, if you follow the OP's moan to its logical conclusion then you will see society regress. The only benefit I could see in that would be the possibility of a reduction in bland middle brow fiction and an opportunity for new Dickensian stuff. Gated Communities and Ghettos.

In reply to MG:

Because I don´t avoid the UK tax and expect to move back to the UK as soon as I can.

In reply to Al Evans: But none the less you moved to Spain (in part) to maximise the money at your disposal. In the same way others will choose where to live based on tax rates. It really isn't rubbish to suggest so.

In reply to another_mark:

Have you been reading the spirit level?

In reply to doz generale:


As I understand it, you can only post once and once someone has spotted it's a troll, it's over.


I agree.

In reply to MG:

I don't think Al moved to Spain for money reasons but because he is a climber and could climb in warm weather most of the year. A lot of people move there for similar reasons, or to get away from British winters.

He wanted to live the dream, but it was not as good as he thought it was.

In reply to lucashc:

ie 70% directly to the treasury, 30% to brewery where it will then be taxed through CT and Paye etc on workers within the brewery.

If you save then when you die it will be taxed at 40% incremental.
(ie 17% on the orig 100% ) taking you back up t0 70% even on savings

In reply to another_mark:


But he wasn't arguing for zero taxation, only that marginal rates of ~80% are too high.

You are indeed correct that the government needs to fund education, health, welfare, etc, but to do that you need a thriving private sector that generates wealth and pays taxes. It is an entirely valid argument that, increasing tax beyond some level, you reduce the thrivingness (is that a word?) of the private-sector economy and thus get a lower tax take, not a higher one. There are quite a few societies that have tried to do without a thriving private sector, and the outcomes are not good for anyone.

In reply to anonymouse:

Guilty as charged. Its always nice to get your gut feelings supported by a huge pile of evidence.

I've worked in Scandinavia, Europe and the US and my experience is that I prefer the countries with more cohesive societies.

In reply to sutty:

Well he has previously posted

"40 years working, finally get my company pension, feel I deserve it, cant afford to live in the UK so live in Spain,"

In reply to another_mark:
I couldn't help thinking that the authors went in with a view and marshalled the evidence to support the view rather than approaching it with an open mind. Interesting book but far from convincing.

In reply to Coel Hellier:

I didn't suggest that he was proposing 0% tax, and I stand by my comments about society.

I can't agree that a thriving private sector depends on low taxation of the wealthy.

I am aware of the work on tax take vs tax level, which has been used extensively in th USA to argue for lower taxes for the wealthy (how unexpected!). I'm unconvinced by the argument that people will stop working when marginal taxation reaches a set level. Most of the very wealthy don't generate income in a way that is proportional to effort anyway.

My main contention is that it isn't just about the money. I am a firm believer in the importance of society. Why would anyone think that having more money is more important than society?

In reply to Postmanpat: It was 'applied with a trowel' but still interesting and I've not seen any intelligent rebuttals. (I've seen some crap rants though)

In reply to Postmanpat:


I agree to quite an extent, and a major point is that correlation does not demonstrate causation. OK, so societies with more social strife tend to be more unequal in wealth distribution. That does not mean that the latter causes the former. For one thing it could mean that the former causes the latter.

For another they could both be caused by some third factor: for example places like Sweden have a homogeneous population that has been settled there for centuries; places like the US are far more disparate with multiple waves of recent immigration (continuing today from Mexico). And the divides in US society between whites and blacks are not *caused* by wealth inequality; rather the wealth inequality is the result of that long-standing division.

In reply to another_mark:


Depends what you mean by "low" really. I think an income tax level of about 40% would be widely accepted and not harm enterprise; if it goes to 60% or 70% maybe it does.


That is a very black-and-white question about what is actually a matter of degree. Nearly all of us would like more money, and would be pleased if we were offered a 10% pay rise. The number who would turn it down and say "nah, give it Great Ormond Street" is minimal.

In reply to rockdude111:


I don't get this. Are you saying in this example that a compnay makes £139 profit, pays tax on it and then the remaining £100 goes to you in wages, on which you pay 80% tax? If so that's incorrect as your wages are part of your companies costs and therefore not taxed, they will only pay tax on the £39 profit made in this example.

Your other figures are rubbish as 50% is the marginal rate above £150 and does not apply to the first £150K, likewise NI isn't payable above a certain amount. Also you can't add the tax you pay on other income streams (capital gains and savings) as part of the PAYE tax rate as these are taxed seperately and at a much lower rate than 50%.

In reply to anonymouse:
" Is the effort required to earn 300k significantly more than that required to earn 150k? I don't know."

If you were earning 300K by running a business with lots of different activities and you decided you would work less hard and manage on 150K.
Then you would be able to pick and choose the activities that required less of your effort. So less than half the effort would be required.

In reply to rockdude111:

Missed this bit:

"To pay me £100, my employer must have already paid 28% tax rate."

No! They pay you and then pay tax on the remainder (assuming no other costs). You've cleared up one thing for us anyway, you obviously don't work in the financial sector.

Partly because they feel that the taxes they pay are badly used. It's hugely simplistic to believe that paying taxes for the State to use is necessarily symptomatic of a strong society.

In reply to Ditch_Jockey:

You are being a semantic pedant

In reply to Coel Hellier:



Exactly. I lived in Japan for many years and the same goes for Japan. There are also all sorts of specific cultural issues about Japan which are never explored (and in my view probably even distort the stats).

Most of their case rests on the specific examples of Scandanavia an Japan at one end and the US and one or two others at the other end.Most of the rest are a bit of a hotch potch.

So if there are alernative reasons for the cohesivesness of Scandanivia and Japan the whole case struggles a bit.

In reply to Postmanpat:

Sorry,that was a hijack.

In reply to rockdude111:
I too think your figures are a little suspect, though I'm sympathetic to your view. 'Tax the rich' will always be popular in democracies, as will running big deficits. Sometimes it's up to politicians to make unpopular decisions for the sake of the country and the future. This lot seem to be giving it a decent try.

In reply to JimR:

You forgot to add the the income tax the brewery shareholders will pay on dividends out of the company and they VAT that they and the workers at the brewery will pay when they spend their wages on beer, together with the further CT and PAYE when this money gets spent again by the brewery. Keep going and you will quickly get up to 100% taxation.

In reply to JimR:


So you've got a financial incentive to work less hours? Lucky you. I don't see the problem and I suspect most people would welcome that.

In reply to rockdude111: I think all taxes should be dropped with the exception of VAT. If you spend more more you pay more, but you also get more. The poor will pay less tax, as they spend less money, the rich will pay more, as they spend more money. No one ends up paying a huge tax bill and not getting something in return....simple. The rate of VAT could be set so that the govt's income is the same as it is now.

In reply to Tyler:

Glad i wasn't the only one confused by these 'slap and dash' figures!!! everyone spouting off about 40%,50,60 tax rates. Isn't that the point incremental tax regimes and yes (in answer to the OP) you always feel a pinch whenever breaking into the next tax band, but i hardly feel for you!!!

So let me get this right apart from the obvious rich/poor banter. You want a new way of taxing people that does't involve set bands??? because no-matter what the % ,those that fall just above will always feel worse off!!

please enlighten me of a different way of taxing people?

In reply to David Riley:

That's an interesting point. One can always earn less by working less, but it doesn't necessarily work the other way round. The correlation between earnings and effort is a dubious and divisive one.

In reply to Steve27:

Sounds like the way forward!!! I like it 'buy that man a drink'!!

I'm sure some-one with a degree in ecomonics will come along and shoot us down, but its seems like a novel solution to me.

In reply to Dan Parker:

I think you'll find Mrs.T thought of it beforehand. Doesn't go down well in some quarters (so to speak)

In reply to Postmanpat:

Yes Mrs T did think of the idea, but used it more as an extra 'stealth tax', instead of whole hearted replacement.

In reply to rockdude111:

I wonder how many of the "how much does he earn? good lord we can't have that! take outside the city walls immediately and hang him by his balls" types on here would turn down a £150k job, for instance the job they do now, on principal???

In reply to Dan Parker:


There's slap dash and there's completely made up! Pretty much everything the OP's written is rubbish and yet people are arguing agains the straw man he's created.


Even that's not correct, If you get a pay rise from £150,000 to £150,001 PA you are still 50p better off PA and only and only 10p worse off than you would be under the old tax rules

In reply to lucashc:
When you add the taxes up in lots of transactions it does not add up to 100% taxation. If that was the case then after the last few days, months, years or decades of VAT then the private sector would have vanished decades ago.

A better approximation is
STEP 1: government taxes a private sector transaction
STEP 2: government spends on something so the money restored to the private sector
STEP 3: GO TO STEP 1

The economics of that may be wrong but it's a closer approximation to reality than the private sector vanishing before I was born!

In reply to Tyler: OK, here's a thought starter for you all?
I earn 20K, and pay 20% tax, thus contributing 4K to HMG.
I earn 150K, still paying 20%, and pay in 30K to HMG.

In reality I earn neither figure, but I fail to see ANT inequality there.
20% of ALL earnings, however obtained.
100% confiscation on discovery of tax avoidance.

Simple, no?

The government can be simply run on THAT share of National Income. No more, no less.

Cut down the size of The State which I have felt to be too large, for the last 30 years. The State is there to protect me from enemies here and abroad, and represent my interests internationally. That is all.

Leave us to sort out pensions etc ourselves. Pay the same in, but get defined benefits from our individual contributions, no?

Let's cut the apron strings...

In reply to Tyler:

'Even that's not correct, If you get a pay rise from £150,000 to £150,001 PA you are still 50p better off PA and only and only 10p worse off than you would be under the old tax rules'

Of course your correct, but if that £150'001 was broken down into weeks, days, hours worked, their would come a point, where extra hours put in would be for less pay!!!

~Until firmly established in the next tax band. The incentive is low to work harder and earn extra,( and thus pay more tax) versus having more time off.

In reply to Tim, the Grey:

I'd say cut taxes to 10% for all!!!, but crank up VAT to fill the gap.

In reply to Tim, the Grey:

Except of course it hits the poorest hardest. As someone said we have gone past the point about arguing about whether we should have a progressive tax system.

In reply to MJH:

Just because you happen to agree with the current majority view, that doesn't mean everyone else has to stop proposing alternatives. Advocates of flat (or flatter) taxes are currently in the minority but the argument is not 'past'.

In reply to thomm: Agreed, but we shouldn't have to re-visit every point each time. While there will inevitably be some proponents of a simple flat rate of tax, hopefully the vast majority accept that we have a relatively reasonable and progressive system of income tax.

In reply to MJH: Mike, I have a long held ambition to have my last £1 taxed at 40%...

But I still maintain, just have a flat rate tax for EVERYTHING. The rich pay more, the poor pay less.

Where is the inequality?

If you insist, make the first £10K tax free. For all.

Happy now?

The more you earn, the more you pay.

And swingeing penalties for tax avoidance.

In reply to rockdude111: I'm surprised someone on £150,000 a year has got their basics maths so wrong.

If you include VAT that is 17.5% of what you spend. So if you get £150,000 you'll see £92,220.40 in your bank account. Lets not forget whatever mortgage you are paying for your house which you do not pay VAT on top of, but if you were lucky enough to spend 92 grand on VATable stuff you would pay a total of £16,000 in VAT. Which is only 10% of your total salary.

Take someone on minimum wage and they actually pay closer to 15% of their total income on VAT.

But considering you have around £7,685.03 paid into your bank account each month I think you are taking a Sh*t in the wrong forest and complaining there is no toilet roll!!!

In reply to Removed User:

I'm sure someone will already have pointed out that everything he earns over 37400 and up to 150000 is taxed at 40% which is substantially more than the rest of us paupers.

to the OP, if you weren't taxed as much, how on earth would we pay the politicians?

There's so much money jealousy in this country and in particular on UKC threads such as this that it amazes me. Most of my clients would laugh at the amounts many of you are getting hot under the collar about. And for the record it really doesn't bother me one iota how much they're worth or earn compared to me.

A progressive tax system is fair. Currently it is on the verge of being unfair but I guess it's probably just about on the right side of the fair/unfair divide in the circumstances (ie. given the need to collect tax) as evidenced by the fact that relatively few of my clients (still too many mind) have decided to emigrate to avoid tax and the general drop in the standard of "life" in the UK. Tip the balance any further and you'd see a lot more people go. If that doesn't worry you it should, many of these people are the very poeple who build businesses who employ a lot of the UK workforce (all of which also contributes to the UK's tax take).

In reply to rockdude111: I couldn't agree more!

In reply to space monkey:
what you and Al said....

Let's think about the value of things, not the cost.
How much would you pay not to have to step over people sleeping in the street? or to have an educated country? or pride in your twon, because it was well-maintained?
150K is about 5 senior nurses worth.
I don't doubt you work hard, but no more than 24 hours a day and certainly less dangerous than mining.
You've still got nearly £8 grand a month to play with. I'd pay 85% on a million to have that.it's just a number!! if someone came up to you in the street and said here's £20, would you be happy or demand that they actually gave you the £50 they might've had in mind to start with? And then give them £30 change?

In reply to rockdude111:
Oh, and how much did gold plating the bridge cost?

In reply to thin bob:


I'd estimate that the OP is paying about 70K per annum to the state precisely for those things, which I suspect is way more than most of us.

It's notable how often those who are contributing much less in tax complain about those who are actually contributing quite a bit more.

In reply to rockdude111:

Some impressive double counting in your calculations, even by UKC standards.

In reply to rockdude111: simple answer,if your not happy with our tax system you can quite easily go back to your home country cant you?

In reply to Coel Hellier:

Yes but isn't the gist of his argument that he would like to pay alot less as he doesn't use the services?

Fair enough if he's happy to live in a country where the poor have no safety net.

In reply to Coel Hellier: I'm talking about the value, not the price, if that makes sense.

In reply to doz generale: people who earn £150k a year in general pay a good accountant to sort their takes out.i have a friend who is an accountant and he says theres people out there earning £100k who pay less tax than the average £30k earner through shrewd accounting.i think this thread is a massive troll

In reply to beastofackworth:

I think it's a troll too (said so a while ago) also think the OP is someones alter ego.

In reply to beastofackworth:

there isn't much that can be done to save you PAYE income tax, unless you're on a minimum of £500k a year (or you want to freeze your money by putting it into pension). There was someone here who apparently works in the tax advisory business, I'm sure they would agree.

In reply to Tim, the Grey: The inequality is that the poorest have far less disposable income and are hit by other costs and indirect taxes disproportionately.

The system we have now still has degrees of equality (for want of a better phrase):

Personal allowance: £0 to £6445 - no tax
Then 20% on income to £37k-ish
Then 40% on income above 37k to 150k
Then 50% on income above 150k

So regardless if I earn £37k or £370k I will still only pay 20% on the first £37k (less personal allowance). Only when I move above a threshold do I pay a higher rate and still only on the portion of my wage above that threshold. What is unfair about that?

So that recognises that the higher earners have proportionately more disposable income and can therefore afford to pay more into the public kitty.

In reply to rockdude111:

I can't be bothered to read this thread given its size but one cursory glance at the numbers you present in your opening post suggests you are a little confused. About quite a few things actually.

And besides, you are in a rather fortunate position of earning what most people would consider a large sum of money. I pay more tax than most (although not as much as you) and I actually take comfort in the fact that I am working and therefore contributing to the common pot to assist and aid those less fortunate than myself. If that means I net less each month so others can enjoy at least a basic level of wellbeing, then so be it. Besides, it prevents me from blowing silly money on things I simply do not need.

In reply to doz generale:


I suspect that he would be content with a rate that would still mean him paying much more than average. At the moment he is paying about 12 times the income tax of someone on median income.


Amazing how every suggestion that tax rates might be a bit too high is treated as though it is a demand that there by no tax at all and that "the poor have no safety net".

In reply to MJH:

I can't remember the exact details, but it does work out that you pay 60% tax on a small band from £110k to £120k somehow.

Anyhow, tax isn't really about fairness, it's about how much money the government can take without destroying the economy or getting voted out.

It would be easier if we could plunder other countries for slave labour and/or natural recourses.

In reply to Axel Smeets:


your in a huge minority fella but i admire you for your views and wish i was in the situation where i could afford to be as generous

In reply to MJH:


Surely its 40% on income above about £44K? Hence the recent headlines re two earners on £43K not being higher rate tax payers etc.

In reply to Thickhead: it did used to be just over £36,800 so im assuming,like you that its now about £44k

In reply to rockdude111:

As many others have pointed out, you're quite mistaken about your marginal tax rate. A more realistic calculation would be:

the 1% national insurance you pay on your last £1 +
the 50% income tax payed on your last pound =
51%.

What happens after that depends on how you use your last £1. You've got a fair whack of cash so you might not spend it. You might invest it, in which case you'll pay CGT on your return. You might pay into your pension, in which case it's tax exempt (up to a point). Absolutely the most profligate thing you can do is spend it, in which case you'll pay some VAT. About 50-60% of household expenditure is on items subject to VAT levy. Assuming you're buying luxuries you'll pay half of 17.5% on anything you spend which brings the marginal tax rate to something like 60%.

IMO the sweet spot for taxation of the rich is just below the point at which increased tax rates would bring the tax yield down. Lots of people commenting on the thread have queried the idea that the rich should pay more in tax. After all, they've worked hard for their cash, why shouldn't they pay the same proportion of it in tax as the poor?

The answer is we do not live in a fair society. Social mobility is low. If you are well off, working in a good job then, yes, you have worked hard to get there but you are also benefitting from a tremendous amount of *luck*. The odds are very high that you will have been born to a well-off family, gone to a good school etc etc. Some of this is due to your talent and application. A lot of it is a lucky fact of circumstance. Even not accounting for social mobility, your affluent position is the result of luck. You haven't had a bad car crash, leaving you immobile or brain damaged. You haven't got very sick, requiring you to take years out of your career. Better yet, you probably were lucky in your parentage and are clever, and sociable.

So, is it not right that those in society who have been fortunate enough to be lucky, should give something back to subsidise the less lucky?

The question is how much? If all of success and wealth was due to luck, you'd have an argument for a communist state, and total re-distribution of wealth. In reality, it's fair to set taxes for the rich at a rate that strikes a balance between how much of your success is due to your own hard work, and how much is luck.

In my own case, I reckon about half of my 'success' is down to me, and half to circumstance. My marginal tax rate of ~40% seems about right....

In reply to Thickhead:


Yes, you add the personal allowance (£6475) to the £37,400, so 40% cuts in at £43,875.

In reply to midgets of the world unite:

oops, now I have to correct myself. You only get 49p of your last pound to spend. If you do spend it all, 50% of that will be on VAT-taxed goods, taxed at 17.5%, so you'll pay about 5p in tax.

Leaves you with taxes of about 56%

In reply to trevor simpson:

That's when they whip away your 6k tax free allowance (as you go above 100k) and tax it at 40%. A cheeky Gordon stealth tax that almost nobody noticed.

In reply to midgets of the world unite:


No one is really complaining that the rich pay more. Even the flat-taxers (a minority) would have the richer paying more (indeed, more directly in proportion to their income). The majority accept progressive tax bands, so it's just a question of how steep that progression is and how far it should go.


Sounds about right, although if the tax-take curve goes through a maximum then it'll be a fairly broad maximum and thus there will be quite a range of tax rates over which the tax take doesn't vary much. I'd put the sweet spot around the start of that quasi-plateau (the psychological advantage of lower rates outweighing the small extra take of putting it any higher).

In reply to midgets of the world unite:

It's astonishing that the OP has a job, given his complete inability to do simple arithmetic.

Of course that explains the mess that the economy is in if he's representative of the higher earners.
1. I've got £1. I'll lend it to you. So now you have £1. Which you owe to me. So I have £2 (the £1 I have which I still have because you owe it to me and the £1 you owe to me).
So I'll lend you £2.....
2. I have £60000 in the bank. I'll borrow £60000 for a flash car. So now I have a flash car and £60000. Great! I've just doubled my money.

In reply to Coel Hellier:


My argument was really for the flat-taxers, to show why it can be fair for high-earners to pay a higher tax rate.


Agreed. Possibly even a little lower, if there's evidence that taxation is affecting wealth-creation...

In reply to Axel Smeets: "I actually take comfort in the fact that I am working and therefore contributing to the common pot to assist and aid those less fortunate than myself. If that means I net less each month so others can enjoy at least a basic level of wellbeing, then so be it."

You win the award for the most sanctimonious, pietistic statement written anywhere on earth today. It actually made my elbows itch as I winced with nausea reading it. Well done!

In reply to Michael Woods:
maybe he just has a bit of feeling for this country and its people, there's nowt wrong with a bit of patriotism.

In reply to Michael Woods: So altruism = bad, greed = good?

In reply to Axel Smeets:

Like you I'm happy to live in a relatively high tax society where the unfortunate get looked after. I'm not entriely convinced with these fashionable arguments that wealth divides directly create social problems but there is good indication that cohesive societies with smaller wealth divides do better and seem happier. I'm a little dismayed that so many climbers here appear so selfish.

In reply to rockdude111:

You say you don't get anything from the state...

Imagine you had been born in Botswana?

We have it very good in the UK,

The military does not run the country.
The level of police corruption is low, you don't live in fear of arbitrary arrest, torture and being fixed up for a crime you didn't commit.
Crime in the UK is very low (compared to the rest of the world)
The army is strong enough to deter invading countries
We have a rule of law.
The government have created a legal framework allowing companies to compete "fairly" and provide jobs.

Your taxes pay for all of this, be thankful for the opportunities you received and pay the taxes that give the same opportunities to others

In reply to Michael Woods:



Sanctimonious and pietistic for believing that a taxation system that supports the less fortunate is fair and just? I'm gobsmacked. Do you kick kittens and steal sweets from children you nasty man?

In reply to Coel Hellier:

Just got my tax thing through. According to that, it's personal allowance £6035 and then £34,800 on top of that at standard 20% rate. 40% kicks in at £40835.

In reply to teflonpete:

£6035 is tax allowance for 2008/2009, current year is £6475

http://www.hmrc.gov.uk/rates/it.htm

In reply to ebygomm:

Ah, that explains it. It was a "you owe us some money from 08/09" tax calculation thing. Time to get the chequebook out, although curiously, it doesn't say where to send the payment. Guess the punishment for underpaid tax is being kept on hold for 57 years when you ring them up!

In reply to rockdude111:

whatever! boring! just pay what you have to and then go climbing

In reply to midgets of the world unite:
>


It would be better to improve social mobility.

My 'success' has come inspite of my 'education' at a state school. Personally I think I should receive tax rebates for the wasted 6 years I spent at a comprehensive where teachers couldn't control the majority of lessons.

In reply to rockdude111:

What do you do with all that money?

In reply to Removed User: I was looking at this earlier and someone had said in what seeemd to be outrage "So you thin k there should be a limti on how miuch people should earn?"
Well, err - yes, of course. No-one needs more than about 50K to live pretty comfortably; maybe a limit of 100k to keep the whingers happy... If you go back to pre-Thatcher times, that ws how it was, certainly for employees, because the tax rates made it so, and to me it felt as if society was a fairer place/
As for the whingeing OP, well, he's rich, and they always have to moan about tax and how hard it is on them. As Denis Healey said, tax them till the pips squeak!!!
And yes, I'm poor.

In reply to Richard Baynes:

Halfwit.Absolutely incredible...

In reply to Richard Baynes:

Well said.

In reply to Michael Woods:

it made my heart swell that there are still people that care about people other than themselves and the grubby bits of paper we call money.. I say well done, and honestly.

In reply to jc545staffy:

Winning statement!!
well said

In reply to Postmanpat:

that's a very cutting and brutal self-assessment, must've been hard to say!...

In reply to thin bob:

No,just utter despair at the complete failure to understand.

In reply to Postmanpat:
whose failure to understand another viewpoint?

In reply to elsewhere:

The poster.Has it never crossed his mind that the much hated Mrs.T was the direct result of "making the pips squeak" and that Healey himself,not to mention 90% of the labour party and 99% of economists and politicians now understand that and understand why and agree.

They understand the other viewpoint(unlike them) and recognise it's wrong.

In reply to elsewhere:

The incredible thing - well, just one of the incredible things about this most disgusting thread, one of the sickest we've seen here for a long while - is that it has become almost incoherent. Not that it started well. If most people who earn 150K per year (!) are really this dimwitted and this insensitive to the larger problems in our society then we are in an even more intractable mess than I realised.

In reply to Gordon Stainforth:
ncredible thing - well, just one of the incredible things about this most disgusting thread, one of the sickest we've seen here for a long while - is that it has become almost incoherent. Not that it started well. If most people who earn 150K per year (!) are really this dimwitted and this insensitive to the larger problems in our society then we are in an even more intractable mess than I realised.

we are

In reply to elsewhere:

... it was so daft at the outset, and became so utterly daft later, that several people naturally assumed that it was a troll.

In reply to Postmanpat:

Well, at least that's a sentence. (Reminds me of a recent grammatical thread.) But it contributes nothing to any constructive discussion.

In reply to Gordon Stainforth:

What I'm trying to imply is that we are in deckchairs on the Titanic mode. None of the arguments are getting us anywhere.

In reply to Postmanpat:

Thus far I'm agreed. But many of us are not even in deckchairs, pmp.

In reply to Gordon Stainforth:

No but we're discussing how to shift them around.
Anyway,it is still utterly bizarre that anyone can think that the disaster which was the 1970s ad which (love her or hate her) was the background which allowed Mrs.T to take power and do what she did,was a blueprint for the way forward.

In reply to Postmanpat:

Complete failure to understand, that makes you the halfwit.

In reply to K.climber.15:

Lol.I could probably argue their position better than them

In reply to rockdude111:

Don't tax'em, eat 'em!

youtube.com/watch?v=h45WnW0ASFY&

In reply to Postmanpat

Really, why do you think that?
I don't mean for this to sound patronising, I'm just curious.

In reply to K.climber.15:

Because they seldom understand basic economics

In reply to Postmanpat:

I really can't see how shifting the deck chairs around is going to help very much at all. Your analogy, to that extent, is quite good.


What Mrs T did - let's spell it out straight - was indulge in a reckless, cynical, vote-winning, income-tax cutting strategy that we've never got out of. What was so terrible about it was, of course, that no opposition could ever then come back into power by saying they would raise taxes. She blew our budget, and our books have been completely out of control ever since. I am extremely critical of Tony Blair's government on other fronts, but not for this. That was an impossible tax-cutting culture that he inherited.

I've no idea how we can get out of this mess now.

I shall never forgive Mrs. Thatcher for putting the country's finances so out of control, and in a way that no opposition government could ever recover.

Then there was another piece of unjustifiable Labour madness that the Conservatives supported wholeheartedly, so they never mention it now, which added another huge hole to that already huge deficit. I have an awful feeling (agreeing with you now) that we're never going to recover from this madness now.

In reply to Gordon Stainforth:
Gordon,for all your myriad talents you have never understood Mrs.T or her economics. She was no saint and one could at a pinch argue that her economics was wrong but she (or at least the Tories) left the public finances in great shape. Even Brown knew that.What are you thinking?

In reply to Postmanpat:

Indeed I haven't. But I do understand balancing my own books, so I have complete contempt for her profligate financial antics.

>She was no saint and one could at a pinch argue that her economics was wrong but she (or at least the Tories) left the public finances in great shape.

This is one of the great Tory myths that I have strong hunch that future historians will find very amusing.

>Even Brown knew that.What are you thinking?

I'm thinking just how much he had to raise other (mostly indirect) taxes to even begin to solve the problem.

In reply to Gordon Stainforth:
What are you thinking? In 1997 the "books" were in better shape than for a generation. If you want to take a pop at Thatcher , balancing the books is just what you shouldn't aim at.

In reply to Postmanpat:

I repeat: not only did Mrs. T blow our books, she took away the realistic means of our ever balancing them again, except in a way that would do irreparable harm to both our society and our economy.

Meanwhile, most Scandinavian countries were laughing all the way to the bank, and are now in such good shape that they can afford, at last, cautiously and sensibly, to reduce their income taxes.

In reply to Postmanpat:

>but she (or at least the Tories) left the public finances in great shape.

Eh? So, if I have a small overdraft, then sell my car, house, furniture and have cleared the debt but now own nothing, that is a good thing to do?

That is what Thatcher did. Now most of our utilities are owned by foreign countries, the council houses have been sold off so reducing the mobility of all the people who now need to move for work but can't, the bus stations are closed to make way for offices, clogging up town centres with buses on the main roads or rented back at high rents when they were cheap before.

All sorts of things like that, any fool can sell the family silver, once.

In reply to Gordon Stainforth:
Look at the pulic sector numbers.You're just plain mistaken.

You've actually acknowledged before that she did what was necessary but resent the way she did it (I should have cut and pasted that!)

In reply to Postmanpat:

I'm not just thinking, I'm remembering that Mrs. T left power in 1990. A much more cautious regime after her did something to address the huge financial problems, and Tory accountants could even make the figures look quite good by 1997, but the truth was that our infrastructure was in a disgraceful, economically crippling mess. We still haven't recovered from that.

In reply to Postmanpat:

No I don't 'resent' the way she did it, I'm just appalled at the way she did it. The extent of her tax cuts was completely ludicrous, and left any future government completely stuffed.

Answer this question: what do you think the present government can do to raise tax revenues by any significant amount? It's all far too late now.

We're probably going to end up with a situation with Osborne being quite smug at reducing quite a lot of the deficit by 2014, but then having a completely crippled economy with millions out of work. No real industries left worth talking about, and so no means of generating any real wealth.

In reply to Gordon Stainforth: None of your posts rang true. Here are the UK tax receipts as a % of GDP
http://www.ukclimbing.com/forums/r.php?id=6080398
http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963

Those during Thatcher's time were higher than in earlier decades. Given that Britain did effectively go bust in the 70s I don't see how you can point to that era as a good time.

In reply to Gordon Stainforth:

But the UK had a public sector surplus in 1988 and 1989 for the first time since 1970!! Tax revenues almost tripled under Thatcher.

I can only imagine you are saying "financial" when you mean "economic"?

In reply to Richard Baynes:

That's quite a lot of hatred, really. Why so? It's not as if I had been born into "old money", or stole someone's money etc. What you wrote is pure hatred, and it's sick.

In reply to Gordon Stainforth:



They could easily increase income tax by 5% If all parties sang from the same hymn sheet on the need for the increase, the electorate would have no choice.

In reply to Richard Baynes:



Wow.

I guess you dont live in London!

In reply to Cú Chullain:
How do you think 50k compares to the an average salary in London?

In reply to Richard Baynes:

Really,this is the most awful of all responses that I've seen here. But at least you give me a specific number - effectively, you’d like the marginal tax rate to be 100% i.e. full salary cap.

Now, as I mentioned before, I actually lived in a country where this kind of approach has been tested – with disastrous consequences. Didn’t it really teach anyone anything?? Whatever altruistic ideas about fair society etc. one might have, such approach is simply impractical, as it kills all initiative. Although in your case, clearly, the motivation is far from altruistic – as I wrote before, I see only hatred in your post. But anyway, there was more to the failure of communist Eastern European states than just misdirected investment in heavy industries and the general failure of central planning of economy. It was the way in which mentalities were changed when it never mattered if you worked hard, or didn’t care at all. You haven’t seen it, I have. The culture of slacking was so widespread, you were almost considered an idiot if you actually did anything more than 8 hours of pretending to work. That’s what happens when you remove all incentives.

But why am I telling you all that? After all, it’s just envy and hatred that motivated your post, not some idea about fixing the society or making it more functional.

In reply to Postmanpat:


I love the way you make these comments without any sense of irony.

So let's just clarify this fine debate. You're right and everyone else is wrong. You must be right because you are in the political mainstream. The rest of us don't understand basic economics. Not much more to say then really is there?

Have you ever considered yourself to be narrow minded or arrogant?

In reply to rockdude111:

So out of interest what is the motivation to earn more than 100k?

In reply to stp:

How about buying a house without a massive mortgage?

In reply to stp:
The rest of us don't understand basic economics.

Well "the rest of us's" view seems to be tax people earning more than £x so much that they will go elsewhere and sod the consequences. For anyone who likes living in a country with good services, infracstructure, jobs etc this seems like madnees.

In reply to stp:

GBP100k per year translates into GBP5,442 per month after tax.

A reasonable 2 bedroom place in London costs at least GBP1500 say.

So let's suppose following for a couple with no children:

Rent 1500
Council tax 150
Gas/electricity/phone 200
Commuting 250
Eating out/entertainment 433
Holiday 400
Charitable donation @5% 272

That leaves about GBP2,237. So assuming the childless couple is saving for a mortgage deposit - it would take 4 years to get a 30% deposit for a GBP350k house. And that doesn't allow for any pension contributions.

Now assume there are (multiple?) children involved. I don't know how much children cost to feed and clothe but I guess it is a lot of money.

You see, 100k doesn't stretch that far really in London.

In reply to SARS:
My 'success' has come inspite of my 'education' at a state school. Personally I think I should receive tax rebates for the wasted 6 years I spent at a comprehensive where teachers couldn't control the majority of lessons.

Strangely when I went to school (left in the mid 60´s) teachers could keep complete control in the classroom, this in an inner city area, so what do you think has gone wrong?

In reply to rockdude111: to suggest a 100K salary cap really is farcical.

If people arent leaving in droves now (and I dont think they are), then they certainly will if you impose that kind of ludicrously low cap on them.

Unless you managed to convince the entire world to impose the same cap as well, of course, which would seem unlikely.

Additionally most big businesses would pull out of the UK, sending unemployment spiralling out of control, reducing tax receipts still further, creating more massive economic and social problems than anyone can possibly imagine.

great plan.

In reply to rockdude111:



OK good answer. I see the logic. But once you've got your house what then?

I'm lucky in that I already have my own flat. If I was given half of what you earn I honestly would have no clue as to what to do with it. I guess an extended climbing trip abroad comes to mind. With that amount one could probably sod off for about 5 years I'd imagine. Though as I've got a kid for me personally that's not an option. But regardless that's not an incentive for me to work harder. Just the opposite in fact.

In reply to stp:
I guess an extended climbing trip abroad comes to mind. With that amount one could probably sod off for about 5 years I'd imagine.

it'd be next to impossible to get back into this super-competitive business after more than a year off.

In reply to stp:

That's you though, not everyone.

I worked 5 hours of overtime last Saturday, earning £100. After paying 40% tax and NI on it and petrol to get to and from work I was left with about £47. Factor in travelling time as well, that's 6 1/2 hours for £47. Not really worth the bother so I don't make the effort unless the company really needs me in. If I was making £75 out of it, maybe I'd do more Saturdays and save up for a holiday or something. As it is, I can't be bothered screwing up my weekend for £47 and in effect, the state misses out completely on the tax I'd be paying if I worked more Saturdays at a lower tax rate. I know £47 is a lot of money to some people and I don't wish it to sound crass but if you're comfortable, working more just to give it to the taxman isn't really an incentive.

In reply to stp:


Yes,but after due consideration I dismissed the idea

Being open minded doesn't mean agreeing with bollocks. When you've thought about and discussed ideas like his enough times you can recognise bollocks. Various other people have now elaborated on why he was talking bollocks which has saved me the effort.

I was having a "sloper moment"

In reply to Al Evans:


The educational reforms and social revolution of the sixties.

In reply to SARS:

400 a month on holidays? 272 a month on charity? are you sure? I live in a flat in london and the gas electricity and phone come to more like 100. Also there are plenty of good flats in london around 1000 a month. If you live within zone 3 your commiting costs would be 109 unless you went everywhere in a taxi. If you live outside of zone 3 you would probably not be paying 1500 a month for a flat.

In reply to rockdude111: youtube.com/watch?v=Oxcyty6zpa0&
Some times i feel people are completely blinkered. If your earning that much money and complaining bout being taxed then maybe your a bit like one of the blokes in this sketch. And i you feel you deserve to be taxed lesscause you've worked hard to earn your money, harder than those of use earning less; then sorry my man but your a fool. Some people worked very hard and for one reason or anopther have not had the good fortune to be earning as much as yourself. Some of us had to grow up in families that were fairly well off, until the last conservative government was ''elected'', and did ''good'' things for society through privitisation of industry. Leading in many cases to redundencies. So tonight when your sat comfy and warm maybe thing about the other side of the story.

In reply to doz generale:

I did the calculation assuming 100k income for a couple.

In reply to LITTLE SAM:

Well, thanks for confirming peoples' concerns about the education system

In reply to SARS:

Ok that makes a bit more sense. a couple on that much has room to ecomomise even in london they could save 30k for a deposit fairy quickly. Just not going on a 5k holliday for a couple of years would help!

As far as children are concerned the major cost in the early years is childcare. In london it's aprox 800 to 1000 a month for 9 to 5 care. But saying that a couple would be hard pressed to spend 430 a month on going out once thay have children!

In reply to LITTLE SAM:


Can I point out that he's not asking to be taxed less than you, indeed I expect he's happy to be taxed much more than you. It's just a question of how much more. Someone on his salary will be paying FOURTEEN times as much income tax as someone on median earnings.

In reply to Postmanpat: Ah, yes, economists. Now what part do we think they and their numeric mumbo-jumo have played in the current economic shit-storm in which we now find ourselves?
If you had the bottle to give your real name then I could take your insults seriously.

In reply to doz generale:

£433 seems a little low for eating out, seeing as you haven't included Tesco shopping!

Still, £100k is a lot of money wherever you live.

In reply to Richard Baynes:

Interesting question. Some but that doesn't mean ignoring simple economic concepts and the lessons of history would be any better.


If you took my insults seriously then you really would be a halfwit

In reply to Richard Baynes: you still havent answered how you would combat potential falling employment and tax receipts due to your madcap 100k salary cap.

I dont see what difference PPs real name makes to you either, I dont take you more or less seriously because you post under what is, presumably, your real name.

In reply to Postmanpat: To go back to the OP, I just find it very hard to take seriously the moans of someone who is clearly overpaid, and lives comfortably,and while cause and effect over Thatcher etc can all be worked through, I was epxressing the feeling that I had as a young man that salaries and the tax system appeared to make life fair. It was a real shock when the system changed an we started to hear of astronomical salaries.
And if £50k isn't enough to live comfotably in london surely that's in part at least because of the ridiculous comedy property prices that have been caused by moaning rich people and their vast salaries.
I did like the person who said I was motivated by pure hatred: actually it was pure satanic evil, that partyicular evil that wants a fairer and better society.

In reply to Richard Baynes: and unfortunately I now have work to do to earn my meagre crust. Death to the Rich!!!

In reply to thread:

There was an interesting piece in the FT the other day about the skills drain that never happened. That Hedge Fund which made a big song and dance about offering individuals and teams financial support to help them transfer to Switzerland (Taylor Perkins?) has apparently had no takers.

In reply to Bob Hughes:


Really? Can you give a cite?

E.g.: http://www.finalternatives.com/node/14043

"Hedge Funds' Swiss Shift Costs U.K. £500M Oct 4 2010 | 1:45pm ET

"Hedge fund managers leaving the U.K. will cost the country's Treasury some £500 million in lost tax revenue, even though the feared "exodus" has yet to materialize.

"About one in four hedge fund employees have moved from London to Switzerland, according to Kinetic Partners. The Financial Times conservatively estimates that those roughly 1,000 people pay nearly £500 million in taxes every year—assuming that they were paying the 28% corporate tax rate on their average earnings of between £1.5 million and £2 million per year.

"The exit of just two people alone is responsible for £200 million of the loss: Brevan Howard Asset Management's Alan Howard and BlueCrest Capital Management's Michael Platt. Leaders of Europe's largest and third-largest hedge fund firms, respectively, the two decamped to Geneva this year, taking with them several group of top traders, whose tax-generating potential is not included in the lost £200 million.

"Britain's decision to raise taxes on its highest earners to 50% from 40%, along with growing fears of strict new European Union regulation, are behind most of the decisions to leave London, the world's second-largest hedge fund center, for the regulation- and tax-friendly Alpine climes of Switzerland."

In reply to Coel Hellier:

And your point is? He will still have massively more disposable income than those on the average wage (many obviosly get a lot less than that to make it ´median´)

In reply to Bob Hughes:

Also:

"Wolseley follows Informa, the publisher and Ineos, the chemicals group in moving its holding company from the UK to Switzerland. Other companies to leave the UK include advertiser WPP and Shire, the drug company, who chose Ireland as their new base."

http://uk.finance.yahoo.com/news/wolseley-moves-to-switzerland-because-of-u...

In reply to Coel Hellier:

if peoples only motivation was to live somewhere where the tax was lowest the uk would have no teachers, nurses, electricians, plumbers, engineers etc as they would all be in dubai as they have 0% income tax.

In reply to Al Evans:


My point is that any suggestion that tax rates are too high, such that somone might pay only 10 times median income tax, rather than 14 times median tax (as now), or 20 or 30 times (as the soak-the-rich advocate) get treated as though they're a request not to pay any more at all than the median tax level.


OK, and if he earns it in the sense of giving his employer value for his salary (and if not why do they keep employing him?) then I don't have a problem with that.

In reply to doz generale:


As usual, any attempt at sensible balanced discuission is met by constructing an extreme strawman position that no-one has ever suggested.

Yes, doz, *of* *course* tax rates are not the *only* motivation. I mean duh!

In reply to Coel Hellier:

Because like sticks with like, if my second in command gets more then so will I, it´s not a difficult frailty to understand and has little to do with the worth of an individual to the company actually.

In reply to Coel Hellier: The problem I have with many of these high salaries is that they are NOT justified by productivity or expertise - they just become accepted as 'the going rate', and employers and agencies accept that.

If you think £150+ salries are always justified, think of the number of bankers who thought that sub prime were a good idea; or the IT consultants who thought they could deliver an NHS IT or Child Benfit system; or the lawyers that advised John Terry that a super injunction was a good idea; or the head teachers in large failing comprehensives.

I could go on, but I won't.

In reply to Coel Hellier:
.

Other then the super rich i don't think anyone is seriously motivated to emigrate in order to save on paying tax

In reply to SARS:
>

What that post says to me is a person earning 100K/yr can live a very comfortable life in somewhere as expensive as london and still provide for a partner. Once they've saved a house deposit, they're saving more each month than most people have to live on, even in London.

I think arguing that anyone *needs* to earn more is shaky ground. Of course, people will always want to earn more, and that's fine. As rockdude points out, if people can't earn more for putting in more effort, they won't work hard and the economy will fail. But there's a mile between accepting that people should get paid more for working harder, and believing that there should be no limit or proportionality to wealth.

Surely what is right is that everyone is payed proportional to the discretionary effort they put in? I notice you work in finance; most people's perception of finance is that pay is grossly distorted, although the median pay scale is not that high. It's really the top-flyers who get payed totally out of proportion to the effort they put in. Do you think Bob Diamond is actually *worth* 3.4 million a year? In that context, can you see why people might feel "the rich" are getting an easy ride in our society?

BTW - I notice you dismiss my point about a man in your situation experiencing a lot of good luck with a single comment that your school wasn't very good. Did you grow up in a family that was quite well off? Were your parents supportive of you outside school? Is your IQ high? Have you avoided major accidents or illness? If any of those are true, can you take personal responsibility for it, or are you fortunate to be in that position?

In reply to doz generale:

It's not necessarily about emigration.It's about the marginal propensity to work harder or take risks. Why start that new venture, expand the company, employ more people if the rewards are severely limited?

In reply to Coel Hellier: I can concur. A good friend who drives for a removal firm told me last week that the company is flat out and will be right through to the new year. All the drivers doing the same route. London to Zurich or Geneva, they have never known anything like it.

In reply to doz generale:

I don’t know, I work in the oil industry where often there were opportunities to go and live and work in low tax regime countries. Now some of these countries were not the most pleasant to live in but I know many people who buggered off to them anyway for 3 - 5 years paying a little over 10% local tax before returning to the UK to pay off a large chunk of their mortgage. These people were well paid but certainly not ‘super rich’ and by deciding to box clever they have secured a better future for themselves and their families.

In reply to midgets of the world unite:

No

1 was.

Not especially.

Yes

I'm where I am because I have a natuaral propensity for mathematics. So yes, there has been luck (in genetics I guess).

The point I was really trying to make earlier was that I didn't (haven't) received much from UK society but contributed considerable amounts in UK tax, vastly beyond what I have/will take out.

BTW, how do you propose deciding what the discretionary effort is? I believe in the market deciding. I specifically chose my occupation for the salary I could earn (no other reason) and the requirement for a good level of mathematical understanding (thus creating a natural barrier to entry). If I wanted to do a job because I loved it then I would have become a mathematics lecturer.

In reply to doz generale:

your assertion is probably correct, up to a point.

In reply to Rob Exile Ward:


Yes, I agree to a large extent, though that's a bit of a seperate issue. I don't think the tax system is there to redress that, rather the people who are throwing their money around on duff people should be scrutinised.

There is an argument that public sector salaries should not go above, say, 120K or so (including pension contributions), without a very special case. One problem is that paying high salaries is a mark of status, so that public bodies out-bid each other to push up levels.

Thus every recruitment committee thinks "we should offer in the top-quartile for our sector", because they don't want to think of themselves as anything less than top quartile. And of course if everyone offers top quartile then pay ratchets up continually.

There's also an argument that -- in both public and private sectors -- there should be a maximum legally enforceable compensation for termination of employment, say the same 120K level * 3-yrs max. That would avoid people getting massive payoffs for screwing up.

In reply to fxceltic:


Now I'm not saying that a salary cap is a good idea, but surely this only applies to the (relative small number of) companies that can actually perform their function from abroad? McDonald's aren't going to stop making massive profits selling burgers in the UK, just because they won't be able to pay their chief executives as much as they'd like. So it wouldn't affect employment that much.

In reply to midgets of the world unite:


It’s not good to assume that anyone with a higher than average IQ, or parents who understand the value of education, is simply “fortunate”, and therefore the resulting “inequality” should be “resolved”. There will always be different levels of commitment, competence and inteligence within the society, and it’s a bad idea to try to bring everyone to the same level. Not least because the average level that we would end up with would be much lower than the current average i.e. the tendency would be to “average down”.
Wasn’t this what Pol Pot attempted in Cambodia? Punish those wearing glasses, with university diplomas, etc?

In reply to crossdressingrodney:


Is it only a small number? In the current world, many companies easily operate across many countries, and can choose which bits they do where according to tax rates.

Take the model of Apple, now the world's biggest quoted company. They consist of a relatively small number of relatively well paid people who design snazzy gadgets. The making of those gadgets is outsourced to China and elsewhere (with China presumably getting pretty small margins, since that bit can be outsourced anywhere). The high-margin profits on Apple stuff will then all go the US, where the company is. If the US put a cap of $80K or so on income then Apple would relocate to Canada or somewhere within six months.

In reply to Coel Hellier: I don´t understand Coel, your latest post seems to completely contradict what you were saying earlier and agreeing with my reply to it?

In reply to SARS:

Sounds like you've done pretty well with a bad set of circumstances.

The reason I don't believe in letting the market decide what discretionary effort constitutes, is that it has done such a poor job so far. Markets vastly distort the pay of the highest earners well beyond the value added or effort put in, because the constraining forces are weak. Pay is set by the same people who benefit so much. In practice shareholders should be a restraining force on this, but they don't seem to be particularly effective. I don't know why.

Another example of the market doing a bad job is that it doesn't serve society all that well; our brightest and best are going into investment banking where the value added to society is, shall we say, uncertain. With such an unbalanced economy we could do with more talented engineers, scientists and (dare I say it) mathematics teachers...

What to do about it is a much bigger problem. The idea of salary multiples is a strong one, with no-one in an organisation being allowed more than a certain multiple of the lowest paid. I don't think this could be enforced easily on the private sector; so start with the public sector and see what social pressure achieves would be my idea. Where to put that multiple is a question for debate, of course.

In reply to rockdude111:


I'm pretty sure that midgets isn't saying that just pointing out that there are other more important factors than hard work in determining how well we are paid. When people, who are well paid, bleat on that they shouldn't pay high taxes because they've worked hard by implication they are saying those that aren't well paid haven't. This is simply not true.

By the way, are you happier about the amount of tax you pay now it has been pointed out to you that your original figures are total rubbish?

In reply to Al Evans:


I don't think I'm contradicting myself. I agree that there are many instances where salaries are undeserved. However, I don't think it's the job of the tax system to try to rectify that by taking it off them again. That's because a thriving and entrepreneurial private sector is essential to the health of the economy, and many high salaries are deserved as rewards for creating and growing thriving companies, and it would be counterproductive to kill that by overtaxation.

So, I agree that many high salaries are undeserved. That's a different issue than what tax rates should be. Note that if it's the private sector paying too-high salaries then it's the shareholders' money they are wasting, and they're giving a 40% or 50% cut to the treasury while doing so, so I don't mind too much.

In reply to midgets of the world unite:

Has it? The market has many inefficiences:the overpayment of investment bankers being one of them , but over the long term market led economies have generally provided much better material living standards for most of their populations than the alternatives.

In reply to rockdude111:

and, as I said myself, that's not what I'm, saying. If it was 100% down to luck then a communist system of redistribution would be fair.

All I'm saying is that anyone who experiences great success in life got there because they were lucky, to a greater or lesser degree. So we can reject the notion that success (and hence wealth) is solely a signifier of worth. If you accept this it becomes hard to justify wealth without limit or proportionality, and easy to argue that it is just for the wealthy to contribute more to help the less fortunate in society.

The exact balance of reward and taxation should depend on how much you think success is due to chance, and how much due to worth, on average. Since that's pretty much impossible to determine, one approach is to tax people until they complain. Which is what we do.

In reply to crossdressingrodney:

having an operation in a country is not necessarily the same as paying tax in that country.

For example, I dont know the exact situation, but take Sainsburys, assuming they currently pay tax according to the UK regime, they could set up a shell company in a tax haven and pump money out to it from its UK operation, thereby avoiding UK tax.
Ive simplified it, but in essence that is possible and some companies already do this.

Other companies will simply move lock stock to another country and take their jobs (and therefore tax receipts) with them.

In reply to Coel Hellier: Ok Coel, fair answer.

In reply to Postmanpat:

you're arguing that the market has done a decent job of governing the economy. I agree. The question was whether the market does a good job of setting renumeration, and it's hard to agree with that. All markets have areas of friction and irrationality that means they fail in certain circumstances; in those circumstances there's a role for regulation to manage market problems. Pay seems to be one of those areas.

In reply to Coel Hellier: 'There's also an argument that -- in both public and private sectors -- there should be a maximum legally enforceable compensation for termination of employment, say the same 120K level * 3-yrs max. That would avoid people getting massive payoffs for screwing up. '

Coel for PM, I say!

In reply to Tyler:


Err, sorry, no they are not implying that! It would be quite consistent for them to maintain that *no-one* who works hard should then be taxed on their income above a certain rate (say 40%). They might fully recognise that low-paid workers might be working very hard, and might fully support the idea that they also should not be taxed highly!

In reply to Coel Hellier:

They might but I expect that my theory is closer to the truth, maybe due to a lack of thinking rather than a genuinely held belief.

In reply to midgets of the world unite:


Yes, it's a problem. The main reasons being that remuneration committees are populated by the sort of people whose pay is then set by remuneration committees, with no independent and non-interested checks. A "going rate" is only a sensible concept if it is grounded in independent checks. Plus the problem I mentioned of all such committees pitching for the top-quartile as a status symbol for their company/organisation.

Absolutely none of them ever decide "well, the guy we're appointing isn't quite as good as we hoped, so we'll set the pay in the lowest quartile", since if they were in that mindset they wouldn't appoint that person.

In reply to Coel Hellier:

and, as you quite rightly point out, if you try to regulate it, they'll naff off to Shanghai.

It's a pickle.

In reply to midgets of the world unite:


I strongly suspect that this would create a classic case of the law of unintended consequences.....

I think the better option my to make the shareholders act responsibility which is a whole new thread.....

In reply to Postmanpat:


agreed, on both counts

In reply to Postmanpat: looks like a classic case of disaster capitalism:
http://www.guardian.co.uk/commentisfree/2010/oct/18/conservative-financial-...
'we're all in this together'- who are they trying to kid?

In reply to Coel Hellier:

Actually I don't have a clue. I'm just pointing out that not all work can be done overseas.

In reply to fxceltic:

If they can do this, why haven't they done it already?

In reply to crossdressingrodney: i thought they already did.
well, i've heard about tesco's tax anticts anyway..
http://taxjustice.blogspot.com/2008/02/tescos-tax-tricks.html

In reply to subalpine:

Classic case of Monbiotballs. Presumably he has a direct line inside Cameron's brain so that he knows Cameron means the opposite of what he says?

There is a decent case to be made against the so called "cuts" but it is the one Ed Balls makes not the one Monbiot makes.

In reply to subalpine:


Monbiot can be a real idiot sometimes. Take the first example of his piece: "If the government's aim had been to destroy useless or damaging public bodies, it would have started with the Commonwealth Development Corporation."

Well, the CDC does not cost the government money, in fact last year it made a profit of £200M. So, since the current exercise is about reducing public expenditure, why would they abolish something about which: "... is entirely self-financing and has received no money from the UK taxpayer since 1995."?

Monbiot will just have a go at capitalism and the Tories whatever.

In reply to crossdressingrodney:

because the effort to do so isnt worth the return... until you tax people so highly that it becomes worth the ballache.

In reply to Coel Hellier:

For stuff on CDC see http://www.cdcgroup.com/key-facts.aspx

In reply to Postmanpat: not a massive fan of Monbiot, but he is correct about the ECGD, which is in principle a good idea to support british exports, but in practice becomes a device whereby taxpayer funds are used to directly finance BAE dealings, some of which are illegal.

once again we are back to BAE being the devil.

In reply to crossdressingrodney:


Yes, that's so, but in the private sector most of the jobs that have to be done in-situ are low-paid, low-margin ones such as stacking shelves and driving lorries around. Nearly all the high-value, high-margin, high-intellectual-input parts of a business can be easily relocated. Since we can never outcompete the likes of China as a low-margin economy, we need to ensure that we are competitive at the high-margin, high-wage stuff.

In reply to Coel Hellier:
This is the one - I have edited for convenience but hopefully fairly:

http://www.ft.com/cms/s/0/ce60a924-d880-11df-8e05-00144feabdc0.html

Banker exodus fails to hit City
By Megan Murphy, Investment Banking Correspondent
Published: October 15 2010 23:24 | Last updated: October 15 2010 23:24

Ever since last year’s one-off “supertax” on bankers’ bonuses was mooted, workers across the City have warned of an exodus from London as high earners relocated to financial centres with more favourable tax regimes.

Ten months on from the introduction of the controversial levy, however, far fewer bankers and traders have left the UK than some tax advisers initially forecast.

From practical concerns over infrastructure and regulation to quality of life issues, executives are proving “stickier” than many feared.

...

< In fairness, a bit of balance>

Almost 1,000 hedge-fund employees have moved to Switzerland over the past two years, ostensibly because of last April’s increase in the top rate of personal income tax to 50 per cent for those earning more than £150,000.

<but...>

Analysis of the impact of the 50 per cent tax rate on take-home pay reveals that the gap with other jurisdictions may not be wide enough to justify a move out of London, particularly for junior and middle-ranking bankers.

For example, a married banker with two children, one of them aged under six, with gross income of £250,000 and a mortgage of £750,000, would net £141,000 in the UK, after deductions for tax and social security, according to PwC’s calculations. In Geneva, that same employee would take home about £156,000, 11 per cent more.

The gap with other European financial centres and the US is significantly smaller. The same worker would net £150,000 in Paris, £149,000 in Frankfurt and £145,000 in New York.

...

<this is the one I was thinking of>

The experience of Tullett Prebon, the London-based broker, illustrates the practical challenges facing financial services companies.

Last year, Tullett became one of the first organisations publicly to offer to help relocate teams of staff looking to move out of the UK, largely to fend off poaching raids by non-UK firms.

While that offer remains open, this week it emerged that it has yet to be taken up by a single team.

In reply to fxceltic:

It's this line I love :

"The government's programme of cuts looks like a classic example of disaster capitalism: using a crisis to re-shape the economy in the interests of business."

He takes 3 or 4 minor parts of a massive package as evidence of some deep but hidden motive for the whole thing.

Not to mention his implied assumption that business is somehow bad for the economy.

In reply to Postmanpat:

Most of them most of the time.

I agree that punitive levels of taxation are probably counter productive and seem unfair.

I'd rather see fewer people being paid silly amounts of money for jobs which involve little personal risk. I'm just not sure how you go about arranging that.

A few years ago I was having a Friday afternoon discussion about salary levels and wondered out loud how much our CEO would get paid if they just made each pay grade 10% higher than the one below it. I think there were 14 grades in our company so we tapped a bog cleaners salary into the calculator and factored it up thirteen times. At the time (15 years ago) the CEO would have earned £110K, this was a multinational company with $100M+ turnover. I think he actually earned $1M pa, about five times as much.

My feeling is that most people would actually be happy with their lot with this sort of pay scale. Most folk just want a comfortable life and some recognition that their efforts are being rewarded in the same way as those in similar positions in different companies and and industries. Conversely people get annoyed when they hear about people earning more than they do for what they see as the same level of commitment and skill. That's why people really hate the banking industry, they don't think they're worth the money.

If folk expect to earn megabucks then most in society would expect them to start their own business, take some risks and work their arses off.

In reply to Postmanpat:

well, hes lucky enough not to have to worry about business as his job allows him to live in mid wales, chill out on his sea kayak and still make a living.

Oh that it were so simple for all of us.

In reply to Coel Hellier:

the CDC is making a few rich people much richer, while bringing little or no benefit to the poor- consistent with the general thesis

In reply to Postmanpat:

All changes to the political and financial system have unintended consequences. The person who thinks they have a change to make whose consequences are all intended ones is either mad, or crazy.

For example...

In reply to fxceltic:

Exactly. Actually yesterdays Grauniad was a cracker. Organised mass hysteria over the cuts. I can imagine the editorial meeting-probably before the announcements,

"George, can you run something off to show it favours business, maybe slip in something about corruption and the defence sector whilst your at it?"

"Come to think of it, can somebody do the not enough defence cuts thing?"

"Polly, just do the normal. You know the form. Raise taxes,spend more, scare the children and so on?"

"Tim can you do the blame Thatcher piece ? Quite topical since the old bag is about to kick the bucket"

"Anybody got Tony Benn's number.Give him a call will you?"

etc etc

In reply to anonymouse:
Some more than others......

In reply to Postmanpat:

I think The FT has been most scathing and indeed beforehand seemed to be offering the sternest warning of all newspapers.

In reply to nick ingram:

Yup,Martin Wolfe the economics editor is against the concept of cuts. But the FT's analysis is not ideological and prejudged like the Grauniad's.

In reply to subalpine:


And of course you make no attempt to substantiate this "little or no benefit to the poor" claim with any evidence?

In reply to rockdude111:

http://listentotaxman.com/index.php

A good website for you all to see how much you pay in tax (and how much more wealthy people pay)

In reply to rockdude111:

I would reply to your op but my heart is bleeding too much

In reply to Michael Woods:

Good link. These are the percentage of deductions inc NI I worked out from there with the default values:

15,000 = 18%
20,000 - 21%
30,000 - 25%
40,000 - 26%

150,000 - 38%
160,000 - 39%


Surprisingly low IMO. If you gross £150,000 you're taking home £1773.47 per week.

Once you've got a home I've really no idea how one could spend that much other than pissing up the wall on frivolities.

In reply to stp: Save for retirement? Uni fees for kids? invest in start up business?

In reply to Michael Woods:

If you can't spend it when your young you're unlikely to spend it when you're old.

Same as typical middle class family on a third of that income.


And make even more money to spend on what?

In reply to Coel Hellier:

there was a private eye article about it recently
http://en.wikipedia.org/wiki/Commonwealth_Development_Corporation

In reply: dispatches is worth a watch to see how these elite parasites milk the system:
http://www.channel4.com/programmes/dispatches/episode-guide/series-72/episo...

In reply to stp:


Your frivolity is another mans requirement

In reply to rockdude111:
Given that I never use the NHS anyway

Are you typical, I hope not.
Part of me wants you to opt out of the NHS so that we can all watch you bleed to death while the private ambulance despatched from the private call centre at the private hospital doesn't come. You cock! Please tell me you don't drive a BMW.

In reply to Al Evans:

Do you still claim the UK pensioners winter fuel allowance even though you live in a warmer country? I know of a retired couple in Cyprus who claim the WFA and use the money to pay for their air conditioning in the summer. There are British pensioners living in Australia who still claim the allowance. I wonder how much money the UK would save if they didn't have to pay the WFA to retired people living abroad in warm countries.

In reply to stp:


Ok ,so here's a challenge. Do a budget. Assume 2/3 kids, 4 bedroom house in suburbs, couple of overseas holiday, usual bollocks.

In reply to stp:
Maybe you could spend it when you're young but choose to save to make sure you have a comfortable retirement

Maybe you'd want your kids to come out with less debt or work less during their uni time so give them more financial support.

Maybe the start-up business you invest in would be for your kids.

There are lots of things you can spend you money on above the absolute basics which are not necessarily frivolous.

In reply to Mick's Daughter:

No I don´t, but anyhow I am not old enough yet to get OAP, I live purely on my occupational pension.

In reply to Postmanpat:


I would tend to agree on this but to make it happen would be somewhat tricky and most likely require laws imposing on the pension funds to make them more responsible to the scheme members in turn. While the fund managers occasionally kick back when companies really take the piss it does take a lot to trigger it.

In reply to dissonance:

You mean as if they were part of some kind of big society, or something. This would be one of those unintended consequences you're so good at spotting. Remove responsibility from the company and put it in the hands of the shareholders means that the shareholders they think the responsibility to act ethically is in the hands of the company. Watch that buck go round in circles.

In reply to subalpine:


Cheers. Very interesting. In this day and age it seems perverse that this sort of archaic financial shit can happen. Its about time these tax havens were closed down and its interesting that the conservatives did not take the opportunity to force a change in the Cayman islands, an opportunity which the equivalent labour MP had actually taken.

In reply to rockdude111:

<plays world's smallest violin>

In reply to anonymouse:

No,I don't. I mean for shareholders to act in the long term interests of the shareholders which would imply, amongst other things, not accepting massive overpayment of incompetent directors.

In reply to Postmanpat:

I wish that would happen.