Starmer's vision quest

[briantrumpet]

Worth a read (unless Dan Neidle brings you out in hives)

https://taxpolicy.org.uk/2025/05/08/tax-rich-1970s-loopholes/

The 1970s are often described as the highest tax decade, but that’s not quite right – income tax rates in the 1940s and 1960s briefly went over 100%. However the rate of capital gains tax in those years was zero – because there was no UK capital gains tax.

It was, therefore, standard practice for the very wealthy to (without too much effort) convert their income (taxed at very high rates indeed) into capital gains (completely untaxed). An episode of Untaxing discusses the Beatles’ successful use of this strategy, and how the same tricks don’t work today. For a much more detailed exploration of the strategies adopted in the 1950s and early 1960s, I highly recommend the 1962 edition of Titmuss, Income Distribution and Social Change.

So, whilst it’s harder to find information on the tax and income share of the 1% in the 1940s, 50s and 60s, I would be reasonably confident that the 1% paid less tax then than in the 1970s – and much less than today.

Why does it matter?​

It matters because the tax policies of the 1970s were a failure. They failed to tax the rich effectively. They failed to fix the Government’s fiscal problems – overall tax as a percentage of GDP was higher in the 60s and the 80s than it was in the 1970s.

The lesson of the decades since the 1970s is that the best way to tax the wealthy is by expanding the base and closing loopholes. That makes a less snappy soundbite than sending rates sky-high, but the evidence and the history shows that it’s fairer and much more effective.

 

[BoldonLad]

You mention 99%, but as I recall, when they reached peak leftiebollox in the 70's the top rate of income tax was 82% and there was a 15% surcharge for unearned income, making the top rate 98%. They then wondered why people were ****ing off and why they needed a bail out. I'm not suggesting that the current lot will go that far, but just goes to show when it comes to tax that lefties don't learn 🙂

My 99% was a suggestion of what Rachel could do. The actual figures in the 60s and 70 I don't recall, I was nowhere near a higher rate tax payer at that time. I do seem to recall that basic rate was around the 33% mark for at least some of that golden era. It was a wonderful time, Red Robbo, BMC Cars, Triumph Motorcycles, Raleigh bicycles, the white heat of technology, the pound in your pocket, Joe Gormley, sick man of Europe, three hour rolling power cuts,

The later probably produced a generation of boomers, now in their 50s

I can't wait for a return to those halcyon days.

 

[BoldonLad]

Worth a read (unless Dan Neidle brings you out in hives)

https://taxpolicy.org.uk/2025/05/08/tax-rich-1970s-loopholes/

Now, you have gone too far! suggesting the Beatles squirmed out of paying their taxes 😂

 

[Stevo 666]

My 99% was a suggestion of what Rachel could do. The actual figures in the 60s and 70 I don't recall, I was nowhere near a higher rate tax payer at that time. I do seem to recall that basic rate was around the 33% mark for at least some of that golden era. It was a wonderful time, Red Robbo, BMC Cars, Triumph Motorcycles, Raleigh bicycles, the white heat of technology, the pound in your pocket, Joe Gormley, sick man of Europe, three hour rolling power cuts,

The later probably produced a generation of boomers, now in their 50s

I can't wait for a return to those halcyon days.

I hate to say this, but those young whippersnapper Boomers are all now at least 60 yo. I'm Gen X so almost spotty by comparison

 

[icowden]

You mention 99%, but as I recall, when they reached peak leftiebollox in the 70's the top rate of income tax was 82% and there was a 15% surcharge for unearned income, making the top rate 98%. They then wondered why people were ****ing off and why they needed a bail out. I'm not suggesting that the current lot will go that far, but just goes to show when it comes to tax that lefties don't learn 🙂

Weird, because Gordon Brown (Labour Chancellor) reduced the basic rate of income tax. He did add a new top rate of 50% in 2010 which Cameron cut to 45%. So it rather does look like the lefties learned.

I don't think anyone is suggesting a return to the 1970s 90% tax rates which were absurd. The biggest problem with income tax is that it is inequitable. If I were to move house to Selkirk I could buy a 10 bed property on 1.4 acres and have half a million in the bank. i could move to Lincoln to a 9 bedroom former vicarage and still have no Mortage.

What income buys changes significantly dependent on location in the UK

 

[Stevo 666]

Now, you have gone too far! suggesting the Beatles squirmed out of paying their taxes 😂

How dare you suggest that musical luvvies avoided tax!

 

[Bazzer]

As I recall, the highest rate of income tax, (not investment income surcharge) was 83% which was applied to taxable income >£21,000. So that would be taxable income of around >£140,000 today adjusted for inflation, (not wage inflation).
However, unlike the present times where allowances available to determine one's taxable income are, for most people, pretty limited, at that time there were a plethora of allowances, for example; married couples allowance (unless a wife's earning election was made). child tax allowances determined by the number of children living with you, mortgage interest relief and interest relief on home improvement loans.
Then there were the benefits in kind. Again unlike the present times where there is a body of benefits in kind legislation covering many ways employees can be remunerated outside the payroll, where benefits in kind charges did arise, these were more of a nominal charge rather than reflecting the actual value to the benefit holder.

 

[icowden]

How dare you suggest that musical luvvies avoided tax!

But if they hadn't done so we wouldn't have had the Life of Brian. So I think it worked out in the end...

 

[Stevo 666]

Weird, because Gordon Brown (Labour Chancellor) reduced the basic rate of income tax. He did add a new top rate of 50% in 2010 which Cameron cut to 45%. So it rather does look like the lefties learned.

I don't think anyone is suggesting a return to the 1970s 90% tax rates which were absurd. The biggest problem with income tax is that it is inequitable. If I were to move house to Selkirk I could buy a 10 bed property on 1.4 acres and have half a million in the bank. i could move to Lincoln to a 9 bedroom former vicarage and still have no Mortage.

What income buys changes significantly dependent on location in the UK

And therein lies the problem - in comparison with a lot of other countries, UK higher earners are already highly taxed and have seen their burden increase, whereas average earners have seen their tax burden decrease. From your favourite news outlet but worth a read:
https://www.telegraph.co.uk/busines...e-wealthy-wont-solve-rachel-reevess-problems/

So it appears that we are out of line here and need to reverse it so some degree...but clearly that won't happen with Labour in charge.

Fyi the increase of the top rate to 50% was a bit of 'scorched earth' tax policy by Labour just before they got kicked out in 2010. So less learning and more leftie spite.

 

[briantrumpet]

As I recall, the highest rate of income tax, (not investment income surcharge) was 83% which was applied to taxable income >£21,000. So that would be taxable income of around >£140,000 today adjusted for inflation, (not wage inflation).
However, unlike the present times where allowances available to determine one's taxable income are, for most people, pretty limited, at that time there were a plethora of allowances, for example; married couples allowance (unless a wife's earning election was made). child tax allowances determined by the number of children living with you, mortgage interest relief and interest relief on home improvement loans.
Then there were the benefits in kind. Again unlike the present times where there is a body of benefits in kind legislation covering many ways employees can be remunerated outside the payroll, where benefits in kind charges did arise, these were more of a nominal charge rather than reflecting the actual value to the benefit holder.

That's exactly what Neidle is saying. Headlines and details are often at odds with each other.

 

[BoldonLad]

I hate to say this, but those young whippersnapper Boomers are all now at least 60 yo. I'm Gen X so almost spotty by comparison

As an original boomer (1947 vintage), you are all spotty youths to me 😂

 

[BoldonLad]

As I recall, the highest rate of income tax, (not investment income surcharge) was 83% which was applied to taxable income >£21,000. So that would be taxable income of around >£140,000 today adjusted for inflation, (not wage inflation).
However, unlike the present times where allowances available to determine one's taxable income are, for most people, pretty limited, at that time there were a plethora of allowances, for example; married couples allowance (unless a wife's earning election was made). child tax allowances determined by the number of children living with you, mortgage interest relief and interest relief on home improvement loans.
Then there were the benefits in kind. Again unlike the present times where there is a body of benefits in kind legislation covering many ways employees can be remunerated outside the payroll, where benefits in kind charges did arise, these were more of a nominal charge rather than reflecting the actual value to the benefit holder.

According to Google, the highest rate has been as high as 94%, in the period since 1945, but, as I said elsewhere, I never reached such earnings heights, in the relevant period, so, I don't recall it..

Another factor IMHO if talking of Income Tax is EE NI, this, to all intents and purposes is an income tax, in addition to what is referred to as Income Tax.

There is also of course the "indirect" taxes, very difficult to work out a meaningful figure, I suppose, but, if we take into account Insurance premium tax, council tax, fuel duty, VAT etc etc, what % of an average earners income goes to the Government?

 

[Psamathe]

From Labour's 2024 Manifesto (https://labour.org.uk/change/strong-foundations/)

Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.

The commitment is "Labour will not increase taxes on working people" next bit clarifies the commitment being the reason for other intended stuff.

To my mind freezing the income tax threshold would be increase taxes on working people.

Now they're trying to weazel out of it with eg"we said we wouldn't raise the headline rate ..." ... no, they said "Labour will not increase taxes on working people.

Ian

 

[BoldonLad]

Weird, because Gordon Brown (Labour Chancellor) reduced the basic rate of income tax. He did add a new top rate of 50% in 2010 which Cameron cut to 45%. So it rather does look like the lefties learned.

I don't think anyone is suggesting a return to the 1970s 90% tax rates which were absurd. The biggest problem with income tax is that it is inequitable. If I were to move house to Selkirk I could buy a 10 bed property on 1.4 acres and have half a million in the bank. i could move to Lincoln to a 9 bedroom former vicarage and still have no Mortage.

What income buys changes significantly dependent on location in the UK

A case for Regional Income tax, or, a case to move house? 😂

 

[briantrumpet]

From Labour's 2024 Manifesto (https://labour.org.uk/change/strong-foundations/)

The commitment is "Labour will not increase taxes on working people" next bit clarifies the commitment being the reason for other intended stuff.

To my mind freezing the income tax threshold would be increase taxes on working people.

Now they're trying to weazel out of it with eg"we said we wouldn't raise the headline rate ..." ... no, they said "Labour will not increase taxes on working people.

Ian

Usual political shenanigans, but the freezing of tax thresholds is increasing the tax on most working people, as you say, and proportionally more on those least able to afford it (i.e. the people Labour would normally be trying to help, and whose votes it's taking for granted).