Starmer's vision quest

[BoldonLad]

The imf have recently basically said that raising taxes wont raise any more tax.

I just looked up the Scottish numbers, where just of half the workforce is pence better off, with everyone else lots worse off.

Overall it generates about 80 million a year, which is about 1Bn equivalent across the UK. I think that's probably an over estimate. Its not a lot and I think the negatives elsewhere in the economy would outweigh it.

Is that a prediction using a much derided curve?

It wasn’t a serious suggestion on my part, but, I thought might please those eager to pay more tax.

 

[All uphill]

Genuine question : can you think of any regulators that can genuinely and meaningfully push back against a capitalist onslaught? The threat is that once they've got a monopoly, they can crash the entire market so it doesn't work at all.

And of course the biggest monopoly in industry is state ownership. Who will be the independent regulator then?

 

[tarric]

And my point is that 5% extra tax after £125 is pretty negligible. it's the 40% on everything between £45k and £125 that is a bit shoot - but it's placed to make the most money out of those that (arguably) can most afford it.

No it's been put in place because those that (arguably) can most afford it pay little or nothing.

 

[First Aspect]

Is that a prediction using a much derided curve?

It wasn’t a serious suggestion on my part, but, I thought might please those eager to pay more tax.

It was a summary of a Scottish govt publication. No idea what methodology was used, but I don't see how they can account for higher earners avoiding Scotland in the longer term. They are aware of that issue though, and haven't floated increasing the difference to rUK more recently.

Whether or not an extra 5% is a lot rather depends hownmuch more above 125 you earn, I suppose. You are getting to the top 1-2% though and the crossover where it is not worth employers paying people that much as a salary.

 

[Psamathe]

And my point is that 5% extra tax after £125 is pretty negligible. it's the 40% on everything between £45k and £125 that is a bit shoot - but it's placed to make the most money out of those that (arguably) can most afford it.

Can't be done. As soon as any Government even suggests increasing taxes on the wealthy (who can afford it) they threaten to abandon the UK and emigrate and Government gets scared as apparently we need people who are not prepared to contribute, those with broadest shoulders and those who have more than they could ever spend in several lifetimes yet apparently need even more.

 

[First Aspect]

Can't be done. As soon as any Government even suggests increasing taxes on the wealthy (who can afford it) they threaten to abandon the UK and emigrate and Government gets scared as apparently we need people who are not prepared to contribute, those with broadest shoulders and those who have more than they could ever spend in several lifetimes yet apparently need even more.

You are missing the point. Yes higher earners can afford it, but if you virtue signal and raise taxes, it raises hardly any tax so what's the point? The downsides are arguably hard or impossible to measure, which is people not staying in that jurisdiction (I am an example) or just putting money somewhere else, which is why the UK system has become a game of whackamole.

 

[BoldonLad]

It was a summary of a Scottish govt publication. No idea what methodology was used, but I don't see how they can account for higher earners avoiding Scotland in the longer term. They are aware of that issue though, and haven't floated increasing the difference to rUK more recently.

Whether or not an extra 5% is a lot rather depends hownmuch more above 125 you earn, I suppose. You are getting to the top 1-2% though and the crossover where it is not worth employers paying people that much as a salary.

In the past, high taxation meant that employers founds ways to pay people, which did not attract tax. Then, of course, Government begin the process of closing those loopholes holes.

Those paying tax are usually more inventive. Than those levying tax.

 

[Pblakeney]

In the past, high taxation meant that employers founds ways to pay people, which did not attract tax. Then, of course, Government begin the process of closing those loopholes holes.

Those paying tax are usually more inventive. Than those levying tax.

True. I found out when I went freelance and limited company that I had unwittingly entered a game with HMRC. They were going to extract as much tax from me as possible and it was up to me (or accountant) to reduce it. Most importantly they were going to engage even if I did not.
I decided to play. First step is to examine the rules to play to full advantage. I became very good at it. Worst part for HMRC is that I am continuing to play even though I'm retired, all legal and above board. They would have collected more by being less aggressive at the beginning.

 

[Psamathe]

You are missing the point. Yes higher earners can afford it, but if you virtue signal and raise taxes, it raises hardly any tax so what's the point? The downsides are arguably hard or impossible to measure, which is people not staying in that jurisdiction (I am an example) or just putting money somewhere else, which is why the UK system has become a game of whackamole.

So, Government needs more money. This Government doesn't seem to want to look at addressing the causes of low productivity (constraining growth) so it's austeriry of increase taxes. Apparently we can't increase taxes on those who can afford it which only leaves increasing taxes on those who can't afford it.

To my mind increasing taxes on business indirectly results in us all paying anyway as business can't run on long term losses so increase their costs and they put up their prices (or go bust).

 

[Psamathe]

True. I found out when I went freelance and limited company that I had unwittingly entered a game with HMRC. They were going to extract as much tax from me as possible and it was up to me (or accountant) to reduce it. Most importantly they were going to engage even if I did not.
I decided to play. First step is to examine the rules to play to full advantage. I became very good at it. Worst part for HMRC is that I am continuing to play even though I'm retired, all legal and above board. They would have collected more by being less aggressive at the beginning.

And if you are resident overseas, even in a country sharing financial info with UK HMRC, lots of "options" open-up.

 

[Pblakeney]

So, Government needs more money. This Government doesn't seem to want to look at addressing the causes of low productivity (constraining growth) so it's austeriry of increase taxes. Apparently we can't increase taxes on those who can afford it which only leaves increasing taxes on those who can't afford it.

To my mind increasing taxes on business indirectly results in us all paying anyway as business can't run on long term losses so increase their costs and they put up their prices (or go bust).

I have a lot of time for the notion of scrapping N.I. and increasing income tax accordingly. The income tax rate could float in the initial years to cover any excess or loss. Maybe even raise it a bit higher and raise the threshold. The headline tax rate would highlight how much tax is paid though and would probably scare off any government.

 

[Psamathe]

I have a lot of time for the notion of scrapping N.I. and increasing income tax accordingly. The income tax rate could float in the initial years to cover any excess or loss. Maybe even raise it a bit higher and raise the threshold. The headline tax rate would highlight how much tax is paid though and would probably scare off any government.

I think it gets more complex. Remember NI is in effect ring-fenced to pay for contributory benefits (incl (New) State Pension). NICs do not go into general Government funds.

And the fund can (and often does) run surplus and then lends money to the Government. Government cannot just take the surplus (Social Security Administration Act 1992). ie Income tax does not go towards paying for state pensions, triple lock does not mean higher income tax rates.

So scrap it and a lot of ring-fencing is lost.

Personally I think if one wants to be a bit radical Universal Basic Income is maybe the way to go. Bold and some won't like it. A lot will depend on the levels and amounts as it means not only what you pay everybody (the UBI) but also the massive changes to taxation associated with that.

But it also simplifies so much eg no more pensions (which resolves those on state Pension being so much worse off than those on New State Pension and having to claim additional support, things like "triple lock" become irrelevant, much of DHSS and welfare goes, etc.

I can't pretend to have all the answers and there certainly would be challenges I don't know the answers to eg how to motivate people to get back into work when they can afford to live on their UBI and stay at home all day - but we already pay lots of clever experts lots of money to sort out those sorts of things.

 

[Pblakeney]

I think it gets more complex. Remember NI is in effect ring-fenced to pay for contributory benefits (incl (New) State Pension). NICs do not go into general Government funds.

I thought that the ring fencing had been done away with.
I could be wrong but Google would appear to back that up.

 

[Psamathe]

I thought that the ring fencing had been done away with.
I could be wrong but Google would appear to back that up.

My understanding (though I'm no expert) is that it's covered by the Social Security Administration Act 1992 (which has been amended but covers a wide range of legislation).

From that (and my Google gave nothing obvious) it is a seperate fund but could be considered not to be ring-fenced in the strict sense in that when the fund in running surpless it can lend money to the Government ie less spent on pensions and contributory benefits more it can lend to the Government.

But is is "lend" but Government seems to run very short term so any chancellor borrowing from the fund probably never thinks about is an being a "loan" and never considers repaying it.

My quick Google returned an article from the Chartered Institute of Taxation from 2024

However while the fund is limited by law (the Social Security Administration Act 1992) in terms of what it can be used for it would be wrong to think of it as a totally ring-fenced pot of money. If the fund builds up a good surplus then it lends money to other parts of government, effectively reducing the national debt.

(from https://www.tax.org.uk/national-insurance-explainer-Jun24) Which again says it's a "loan".