"Let me tell you about the very rich. They are different from you and me."

From ‘one who knows’:

“ I have lived this life of a “celebrity” since I was 19 years old, in Nashville, Tenn. And that’s only expanded over the years. But in Nashville [when] people first started recognizing me at the Kroger store, I noticed that things change for you when you are a person who is known. You get the doctor’s appointment. You don’t have to wait in line. You don’t have to deal with a lot of excess delays that other people have. And so I have lived this life of privilege and advantage, and then been exposed to the best of healthcare. I don’t normally get headaches, but if I get a headache I immediately think I have brain cancer. And so I’m now getting an MRI to get it checked out. And I can always get the MRI. Being exposed to what that kind of celebrity does when it comes to having access to what you need, I have a particularly strong empathy for people who can’t get it and don’t have it.”

Oprah Winfrey speaking recently.

growstuff

Dinahmo

DaisyAnne Which legal ways of avoiding tax would you abolish? Tax relief on pension contributions? Allowing the self employed to claim some of their costs for working at home?

Available reliefs have been disappearing over the last 40 years or so - such as mortgage interest and more recently a change in the way in which interest on a loan for the purchase of a rental property have changed.

MaizieD The figures you quote are taxable income - ie after taking into account personal allowances (single £595 and married £775 in the 1973/74 tax year)

I would certainly limit tax relief on pension contributions to basic rate.

Bit confused here. The self-employed can already claim some of their costs for working from home.

This will be my last answer. I haven't the resources of the Treasury and I am sure you can keep coming up with quibbles.

My overall opinion is clear. All tax subsidies should be stopped; they squew the economy. Like "trickle down" they do not work.

Err no, I don't think so.

In your first example, there would be no tax relief in buying a pension. It would be paid from taxed income.

No one would receive a subsidy.

DaisyAnne You're confusing buying an annuity (out of taxed income) and pension contributions. Currently, higher rate tax payers effectively receive a higher subsidy from the Treasury than basic rate tax payers.

Dinahmo

DaisyAnne Which legal ways of avoiding tax would you abolish? Tax relief on pension contributions? Allowing the self employed to claim some of their costs for working at home?

Available reliefs have been disappearing over the last 40 years or so - such as mortgage interest and more recently a change in the way in which interest on a loan for the purchase of a rental property have changed.

MaizieD The figures you quote are taxable income - ie after taking into account personal allowances (single £595 and married £775 in the 1973/74 tax year)

I would certainly limit tax relief on pension contributions to basic rate.

Bit confused here. The self-employed can already claim some of their costs for working from home.

Dinahmo:
DaisyAnne Which legal ways of avoiding tax would you abolish? Tax relief on pension contributions? Allowing the self employed to claim some of their costs for working at home?

I think you are overcomplicating an already overcomplicated system Dinahmo. Your second example comprises two entities; the business and the salaried employee. All costs for running the business should be on the balance sheet and any tax due from that business paid accordingly.

The salary should be taxed as a salary. Should the business make a profit and pay a dividend to the same person earning the salary, the amount would be added to the salary as income and tax paid at a higher level if the additional income takes the salaried person into another level.

I can't see where you are seeing any tax incentive to behave in a particular way. If you separate the business and the employment - as you would do wherever you work - the costs of running the business is simply that.

In your first example, there would be no tax relief in buying a pension. It would be paid from taxed income. It would not be taxed while you could not use it as it is not a disposable asset so you are not benefiting from it at that point. When an annuity or other vehicle is bought the purchase price would be treated in the same way as buying a pair of shoes (VAT possibly?). When an income is paid as a pension from that vehicle it would be added to any current income and taxed accordingly.

The point of this is that if those with enough to "invest" paid the same tax as those who can only just afford to keep themselves in decent shoes everyone in the poor to comfortable range should benefit from lower overall taxation.

MaizieD The figures you quote are taxable income - ie after taking into account personal allowances (single £595 and married £775 in the 1973/74 tax year)

Thanks, Dinahmo. So that would add about another £4,000ish to the modern day equivalent of the salaries I quoted?

(It feels really weird to think that I once had a personal allowance of only £595!)

DaisyAnne Which legal ways of avoiding tax would you abolish? Tax relief on pension contributions? Allowing the self employed to claim some of their costs for working at home?

Available reliefs have been disappearing over the last 40 years or so - such as mortgage interest and more recently a change in the way in which interest on a loan for the purchase of a rental property have changed.

MaizieD The figures you quote are taxable income - ie after taking into account personal allowances (single £595 and married £775 in the 1973/74 tax year)

I don't think I don't think expecting

volver

My point is that what one person things is "appropriate" might not be the same as what another thinks is "appropriate".

Not being a tax expert, I can't answer your questions.

Mmm. I wonder what is not "appropriate" about a progressive tax system? My issue is that although we are supposed to have such a thing, there are so many legal loopholes that the richest can use to avoid paying their tax in full. I can't see how the Chairman of a company paying less tax than their cleaner is appropriate.

I think it is possible to categorise what is appropriate. I don't think the lower and "comfortable" tax payer to make up for the highest avoiding tax can ever been seen as appropriate. Perhaps someone can explain why it is.

Chocolatelovinggran

Doodledog, it was I who posted that most contributors to the foodbank at which I volunteer are not well off. Many can refer to difficult times in their life, and have some understanding of how our clients feel. As an aside, many receiving parcels today have asked for squash to replace tea and coffee, as they are anxious about the cost of using a kettle .

That people can't afford to make a cup of tea is a real indictment on the government. This is a First World country, and was the fourth richest in the world when the Tories came to power - I think we've slipped since Brexit, but we are still perfectly able to ensure that even the poorest in society can feed themselves.

I'm sure I've also read in a newspaper or somewhere about poorer people's support of foodbanks. Not that that makes it any more reliable than your account Chocolatelovinggran ?, but it suggests that it is true across the country, and not confined to one food bank or one area.

Just my thoughts Doodledog - but I have been thinking and writing about them for some time so hopefully they have become more succinct than my usual essays

Sorry if I sounded rude - I couldn't tell from the way your post came out whether it was you or Pammie1, as it looked like you were quoting her without comment. Anyway, I agree .

My point is that what one person things is "appropriate" might not be the same as what another thinks is "appropriate".

Not being a tax expert, I can't answer your questions.

volver

OK, I'm being extreme. But you get my point, I'm sure.

BTW, speak to most people and they'd think anyone earning £50,000 was very well off indeed.

Inheritance tax wouldn't "punish" anybody because they'd be deceased. But I'm not getting into that again.

I can't see your point at all, I'm afraid.

How about starting by taking off all measures designed to allow people to mitigate the tax they owe? What would the tax take on the current tax system be if all legal ways to avoid tax were abolished? How much more efficient, and therefore cheaper, would it be to collect?

Total simplification and a progressive tax for all might mean that all the "ordinary person" was paying considerably less. It would certainly be worth looking at.

@ Doodledog Mon 25-Apr-22 11:41:08

Just my thoughts Doodledog - but I have been thinking and writing about them for some time so hopefully they have become more succinct than my usual essays

GrannyGravy13

MaizieD if by redistribution you mean The State commandeering peoples money, which in most circumstances they have paid the appropriate tax on just because they choose to save it for another day/project, I am vehemently against this.

But the point about 'money', as I have frequently pointed out, is that it all comes from the government in the first place. So they can be free to determine how it is distributed by way of taxation.

volver

So. If the government of the day decided on a 90% rate of tax for every penny earnt over than £50,000, and a 95% tax on any dividends, and a 98% tax on share income. Plus a 75% inheritance tax.

And they'd got elected on that manifesto.

Would that be appropriate?

I seem to recall that in the 1960s, or thereabouts, there was a 90% tax rate on the rather wealthy...

Not easy to find information, but:

in 1973 higher rates kicked in after £5,000 pa = £42,278 today. Basic rate = 30%

Highest rate of 75% kicked in at £20,000 pa = £169,000 today

Not sure if those figures are gross or net of tax allowances.

A bit similar to volver's suggestions, really

It was Thatcher who decided that income tax rates should be lower and more tax was to be raised from VAT and NI. Her decision obviously hit the poorest the most as the percentage of their income paid in taxation is always higher than that of the wealthy (so it wasn't really a give away for most people, she just increased taxation from other sources.)

Thatcher was much attached to the 'trickle down' theory of wealth, but mostly wealth seems to have trickled up over the past 4+ decades...

That's awful Chocolatelovinggran. I read that people are asking not to get potatoes because they can't pay for the energy to cook them.

But I'm sure they'd have sympathy for the people living in a million pound house who want to be able to leave it to their children who are also living in million pound houses? (oh, for a sarcasm emoji...)

Doodledog, it was I who posted that most contributors to the foodbank at which I volunteer are not well off. Many can refer to difficult times in their life, and have some understanding of how our clients feel. As an aside, many receiving parcels today have asked for squash to replace tea and coffee, as they are anxious about the cost of using a kettle .

OK, I'm being extreme. But you get my point, I'm sure.

BTW, speak to most people and they'd think anyone earning £50,000 was very well off indeed.

Inheritance tax wouldn't "punish" anybody because they'd be deceased. But I'm not getting into that again.

As for 95% on dividends ?????

volver

Well they might. If the people with all the money weren't in charge.

Volver the amounts you suggested (£50,000) would hit Doctors and plenty of other professionals.

Punitive taxes for the sake of it will never be popular.

A sliding scale beginning at £100,000 would be an idea in my opinion. Inheritance tax of 75% would punish homeowners in the South of the Country along with those in expensive housing areas.

Well they might. If the people with all the money weren't in charge.

volver

So. If the government of the day decided on a 90% rate of tax for every penny earnt over than £50,000, and a 95% tax on any dividends, and a 98% tax on share income. Plus a 75% inheritance tax.

And they'd got elected on that manifesto.

Would that be appropriate?

No political party aiming to be in Government would put those would be tax regulations in their manifesto.

Appropriate not ridiculous…

So. If the government of the day decided on a 90% rate of tax for every penny earnt over than £50,000, and a 95% tax on any dividends, and a 98% tax on share income. Plus a 75% inheritance tax.

And they'd got elected on that manifesto.

Would that be appropriate?

Because I often hear Conservatives blaming Labour for not doing this or that I decided to check exactly how many years both have actually been in power.
Despite their ( too) long current period in office Torys will still answer difficult questions by blaming Labour fir not doing their job when in power, even if it’s decades ago.

I have just had a quick google and found that in the last 120 years, ( it’s inception) the Labour Party have only been in power 30 years. That leaves the Conservatives 90 years to sort things out but they still don’t. Their ethos is in the individual, the Me (and people like Me) with scant regard fir anyone not in their social or economic group.
The strange thing is given the Uber wealthy are a minority’ yet have been so politically successful over the past 120 years. There is plenty of research available on the theory of The working class Tory Vote to talk about why this happens,
The reality is Conservatives will never put the ordinary working people first or even an equal basis.