O/T people on benefits

[ragingpup]

My own view is that, rather than this being cloak and dagger, everyone should pay a flat rate of income tax, irrespective of earnings. That would pretty much wipe out avoidance and evasion at the upper income levels, and attract a lot of high net worth individuals into the country, bringing their money and their jobs with them. I believe this could be achieved at a flat income tax rate at, or lower than, the current basic rate.

There's quite a bit of research that shows that as you increase tax rates beyond about 45%, no additional revenue is forthcoming because of avoidance and satisficing behaviours. It would be interesting to see how the overall tax take changed if top rates were slashed. I know what I think would happen, but it's untested in an economy like ours as far as I know.

Where do you get your research that leads you to these conclusions?

If I was a super rich person who uses legal loopholes to avoid paying tax on my millions at 40%, why wouldn't I also use legal loopholes to avoid paying tax on my millions at 20%? AS I had gone to great length to establish such loopholes, why would I stop avoiding tax at whatever figure society happens to charge normal working people?

And are you saying that the lower the rate of income tax, the more prosperity you create through attracting wealth? Kerr puts forward similar propositions for corp tax. But struggled to answer why we shouldn't then just cut the tax to 1% How low would you go?

The only certainty I can see from your proposals is that the super rich will get super richer! But will they sufficiently spread the wealth around to avoid further cuts to the public purse? Evidence from historical cuts to taxes are at best inconclusive. I'll look at your research to see if it casts new light.