O/T people on benefits

[Lasterman]

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.

In terms of the effect of raising tax rates beyond 45% on overall tax take and tax payer behaviour, my research is from the Institute of Fiscal Studies Mirrlees Review. As I said, the effect of reducing top rates down to basic rate levels on behaviour and tax take is speculation on my part, because it hasn't been done. My opinion is that people at all levels of income are content to pay taxes and don't seek out avoidance measures, if they feel they are being taxed fairly.


A bit of light reading for you:

https://www.ifs.org.uk/bns/bn84.pdf

[ragingpup]

In terms of the effect of raising tax rates beyond 45% on overall tax take and tax payer behaviour, my research is from the Institute of Fiscal Studies Mirrlees Review. As I said, the effect of reducing top rates down to basic rate levels on behaviour and tax take is speculation on my part, because it hasn't been done. My opinion is that people at all levels of income are content to pay taxes and don't seek out avoidance measures, if they feel they are being taxed fairly.


A bit of light reading for you:

https://www.ifs.org.uk/bns/bn84.pdf

Thanks for that. Certainly makes a fair case for not raising the top rate to more than 45%.

It also states that in their opinion the maximum revenue raising amount of the top income tax rate is around 40%. Yet you say that you would slash this by more than double to get a flat rate for everyone. Not even this notoriously neo-liberal policy supporting think tank are supporting your stance here? So why/how do you arrive at this figure?

I'm likewise intrigued by the suggestion that the super rich tax evaders would suddenly start paying their full whack if the tax rate was much lower? Why would they do this when you've created even more wealth for them to employ the finest accountants (and former government ministers) to evade the new rate? This seems like a huge faith in corporate humanity you have here?!

I agree that it would be a very interesting corporate experiment though. But then, come to think of it, the last 40 years have seen one corporate tax slashing 'experiment' after another with no discernible increase to the public purse; just increased profit margins... Maybe we could actually try an 'experiment' the other way round, and see what would actually happen if you increase the top rates of income and corporation tax instead??? I would have thought that 40 years of slashing top rates have led us to a pretty sorry state of public service finances thus far - maybe we should try something different?

[Lasterman]

Thanks for that. Certainly makes a fair case for not raising the top rate to more than 45%.

It also states that in their opinion the maximum revenue raising amount of the top income tax rate is around 40%. Yet you say that you would slash this by more than double to get a flat rate for everyone. Not even this notoriously neo-liberal policy supporting think tank are supporting your stance here? So why/how do you arrive at this figure?

I'm likewise intrigued by the suggestion that the super rich tax evaders would suddenly start paying their full whack if the tax rate was much lower? Why would they do this when you've created even more wealth for them to employ the finest accountants (and former government ministers) to evade the new rate? This seems like a huge faith in corporate humanity you have here?!

I agree that it would be a very interesting corporate experiment though. But then, come to think of it, the last 40 years have seen one corporate tax slashing 'experiment' after another with no discernible increase to the public purse; just increased profit margins... Maybe we could actually try an 'experiment' the other way round, and see what would actually happen if you increase the top rates of income and corporation tax instead??? I would have thought that 40 years of slashing top rates have led us to a pretty sorry state of public service finances thus far - maybe we should try something different?

My comments related to personal taxation levels rather than corporate ones. Companies have a different agenda and collection of responsibilities. Rightly or wrongly, I do believe individuals have an inbuilt sense of fairness and the great majority would dispense with any ideas of avoidance if they perceived it to be a level playing field. I can't pretend to know exactly what flat rate of tax would result in the greatest revenue because there are so many contributing factors. However, in principle, I see no less reason to think that rate is 20% than 25% or 30%.