REFERENDUM RESULTS AND DISCUSSION THREAD

[Deutsch Wolf]

Current take home pay for someone on £70k/yr is around £48k/yr. It's a lot of money. The average wage is currently around £26.5k/yr. Take home pay of just over £21k/yr. Substantially less money. One year's worth of Working Tax Credits or Jobseekers' Allowance comes in at anything between £1.5k and £3.2k I think.

Now, if we need extra money to pay for things that EVERYONE values, indeed all three sets of people will probably need at some point, which of the three options would you be hitting?

 

[Deleted Cyber]

Similar to DW I don't know enough to decide where the breaks should be, I do think, though, that people need to accept that if you want better services you have to pay more tax. I'm a 40% tax payer and am willing to pay (slightly) more if required - the days of just considering yourself and your own personal income should be over.

I think you'd need to have tax rates going up to (and past?) 60% to make it work though.

I don't. 50% of the countries wealth sits with 1%. So if you tax that 1% by 5% then you are or should have covered as much as taxing the other 99% by 5%. You see my logic?

 

[Deleted Cyber]

I used to be 40%. Now I keep just below as I can! Others can't.if they hit me for 50 a month extra tax I really would not notice it and I am over 42k a year . hence my numbers

 

[Paul]

Wealth or income ??

 

[Johnny75]

Similar to DW I don't know enough to decide where the breaks should be, I do think, though, that people need to accept that if you want better services you have to pay more tax. I'm a 40% tax payer and am willing to pay (slightly) more if required - the days of just considering yourself and your own personal income should be over.

I think you'd need to have tax rates going up to (and past?) 60% to make it work though.

I'm not sure that'll ever be the case though unless you fundamentally change people's perception on the consumer age and I certainly don't think you'll get a political party to put tax rates up that high as it would be a massive vote loser. Especially with the market research driven politics we have right now.

Broadly though I agree with you, we should be driven by more than just money and the safeguarding of the NHS and free top class healthcare should be of real importance to all of us and I don't think any of the parties are making that point at the moment.

 

[Deutsch Wolf]

Of course I'm going to say this as apparently, I'm a raving Leninist, but there are lots and lots of people who earn so much money in this country that they can't possibly spend it and their contribution relative to everyone else's is pathetic. Meanwhile we have people relying on food banks in the fifth biggest economy by GDP in the world and a mean spirited welfare system which tries to snatch pennies from desperate people's hands.

There is of course a 0% chance that any Tory manifesto would look at increasing taxes for higher earners, it's against everything they believe so it is up to the other parties to make the alternative case.

 

[Deleted Cyber]

Of course I'm going to say this as apparently, I'm a raving Leninist, but there are lots and lots of people who earn so much money in this country that they can't possibly spend it and their contribution relative to everyone else's is pathetic. Meanwhile we have people relying on food banks in the fifth biggest economy by GDP in the world and a mean spirited welfare system which tries to snatch pennies from desperate people's hands.

There is of course a 0% chance that any Tory manifesto would look at increasing taxes for higher earners, it's against everything they believe so it is up to the other parties to make the alternative case.

Fuck it, I am convinced. Communism it is lol!

 

[Deleted Cyber]

How the hell have I gone from ukip supporter to Lenin on here? Must....... Control.........Leftie.....urge.....!

seriously its bloody good to air the views and have debates isn't it?

 

[Paddingtonwolf]

I have spent my entire working life in that just around the change in tax rate zone. This idea would absolutely destroy us.

Ever since 1997 it seems we are the area of income earners it is a safe vote winner to hit.

 

[Deutsch Wolf]

Forget the specifics Pad - it's back of a fag packet stuff from Cyber who I'm sure would confess he is no expert on the matter and is just trying to find solutions that we can sensibly discuss. It isn't a personal attack on you because your household happens to bring in that much.

If you're not willing to countenance tax rises for the likes of £70k earners then what do you suggest?

 

[Paddingtonwolf]

They already pay 40% compared to 22%. So those earning more are paying more.

You would be MILES better off looking at bonuses paid in shares and share schemes in general. The whole idea there is to get into the CGT system at 25% for a chunk of income rather than IT at 40%. And all those 70k earners working for listed companies will be getting some element like this in their remuneration.

 

[Deleted Cyber]

Forget the specifics Pad - it's back of a fag packet stuff from Cyber who I'm sure would confess he is no expert on the matter and is just trying to find solutions that we can sensibly discuss. It isn't a personal attack on you because your household happens to bring in that much.

If you're not willing to countenance tax rises for the likes of £70k earners then what do you suggest?

Correct. I just want a different approach to the current one

 

[Deutsch Wolf]

They already pay 40% compared to 22%. So those earning more are paying more.


You would be MILES better off looking at bonuses paid in shares and share schemes in general. The whole idea there is to get into the CGT system at 25% for a chunk of income rather than IT at 40%. And all those 70k earners working for listed companies will be getting some element like this in their remuneration.

You know more about this than the rest of us so give us some details (relative to how it would result in a greater and more efficient/deserving take) and we can discuss it.

Better than just swearing at people, eh

 

[Parkins left foot]

I don't have a problem with that in principle (adjusted), would prefer the higher rate tax earners (over £250K) to look at an 'investment tax' where they have to invest in a capital project either with other like minded folks or some sort of non-profit vehicle where the primary aim is to build infrastructure projects. This is not instead of their normal taxation, they are still liable for that, purely an extra tax (this is twice in 1 day Tredman).

I would also split the tax take into the old version of normal taxation and health tax (NI) whereby a percentage goes directly to the health service and can be tracked via freedom of information acts.

Whilst in principle the idea of NI as a dedicated health tax is fine you have the problem that under the current system you stop paying NI on earned income when you reach 65 & never pay it on pension income (I know as I was drawing works pensions before I retired & carried on working after that age so paid no NI in my last year). I also have no idea as to how the total NI take squares with NHS budget.

Whether this 'benefit' is fair & reasonable doubt it makes sense that only those under 65 are the ones paying when you are more likely to make use of the service after that age. There may be an argument that this should not happen & that we carry on paying NI forever. Its not a dedicated tax for anything whatever many people think in that its their payment for their state pension. Its merely another tax stream into the one pot. (The only link with the pension is to record qualifying years to determine what level of pension you get.

The difficulty with any change would be for those of us already retired who have made financial decisions/budget based on the current arrangements. If this was brought in in one fell swoop then I would struggle to adjust quickly

 

[Paul]

Does anyone else find it quite ironic that a group of ardent football fans are pillorying high earners ??

 

[Paddingtonwolf]

Share options (bar Save As You Earn which is limited to £250 per month and a very different system)

First £30k worth of options granted are Income Tax Approved. So therefore you get the option without paying income tax and if say the option is over 10000 shares at £3 a share, and the price at time of sale is £4, it is fairly easy to explain. You make £40000 of extra bunce. You pay CGT on the difference between £30k and £40k (so basically £2500 tax for £40000 profit.

After that you just have to sell enough shares immediately on exercise to cover the IT liability when running the options, so the simple thing to do is gross up the size of the option as much as you can to try and cover that off.

Long Term Incentive Plans
These run in a pretty similar fashion but are even more of a wheeze in that you grant a right over a set number of free shares at a point in the future. So I give a right to executive X to have 10000 shares in widget co in three years time (it has to be a minimum of three years to be tax efficient). So three years pass, and Exec X exercises on day one, with widget co shares sitting at £5 a piece on that day. At exercise the tax liability (which is usually calculated on the share price at the DATE OF GRANT not the DATE OF EXERCISE is dealt with without the exec seeing the pain so it feels like free bunce, especially if you gross up the size of the grant to cover off plenty of the tax liability. Exec X gets the say, £50k he is expecting, tax is deducted at source. He feels no pain. There is no great rule that shares have to be held (except at the very top levels). This also applies to deferred share bonus plans. You crystallize the tax liability on date of grant of a bonus. If the share price goes up in the three years until exercise then the execs benefit to the tune of that amount of uplift without taxation. Plus the company benefits by shackling its talent to golden handcuffs as if you leave you lose usually around 40 per cent of your annual bonus for a three year period.

I could go on, but I fear I would bore you all to death!

 

[Deutsch Wolf]

No, it's interesting.

So you could enact legislation where all these options are still there, but they all come under the wrapper of general salary and be taxed as such?

 

[Paddingtonwolf]

In theory yes.

1) Get rid of Inland revenue approved options. Treat all options the same in terms of taxation under IT. Simple.
2) Crystallize tax calculations on THE HIGHER OF date of exercise and date of grant and then subsequent share price uplift is taxed rather than freebie bunce. Simple point is that (in the case of an option you wouldn't exercise if the price had fallen as it would be loss making (an "underwater" option), but Long Term Incentives have no strike price that you have to pay. At the moment, if the share price falls in the intervening period you pay more tax than ideally wanted but you are still getting free bunce (or if you are REALLY cunning, you sell enough shares on exercise to ensure that your tax liability is covered and then sell the rest when the share price rises at a later date)

 

[Deleted Cyber]

Does anyone else find it quite ironic that a group of ardent football fans are pillorying high earners ??

Who are PAYE? No not at all.

 

[Deutsch Wolf]

And how prevalent are these schemes? Would attacking (for want of a better word) them be at least equal or indeed superior in terms of overall take than simply looking at increases in taper for basic rate IT?

The problem I suspect is that like with Brexit and us not having the civil service to deal with it properly - HMRC aren't even close to knowing how to close off all the loopholes and deal with this efficiently.