Author Topic: Taxation and its ability to alleviate Poverty  (Read 2282 times)

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Offline johntaylor49

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Taxation and its ability to alleviate Poverty
« on: August 22, 2013, 19:20:20 PM »
Having begun as a devoted Tory I find I have become more of a Socialist as I have aged, (Wife says I was 11 last Birthday  :) ) and an interesting view is that if we radically reformed Taxation it would have a dramatic affect on the poor and significantly affect the Benefits trap.

An interesting view is that if the Tax threshold, point at which you pay Tax on your income, was raised significantly this would take both low paid workers and those on average pensions out of the tax system altogether significantly increasing their real income. This however would have to be balanced by an increase in Taxation percentages for people above a certain threshold.  Put simply the more you earn the higher percentage you are taxed.

Personally when I was doing rather well many years ago I found myself being taxed at 50% on a percentage of my income, albeit this was offset a little with MIRAS (Mortgage Interest Relief at Source) and some other taxable benefits. Whilst like anyone I hated paying Tax as I sometimes earned in a month what my wife earned in a year
it was actually not that much in terms of available cash. (Heady days -- didn't last  :) )

If people could receive more of their earnings in lower paid jobs would this encourage more people to come off benefits, and would the savings now that benefits are such a large amount of the annual Budget help to offset this? What is acceptable in taxation, for example was the 50% tax rate actually really encouraging a brain drain?

Opinions and discussions in a sealed envelope to my home address with £1000 or you can answer for free on here  :)



Offline johntaylor49

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Re: Taxation and its ability to alleviate Poverty
« Reply #1 on: August 23, 2013, 09:00:57 AM »
Oh well, obviously I picked a subject nobody cares about  :)

Offline mog

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Re: Taxation and its ability to alleviate Poverty
« Reply #2 on: August 23, 2013, 10:01:25 AM »
i couldn't agree more so have little to add.

Offline GordonA

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Re: Taxation and its ability to alleviate Poverty
« Reply #3 on: August 23, 2013, 11:02:15 AM »
There may be a very good reason for disinterest in your very 1st sentence John. I for one, get really angry when people claim long term allegiance to a particular political party, then jump ship when the goal posts are moved, and they are affected financially, or otherwise. Nothing personal, your politics are your concern, and, as for your original point, taxation, in any way, shape or form, will NEVER find a satisfactory balance for everyone. Once again, nothing personal.

Offline johntaylor49

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Re: Taxation and its ability to alleviate Poverty
« Reply #4 on: August 23, 2013, 11:16:07 AM »
I see your point about the introductory line, perhaps could have been wiser! One of our greatest leaders of all time, whilst not perfect, "jumped ship" whilst actually in Parliament, got and walked across the House -- His name? Oh yes, Winston Spencer Churchill!

Surely politics is about following what you believe is right rather than blind allegiance no matter what?? Isn't that one of the complaints made continuously about our political system, blindly voting for the xx candidate no matter what? The bad jokes about "they could field a monkey as the candidate there and they would get in?

An unfortunate introduction perhaps, but I would have hoped that people might read beyond that and have an opinion about the subject matter.

Oh and I didn't "jump ship" because my finances were affected, that happened in 1990 and I was still voting Conservative at the last election, because I didn't want  more of the same from the disastrous hidden borrowing to appease of the Labour administration, my conversion was to more of a socialist viewpoint and care about my Country, I actually have no idea which party I will vote for at the next election, just know it wont be any of the gang of 3!

Of course we cant get a perfect balance, but we can try??

Offline teetee

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Re: Taxation and its ability to alleviate Poverty
« Reply #5 on: August 23, 2013, 12:47:11 PM »
Without getting involved in my political allegiance, in answer to johns question regarding raising the level of the tax rate to try and get people to off of benefits and working so they earn as much or more by working, this in theory could work for people in this situation.

The issue is that over consecutive governments the benefits system has played in to the hands of those who do not wish to work, as such my opinion is that it may be of help to a percentage of those in this situation but those who are lifetime players of the benefits system will not be effected. They don't want to work so the system says that they can manage without working.

Most reasonable people understand that in the way that the current system is set up that for the system to work we all need to contribute to make it work. The issue is the balance between those that do contribute and those who do not. My opinion is that this balance is often wrong.



 

Offline Colwyn

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Re: Taxation and its ability to alleviate Poverty
« Reply #6 on: August 23, 2013, 13:27:39 PM »
The main problems with the British tax system stem from two significant shifts that have been condoned and even encouraged, by successive governments over the last thirty years. These are firstly the trend that large corporations. especially MNCs, have steadily reduced the amount of taxes that they pay. This increases the burden on private individuals. Secondly, those at the top end of the income scale have increasingly found ingenious ways of avoiding making their proper contribution. This means that the increased tax burden falls disproportionately upon those with medium-high, middling and lower incomes. These taxation changes have taken place in the context of general, and large-scale, shifts of income (and, of course, wealth) from poor to rich. This leaves governments with little room to manoeuvre unless they have the courage to tackle fundamental problems with the British economy - which they haven't. The present government has made a tentative, but useful step, in the direction of taking the poorest, earning less than £10k, out of taxation. But more commonly governments fiddle around with increasing indirect taxes (VAT) and income tax under another name (National Insurance). What this does, of course, is to further increase the tax burden that falls on the low and middle income earners.


Would I support changes to the tax system directed more positively to the redistribution of wealth? Most certainly. Do I think there is any prospect of this happening? Not at all. Our society will continue to be increasingly unfair and increasing effort will be poured into finding more scapegoats for this - immigrants, "benefit scroungers", the EU, or anybody else the government can find to stir people up and distract public attention from the real underlying malaise of our economy.

Offline madmart

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Re: Taxation and its ability to alleviate Poverty
« Reply #7 on: August 24, 2013, 08:51:02 AM »
The 40% tax bracket starts at approx £39000. A few years ago it started at approx £45000. Middle earners are now being squeezed, no one in the UK government seems to be bothered about it.

Offline johntaylor49

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Re: Taxation and its ability to alleviate Poverty
« Reply #8 on: August 24, 2013, 10:18:46 AM »
Colwyn, interesting information and views indeed, sadly you are probably right about it continuing but I live in hope! What I was not considering and you rightly stressed is the drop in Corporate Taxes (I believe based on the "Myth" that it encourages investment).

Yes, Madmart, I too have noticed over the years that the highest brackets seem to have been abandoned and the thresholds dropped for middle income earners. So, far form moving the tax thresholds upwards and small increases for the highest earners the opposite has been implemented.

Stealth taxation is increasing at an alarming rate, and it goes back to the view that we are in a sick Society where subterfuge and outright lies are considered ok and there are no true ethics in business any more. I wonder how many people still don't realise that when they pay insurance the Government steals 5% of their payments as "tax"!

Self employment most definitely provides one with a raft of hidden benefits and enables you to play the tax game quite blatantly! I worked for a small Company for a while where the owner even tried to claim his Winnebago as a business expense! Who hasn't been out with a friend who owned their own business and asked for a receipt -- I wonder why  :) One can argue that a self employed individual has all the risk, (which they can insure against) but by the same token poor management over which an employee has little control can easily put one out of work as once happened to me!

I would like to make clear when I started this thread it was to get a feeling of peoples views and to explore ideas, it was not at any time meant to be a discussion on Benefits per se, that is a different subject. I am sad to say that there are "benefit cheats and scroungers" out there, but I believe most people on Benefits struggle, and some actually suffer deteriorating health because they simply are not as good as managing the small income they get. There was no intent to say that lowering tax was a cure for the Benefit system, just one of many things to help the poor generally.

If we can get people to be more confident in the future at no increased costs to industry, can change our direction to more vocational training and become a nation of makers and doers rather than administrators and servicing that would be a good start?



Offline Piscoe

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Re: Taxation and its ability to alleviate Poverty
« Reply #9 on: August 30, 2013, 14:28:41 PM »
I personally take a very different view. I did not vote for this nor the previous government and do/did not agree with how it spends our money. Providing a system that permits lazy people to stay lazy and live relatively comfortably for long periods of time is abhorrant to me. The health system is overloaded with health tourists (or whatever you call them) and monies spent on countless needless jobs and projects leaves me astonished.

I have been extremely careful to plan my and my company's tax affairs so as to pay the absolute minimum. I would add here that we do nothing illegal and simply take advantage of the system where we can. Where are my morals in that I hear you ask?

Over the last 2 years I have managed to double the size of the company and the cash we saved in tax has gone into investment in people. These people went from no job or very low paid jobs to well paid careers. We have created 18 new jobs directly and probably something similar indirectly. All these people pay their taxes as does the Company in NI contributions etc. Had we paid the maximum in tax these jobs would not exist nor would I have had the means or incentive to make any investment.

The upshot was that increasing taxes removed our ability to employ people who were dependent upon a benefit system that was reliant upon my taxes. My actions amount to a massive net gain to the treasury and took a lot of people off the bread line.




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