Labour to tax rich

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Anonymous
Nov 23 2008 21:38
Labour to tax rich

Apparently:

http://news.bbc.co.uk/1/hi/uk_politics/7745070.stm

no1
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Nov 24 2008 13:16
Quote:
It is unclear how much a new tax rate could raise, but a Treasury answer to a Parliamentary question in 2006 suggested a 45% rate on people earning more than £150,000 would have raised £1.2bn.

Seems like it's just cheap Labour populism - a billion won't make a difference here.

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Joseph Kay
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Nov 24 2008 13:50

there's also the point that taxing the rich doesn't alter the balance of class forces - it will either mean capital flight, lower investment and higher unemployment or bosses topping up their salaries/dividends, which depresses profits, making them attack wages, or at least not offer rises they otherwise would have conceded. ultimately income resolves to profits and wages, anything that attacks the former will prompt the bosses to attack the latter to compensate, so it comes back to class struggle to determine the balance of profit/wages (and eventually abolish it of course). which is of course why libertarian communists aren't social democrats, even 'really' taxing the rich cannot substitute for class struggle, only we can defend our interests.

Caiman del Barrio
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Nov 24 2008 18:05

Presumably their army of accountants will find ways round it anyway...

I mean, do you really see Osbourne, Mandy et al paying it?

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Joseph Kay
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Nov 24 2008 18:34

yeah i think no1's right that it's tokenistic - but even if it was real it wouldn't help us. like meritocracy.

no1
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Nov 24 2008 19:18

What makes it even more tokenistic is that they won't even decide on introducing it until 2011..... very cheap populism.

I can't see the reduction of VAT by 2.5% making much of a difference to ordinary Labour voters either - aren't most shops just going to pocket the difference?

no1
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Nov 24 2008 20:26
Jack wrote:
That's why it's so brilliant. A subsidy for capital in disguise as cut prices for the working class.

Exactly. I wonder how many people are going to fall for it though.

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Joseph Kay
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Nov 25 2008 18:55

what are you all talking about, the front page of The Times today just declared communism:

like has been pointed out above and in Rob Ray's blog, if Brown's a commie, Thatcher must have been ultra-left with her 63% top-tier tax.

no1
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Nov 25 2008 20:15

Funny that cartoon. Here's the "reality":

Eye-watering squeeze on public spending
Capital spending is to be frozen in cash terms after 2011 and departments can expect to get 
billions of pounds less in expenditure than they were anticipating even as recently as this 
year’s Budget. 
This means a fierce and progressive squeeze on public spending is in prospect after 2010, 
with health and education – the government’s top two priorities – enjoying vastly lower rates 
of growth than in recent years, and other departments facing actual cuts.

http://www.ft.com/cms/s/0/f900fb98-ba5f-11dd-aecd-0000779fd18c.html?nclick_check=1


A string of public sector businesses, from the Met Office to the Oil and Pipeline Agency,  the 
Royal Mint and the Ministry of Defence’s storage and distribution agency, could be put up for sale 
as the government seeks to boost by £5bn the £30bn efficiency cash savings that it had already announced.

[...]High cost and underperforming prisons are to be identified and failure to improve “will 
lead to services being contracted out without a public sector bid”, the Treasury documentation 
says. The so-called Lift programme, which uses public/private partnerships to build GP surgeries 
and other buildings, will be extended to the whole of the primary care estate.

http://www.ft.com/cms/s/0/64387c10-ba74-11dd-aecd-0000779fd18c,dwp_uuid=7cdbbb7e-84aa-11dd-b148-0000779fd18c.html?nclick_check=1

Whoever said neoliberalism was dead?

What I don't get is this: As far as I understand it, economic growth in the UK in the last decade has been mainly based on the City and on debt-fuelled consumption based on the housing bubble and the credit bubble. All of these have fallen away now. So where is this economic growth New Labour predict to re-appear from May 2009 going to come from? Government-subsidized loft insulations and other building projects? I don't see how their proposals deal with the economic situation.

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Rob Ray
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Nov 25 2008 21:34

You missed out the looming public sector pension attacks, Channel 4 were doing a marvellous cheerleading job on it this evening 'people are starting to question the gold-plated pensions of the public sector while the private sector has lost its final salary pensions' apparently.

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Steven.
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Nov 25 2008 21:35

Yeah, something that will be big is the 0.5% increase in NI after 2011. The tax increase for the "rich" is bollocks, most "rich" people don't earn a massive wage, they get it from property/investments.

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oisleep
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Nov 25 2008 22:55

that is a common perception, but it's not actually true for most rich people, at least not in the UK

about 47,000 people make up the top 0.1% of 'high income individuals', with an average income of about £780k - out of this roughly 80% is through employment/self employment with the remaining 20% through investment income/pension income

about 422,000 make up the next category of 0.1% to 1% of income earners, with an average income of about 150k - again just over 80% is from employment/self employment

if you went to the highest 0.01% or 0.001% then the picture would be slightly different but that's getting to a handful of people

http://www.ifs.org.uk//bns/bn76.pdf

anyroads, even if a bigger proportion was 'earned' through investments rather than a wage, it wouldn't change anything, when it comes to that person it gets taxed at the same rate

these tax increases for the rich at most raise about £2bn a year (and that's the highest amount, a big amount will be avoided through pension scheme arrangements and other avoidance schemes/scams), this compared to the £104bn gap that needs to be plugged on the picture no1 posted above shows how relatively insignificant it is, especially compared to the £35bn of effective cuts in public spending in the next few years and the disproportionate impact that will have on the worst off

the VAT cut is actually fairly regressive as well

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oisleep
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Nov 26 2008 07:07

depends how much under £100,000 - between 50 and 100 grand marginally worse off overall, because of NI increases (the benefit of extended tax allowances is offset by the increased NI) from 2011

http://www.ft.com/cms/s/0/55efea9c-ba71-11dd-aecd-0000779fd18c.html

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oisleep
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Nov 26 2008 08:24

yes, that was my point to steven above, doesn't matter where the income or realised capital gains comes from, when it comes to you it still gets taxed on the same basis as income from employment (albeit the source of the income can allow differing ways of avoiding tax on it and give different allowances against tax etc..)

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jef costello
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Nov 28 2008 00:13

I can't remember if I had a factual basis for this one but I thought that about 150k a year was the point where having an accountant paid for itself.

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Django
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Nov 28 2008 10:07

We should keep in mind though that many of the very richest don't pay any income tax whatsoever, using various loopholes to dodge tax:
http://www.dailymail.co.uk/news/article-463252/Only-UKs-richest-men-paying-income-tax.html

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Steven.
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Nov 28 2008 11:08
Django wrote:
We should keep in mind though that many of the very richest don't pay any income tax whatsoever, using various loopholes to dodge tax:
http://www.dailymail.co.uk/news/article-463252/Only-UKs-richest-men-paying-income-tax.html

yes that's what I meant with my post above.