The Policy Blender

Don't I currently have a flat tax of 20% applied to everything above £4700ish? Or is it 15%?

Would this replace VAT? NI? Fuel duty? Tobacco duty? Spirits duty?

Or wouldit just replace our complicated Income Tax system, so we'd keep all that other crap?

personally I'd have it replacing income and NI with drops in all the rest.

there are no other thresholds other than the £12000 (or whatever the hell you set it at)

I'd also like to see a peg to company tax, so that the two depend on one-another.

The BBC has quite a balanced overview of the arguments for and against here

jesus - you are a communist!

no more second homes? why not go further comrade and abolish all private property?

Top rate of 60%? are you mad? people will just leave if more of what they earn goes to the Derby Slappers or some twat with a petrol light-sabre.

how about concentrating on getting the same percentage of gross income out of the rich than the poor, because at the moment, with the loopy system we have rich people just pay someone to get them off it.

The point about the simple rules is that there are only two:

1, there is a threshold (12k or thereabouts so really poor people don't pay any tax at all)

2, there are no excuses, everyone else pays 22% (or whatever) of their income.

how is that "bollocks from start to finish"?

No- I'm assuming that the £12,000 threshold would be for everyone. So you'd pay £1,760 - a massive tax cut for you.

you're assuming that the exec earning £200k actually pays 80k in tax, which he wouldn't of course, because he's an exec and his company would provide him with the neccicary loopholes to probably pay something in the region of £5k a year...

The point about flat tax is that the rules are so simple that they are impossible to break - everyone pays the same proportion of theri income, that way, those earning more will pay more tax rather than the current system which you are defending.

we even have the methology in place to plocie that system - tax inspectors currently investigate people whose tax returns don't match thier percieved lifestyle - only the hardly ever prosecute becuase there's usually some accounting/taxation loophole that explains it all away. FT would remove that.

The only real downside is that a lot of people who make money from advising on tax avoidance will suddenly be unemployed - So we've got the rich finally paying their fair share in tax with no excuses, the very poor paying no tax at all, the poor paying less tax, and companies like KPMG, Deloite Arthur Andersen etc taking a massive body blow - what is there for the left no to like apart from the removal of the perception that the rich were paying proportionally more, which, as they are rich, they probably weren't anyway.

philoshically it may not sit well with the comrades who see a higher tax band as a good way to punnish the rich. But practically it collects much more revenue from the top end than we do now, and gives rich people no excuse whatsoever to try to avoid it, because they're paying proportionally the same as the guy who cleans their drains.

sorry for the communist jibe by the way. getting a little heated at work - no, really, the A/C has gone haywire, it's like a rain forest in here!

:-)

Oh and Matt, Chris' example was right, it is just a threshold for those under 12k (or whatever), everyone else pays 22% (or whatever) of all of their earnings

Well, if you'll excuse me - fuck that.

So someone earning £11,999 takes home £11,999, and someone earning £12,001 takes home £9380.78? No, whoever thought that up would have a 'Must try harder - see me' on their school report.

And you'd need to be earning up to £14,000 before you'd actually make more than someone just below the threshold. It's just going to mean more people have a barrier to how high their earnings will go, and companies will have a justifiable reason for keeping their employees poor.

Maybe we should have a tax on earnings above £12k, which is up to 30% (though I don't know what the sums are). Then poor people get their tax break, and there's no reason not to give people salaries of £12,500, £13,000 and £14,000 for menial jobs, instead of near-minimum wage or £14k and above.

But I'm still in favour of rich people subsidising me. Naturally my views are liable to change when I'm rich.

I'm asssuming, as similar to part of the current system it's a 12k taxable threshold: thus when earnings reach 12k Net then the tax kicks in, but someone earning 12k would not be taxed, because - as you point out - their net earnings would be £9300ish. Thus there is no perverse incentive to have a lower gross salary and higher net income.

I fail to see how making everyone pay a flat tax will stop people abusing the system. As Chris said, they currently play with their expenses to reduce their tax bill, but then at 40% odd wouldn't you? If there was a flat tax who said that people would stop playing in the grey areas (what constitues expenses etc..)? It's just that with a flat tax they'd pay less on the bits they were unable to hide. Am I oversimplifying the tax system as it stands here? Perhaps, but I fail to see how reducing the amount and making it standard rather than the current system of many different cut-offs will help. Plus if the idea was to keep it simple with a flat rate you'd have to do away with tax credits incentives.

Furthermore, if you really want to stop people screwing with certain markets, housing to mention but one, then why not sort out the taxes relating to those markets rather than brandishing changes to income tax as the solution.

For example, people with second homes pay less coucil tax on siad second home because they don't live there 100% of the time. Now, go on, explain how that makes sense. It is nice for Mr Big City Fat Cat but if there were a family living there full time they would pay 100% of their council tax. Therefore Mr Big City is jipping the local council out of money they would otherwise have. This means that everyone else in the area has to subsidise his reduction.

Simply saying that income tax (flat or overly complex) will sort things out is rubbish in this case. Especially when you throw in landlords (as mentioned above) that make a living sitting on their over inflated arses.

Paul: Absolutely, the council tax thing makes no sense, either for people with second homes, or for landlords and estate agencies.

I think perhaps you are oversimplifying the current system - the expenses claims just wouldn't come into it in a two rule flat tax system because expenses wouldn't be claimable. It's the complications of the current system that make it easier to sidestep.

The only way you'd be able to evade tax under a new simpler system like the one proposed would be by hiding income. No doubt they'd invent ways of doing this (income to a company you owned instead of yourself, your company buying your car/house, paying your rent, so you get the benefit but never get the income) but it might stump people for a few years before we got back to normal. Or a government with the balls to really make it stick, to everything, for everyone.

Can't believe we'd have to vote in that orange nonce in order to do it though.

My proposal for a discussion on flat tax is IN NO WAY AN ENDORSEMENT OF THE TANGOMAN

oh, and I agree with all of the above. The point is that as there is only one rule - everyone pays x%, the whole evasion thing becomes a lot less easy to justify and a whole lot easier to spot.

In the second homes issue, we are forgetting that council tax is a tax that relates to council services - bins, etc, and that the reason for banding is not to reflect somebodies ability to pay, but their use of the services (bigger houses = more rooms = more people = more use of council services) and that people who don't pay the full tax on a second home do so because they don't use the councils services for the whole year.

I'm only prepared to go along with that view if they are forced to leave me as their sole beneficiary in their respective wills. Then go for it, kill 'em all (as hetfield would say).

On a more serious note, some people get rich on either merit or through hard work, you know. If they get off on being rich, let them, you get off on being important to Russia - which is something you worked bloody hard for.