Should The More Wealthy Pay More?

[Si Hunt]

I was actually prompted to start this thread reading about John Cleese's horrendous divorce, which has led to the bizarre situation of a 70 year old comedy legend having to suddenly go on tour round the country to raise £1million a month which his ex-wife is now apparently "owed". It seems the wealthier the husband in a marriage split, the more he is fleeced so the wife can live in luxury.

But I guess this is also relevent to the Governments current attitude for bailing us out of our dire financial hell hole. Those with the "broadest shoulders" should pay more of the burden, we are told. The wealthiest should contribute most. Is this fair?

I guess it depends on how you look at it. Most people are going to say "yes" because they probably don't view themselves as wealthy. The word "Rich" tends to be associated with millionaires with yachts who must have billions sitting in the bank not doing anything. Yet the average wage I think I read was something like £24k per year. You could earn a little more than that, live in Southern England with a £80k mortgage and not have very much left at all.

Anyway, trying to put aside ideas about what is "wealthy" and what isn't, is it fair anyway? If you have more money, there is a high chance it's because you have worked harder or saved harder than someone else. Again, there are exceptions, and lots of people in London are on the poverty line through not fault of their own. But let's remember that this Government policy doesn't JUST affect the exceptions; and it's no comfort to those who genuinely work to earn a decent age, and are then told they have to pay than others who don't.

Is this fair? You decide.

Si.

[SiHart]

Broadly, yes, the wealthier you are the more tax you should pay. I agree with that. Sadly, as you say Si, that doesn't take in account the fact that there will be regional disparities, but then there are regional disparities in wages too, so maybe it does. You can't start havign a scheme that looks at the wealth of yuor area to decide how much you pay- that'd be an absolute logistical nightmare to make work.

However, it seems to me that the wealthier you are, the more you can find ways not to pay. You can afford people to find the loopholes and the ways around the regulations to stop paying. Perhaps that needs to be looked at.


Si xx

[Si Hunt]

I'm not criticising your view Si, but I genuinely don't understand why you should pay more tax if you earn more money. Doesn't it sort of penalise you for striving to earn a better living? Surely if everyone was equal they should pay the same for the same thing?

Surely the price for something should be entirely dependent on what you are getting. That, to me, sounds fair.

I just don't get it.

Si.

[Si Hunt]

I actually don't mind paying tax on every pound I earn; I guess I'm used to it. In that way, I'm paying more than someone who earns less.

But I think that's enough; I don't like these threats that "the broadest shoulders should do more to bail us out", which hints at more to come.

I also don't understand why the Banks seem totally absent from these "now it's time to pay" discussions. Why should WE have to suffer entirely for their lapses? I really don't get why they arn't at least trying to evoke a token impression that the Banks are in some way helping out, seeing as how they caused it! And what about the reckless credit card companies?

Si.

[SiHart]

When they tried putting that into practice in the late 80s there were riots on the streets. That was the essence of the poll tax- it wasn't charged on your house or whatever, it a tax on a person. And no-one liked it, even though it was fairer.

I don't know about fairness, but I've always felt that it was the social responsibility of those who are better off to help pay for those who don't make so much money. It's probably my woolly liberalism.

Perhaps you need to look at it from the other way round and think is it fair for someone who doesn't earn as much money as someone else to pay the same tax?

Si xx

[Lissa]

I genuinely don't understand why you should pay more tax if you earn more money

Do you mean as an absolute amount or as a percentage of your income?

[Si Hunt]

I still don't see what was wrong with the poll tax! You should pay for what you use surely. We don't all pay different prices in the supermarket do we?

The trouble is, whenever I think of "someone less well off than me" I think of someone starving with four kids in a Hackney squat and feel guilty. But I guess I should think of someone in almost the same situation as me (decent house, small amount of disposable income) who happens to earn 10k less. Is it fair that David Cameron turns to me and says "You should pay more than him for the Banks mistakes"?

Si.

[Si Hunt]

As I said, I'm sort of used to taxable income so I don't mind that so much. But it should stop there, surely. We should all help towards the deficit equally outside of that, unless people are propelled downwards into poverty by doing so.

I don't know, enough about me, what do you all think? Would you be happy if the Government suddenly asked for a lump sum from everyone to pay our way out of this hole, and you had to pay, say £500, and someone two tiers down from you at work had to pay £100? Or got let off?

Si.

[WhiteCrowNZ]

I think in divorce it's always hard to have a fair settlement. I know husbands who've been pretty fleeced, but I also know wives who've come off poorly from it too. All depends on how good your lawyer is.

[WhiteCrowNZ]

Of course ... traditionally under various aristocracies it used to be that it was only the poor people who were made to pay tax, and the wealthier citizens were pretty much tax exempt. You have to admit that the system we have is a bit fairer than that.

But taxation has always been a loaded issue since the time of Christ, where the Bible chronicles how Jews were a bit peeved with the Roman system of taxation. The whole idea of the Magna Carta, one of the most important documents in UK law - is about limits and rules on the powers of the state to tax.

An early attempt at Poll Tax in the 14th Century led to a peasant revolt. So when Mrs Thatcher was on the one hand telling unions of the need to modernise she was also grasping for a return to 14th Century values with the other.

One of the background rumblings on the road to the English Civil War was about the King expanding an additional tax.

And of course I always hate quoting history, cos Ant Williams gets all History teacher on my case ...

[WhiteCrowNZ]

But I do notice a general thing in human behaviour. It goes roughly "I'm taxed too much as it is ... you should tax someone else more". Pretty much everyone feels that way ... about everyone else.

[WhiteCrowNZ]

I guess the problem is that taxation in the UK feels a bit like this ...

ME: Wow - I've earned 100 pounds.
CHANCELLOR: Actually you need to give me 10 of that for National Insurance.
ME: Okay then ... 90 pounds.
CHANCELLOR: Oh and about 25 in income tax.
ME: I suppose that's okay ... so I've now got ... 65 pounds left then?
CHANCELLOR: Yes - that's right, all yours to spend, don't spend it all on sweets now. Seriously we're thinking of putting VAT on sweets ...
ME: Erm .. maybe some DVDs then?
CHANCELLOR: Cool ... you need to pay us 20% VAT for that then. And word of warning even more if you're thinking of buying petrol.
ME: But I need petrol to drive to work.
CHANCELLOR: But it's a luxury innit? Oh ... erm ... and bad for the environment!

So pretty much for every pound you earn about 50pence of it goes straight to the Government. It does feel like it's forced out of you in a whole host of little taxes, and I do get Si Hunt's point - 10% there, another 25% there, 17.5-20% there and it all stacks up.

If the Government just went up to folks and say "look you're going to pay us half of everything you earn" there'd be riots. But as it is ...

[Si Hunt]

They tax you when you earn it, they tax you when you spend it, they tax you when you save it, and if you have anything left when you croak it through stress at having to pay so much tax... they tax that too!

Si.

[SiHart]

Let me tell you how it will be;
There's one for you, nineteen for me.
'Cause I’m the taxman,
Yeah, I’m the taxman.

Should five per cent appear too small,
Be thankful I don't take it all.
'Cause I’m the taxman,
Yeah, I’m the taxman.

(if you drive a car, car - I’ll tax the street;
(if you try to sit, sit - I’ll tax your seat;
(if you get too cold, cold - I’ll tax the heat;
(if you take a walk, walk - I'll tax your feet.

Taxman!

'Cause I’m the taxman,
Yeah, I’m the taxman.

Don't ask me what I want it for, (ah-ah, mister Wilson)
If you don't want to pay some more. (ah-ah, mister heath)
'Cause I’m the taxman,
Yeah, I’m the taxman.

Now my advice for those who die, (taxman)
Declare the pennies on your eyes. (taxman)
'Cause I’m the taxman,
Yeah, I’m the taxman.

And you're working for no one but me.

Si xx

[WhiteCrowNZ]

[Lissa]

Other things being equal, every pound you earn over a certain amount is needed less to pay for necessities than the pound before. Therefore it is perfectly fair to tax those extra pounds at a higher rate. A millionaire needs his 100,000th pound less than a factory worker needs their 10,000th pound so the millionaire should give more of that 100,000th pound to pay for the running of the country than the factory worker should give of their 10,000th pound.

[Si Hunt]

What I don't get it why how much you "need" the money should matter when it comes to taking it away from you?! Correct me if I'm wrong, but you earn/make money on the understanding that you get to keep it. Not that someone else can then come along and decide how much you need it.

Si.

[Lissa]

Anyone in this country and most of the developed world doesn't earn money on the understanding that they get to keep it - they earn money on the understanding that tax will be deducted. Some will understand how to avoid paying tax but the deduction or attempted deduction of tax must be understood by everyone surely?

How much you "need" the money is relevant if trying to decide whether variable tax rates are fair. The Rooneys are entitled to child benefit. Do they need £20 a week as much as a single parent family living in poverty? No. Would it be better to give the poor family £40 a week and the Rooneys nothing? Yes. Is that fair? That depends on your definition of fair. I don't think there's much wrong about the old saying "From each according to their means, to each depending on their needs".

[Jason Thompson]

There will never be a 100% fair tax system, because individual circumstances play too much part in how much money you need and can afford to pay back in taxes. There's a debate in the letters page of the Metro today regadring single parent familes and child benefit, and today is the backlash against someone who tarred them all with the same brush, failing to consider single parents who are so because their partner ran out on them, or died, or they got pregnant as the result of sexual abuse, or the like.

All things being equal, yes, the wealthier you are the more you should have to pay back when the country's economy requires raised taxes. I work hard to earn my money, the people on minimum wage stacking shelves in a local supermarket work hard to earn theirs, the big bosses of large companies work hard for theirs, and so on. However, I am not going to be happy if, in your hypothetical lump sum payment scenraio, I have to take a significant but manageable hit to my finances while my shelf-stacking friend loses so much he has to massively tighten his belt for a few months while the boss has to pay back a chunk smaller than that he p***ed away on pointless bling for his BMW last week and that he'd barely notice. Everyone paying the same amount penalises the lower earners, and whatever else you say about them, it wasn't them who got us into the mess that required the payback in the first place, was it?

But then all things are not equal. No syhstem of tax is going to be to everyone's taste, so to a certain extent I sympathise with the politicians who knew coming in that whatever they did this term to fix the economy was going to be unpopular with someone.

[Captain Tancredi]

I don't think there's much wrong about the old saying "From each according to their means, to each depending on their needs".

The problem I have with that idea is that it preserves the idea of inequality in society- unless you're giving the poorest people a shove from behind to encourage them to work hard and better themselves, they've no need to strive because they know that the state will make up the difference and ensure that they have a basic standard of living.

You need to have a system which encourages people to work hard and strive to become the next Richard Branson without feeling that they need to relocate to a tax haven the moment they start coining it in. The generally received wisdom is that the very wealthy also generate employment because they hire domestic staff, gardeners, accountants and so on so you don't want to bleed them dry- personally I think it's a shame that we've lost the spirit of philanthropy which encouraged local businessmen to endow museums, libraries and universities. I studied at the University of Bristol, which was heavily endowed by the Wills (tobacco) family and their name was all over the place. The Americans still seem to have that concept and give tax breaks for philanthropic donations.

[brandynigma]

Look at your taxation system:

Lower rate 10%- £0 - £2440
Basic rate 20%- £0 - £37,400
Higher rate 40%- over £37,400
Additional rate 50%- over £150,000

Now look to Australia:

$0 – $6,000 Nil
$6,001 – $37,000 15c for each $1 over $6,000
$37,001 – $80,000 $4,650 plus 30c for each $1 over $37,000
$80,001 – $180,000 $17,550 plus 37c for each $1 over $80,000
$180,001 and over $54,550 plus 45c for each $1 over $180,000

Incidentally, tax in Australia includes Tax, National Insurance, Medicare, and the TV License. We do have VAT (called GST) of 10%, which is on everything expect fresh food (ostensibly under the example that cooked chicken pieces require more service than raw chicken pieces).

To be honest, the high level of taxation in the UK is one of the few things I don't like about living there.

Another is the lack of good Chinese food. It's not meant to make you feel bloated! It's meant to be some of the lightest cuisine on the planet!

[WhiteCrowNZ]

Oh don't worry too much about the rich - if they're paying exactly the amount of tax expected from them by Inland Revenue, then it's really time they fired their accountant. There are all kind of loopholes and special things you can do to avoid paying the full rates of tax - such as avoiding paying National Insurance on bonuses etc.

Alas of course it's only the rich who can afford the accountants to exploit these kinds of rules ...

[Si Hunt]

I think that's part of the problem - "The Rich" are seen as this subset of yacht-riding millionaires with an endless supply of money in the bank. They have it easy. They are untouchable. They can pay for all of us! It's like there's a threshold and everyone beyond it lives in Rich Land.

There are, of course, many people like that out there. But of course, lots of people in between, too. And it's all relative. To the people living on the breadline, you and I are "the rich", but I daresay we wouldn't be too happy being considered this fat bloated class who can afford to pay for everyone because they have more money than they know what to do with; yet to them, we probably are.

And, without wanted to be hated by standing up for this mythical loathed sector, if you work hard and get rich that way, you aquire a different standard of living and that costs more to uphold.

I guess what I'm trying to say is that (i) a lot of other people would consider you to be rich (ii) Maybe some of these mythical rich people are just like everyone else, except they have a better standard of living (i.e their costs rise proportionally and they still have to save and budget for their increased means in the same way we do).

Si.

[WhiteCrowNZ]

I think part of the problem is though Si - human beings are kind of hard wired to always want more and more. We can have a lot of money, but we always want EVEN more, cos unless you're Bill Gates there is someone out there with even more than you.

In fact our whole economy is based on this. We buy something cos we want something and think it'll make us happy. But soon afterward our happiness is now driven by possession something else we don't have.

Every so often the human race throws out someone who tells us all it'd be better if we just learned to accept things, and be happy with what we have, and be nice to one another. But fortunately society finds way to deal with such people and soon have them nailed to a cross before they interfere with the status quo ....

[Rob McCow]

You can certainly argue that society should reward success and hard work. The problem is, what constitutes hard work? Does the cleaner who works a fourteen hour day more worthy to society than the head of a cleaning company who flies around the world giving one-hour conferences on how to clean better?

Tax and benefits systems should be seen to be fair and take an appropriate proportion from everyone. But it's an intensely complex world! I don't think that the rich are deliberately protecting their own interests by screwing down the lower and middle classes. But it's happening anyway.