Reply to: Personal tax guarantee

[AtW]

This is possibly true, but as a non-Labour person, I kind of tip my hat to McDonnell for tactics on the issue, effectively saying to the Tories, "That's what's in our manifesto - now what's yours?". I'll bet the tax on my dividend (before it goes up) that the Tories won't have the balls to come out with as much detail. Instead they'll say we're all on a journey - strong and stable of course. If they do that, then I would expect the Tories over the next 5 years to put tax up more than Labour would have done. And that would be very weird wouldn't it?

McDonnell is fooking us over even if he does not win - by playing ball for their supposed enemy making it easier for them to increase taxes and claim innocence.

The real irony is that unless they increase tax massively they won't raise much more money - particularly in light of Brexit that will certainly force some rich people to move, perhaps to France where they might start getting sensible taxation.

[Swamp Thing]

Labour won't get it, Tories will have landslide.

So what Labour doing now is making it easy for Tories to increase income taxes and claim they are increasing them at lower rate than Labour wanted.

This is possibly true, but as a non-Labour person, I kind of tip my hat to McDonnell for tactics on the issue, effectively saying to the Tories, "That's what's in our manifesto - now what's yours?". I'll bet the tax on my dividend (before it goes up) that the Tories won't have the balls to come out with as much detail. Instead they'll say we're all on a journey - strong and stable of course. If they do that, then I would expect the Tories over the next 5 years to put tax up more than Labour would have done. And that would be very weird wouldn't it?

[d000hg]

Lots of them aren't hiring many people... Amazon clearly has to hire people as they actually handle products. But the original claim was these companies would sack all their employees and leave if they had to pay tax on UK profits. Which seems stupid... if they can still make a profit they will remain.

And since you mention VAT, isn't that one of the big areas of controversy... paying all your VAT in a country with the lowest rate?
Will that particular avenue be closed through Brexit?

[WordIsBond]

Right, and Amazon aren't going to stop selling in the UK. If they're told "you have to pay tax in UK income" they will realise they can still turn a profit and continue.

Which is hardly the point. You said they weren't employing many people.

The real money-spinners for the UK government are employment/income taxes and VAT. As long as that's rolling in, I'd be just as happy to see corporation tax slashed. Then, there'd be no incentive to move shift profits elsewhere, and more incentive for corporations to locate here, providing employment and employment taxes.

[d000hg]

Starbucks
In 2012 Starbucks was employing 8500 people in the UK. Presumably that number is higher now.

Starbucks, or Starbucks franchises?

Google
In 2015 Google was employing 2500 people in the UK and paying them an average of £160K. The Employers NI on £160K is over £20K. At £20K per head, for 2,500 people, that's £50 million in NI contributions. That doesn't count the Employee NI and income tax.

2500 people, £50 million NI, on how many £billion?

Amazon
They employ over 15,000 permanent UK employees. They also provide a lot of temporary jobs, which may not provide a living wage but do provide a nice supplementary income for many people in between jobs or just looking for something temporary to supplement their income.

Right, and Amazon aren't going to stop selling in the UK. If they're told "you have to pay tax in UK income" they will realise they can still turn a profit and continue.

[AtW]

And this is the worst lot Labour has ever had leading them. By the end of the parliament, we'd see withdrawal of the personal allowance starting at £80K, a 45% additional rate band starting at £100K, 50% starting at probably £125K, below inflation increases in the higher rate band threshold, higher corporation taxes, and higher NI "contributions."

Labour won't get it, Tories will have landslide.

So what Labour doing now is making it easy for Tories to increase income taxes and claim they are increasing them at lower rate than Labour wanted.

I can't see Tories (or Labour) merging Income Tax with NICs, no chance - it would show true level of taxation on income and we can't have that...

[AtW]

Won't people earning over 80k just pump the extra into a pension instead, I know a fair few people round the £105k-£115k mark and to avoid the £100k tax hit just put anything above £100k into there pension ?

Pension relief will be massively curbed for those "rich" people - they've already pulled it with 45% thresholds.

[WordIsBond]

So your approach is just to turn a blind eye to corporate tax dodging on a massive scale? The companies who are in the news aren't hiring a lot of people in the UK anyway, if they were it would be less of a problem.

Starbucks
In 2012 Starbucks was employing 8500 people in the UK. Presumably that number is higher now.

Google
In 2015 Google was employing 2500 people in the UK and paying them an average of £160K. The Employers NI on £160K is over £20K. At £20K per head, for 2,500 people, that's £50 million in NI contributions. That doesn't count the Employee NI and income tax.

Amazon
They employ over 15,000 permanent UK employees. They also provide a lot of temporary jobs, which may not provide a living wage but do provide a nice supplementary income for many people in between jobs or just looking for something temporary to supplement their income.

[d000hg]

Theresa May has said she has "no plans" to raise other taxes after the election, but has so far declined to say whether a manifesto pledge not to raise direct taxes ahead of the 2015 election will be retained."

Even Taxing Labour offers some form of guarantee, and what about Tory Scum? Perhaps May would outdo Labour and lower 45% tax band for those on £50k+

Maybe wait for the manifesto?

John McDonnel is probably the most competent of the opposition front bench - although the bar is pretty low.

This is about as smart as he could get on tax.

The numbers won't add up of course. The problem with taxing the rich - is that there aren't that many of them. Jacking up the rate by 10% won't raise that much cash in the grand scheme of things - certainly not enough to fund their spending promises.

The top few percent contribute a hugely disproportionate fraction of the overall tax take so actually increasing the tax on the top 5-10% does make a meaningful difference. I saw an article on the exact amounts but can't find it. Anyone?

So huge increases in unemployment as big companies relocate to wherever workers are cheaper and corp tax rates are lower.

Vote Labour, vote yourself out of work.

So your approach is just to turn a blind eye to corporate tax dodging on a massive scale? The companies who are in the news aren't hiring a lot of people in the UK anyway, if they were it would be less of a problem.

Won't people earning over 80k just pump the extra into a pension instead, I know a fair few people round the £105k-£115k mark and to avoid the £100k tax hit just put anything above £100k into there pension ?

If you're a salaried employee, do you get to do that pre-tax, to that extent?

[BoggyMcCBoggyFace]

Won't people earning over 80k just pump the extra into a pension instead, I know a fair few people round the £105k-£115k mark and to avoid the £100k tax hit just put anything above £100k into there pension ?

[chopper]

Employer and Employee NICs need to be merged into a single Income tax band. (kills the IR35 problem too)
Oh but those poor pensioners would end up paying more tax. So maybe you increase the personal allowance for pensioners as compensation if that really is a problem - maybe increase the personal allowance for pensioners by the amount of the state pension then?
Tax dividends for close companies as income rather than dividends

But then there's a problem. You either increase tax to earn more money (it either hits the low paid, or it tries to hit those who can afford to avoid it), you can reduce corporation tax to try and stimulate businesses into hiring more people (more IT tax in without increasing rates), you can try and solve the NHS problem - not by throwing more money at it, but instead legislating against PFI contracts to build hospitals (and schools for that matter) which make huge profits over the actual build cost, instead compensating the private contractors so they at least get their money back and a little bit.


One thing is certain. "strong and stable" doesn't mean that a landslide Tory majority is going to be the party that reduces taxes. It simply means they'll have the landslide majority to do what they want. After all, one of the purposes of this election is to kill off that manifesto pledge to not increase tax (you know, like they tried to do for self employed people a few short months ago - something forgotten about by the short-memoried Tory voter).

[centurian]

It would have been fairer to make 45-50% tax band at £125k, or even at £100k rather than steal personal allowance.

Assuming 45%, then in order to be revenue neutral (anything else would be political suicide), it would have to kick in lower than 100K

Those at £150K would only pay marginally more tax if the 45% threshold was at 100K - with the personal allowance restored - while those earning £110/120/130K would pay less.

Back of an envelope calculation - 45% band probably needs to be around 80K

[WordIsBond]

Labour made a pledge in 1997, too. They kept it.

They also didn't raise the higher rate threshold in line with earnings, so more and more people got dragged into higher rate band.

They also zapped the marriage allowance except for pensioners.

They also increased employer NI.

They also brought in IR35.

But they didn't increase personal income tax rates, nice people that they are.

Of course, they used their time in office to consolidate their power. And later, they gave us the additional rate tax of 50%. Nice people that they are.

They also ran the public finances into a hole during periods of economic growth, instead of running a surplus, and encouraged consumerism and economic profligacy, so that when the crisis hit neither the UK government nor many UK citizens had any substantive reserves to cushion the shock. Nice people that they are.

And this is the worst lot Labour has ever had leading them. By the end of the parliament, we'd see withdrawal of the personal allowance starting at £80K, a 45% additional rate band starting at £100K, 50% starting at probably £125K, below inflation increases in the higher rate band threshold, higher corporation taxes, and higher NI "contributions."

[AtW]

I am very surprised the 60% tax band between 100-122K has lasted this long, probably because of the stealthy nature of it.

It makes them very steathyly lots of month and who is going to be defending people who make £100k?

It would have been fairer to make 45-50% tax band at £125k, or even at £100k rather than steal personal allowance.

[centurian]

It will be 2-3% of the electorate if that happens.

Lots of people will ensure their earnings don't go above that magic number if they stand to lose a lot until it is well over that figure. People use to do that with the higher tax brand when the 40% rate was worth something and it is also one reason why the 50% rate was abolished.

WSS

What many don't realise - is that in order to earn > £75K - usually means making sacrifices - long hours - long commutes - stressful jobs.

Push up the tax rate too high - and some will opt to take a lower paid job closer to home which comes in below the threshold - especially when combined with the cheaper season tickets (paid out of post tax salary by most).

I am very surprised the 60% tax band between 100-122K has lasted this long, probably because of the stealthy nature of it.

Even so, I bet there is a spike of people in the £95-99K range.

I'd actually be very supportive of bringing in the 45% band at ~70K-80K - and restoring the full personal allowance to all earners.