50% Tax Rate

Having knowledge industry jobs can also motivate the native population to education in those subjects, which can only be a good thing in a country whose maths and science scores are so far behind what they should be.

Exactly.  Why are we ok with bankers making millions when those educating the youth of the nation make under £30k?  When scientists working on cures and solutions to humanity's problems work for peanuts? 

I'm anti 50%.

It does drive the big earners away. Why do we assume all big earners are oil or finance? How much do these sectors put into the economy? I know it's a lot but compared to pharmaceuticals, engineering, how does it compare?

 Let's also not forget what the oil did and does for the engineering and service sectors? It was and is still a huge boost for many many companies such as Woodgroup, Merpro and hundreds of smaller but extremely financially successful companies. One only has to look around and see how many engineering and telecommunication advancements have been made because of the oil and a decent tax rates.

Do you realise how much oil related business around the world comes back to the UK? I normally work in the Oil&Gas sector but have not done anything in the last 12 years for the UK. It has all been for abroad from the UK. So the UK reaps huge rewards for these engineering companies that will be viable long after the oil runs out. There will be work for new energies and new opportunities. Let's not drive these companies out of business or abroad.

I agree we need more technology based businesses and Scotland is certainly doing her part. Do we want to drive away software developers and the like? These people have developed their businesses and why should they not enjoy it? They are kind of different than the CEO of multinationals. I have no heartburn with the Alan Sugars, Richard Bransons or John Woods of this country earning whatever they want to pay themselves. They earned it and have generated 1000's of jobs and billions in revenue.

Everybody has a downer on the finance, then why can't there be something levied against that industry? I just think its unfair on the other decent hard working companies that are here.

Perhaps we should look at caps on bonuses. I just don't think it's fair to tax entrepreneurs who have done great things that are non finance or oil related. And if you don't think these people would move their business, I would seriously ask you to think again. And once they are gone, I doubt we'd get them back.

Does anyone remember the pre Thatcher years? I would hate to see a return of that. It was grim. We can still have socialised systems without the 50% + taxation. We should be looking at all options which include gov't waste and incompetence. How much revenue is lost due to the no duty or VAT on jet fuel? How much is lost on production due to traffic hold ups and congestion? How much is lost on courts costs for grass and how much revenue could be collected off that? Think tobacco and alcohol. How much is wasted on street lighting? Could we not do away with every other lamp post? How much is lost on not collecting taxes for UK citizens working abroad? At least the US collects on their citizens working abroad (tax on everything over 90K I think).

I think there are many other avenues to be explored and exploited. Hammer the sh*t out of the financial sector but leave the rest of alone.

Thing is, I don't want to hammer the sh*t out of the financial sector - we can't force them to cut down over 3 years, more like 10.

And the other groups, to be frank, should be paying this as well because they are earning LOADS of money. We're talking about a country where the median household income is £24,000-odd pounds. The 50% only hits in over £150,000 - that doesn't even cover everyone in the top 1% of the population, which starts at £112,000.

I don't deny that the UK does very well from the oil industry as a whole, and really is a model for Britain, but my point with regards to the North Sea was that our economy became far too dependent on it. Our balance of trade would be disastrous without that.

The thing is, is that these companies won't really be driven away. Financial services are quite uncomplicated in the things they need in a place - they need low taxes, good international links and an attractive lifestyle. Other industries are more embedded into the economy, oil being a somewhat relevant example insofar as the technical side of the oil industry in Britain developed in response to the challenges of developing the North Sea. What is more, and the oil industry is a worse example for this compared to other sectors, a lot of industries use people who quite simply don't want to leave Britain.

You brought up the pre-Thatcher days when the top rate was 83% but the brain drain was at most an exaggerated trend. The vast majority of people stayed put - despite the fact that a British professor in 1980 earned less than a bus driver in New York City. This is also especially relevant because Britain, moreso than any other developed country I can think of, does have a cultural bias for emigration. A lot of the stories here have families being worried and such about family members moving abroad. But British families are inevitably supportive and there's a bit of an attitude of "Lucky you getting out of this dump".

Which brings up an entirely different point about how cynical Brits are about Britain, but anyway... Sort of lost the thread. The main point is, though, that the sort of industries which we need to encourage in Britain, which we need to shift to over the next 10-20 years, are the sort of industries which are far more embedded and contextualised than finance.

Essentially Britain needs to start competing with the rest of Europe and not the US. With our social system we can't beat the US in the industries which do depend on high rewards and high risk.  And I think that our light-touch regulation in many aspects combined with a tendency for state organisation of consistent frameworks (if not mobilisation of resources like France) which is a speciality of the British bureaucracy will mean that high value-adding industries relying on long-term planning and investment (chemical industry, defence and bio-medical comes to mind) will find a natural home in Britain.

I think essentially this 50% choice is part of Britain's convergence with Europe. Over the past 30 years we've increasingly begun to act like Europeans. After the war we were too left-wing, then too right-wing, but now our political sphere has begun to centre on the same issues that dominate every other country in Europe. The problems of a disgruntled, empty and yet popular prosperity.

I am short on time this evening and wanted to respond to more posts individually but instead I am going to have to make a few points only.

To the comment about supporting existing social services, this is where I think we will just fundamentally disagree.  I am really not in favor of the UK social services as they stand now.  Since New Labour has come to power social services has increased by nearly double, to just at 50%, but social services as a whole contribute ZERO to GDP.  So in increasing social services in this manner, the government has actually reduced GDP which has somewhat led to the financial sector being over relied on.  We would be much better off divesting some of the services and letting them go back to the private sector -- creating efficiencies, GDP growth and eventually more jobs.  Canada has been very successful in doing this in more recent years.

Further for the level of tax we pay -- akin to Scandanavian countries -- the UK offers far less social services.  In my opinion, we are not getting bang for our buck so I don't see any reason to continue to pour into the money pit in its current form.

Regarding the comment that most people aren't paying the 50p rate, so what's the point?  Well I certainly don't make anywhere near the 50p band but I certainly care if these high earners are made to leave.  It is simply a fact that those in the 50p band pay significantly more tax and also are the wealth generaters.  If they leave, then what? 

Regarding the greedy bankers getting what they deserve for getting us into this mess, well a whole topic in itself, but one worth exploring as I again think I will fundamentally disagree.  So what are the researched reasons for this crisis?  Bonuses?  Greed?  If only it were that simple.  The crisis has far more to do with cheap monetary policy and the government encouraging reckless spending.  It also has to do with dealing with financial assets that had not been valued before and the level of risk wasn't appropriately measured (but not because of greedy but lack of experience).  Bonus may be a factor but more of a symptom rather than any underlying cause.  The fact remains most of the banks that failed had long term remuneration policies which are designed to reduce risk (people are losing their own money if the bank does poorly), so bonues really are very insignificant overall.  I also think the shouting both from the media and the government to point fingers away from the true causes does a diservice to all and means we actually won't get to the root of the problem.  I think it is cheap to appeal to the populist opinion that just wants to see "greedy bankers" go down.

And regarding the types of people leaving, I think we need to worry much more about entrepreneurs leaving than bankers.  And that is part of whose going.  It is very simplistic to think the 50p rate is just going to run off the "bad" people.

And the last point to make, the banking sector pays salaries on average with other sectors so I don't understand the obsession with taking down bankers.  The financial sector generates a lot of money and people are compensated in line with other industries.  Doesn't sound like a scandal to me.  Banks grow and create more jobs.  Bankers pay taxes.  Spend money.  That also creates jobs and funds the bloated and inefficient public sector. 

I was watching Question Time last week and someone in the public sector said that bank bonuses were unfair, banks should be heavily taxed and that money should be used to bonus the public sector.  Dude, what sort of job will you have when there is no bank money left.  The banking sector entirely funded the rise in public services via income/corporation tax and the government completely encouraged it through light touch regulation and loose monetary policy.  But the bankers are the only greedy ones here?

What a massive over-reaction. The 50% tax is only for banker bonuses over £25,000. It doesn't affect anything else, and if bankers are so greedy that they won't accept a 50% tax on an outrageous bonus (and yes, a single bonus that is higher than the average wage is outrageous), they can bugger right off. Bonuses affected the economic crisis because bankers were making millions of pounds in bonuses alone because of wild speculation; had they not been so encouraged, perhaps those chances wouldn't have been taken. I'm not saying banks are alone in causing the problems or are the only greedy ones, but they certainly shouldn't be getting giant bonuses just to do their fecking jobs, and certainly not on the taxpayer's bill. I don't get a bonus when I get a good scientific result or publish a paper- my job is to do science and be successful at it. A banker's job is to make money (preferably through sound practices that create long-term, stable wealth); why should they get bonuses for just doing their jobs when very few other jobs do? It's like MPs getting to claim for home repairs and furniture when everyone else just has to use their salaries to pay for these things. Screw bankers and MPs frankly

What a massive over-reaction. The 50% tax is only for banker bonuses over £25,000. It doesn't affect anything else,

This is incorrect.  There is an immediate 50p on bonuses for companies who are regulated under the FSA (not all banks mind you).  Separately and the point of this thread is that a 50p band is being implimented for higher earners.  We are talking about two separate lots of 50p rates.

Bonuses affected the economic crisis because bankers were making millions of pounds in bonuses alone because of wild speculation; had they not been so encouraged, perhaps those chances wouldn't have been taken.

This is a wildly simplistic and inaccurate view of the economic crisis and ... it doesn't make sense.  The majority of banks that failed had long term / deferred bonus policies (like bonus out of shares).  By definition, these bonus decrease speculation and risk.  So how do bonuses of this type increase speculation, in your view?  Particularly when the great "fix" to all the bonuses is to make mandatory the deferral element, which again exactly mirrors the types of bonuses from failed banks.  It can't be both ways.

I'm not saying banks are alone in causing the problems or are the only greedy ones, but they certainly shouldn't be getting giant bonuses just to do their fecking jobs, and certainly not on the taxpayer's bill.

Again, bankers' pay as a percentage of the banks income/profit is inline with other industries.  I don't see how this is different from your own salary then.  If it is the case that the banks make more money thus a higher salary can be earned, you can apply that to many other industries.  I just don't see the scandal if pay is inline with other industries.  WHy should bankers be paid less as a percentage?

And most of the banks paying bonus didnt do so on the taxpayer's bill (Goldmans for example) so this is a bit of a strawman.

I don't see how this is different from your own salary then.

I don't get any bonus at all, so how is it the same?

I don't get any bonus at all, so how is it the same?

Because as a proportion of how much your employer makes, or you make for your employer, the percentages of total compensation to employer profit are on par.

I'm on a fixed term academic research contract externally funded by a charity and with no connection to any profit, or indeed an expectation of profit. So not really.

I am not sure if you are being willfully pendantic.     

Your specific job may not completely align with a specific banker role, but as a whole the banking industry is no different from other sectors, when it comes to percentage of pay to income/profit.

I am not sure if you are being willfully pendantic.

No, I was just trying to point out that not all jobs have a bonus factor or are connected to profit-making ability. I'm opposed to the general idea of bonuses for just doing what you're supposed to be doing in your job, whatever the sector. If you work in finance, your job is to make lots of money for the company, and your salary should be set according to your skills and seniority. If you're really great at your job, promotions and raises are in order, but I just don't understand bonuses.

Particularly when the great "fix" to all the bonuses is to make mandatory the deferral element, which again exactly mirrors the types of bonuses from failed banks.

I don't think deferred bonuses are a fix at all.

Separately and the point of this thread is that a 50p band is being implimented for higher earners.  We are talking about two separate lots of 50p rates.

I did misunderstand which 50% tax was being discussed, but my original comment was in response to this post and not directly about the tax issue, so I missed that first part and thought you were talking about the bonus tax from the PBR. I'm still in favour of the higher tax rate. It's not like someone earning £200,000 is only going to get £100,000 back- the 50% only starts at the portion of the wage above £150,000 right? Oh boo hoo, my heart bleeds for those people only getting to take home just under 5 times the average gross salary of the country.

Oh boo hoo, my heart bleeds for those people only getting to take home just under 5 times the average gross salary of the country.

Well I don't think oh boo hoo for them.  But I recognise that if more of these people leave, and the income tax isn't covered by them, my tax rate will go up.  We saw it yesterday and we will certainly see it again in April if the situation doesn't continue.  I am looking at the bigger picture and not if the bankers are hurting personally over the 50p rate.

No, I was just trying to point out that not all jobs have a bonus factor or are connected to profit-making ability. I'm opposed to the general idea of bonuses for just doing what you're supposed to be doing in your job, whatever the sector. If you work in finance, your job is to make lots of money for the company, and your salary should be set according to your skills and seniority. If you're really great at your job, promotions and raises are in order, but I just don't understand bonuses.

Bonuses are one-off payments meant to reward someone for going above and beyond what is expected of them.  You get paid your salary for what you are meant to do as a baseline, and you get raises when you are expected to do more than what you were previously doing (i.e. taking on more responsibility as part of a promotion).  A bonus is to demonstrate the company's gratitude/appreciation for your achievements over the year, and also it can allow the company to 'give back' some of the earnings it has made over the year for which you may have been in some way responsible.

Sorry, but until people who do proper important jobs that matter to greater humanity in more than a monetary way (nurses, teachers, etc.), I don't think people working in jobs like pushing around imaginary money, thinking up tricks to make us buy stuff we don't need or speculating on whether people pay their mortgages should get them them. I'd rather we based the economy and budget on thriving and diverse industries, innovation and running efficient public services (as in Scandinavia) than trying to keep stupidly rich people around to pay taxes. I do recognise that one country raising taxes is only going to send people elsewhere at first, but if everyone does it (and former finance centres like Dubai and Iceland continue to go belly-up), they'll run out of places to go eventually.

Sorry, but as a person who works in finance, I don't agree.  Not everyone who works in the corporate world is a crook or a hustler.  Many of my colleagues and I spend our days trying to ensure that people will have money to be able to live on once they retire.  It's not the fault of the people in these industries that doctors and teachers don't get bonuses.  Reducing it to "pushing around imaginary money or trying to trick people into buying stuff" is pretty inflammatory and downright incorrect, in my opinion.