50% Tax Rate

http://www.bloomberg.com/apps/news?pid=20601109&sid=alNiweY01.Mk

It's a bit of an old article, but it does seem interesting that the number of Americans in the US has dropped 3.8% over the past year.

Does anyone here know anyone thinking of moving back because of the 50% rate?

I really like the idea of the 50% rate, but it'd be a little iffy if there were floods of people leaving the country!

I know tons of people moving (because of my job), though not necessarily back to the US. Some are moving to the Far East, Dubai or Switzerland. 

Wait until tomorrow lunchtime and you will have a better idea of how many are going to leave in droves, particularly if they crank up the capital gains tax, lower the income threshold for the 50p rate and enact the super-bonus-wealth tax (or whatever they will call it at the moment).  Not to mention the already introduced raise on NIC, the non-dom changes and the pension restrictions.

I hate the idea of a 50% tax.  I fundamentally do not think you should pay the government more than you get to keep.  I think the 50p rate panders to uninformed people, who just want to stick it to the rich.  As it is now, the top 1% of taxpayers, pay nearly 25% of income tax.  This is substaintially smaller percentage of taxpayers than paying a larger chunk, even compared with years ago when the tax rate was much higher.  Basically the top guys continue to get squeezed. 

And I am not sure for what aim?  Given all the changes, the UK is increasingly uncompetive and tomorrow will nail that coffin shut.  The top earners are the ones that generate the most wealth and can leave the easiest.  It seems rather silly to me.  And the income tax generated from these raises are literally a drop in the bucket overall, so clearly it has nothing to do with the top earners paying a fair share (which I would argue they already do) but instead satisfying the angry masses.

And why are the masses angry?  I would argue a lot to do with misinformation.

There was another article months ago about a hike in business tax and lots of foreign, many American, companies left the UK.

I hate the idea of a 50% tax.  I fundamentally do not think you should pay the government more than you get to keep.  I think the 50p rate panders to uninformed people, who just want to stick it to the rich.  As it is now, the top 1% of taxpayers, pay nearly 25% of income tax.  This is substaintially smaller percentage of taxpayers than paying a larger chunk, even compared with years ago when the tax rate was much higher.  Basically the top guys continue to get squeezed. 

And I am not sure for what aim?  Given all the changes, the UK is increasingly uncompetive and tomorrow will nail that coffin shut.  The top earners are the ones that generate the most wealth and can leave the easiest.  It seems rather silly to me.  And the income tax generated from these raises are literally a drop in the bucket overall, so clearly it has nothing to do with the top earners paying a fair share (which I would argue they already do) but instead satisfying the angry masses.

Well put! I bolded the lines as this is so true but my choice of words would not have been silly. You're being to polite.

And, being the wealthiest, they have the best accountants so probably wouldn't pay a fraction of the tax they're supposed to.

And, being the wealthiest, they have the best accountants so probably wouldn't pay a fraction of the tax they're supposed to.

What does this even mean?  If someone is able to take advantage of legal methods of tax relief, why shouldn't they. No one is obligated to pay MORE tax than the law allows.  So if someone is legally reducing their tax bill, how is that not paying the tax they are "supposed to."

It means that some of the complaints being made about the proposed 50% tax rate are being made by people who pay significantly less than that in tax -- so what’s the point?

It’s just a moan about the principle of it, like people who are offended by something aired on the BBC, though they didn’t actually see or hear it.

And, being the wealthiest, they have the best accountants so probably wouldn't pay a fraction of the tax they're supposed to.

The tax reductions available are usually the result of politicians being greedy and putting loopholes into the tax code.  

I have a friend who is based in NY, but who comes over on business travel to London quite frequently, that is until this tax hike was announced.  Then his company started moving everyone to Switzerland, now he goes there instead.  So the result of this tax hike...the UK is losing tax revenue when high earners move away.  Smart move.

The 50% rate is a bad idea in my opinion for much of the same reasons already stated but is the tax rate greedy or the loopholes to get out of paying the tax? In my mind, it can’t be both.

The fact shouldn’t be lost that the people complaining the most about this work in the industry that caused this mess in the first place – banking and finance.

If London is losing business to Switzerland or other places I think it’s due more to impending regulations on the banking industry than solely because of the 50% tax rate, which is being used as an excuse, to shift the blame for the recession from the financial industry to government.

What does this even mean?  If someone is able to take advantage of legal methods of tax relief, why shouldn't they. No one is obligated to pay MORE tax than the law allows.  So if someone is legally reducing their tax bill, how is that not paying the tax they are "supposed to."

Sorry, poor phrasing:

I meant to say, the people at whom the 50% tax will be levied are the one's that can afford accountants to find ways around paying the tax (legally or not) therefore it is an expensive change in legislation that will not have the desired effect, particularly, as Karin said, it will push business elsewhere, possibly resulting in less tax revenue overall.

So, when I said "supposed to" what I meant was the tax wouldn't get the revenue that was intended.


Also, I completely agree with karin on the "politician loophole" bit. IR35 is a real bone of contention with me. In short, it was designed to get IT and construction industry people to pay more tax. They were "legally avoiding" paying NI by declaring low salaries and high dividends (dividends are subject to tax but not NI).

The simple solution would have been to make dividends subject to NI too. Ooooooooooooooh no, that would mean that big wigs with multiple directorships (hence, lots of NI free dividend income) such as the very politicians making the laws would get trapped too, SO they come up with IR35, the most laughably ineffectual piece of legislation known to man.

But that's another rant for another day LOL

I think I'm alone in backing the rate!

It's necessary to pay for the social services we've come to expect in this country. I don't like taxes - far from it - but we can't sacrifice the social good for the economic interests of the globally transient. If it was this easy for them to leave we would have done something to drive them away sooner or later anyway.

It will hit our tax base somewhat, but it will also generate more revenue as most of these people won't leave Britain. It'll also help tackle our shocking record on inequality.

The fact shouldn’t be lost that the people complaining the most about this work in the industry that caused this mess in the first place – banking and finance.

That hits the core of the issue. Not especially that they caused the mess so should pay the price, etc... Though certainly they should. But rather that Britain has become far too dependent on finance and if this tax hike helps raise more revenue and drives away the more footloose financiers who feel no connection to this country beyond the money they can earn here. This has become an accepted truth that Britain can't expect sustainable economic success without diversifying away from the North Sea and the City - two money makers which the rest of the country has become little more than an appendage to.

If one of the main "negatives" is actually a positive for the country in the long-run, how can this be seriously criticised?

As a society we need to focus on developing the sort of industries which don't depend on such a socially destabilising industry as the finance industry. The City is a goose which lays golden eggs, but it is also a goose which attracts a disproportionate amount of attention. We've adopted policies to keep the City at the expense of other sectors because the City can flee whilst other sectors are tied by the long-term nature of their investment or just by the nature of the experts - a British engineer strikes me as less likely to leave London than a French banker. If British engineers were as nomadic as their financial counterparts, we would already have seen that exodus!

This all said, the most important reason for doing this, the reason which guarantees my support and the support of most people in this country, is that we need this to pay for our social system. I'm not willing to sacrifice what quality we had rebuilt in the welfare state, the schools and the NHS. We need to preserve the welfare state and to abandon it and undermine it at times of crisis is to reject the very reason why we have it.

We've long operated under the principle that those who are most able must support those who are least able - 2009 should be no different.

I'm with you peterm. If you want evidence of what happens when transient fast-and-loose financial muckity-mucks get free reign, have a look at what's going on in Dubai, what happened a few months ago in Iceland, or even in America. The UK is now the one of, or perhaps even the only(?), European country still in recession, and according to today's PBR, we're in even worse shape than we thought. The main reason for this was the conditions that made the finance sector so happy to be based here. It might hurt a bit in the short term if the types of greedy w@nkers who only live here because of loose financial regulation leave, but in the long-term, I say good riddance! I'd rather see an economy based on proper industries than one that depends on well-dressed gamblers playing with imaginary money all day, thank you very much.

I am for this tax.  No one should be able to earn hundreds of thousands, even millions just as a bonus to their already inflated salaries.  There is living comfortably, then there is this: earning in the excess.  Go socialism.

Whilst we're at it, lets hit movie stars as well.

Exactly DrSuperL99!

Living up to your name.

And "proper industries" doesn't have to conjure up images of people in flatcaps refusing to use definite articles whilst carrying molten metal. It should in reality bring to your mind advanced industries, business services, consumer services, even normal manufacturing - basically anything but the unstable and lavishly paid speculative financial services.

I mean, whatever happened to the head of ICI being the most important man in the British economy? I know ICI isn't prominent, but it says something that even in the US there are major industrial enterprises, but you have to scan your mind for a little while to think of a major British industrial enterprise. BAE Systems is the first that pops to my mind, but after that I'm a little stumped.

And yes Navie, there is earning in excess. Just because the market produces an outcome doesn't mean the outcome is correct or needs to be accepted. We have ended up reifying the market, treating a man-made system as an unalterable and external law of life.

And "proper industries" doesn't have to conjure up images of people in flatcaps refusing to use definite articles whilst carrying molten metal. It should in reality bring to your mind advanced industries, business services, consumer services, even normal manufacturing - basically anything but the unstable and lavishly paid speculative financial services.

Couldn't agree more. I may be a bit biased, as I'm a scientist, but I think science and technology are great sectors to build up. There will always be problems for people to solve, and a strong R&D base keeps a country ahead. It's also a sure way to get talented, motivated and intelligent people to your country without having to pay outrageous wages and bonuses- nobody goes into science for the money! 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. Being so dependent on oil, finance and tourism is bad bad bad due to the inherent instability of these industries.