Whats the exact % of income tax........

[t020 11]

Originally posted by nick2

I never understood those tax credits, why not just tax them less in the first place, and when the advert says "you've earned it" how have they earned it, and have I earned any ?

 

Precisely - it's bureaucracy gone mad, and exactly what we've come to expect under New Labour.

[Greybeard 10]

Originally posted by t020

"It was encouraging to see shadow chancellor George Osborne propose an alternative this week. Flat or flatter taxes could sweep away the complexities described above - and many others for which there is insufficient space here. Doubling personal allowances could free low earners from any need to pay tax or claim benefits from the state."

 

- Daily Telegraph, September 10th 2005.

 

 

It's a nonsense to be paying out "tax credits" to low earners who pay tax. A flat tax with a higher personal allowance wipes out such nonsense and saves millions in administration.

 

It is of course silly to tax people and then hand the tax back, but the tax credit system is supposed to lift people from poverty. Doubling the personal allowance and abolishing tax credits might seem an attractive idea but would throw a lot of minimum wage earners into poverty.

 

A single parent with two children at school, working 40 hours on the current minimum wage with an annual income of £8700 after paying NI (which is less than double the personal tax allowance) would still be entitled to a large tax credit. The disparity arises from what the govt. deem a 'living wage', depending on personal circumstances. and the income to be derived from the 'minimum wage'.

 

If the aim is to keep children out of poverty then a much more generous, but means tested, child benefit system combined with higher personal tax allowances might be a better solution.

 

The tax credit system is a very messy excersize in social engineering which effectively subsidises employers who pay just the minimum wage.

[cgksheff 44]

The 'child tax credit' only replaced the previous tax allowance that you could merit by having children.

Previously you told your employer (with proof) that you had children!

Now you have to go through another level of form filling.

 

The cynical explanation for its introduction is that only 70% of those entitled to this credit have applied. Thus reducing the govt. payout by a fortune!

[t020 11]

Originally posted by Greybeard

It is of course silly to tax people and then hand the tax back, but the tax credit system is supposed to lift people from poverty. Doubling the personal allowance and abolishing tax credits might seem an attractive idea but would throw a lot of minimum wage earners into poverty.

 

A single parent with two children at school, working 40 hours on the current minimum wage with an annual income of £8700 after paying NI (which is less than double the personal tax allowance) would still be entitled to a large tax credit. The disparity arises from what the govt. deem a 'living wage', depending on personal circumstances. and the income to be derived from the 'minimum wage'.

 

If the aim is to keep children out of poverty then a much more generous, but means tested, child benefit system combined with higher personal tax allowances might be a better solution.

 

The tax credit system is a very messy excersize in social engineering which effectively subsidises employers who pay just the minimum wage.

 

But if the allowance was doubled, why would anyone on a low income need tax credits? They should be able to manage their money properly and spend it on their children when necessary. It's time we realise that things like Sky TV, cars, beer drinking, etc, are privileges and not rights. They're a reward for hard work, not a state hand out.

[Cyclone 10]

but at what level do you set the allowance, enough for a single parent on the minimum wage to support 3 children? 2 children? 1 child?

 

Wherever you set it, it immediately reduced the tax burden on those without children, and thus would probably actually cost the government in lost tax income.

Better from their point of view to keep the minimum amount low, and top up those who need it, rather than the other way around.

[t020 11]

Originally posted by Cyclone

but at what level do you set the allowance, enough for a single parent on the minimum wage to support 3 children? 2 children? 1 child?

 

Wherever you set it, it immediately reduced the tax burden on those without children, and thus would probably actually cost the government in lost tax income.

Better from their point of view to keep the minimum amount low, and top up those who need it, rather than the other way around.

 

But the government would save money too as it wouldn't need anywhere near as many people dealing with an overly complex system and all the bureaucracy that goes with it.

[Jamie 10]

Flat rate tax does sound interesting, let me get this right ...

 

A persons tax-free allowance would go up, and all income after that would be taxed at the same rate?

 

Is that correct?

 

I like the sound of that, I think it sends out a message to people, that it's ok to earn a lot of money, because you won't be penalised by the taxation system, this in turn will encourage people in their business endevours, because they won't feel they're going to be penalised if they do well, that has to be good for the economy and the country as a whole?

 

Also, admistration of the traxation system would be simpler? Reducing costs?

 

I'm all for it.

[t020 11]

Originally posted by Jamie

Flat rate tax does sound interesting, let me get this right ...

 

A persons tax-free allowance would go up, and all income after that would be taxed at the same rate?

 

Is that correct?

 

I like the sound of that, I think it sends out a message to people, that it's ok to earn a lot of money, because you won't be penalised by the taxation system, this in turn will encourage people in their business endevours, because they won't feel they're going to be penalised if they do well, that has to be good for the economy and the country as a whole?

 

Also, admistration of the traxation system would be simpler? Reducing costs?

 

I'm all for it.

 

 

Spot on, Jamie.

[Tubthump 10]

Originally posted by t020

Spot on, Jamie.

 

Oh yes, spot on, spot on. Why should the rich even pay tax at all? After all, successful business men are giving people jobs (who pay taxes) and so are contributing to the economy indirectly. A fair system would be to set a rate of 90% against any incomes under £15,000 a year. The poor won't mind, they're used to struggling. Anyone with incomes over £40,000 should be rewarded with a free rifle, steed, hound, jodpers and bugle.

 

Am I spot on too t020?

[Jamie 10]

Originally posted by Tubthump

Oh yes, spot on, spot on.

 

Thank you, thank you!!

 

Of course, the rich would be paying more tax though Tubthump.

 

I don't understand you're objections and your comments re: free rifle, steed, hound, bla bla bla.

 

It's not a question of creating a system, that's better for the rich, or better for the poor. It's about having a system that's better for the country as a whole.

 

But if you want to talk about what's fair ...

 

Fair, would be to tax everyone 'x' amounts of pounds, not dependent on income, say £4000 each, no matter if you earn £10k or £10m.

 

That would be 'fair'. Having a tax free allowance and a flat rate of tax, is actually unfair to the rich.

[xafier 10]

I think the fairest approach is to totally abollish money...

 

lets go back a few hundered years and work on payment via whatever means you can afford...

 

I'll fix your computer for 2 turnips and a bag of potatoes Mr Farmer sir!

 

and Mrs GrannySmith I'll fix up your electrics for a nice apple pie and a knitted jumper

[fnkysknky 10]

Originally posted by xafier

I think the fairest approach is to totally abollish money...

 

lets go back a few hundered years and work on payment via whatever means you can afford...

 

I'll fix your computer for 2 turnips and a bag of potatoes Mr Farmer sir!

 

and Mrs GrannySmith I'll fix up your electrics for a nice apple pie and a knitted jumper

 

It's not that daft an idea - there's various schemes around where people have gone back to bartering systems. I've read about a few but can't remember where they are off top of my head.