Sunday 17 February 2013

Tax has to be taxing these days!

Ed Milliband speaks to Vince Cable
Is it just me or has the UK gone totally potty? Years ago, not that many, there was a consensus that you could tax the rich, but pushing it too far would be counter-productive. Now we just have more outrageous proposal after more outrageous proposal - with all the Political parties joining into say how much the rich should pay.

Think of the poor people on benefits they say - what of them. The thing is, its the maths that sticks in my craw. Say one earns £500,000 a year, a princely sum for a banker. and sadly, a few multiples of my own hard earned crust. Already this is taxed at over 50% in its entirety. So take home is somewhere near £250,000, but not quite.

Now if you have this kind of income you could have thought about buying a house at 4x your earnings at about £2 million. You may even have been able to rent your pre-richness property too, or bought a small place in Spain. Now the proposal is to tax this at £20,000 a year, maybe even £100,000 if the plan really is to raise £2 billion (OK so this is an uncosted Labour gimmick, but here we are they are nailed on to win the next election).

Plus you would have bought your house, paying a whopping 7% or £140,000 in stamp duty. Then you have council tax and your rather expensive £1.5 million mortgage at say 5%, so a mere £80 thousand a year in outgoings and upkeep.

So worst case scenario and even on £500,000 a year you could not live in a £2 million house. Even then a well paid FTSE100 executive could not do it. You would have not money left to live or feed your family. Even with a mere £20,000 tax your actual take home is going to be £10,000 a month - is loads, but blimey, its getting on for a total tax rate of 80% - this is before VAT, APD, Insurance taxes, MOT's etc.

If this really gets discussed seriously it will certainly hammer house prices at the top end. What gets me is that two public or private sector workers on good salaries of say £60,000 each are going to be are going to be taking home a total sum per month of about £8,000 a month.

I have long considered leaving the country, but have not managed to find the right role in the right country as yet, this finishes for me though if I ever succeed in my ambitions, why be successful in the UK - the marginal taxes will be so high that it just won't be worth it. It's scary, the 1970's were supposed to be history, not a roadmap to the future.

The final nail for me is that I have yet to see anyone on the gogglebox try and correct this nonsense, everyone just lies and says they don't have any money and screw those who do. I have my doubts these well paid journalists and politico's have all done so badly; but they dare not speak out against the zeitgeist.


18 comments:

Bert said...

Its been driving me mad recently.

Oh, the poor souls of camden who must have £2k a month housing benefit or they can't afford a 4 bed house. Tough tits.

Why we treat those not in work as if they were is beyond me.

no need to move abroad CU. Just give up your job, transfer your asets to your missus. Say you're separated and then claim that you need to live in Mayfair to be nearby your next likely job market.

You'll have an income equivalent of about 70K. And you won't even have to go to work.

Sage and Onion said...

High time all our stupid innumerate politicians were tax idermisted!

James Higham said...

That sort of money makes my eyes water.

Blue Eyes said...

Are Labour nailed on to win?

Didn't they try this kind of thing in the 80s and 90s?

If they really want to bash the bankers why not just stop subsidising the fuckers?

Blue Eyes said...

"If this really gets discussed seriously it will certainly hammer house prices at the top end"

Which you were arguing for just a few posts ago!

Actually house prices at the top end have become ridiculous and if a wealth tax puts a ceiling on it might actually be healthy. For example, the house where I grew up was in a slum when my fairly ordinarily paid parents bought it and is now off the map unless you get given free cash by the Bank of England.

Remind me why you think a house price crash would be a bad thing???

CityUnslicker said...

BE - damn you and your good logic!

Of course prices are too high, but targeting a specific set of homes at the £2 million mark is not the way to go about it.

Building more houses is the way forward to lower prices and raising interest rates so that people buy what they can afford - both of these effects can dramatically change teh dynamic of the housing market without egregious wealth taxes.

Blue Eyes said...

I agree! There are homes being built in London just not enough and not quickly enough. I do think there is a natural switch from taxing income to taxing land in some way. A "wealth tax" is clearly not the way to do it, and increasing taxes higher overall is clearly not the way to do it.

I could accept, for example, much higher and much more progressive council taxes in return for lower income tax or VAT.

CityUnslicker said...

BE - good plan, I agree with that. taxing money twice is never something I am comfrotable with, especially when the first hit is already 40% of income. but better a staggered and improved council tax than a wealth tax.

As for Land tax, there is your inner communist wanting to get out!

Blue Eyes said...

Land tax might be the wrong term. Business Rates and and improved version of Council Tax is what I am thinking of. A taxation nudge to get people to use limited urban land as efficiently as possible. With income tax and VAT and corporate taxes reduced equivalently.

Partly it's inevitable anyway because taxing income is harder to do because of global movement. I don't want a UN Income Tax thank you very much.

Partly it's desirable because council tax is more "in your face" and so would encourage people to be a bit more demanding of their elected politicians.

Andrew Zalotocky said...

The bottom line is that the welfare state is going broke. The social democratic Leviathan is rapidly running out of other peoples' money and the left is getting desperate. If they ever accept that we can't afford current levels of government spending then they have to admit that the kind of spending they really want is impossible. They would have to admit that their whole vision of government has never been affordable and never will be.

So they have to tell themselves that the money does exist, but it's being hidden by evil capitalists. Therefore the "tax avoidance" nonsense will get worse and worse. The Guardian and the BBC will repeat it out of ideological sympathy and Labour will use it for tactical advantage. It will probably peter out when the economy finally starts to improve and renewed public optimism makes the politics of envy ineffective. If not, the British people will once again discover that squeezing the rich too hard makes everybody else's pips squeak as well.

Anonymous said...

Andrew Zalotocky has it!

How can the socialists ever admit that their isn't enough money.

But in some respects they are correct. The banks have hidden cash all over the place. And the super multi-national companies aren't paying taxes on billions of pounds.

But as Andrew says, even if the redistributers got their hands on that money, it would just be added to the bucket with the hole in, and eventually that would drain away too, leaving them searching for some other for of tax to add to the 'rich'.

Agence Referencement said...

Une très importante initiative afin de faire progresser en avant et dévoiler un énorme visThink of the poor people on benefits they say - what of them. The thing is, its the maths that sticks in my craw. Say one earns £500,000 a year, a princely sum for a banker. and sadly, a few multiples of my own hard earned crust. Already this is taxed at over 50% in its entirety. So take home is somewhere near £250,000, but not quite.
"ion pour divers catégories."

site web maroc said...

un projet comme celui là nous mis la voile vers un autre occident de première qualité il ne faut sans laisser aller par les divers vents qui nous submerger de temps à autre mais il faut faire un surplus pour en faite en avant c'est pour celui ail nous faut surtout se baisser les bras pour un sans rien

Referencement Maroc said...

Now if you have this kind of income you could have thought about buying a house at 4x your earnings at about £2 million. You may even have been able to rent your pre-richness property too, or bought a small place in Spain"

Creation site web said...

Le dernier clou pour moi, c'est que je n'ai pas encore vu quelqu'un sur le gogglebox essayer de corriger cette absurdité, tout le monde est juste et dit qu'ils n'ont pas d'argent et visser ceux qui font

agence web said...

les taux marginaux d'imposition seront tellement élevés qu'il va tout simplement pas la peine. C'est effrayant, les années 1970 étaient censés être l'histoire, pas une feuille de route pour l'avenir.

Cours informatique said...

Si cela devient vraiment discuté sérieusement il va certainement enfoncer les prix des maisons à l'extrémité supérieure. Ce qui me reçoit est que deux travailleurs du secteur public ou privé sur de bons salaires de dire 60.000 £ chacun vont être vont être ramener à la maison une somme totale par mois de 8.000 £ par mois.

Agence communication said...

"" Think of the poor people on benefits they say - what of them. The thing is, its the maths that sticks in my craw. Say one earns £500,000 a year, a princely sum for a banker. and sadly, a few multiples of my own hard earned crust. Already this is taxed at over 50% in its entirety. So take home is somewhere near £250,000, but not quite.

Now if you have this kind of income you could have thought about buying a house at 4x your earnings at about £2 million. You may even have been able to rent your pre-richness property too, or bought a small place in Spain. Now the proposal is to tax this at £20,000 a year, maybe even £100,000 if the plan really is to raise £2 billion (OK so this is an uncosted Labour gimmick, but here we are they are nailed on to win the next election)."""