UK introduces 50% tax fate over £150k / year

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UK introduces 50% tax fate over £150k / year

Postby cliffski » Wed Apr 22, 2009 5:40 pm

Ok, so it doesn't come close to impacting an indie game developer (unfortunately), but is this a good policy?
Although I understand the motivations of people wanting people in the top 1% of earnings to contribute more towards government coffers, I also take seriously the point that this is a dis-incentvie to success, and qould quite possibly encourage entrepreneurs and top business talent to take jobs in countries with lower tax rates.
Will this actually have a net negative effect on UK tax income? (if the gains from those who pay are outweighed by the losses from emigration and people who take their jobs/businesses overseas)
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Re: UK introduces 50% tax fate over £150k / year

Postby Styrax » Thu Apr 23, 2009 1:14 am

cliffski wrote:Ok, so it doesn't come close to impacting an indie game developer (unfortunately), but is this a good policy?
Although I understand the motivations of people wanting people in the top 1% of earnings to contribute more towards government coffers, I also take seriously the point that this is a dis-incentvie to success, and qould quite possibly encourage entrepreneurs and top business talent to take jobs in countries with lower tax rates.
Will this actually have a net negative effect on UK tax income? (if the gains from those who pay are outweighed by the losses from emigration and people who take their jobs/businesses overseas)

Look at New York. While most millionaires aren't leaving the country, they are relocating to other areas of the country with lower income taxes. I don't agree with current tax policies, since they essentially punish economic advancement. I'm more interested in a tax policy with a flat rate, or a national sales tax.
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Re: UK introduces 50% tax fate over £150k / year

Postby cliffski » Thu Apr 23, 2009 8:05 am

I remember Vince Cable saying that our tax system is backwards because it punishes success and rewards failure. There is some truth to that. We tax economic achievement, rather than taxing stuff we should try to discourage such as pollution etc.
Just a thought :D
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Re: UK introduces 50% tax fate over £150k / year

Postby mechasaprophyte » Thu Apr 23, 2009 6:09 pm

I much prefer your use of the word "dis-incentive" to "punish," which seems ridiculously loaded in this context; doubtless the rationale for progressive taxation is more of a "that's where the money is" sort of thing. Meanwhile, poverty sort of discourages itself, and conversely, though people might be a little less eager to make more than 150k a year in the UK if they know that a larger proportion of it is going to be taxed, it's hard to imagine it having all that much of an impact. People aren't going to start turning down the opportunity to make another fifty thousand pounds just because they know they'll "only" get to keep twenty-five, instead of the usual thirty or whatever.
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Re: UK introduces 50% tax fate over £150k / year

Postby Styrax » Fri Apr 24, 2009 12:41 am

mechasaprophyte wrote:I much prefer your use of the word "dis-incentive" to "punish," which seems ridiculously loaded in this context; doubtless the rationale for progressive taxation is more of a "that's where the money is" sort of thing. Meanwhile, poverty sort of discourages itself, and conversely, though people might be a little less eager to make more than 150k a year in the UK if they know that a larger proportion of it is going to be taxed, it's hard to imagine it having all that much of an impact. People aren't going to start turning down the opportunity to make another fifty thousand pounds just because they know they'll "only" get to keep twenty-five, instead of the usual thirty or whatever.

I do agree with you on people not turning down the opportunity to make more money. And I guess it's different in the UK. Here in the states, besides federal taxes, there's state and local taxes, and a lot of people will go to those states/localities that have the lower taxes, though they can't escape the fed.
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Re: UK introduces 50% tax fate over £150k / year

Postby cliffski » Fri Apr 24, 2009 8:18 am

mechasaprophyte wrote:I much prefer your use of the word "dis-incentive" to "punish," which seems ridiculously loaded in this context; doubtless the rationale for progressive taxation is more of a "that's where the money is" sort of thing. Meanwhile, poverty sort of discourages itself, and conversely, though people might be a little less eager to make more than 150k a year in the UK if they know that a larger proportion of it is going to be taxed, it's hard to imagine it having all that much of an impact. People aren't going to start turning down the opportunity to make another fifty thousand pounds just because they know they'll "only" get to keep twenty-five, instead of the usual thirty or whatever.


But imagine if Positech put its owner (me) in the 50% tax band? (I wish!). In that case, a business like mine that can be located ANYWHERE on earth is more likely to sod off to New Zealand or Canada than stay in the UK.
That *must* have some impact on UK govt tax revenue. We don't live in a time where the UK has a huge manufacturing base, We make money from finance and IT, businesses that are trivial to relocate where the tax situation is best.
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Re: UK introduces 50% tax fate over £150k / year

Postby rboni » Fri Apr 24, 2009 3:16 pm

I know corporations move their operations around the global looking to maximise profits, but does the efficiency equality trade-off really exist?

The most inefficient organisations I have worked in, those with huge disconnections between the decisions being made and the real world situation, are those with huge income disparities between employees, and the larger the disparity, the greater the disconnection, and they also tended to be fairly large organisations with a 1000 plus employees.

The most efficient and pleasant organisation I have worked in, had relatively equal income distribution, a highly educated workforce, with the great majority having four plus years of university study, and less than 500 employees.
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Re: UK introduces 50% tax fate over £150k / year

Postby rboni » Sun Apr 26, 2009 4:33 am

Entrepreneurs I suspect would avoid paying the 50% income tax rate through the use of trusts.
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Re: UK introduces 50% tax fate over £150k / year

Postby cliffski » Sun Apr 26, 2009 4:04 pm

rboni wrote:Entrepreneurs I suspect would avoid paying the 50% income tax rate through the use of trusts.

how do they do that?
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Re: UK introduces 50% tax fate over £150k / year

Postby rboni » Mon Apr 27, 2009 4:37 am

Tax laws work differently in every country, and I am no expert on UK tax laws.

A trust implies dual ownership. Trusts have a person(s) that controls the assets (trustee), who can also be a beneficiary, and a person(s) who benefits from the obligation of the trustee to accrue wealth from the assets.

Trustees can be companies, and trusts pay no income or company tax, as long as they distribute all their income to their beneficiaries in the financial year that it is accrued. The beneficiaries (can include a company) then pay tax on the funds as part of their assessable income.

Discretionary trusts allow the trustee discretion when distributing funds to beneficiaries. It allows the trust to minimise or avoid taxation paid on its funds, although this depends on current tax laws. The most common discretionary trust is a family trust.

Trusts are a British institution that are particularly common in British settler societies. Depending on where you live, it can protect your assets against divorce, bankruptcy and insolvancy, minimise or avoid income tax and inheritance tax.

http://www.tasa.org.au/conferencepapers08/Economic/Gilding,%20Michael,%20Session%2029%20PDF.pdf
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Re: UK introduces 50% tax fate over £150k / year

Postby seamus » Mon May 04, 2009 9:15 pm

Just wondering, but with these high tax rates what do the average person actually get in return from the government? I dont live in the UK or have ever been in the UK so im interested to know...
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Re: UK introduces 50% tax fate over £150k / year

Postby ohms_law » Mon May 04, 2009 10:36 pm

"Free" health care.
lol
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Re: UK introduces 50% tax fate over £150k / year

Postby Styrax » Tue May 05, 2009 12:10 am

ohms_law wrote:"Free" health care.
lol

"no such thing as a free lunch" my economics professor once told me.
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Re: UK introduces 50% tax fate over £150k / year

Postby seamus » Tue May 05, 2009 3:11 am

which is why taxes exist, i assume.
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Re: UK introduces 50% tax fate over £150k / year

Postby Styrax » Tue May 05, 2009 4:22 am

seamus wrote:which is why taxes exist, i assume.

He also told me "no one will spend your money as carefully as you do." He liked to call taxes a legal form of what a thief does.

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