Messing with income tax won’t fix anything, it’s capital gains and all the loopholes that need dealing with.
Income tax starts at 20% then goes up. Capital gains starts at 20% then goes down.
Rachel Reeves rules out wealth tax if Labour wins next election
Submitted 1 year ago by thehatfox@lemmy.world to unitedkingdom@feddit.uk
Comments
TWeaK@lemm.ee 1 year ago
JoBo@feddit.uk 1 year ago
For lower rate tax payers, it starts at half the income tax rate (with no national insurance). So 10% instead of 32%. For residential property, 18% (with no NI) so 18% instead of 32%.
For higher rate income tax payers it’s half the income tax rate (with no national insurance). So 20% instead of 52% (if NI wasn’t also tilted in favour of high earners). For residential property, 28% (with no NI) so 28% instead of 52%.
But higher rate tax payers get a massive cut in NI too at not much above the higher rate income tax threshold, paying only 2% NI on earnings above the higher NI threshold, so on that portion of their earnings it is 20% (or 28%) instead of 42%.
Then the very rich get to play with massive loopholes, only paying tax if they feel like it. Which, mostly, they don’t.
TWeaK@lemm.ee 1 year ago
Yeah I left out NI for brevity lol. TL;DR for everyone else, in the last couple years they changed the boundaries for NI to match those for income tax. NI is 0% for the first £12,500, 12% up to £50k, 2% over £50k. So really you can just combine it with income tax, and the total tax bands are 0%, 32% and 42%. This means the take home tax rate difference is only 10%, not 20% like commonly perceived with the 20% and 40% rates.
There’s also some fuckery around the £120k mark, where basically you take home less as your salary goes up a bit. I forget the exact details, but you have to punch through to almost £150k for it to be worthwhile, or something.
Then there’s salary sacrifice, which anyone earning over £50k should consider. Basically, you agree with your employer to reduce your salary, and the extra goes straight into your pension. When you do this with income above £50k, you avoid paying the 40% tax at that time. If when you retire your retirement income remains below the 40% tax bracket, then you’ll never pay the 40%, only 20% when you withdraw your pension.
idunnololz@lemmy.world 1 year ago
Wait it goes down?! Excuse me wtf.
TWeaK@lemm.ee 1 year ago
Yes, through loopholes.
An example, you may have heard of “Employee Owned Businesses”, a system introduced by the Tories, modelled after John Lewis/Waitrose, which is an employee owned company. Essentially, under the scheme a privately owned cash-rich business can buy itself from its owners. This is done with the set up of an Employee Owned Trust (EOT), a separate business that temporarily owns the main business over however many years it takes to pay off the owners for the full price. After that, the business is fully employee owned and operated. However, the big incentive is that it’s tax free for the original owners.
Say the business was worth £50 million. In theory you could restructure the business into an employee owned business, or sell it to anyone else, but you’d have to pay £10 million in capital gains tax, and you’d only take home £40 million. By going the EOT route you get the full £50 million.
Most high value transactions that are done use some tax incentive scheme or another to reduce the capital gains tax below the starting level of 20%. Such loopholes are not available for income tax. However, truly wealthy people don’t make most of their money through salaries, their main income is capital gains.
Personally I don’t think income should be taxed, at least not below some very high threshold (to prevent exploitation). You’re already giving up your time, which is the ultimate value, and you’re doing so in service of a business which itself is in service of society. You’ve done your part, you’re not getting the excess profit. The things that should be taxed are when people make money from assets, when they make money not by doing things but by exploiting what they own.
JoBo@feddit.uk 1 year ago
Literally no point voting for the Tory seat-warmers. Even if you concede that they can’t be worse, rewarding this behaviour just dooms us to, at best, treading water while the Tories pull themselves together and then pick up where they left off.
Been there, done that, it got us where we are today. Fuck that, fuck Labour.
Elkenders@feddit.uk 1 year ago
What would you recommend?
JoBo@feddit.uk 1 year ago
I’m assuming you mean for voting, the least important thing you can do, politically.
It doesn’t matter much. Protest vote (if there’s a good protest vote available to you), spoil your ballot (if there’s something you want to say because it will be read by bored candidates), or stay at home (so that you don’t add to turnout). In the vanishingly unlikely event that your local Labour candidate is an actual leftist, vote for them.
For more meaningful action, whatever works for you. Protest, direct action, letter-writing. In the vanishingly unlikely event that your local Labour candidate is an actual leftist, campaign for them (and turn out to support them when the leadership inevitably comes for them).
Just don’t pretend that voting for the least worst option will give you better options in future. It will not.
midgephoto@photog.social 1 year ago
@JoBo @thehatfox This is not sensible.
aeternum@kbin.social 1 year ago
could you imagine if they taxed the wealthy?? They might have to give up one of their super yachts! Won't somebody please think of the wealthy!
autotldr@lemmings.world [bot] 1 year ago
This is the best summary I could come up with:
Reeves also confirmed that Keir Starmer’s leadership pledge to increase the 45p top rate of income tax was – as was widely thought to be the case – now off the table, after he indicated in June that he was no longer keen on the idea.
Her remarks underline how Labour has decided that it needs to go further in blunting Conservative attacks, with party figures fearful that any hints of tax rises or unfunded spending commitments would be used to suggest it would be profligate with the nation’s finances.
There are also plans to go on the attack over Rishi Sunak’s stewardship of the economy, as internal polling suggests Tory-to-Labour switchers are irritated by his optimism on inflation when they do not feel that their own finances are improving.
Reeves’ words, in an interview with the Sunday Telegraph, also mark a shift away from her comments in September 2021 that “people who get their income through wealth should have to pay more”, highlighting those with stocks and shares and buy-to-let properties.
Labour has stepped up its focus on wooing the corporate sector, with the annual business forum hosted at the party’s conference this autumn over-subscribed by 75%, with 200 delegates due to attend, compared with 130 last year, and 150 on the waiting list.
As recently as the party’s conference last September, Starmer had said it was “hugely divisive” of ministers to hand out a tax cut to people who were paid more than £150,000, as he pledged to reverse the scrapping of the additional rate on the highest earners.
The original article contains 610 words, the summary contains 261 words. Saved 57%. I’m a bot and I’m open source!
Leap@lemmy.world 1 year ago
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