Lootman wrote:Have just one rate of income tax, CGT and VAT. Set those rates at whatever level is revenue neutral. Simple and transparent.
The rich would still pay more tax but crucially everyone would pay some tax.
But crucially, rich people like you would pay less tax. This is just another variation on the selfish "I don't like paying tax, other people should pay it instead".
The real problem is not that tax is too concentrated, it's that income and capital gains are too concentrated. If you want to broaden the tax base, think about how to broaden income and capital gains. Measured by Gini coefficient the UK has the 9th out of 41 most unequal income distribution in the OECD, and has one of the least redistributive tax/benefit systems (per pp36-7 of
this report from the Commons Library).
Abolishing allowances implies you support the creation a huge amount of extra bureaucracy devoted to chasing people paying <£2,512 of income tax, it's just make-work. And it's a fantasy to think that will automatically convert them to your way of thinking about tax, when polling suggests that even people who pay tax now, want to pay more tax if it means they will get better services, because the NHS and transport ex-London are crap, and people can see it.
But I agree with you that NI needs to be "simplified" - ie applied to unearned income and then merged into income tax. We don't hypothecate tax in other areas, but NI encourages the toxic "defined benefits" mentality that "I've paid my stamp [of £x] 30 years ago, so I'm now entitled to healthcare and benefits worth multiples of £x". Since you are such a visceral opponent of defined benefits I can see why you would want NI applied to unearned income and merged into income tax. These people with unearned income need to feel the pain of paying NI, it would be Good For Them by your thinking.
We also need to be more honest about employer NICs - starting with renaming it to employment tax. That would make it clear that we regard employment as a bad thing like cigarettes and alcohol, to be taxed as a way to get less of it. But applying employee NI to unearned income would allow the employment tax to be reduced and hopefully ultimately abolished.
xeny wrote:I think this is also potentially good for social cohesion. I know people from NZ and Norway and they often say "we decided to" about government policy/decisions rather than the UK centric "they decided to".
The Brexiteers had one part of their analysis correct, it is bad to have too many decisions taken remotely by people uninterested in us Brits. The problem is that they are in Whitehall and not Brussels. Even France has moved away from dirigisme from Paris in favour of more decisionmaking at regional level, whereas far too much of UK policy is set by Whitehall and it is blighting the country outside London.
It would have been better if Hunt had cut NI by 4p, and cut the grant to councils by the equivalent of 2p but given them the freedom to charge up to 4p in local NI.
I saw something recently that said the UK is almost unique in how little tax it raises at local level, something like 9% compared to 50% in some countries. How about we aim to raise 30% of tax at local level and cut the grants from central government?
There's all sorts of anomalies, like which of these properties pays less Council Tax?
Yep, it's Buck House - £1,824.10 for Band H in Westminster compared to £1857 for the Band B properties in Woodbury Drive, Dorchester in Tory-controlled Dorset. First step would be to change Band H into a % property tax, the current system is a blatant subsidy of the rich.
That was quite a belly-flop!
Unbelievable.