[ThisIsTheLife]

I voted no, but only because I disagree with taxation in general.

If we absolute have to have tax (and believe me, we don't), then yes it should be flat (and I don't mean a flat percentage, I mean a flat amount).

But we shouldn't have tax at all in the first place.

[Cable]

(Original post by FDR)
1) But humans aren't treated equally

2) - it is far more likely that those from wealthier families will have high paying jobs than those from poorer families, simply because those from the wealthy families will likely have gone to better schools, been brought up in an environment where achievement is valued, and will have many more connections than someone brought up in say, the poorest part of Liverpool or Bradford.

3) That's not fair, and furthermore, does not treat everyone as an equal at all, it's a system whereby opportunities in life are strongly correlated with the wealth of your parents.

4)When it comes to jobs, women and some ethnic groups are still discriminated against, and those from public schools dominate many top jobs. That's not fair, nor does it treat people as equals.

5) The progressive tax system does treat people as equals, because someone earning £30,000 will pay the same amount of tax as someone else earning £30,000, and someone earning £150,000 will pay the same as someone else earning £150,000. It does not discriminate on factors that we cannot influence, but does so on factors that we have some influence over - income.

6) Conquer's response is extremely poorly thought out - Conquer justifies a flat tax because they say that it takes an equal proportion of income, therefore utility after tax would be the same. But this completely ignores the fact that those on lower incomes spend a greater proportion of their income than those who are rich. Someone earning £15k will probably spend all of it on maintaining a minimum standard of living - any deduction as a result of tax will decrease their well-being much more so than the same proportional deduction from someone earning £100k, as the latter enjoys a much higher standard of living, with income well in excess of consumption.



7) Your (extremely flawed) reasoning for a flat tax is that it treats humans equally, but yet you want those children with the poorest parents not to go to school because their families can't afford it, and those from the poorest families to die if they fall ill.

8) You are aware that many of the economic problems that have taken place over the last decade, infact since the 1980s, have originated from the private sector, not the public sector, and have become larger problems because of less regulation. From the 50s to the 80s, western economies were highly regulated, highly unionised, and highly taxed; the top rate of tax was 90% in the US, and during that period, the west grew at an unbelievable, unprecedented rate. Everyone's incomes rose, living standards rocketed. Capitalism was working.

Then people like Thatcher, and Reagan took office. They deregulated, and cut down the size of governments, Our growth rate was slower, and the average person's income didn't grow much - although those at the top's income boomed. The banks were allowed to loan someone making $15k enough to buy a million dollar home which they could never afford, and then sold these loans that were guaranteed to fail as 'safe' assets, and governments and regulations couldn't do a thing, and now we are where we are.

1) I know they aren't. It doesn't mean that I can't support equal treatment anyway.

2) Yeah, thanks to our current rubbish system where state schools are public, there are fewer incentives to immensely improve the education within each school. However, if the schools were made private, the schools have to attract pupils by vastly improving their education system, by getting the best teachers possible and reducing prices as much as possible. This leads to all schools having much more similar standards compared to the gap between state schools and grammar/private school in our current system. So all children generally get better education in the totally private system than they do in our current system (as long as they can afford it).

3) No it's not unfair overall. Surely the richer person could have had better education in a private school. But that doesn't mean that the person from the state school couldn't have achieved well either. The curriculum is the same across all schools and if those at state schools have failed to get high enough grades for a good university and not done enough extra-curricular activities, then they are individually to blame overall for their failures. And I'm sure you're aware that many of the rich didn't come from privileged backgrounds (e.g. Lord Sugar, many of the people from Dragon's Den etc). And remember that the children are being treated equally in the sense that they have access to education in our current system (although the standards may differ between them).

4) Sure, we never completely irradicate unequal treatment. But that doesn't mean I can't still support equal treatment for human beings.

5) Yes, but the person earning 30k is paying a different percentage to the person earning 150k, isn't he? So it's not really equal treatment then, is it?

6) I think what Conquer was trying to point out in that thread was that we cannot accurately measure the utility of each person with different wages after tax is taken. Hence any percentages that are charged towards each band are merely and completely arbitrary with regards to utility. So why not just charge an equal proportion of tax from each person to avoid such problems?

And with lower taxes overall from the govt, including the flat tax and land value tax, this will lead to the poorer having higher spending power than they would under the current system. And of course, this depends on the state of the economy (e.g. gov't may have to raise taxes if the economy is in a big boom to control inflation).

7) Woah woah woah. Firstly, thanks to the nature of competition in free markets, the prices for education and healthcare should be affordable since they have to lower prices to attract customers. Secondly, if someone is struggling for whatever reason to cope with the prices, then they can try and get support from relatives, friends, neighbours or charities set up to support the poor. Thirdly, the nature of my system means that people will avoid having kids if they know that they will struggle to keep them fed and afford their education & healthcare.

8) Just because I want a gov't that throws out less regulations overall, doesn't mean that I don't want the gov't to have strong regulations in the right areas.

As for Thatcher, I don't have the data right now to debate with you about her. But I swear she had a big debt from the previous gov't to tackle.

As for the housing bubble, I think you underestimate the role of the gov't here. Yes, the banks are mainly to blame. But the gov't going into elections would have wanted a nice boom to gain more votes. Hence they were happy to slash interest rates, encourage bank lending and avoid regulations on who the money is lent to. And then when people started to default, leading to the banks losing money and then a credit crunch as a result, the gov't was then happy to pin all the blame on the banks and come out as an innocent and the messiah to solve the economic problems. Very clever game by the gov't and many people lapped it up.

But still, I do support regulations on banks or some sort of reform to avoid such problems like the credit crunch.

And don't you think that having a large public sector debt has made it harder for many countries to deal with their economic problems? Hence why I believe that cutting the public sector severely can avoid the severity of many economic crises.

[FDR]

(Original post by Cable)
1) I know they aren't. It doesn't mean that I can't support equal treatment anyway.

2) Yeah, thanks to our current rubbish system where state schools are public, there are fewer incentives to immensely improve the education within each school. However, if the schools were made private, the schools have to attract pupils by vastly improving their education system, by getting the best teachers possible and reducing prices as much as possible. This leads to all schools having much more similar standards compared to the gap between state schools and grammar/private school in our current system. So all children generally get better education in the totally private system than they do in our current system (as long as they can afford it).

Education is something that should be available to everyone, regardless of income. I appreciate what you are saying, that in a market prices would be pushed down, and that there would be gains in efficiency, and that, in theory you could still make attendance compulsory, however in practice this wouldn't work, even if it seems like it would in theory. This is because whilst wealthy families can afford to shop around, and move so that they live near the best schools, the poorest can't, so they will just send their children to the nearest school, regardless of standard, and these schools will have little incentive to improve, and may just cut costs and therefore compromise quality in search of higher profits. In our current system, families can find the best state schools, and try and send their kids to them, but many do not. The answer is to raise state schools to the standard of private schools. How? Well that's another debate.

3) No it's not unfair overall. Surely the richer person could have had better education in a private school. But that doesn't mean that the person from the state school couldn't have achieved well either. The curriculum is the same across all schools and if those at state schools have failed to get high enough grades for a good university and not done enough extra-curricular activities, then they are individually to blame overall for their failures. And I'm sure you're aware that many of the rich didn't come from privileged backgrounds (e.g. Lord Sugar, many of the people from Dragon's Den etc). And remember that the children are being treated equally in the sense that they have access to education in our current system (although the standards may differ between them).

You're right in that many people in state schools do achieve, and go on to top universities. But the proportion of privately educated children at top universities is still very high - as you would expect, given that parents fork out a lot to ensure their offspring get the best education. If someone makes a lot of money because of sheer hard work, then they deserve their money, and if someone else didn't work so hard, then they deserve what they get. However, they should have the same opportunities to achieve, and they don't.

4) Sure, we never completely irradicate unequal treatment. But that doesn't mean I can't still support equal treatment for human beings.

5) Yes, but the person earning 30k is paying a different percentage to the person earning 150k, isn't he? So it's not really equal treatment then, is it?

But the progressive way is equal in that the income between 0-£30k that both earn is the same for both - the person earning £150k doesn't have to accept the extra £120k they make, but in doing so accepts that they will enter a higher tax bracket, in the same way that the person earning £30k accepts that if they earn another £10k or so, they will move into a higher bracket. The Law is the same for both. I could also argue it's not equal in that it's only the proportion that's equal, and in absolute terms, it's still not equal.

6) I think what Conquer was trying to point out in that thread was that we cannot accurately measure the utility of each person with different wages after tax is taken. Hence any percentages that are charged towards each band are merely and completely arbitrary with regards to utility. So why not just charge an equal proportion of tax from each person to avoid such problems?

And with lower taxes overall from the govt, including the flat tax and land value tax, this will lead to the poorer having higher spending power than they would under the current system. And of course, this depends on the state of the economy (e.g. gov't may have to raise taxes if the economy is in a big boom to control inflation)

.

The tax system is (well, was) designed to maximise revenue, not wellbeing. However it also ensures that those who make less keep more of what they make as they need more of it. A Land value tax may not be a bad idea however.

7) Woah woah woah. Firstly, thanks to the nature of competition in free markets, the prices for education and healthcare should be affordable since they have to lower prices to attract customers. Secondly, if someone is struggling for whatever reason to cope with the prices, then they can try and get support from relatives, friends, neighbours or charities set up to support the poor. Thirdly, the nature of my system means that people will avoid having kids if they know that they will struggle to keep them fed and afford their education & healthcare.

In theory, the free market should lower prices. In practice, it doesn't. Just look at the US - healthcare there is much more expensive per person that pretty much anywhere else, and to be honest, the results aren't great - a life expectancy below the OECD average, and an appaulling infant mortality rate. As for people not having children, what if they choose to? Should society let the children and parents suffer because they made bad decisions? I hope not.

8) Just because I want a gov't that throws out less regulations overall, doesn't mean that I don't want the gov't to have strong regulations in the right areas.

Regulating the right sectors are indeed important, particularly when it comes to finance.

As for Thatcher, I don't have the data right now to debate with you about her. But I swear she had a big debt from the previous gov't to tackle.

When Thatcher took office in 1979, UK debt as a percent of GDP was the lowest it had been since around 1910, so she didn't have much of an issue there. As for Reagan, who many Republicans and necons hold in reverence, prior to Reagan, between 1950 and 1980, US GDP growth per capita was 2.2%, and median income growth 2.3%. After Reagan, between 1980 and 2007 (not even including the financial crises that he helped start in the 80s), real GDP per capita growth was 2%, and median income growth was more than three times smaller than before Reagan at 0.7%.

As for the housing bubble, I think you underestimate the role of the gov't here. Yes, the banks are mainly to blame. But the gov't going into elections would have wanted a nice boom to gain more votes. Hence they were happy to slash interest rates, encourage bank lending and avoid regulations on who the money is lent to. And then when people started to default, leading to the banks losing money and then a credit crunch as a result, the gov't was then happy to pin all the blame on the banks and come out as an innocent and the messiah to solve the economic problems. Very clever game by the gov't and many people lapped it up.

Most governments, including the US, UK and Eurozone have no control over the interest rate, but yes, central bankers such as Alan Greenspan and Mervyn King were irresponsible. The governments were by no means innocent, but the truth is, they had no idea what was going on, and the regulators were told to be light touch. This wasn't an elaborate plan by the government to blame the banks, but rather a mistake that they didn't make sure they had a reliable set of eyes and ears on Wall street and The City.

And don't you think that having a large public sector debt has made it harder for many countries to deal with their economic problems? Hence why I believe that cutting the public sector severely can avoid the severity of many economic crises.

In the US, UK, Japan and pretty much any country that can borrow in it's own currency, debt isn't an issue - they can borrow at very low rates, and have no urgent need to cut down whatsoever.

Should we make some necessary cuts in five or six years? Perhaps. But for the UK, a country that can borrow cheaply and which has it's own currency, to cut now is resulting in us being in the longest depression this country has ever seen, with no signal of us getting out. Even the market for UK 10 year bonds (a measure of how easily a government can borrow) is too cheap - the markets show that they are worried that the UK will be in a long depression with periods of deflation, and therefore signals that we need to spend more to offset the lack of private demand.

[Cable]

(Original post by FDR)
1) Education is something that should be available to everyone, regardless of income.

2) I appreciate what you are saying, that in a market prices would be pushed down, and that there would be gains in efficiency, and that, in theory you could still make attendance compulsory, however in practice this wouldn't work, even if it seems like it would in theory. This is because whilst wealthy families can afford to shop around, and move so that they live near the best schools, the poorest can't, so they will just send their children to the nearest school, regardless of standard, and these schools will have little incentive to improve, and may just cut costs and therefore compromise quality in search of higher profits. In our current system, families can find the best state schools, and try and send their kids to them, but many do not. The answer is to raise state schools to the standard of private schools. How? Well that's another debate.



3) You're right in that many people in state schools do achieve, and go on to top universities. But the proportion of privately educated children at top universities is still very high - as you would expect, given that parents fork out a lot to ensure their offspring get the best education. If someone makes a lot of money because of sheer hard work, then they deserve their money, and if someone else didn't work so hard, then they deserve what they get. However, they should have the same opportunities to achieve, and they don't.



4) But the progressive way is equal in that the income between 0-£30k that both earn is the same for both - the person earning £150k doesn't have to accept the extra £120k they make, but in doing so accepts that they will enter a higher tax bracket, in the same way that the person earning £30k accepts that if they earn another £10k or so, they will move into a higher bracket. The Law is the same for both.

5) I could also argue it's not equal in that it's only the proportion that's equal, and in absolute terms, it's still not equal.

.

6) The tax system is (well, was) designed to maximise revenue, not wellbeing. However it also ensures that those who make less keep more of what they make as they need more of it. A Land value tax may not be a bad idea however.



7) In theory, the free market should lower prices. In practice, it doesn't. Just look at the US - healthcare there is much more expensive per person that pretty much anywhere else, and to be honest, the results aren't great - a life expectancy below the OECD average, and an appaulling infant mortality rate.

8) As for people not having children, what if they choose to? Should society let the children and parents suffer because they made bad decisions? I hope not.



9) When Thatcher took office in 1979...


10) Most governments, including the US, UK and Eurozone have no control over the interest rate, but yes, central bankers such as Alan Greenspan and Mervyn King were irresponsible. The governments were by no means innocent, but the truth is, they had no idea what was going on, and the regulators were told to be light touch. This wasn't an elaborate plan by the government to blame the banks, but rather a mistake that they didn't make sure they had a reliable set of eyes and ears on Wall street and The City.



11) In the US, UK, Japan and pretty much any country that can borrow in it's own currency, debt isn't an issue - they can borrow at very low rates, and have no urgent need to cut down whatsoever.

12) Should we make some necessary cuts in five or six years? Perhaps. But for the UK, a country that can borrow cheaply and which has it's own currency, to cut now is resulting in us being in the longest depression this country has ever seen, with no signal of us getting out. Even the market for UK 10 year bonds (a measure of how easily a government can borrow) is too cheap - the markets show that they are worried that the UK will be in a long depression with periods of deflation, and therefore signals that we need to spend more to offset the lack of private demand.

Sorry for the long post.

1) Yes and no.

Yes in the sense that if anyone wants to maximise their success in life, education is very important. No in the sense that education from schools is a service. And whether you like it or not, teachers don't teach for free and the resources aren't free either. So if a parent(s) wants their child(ren) in school in my system, then they've got to pay up. End of. If they know they will struggle to pay, then avoid having kids in the first place. Or else, get support from friends/family/charities etc. And if for some reason they can't afford to send their kid to school, then they'll have to home-school them with what little resources they have.

2) I disagree. Firstly, if the standard of the schools matter so much to a very poor parent who's struggling with the price of school, then they can try and get financial support from others (e.g. friends/family) to send their child/ren to a better school. Secondly, the moment the school's standards drop, parents can just ship their kids to better schools. And because the school is losing customers, they'll have raise their standards again or go extinct. Hence why sticking with state schools isn't the answer. The answer is to privatise because no school would dare lower their standards or else they'll be extinct.

3) Yes. But do you still accept that the child and the parents are ultimately to blame if the child doesn't get the best opportunities? Did the child try his hardest to succeed even though he was in state school? Did his parents give him the freedom and support to do extra-curricular activities (which top universities are fond of whether you know it or not)? Why did the parent have the child in the first place if s/he knew s/he can't give the child the best opportunities?
And in my system, all children would not only have education (as long as they can afford it) but they would also have similar education standards (due to the nature of competition) unlike the gap between state and private schools in our current system.

4) Oh come on. Whatever angle you look at it, the result is still the same. Progressive tax treats the richer differently by charging a higher percentage of their incomes over certain bands. The law might be the same for both but the treatment is not the same when all is said and done. Progressive tax still ends up taking a higher proportion of the rich's money and taking a lower proportion of the poor's money. They're treated differently.

5) It might not be equal in absolute terms (if you're refering to poll tax) but then again, absolute equal in the form of poll tax is actually regressive. If the same sum of money is taken from each person, then a higher proportion of money is taken from the poor than the rich. So in this bid for equality, not only does it cause inequality in the form of different proportions of money taken from each person but it likely severely affects the utility of the poorer in comparison to the rich. But with flat tax, we avoid this problem.

And flat tax is a hell of a lot more equal than progressive tax which offers no form of equal treatment whatsoever (people are treated differently according to what they earn).

6) That's a contradiction. If the tax system is not about well being, then why does it matter if those that earn less money can't keep more of it to fund their necessities? And if taxes is just about revenues, why doesn't the gov't charge 99%? They'll be raking in a lot of money for sure! So maybe well-being is also important in taxes as well as raising revenue. And don't forget that things like increasing Aggregate Demand to boost an economy via increasing people's spending power (lower taxation) are also vital when considering what taxation system to use.

So like I said, using flat taxes (which avoids equality issues imo) and land value tax will not only be fair overall but it will generate enough revenue for the smaller gov't that I propose.

7) But the US healthcare system isn't completely free market though, is it? Things like Medicare and Medicaid come from the gov't. And that money obviously comes from taxes. However, I propose we replace our current health system with a slightly free market system where all clinics and other health service providers have to lower prices to attract customers and the gov't regulates them only where necessary to a minimum. Also where needed, the gov't can subsidise a few hospitals in the short term just to help them get started up and running properly.

8) Yes, they will have to. And it is completely the parents' faults. No-one else's. But thanks to our current system that encourages the entitlement culture, many people these days think that they no longer have to take responsibility for their mistakes, it's always someone else's fault for their mistakes and they can carry on making mistakes because the nanny state will always bail them out. Continuing our current system only prolongs our problems; it doesn't solve them.

And the funny thing is that it's very likely that they wouldn't suffer anyway because "they can try and get support from relatives, friends, neighbours or charities set up to support the poor."

9. Ok. I'll drop this particular issue because we're starting to deviate away from the original topic a bit.

10. Fair enough.

11. True. But surely having a lower debt makes things easier anyway? I know that a lot of the problems in countries like Greece and Italy are down to not being able to devalue their currency and the ECB not buying any of their debt/lending money. But still, if they had a lower debt, the cuts they have to make may not be so severe.

12) I agree with you here. We have to increase our spending in the right areas to boost our economy. We have to find ways to encourage people to spend. And that's one of my biggest problems with the Tories. Prior to the election and afterwards, they kept screaming at the top of their lungs about the numerous cuts they'll be making. This was a disastrous move because it scares the general public and lowers the consumers' spending confidence. However there's some data that the Tories have actually spent more money so far than the Labour did in their final year, despite making some cuts.

And the loss of money in banks and the witch-hunt against them have not helped either. Now the banks are far more reluctant to lend out money and this just contributes to slower growth in the economy.

However, I also support cuts in the right areas as well. And those cuts would be in the public sector and benefits (gradually over a period of time). I'd only keep unemployment benefits.

[icouldntthinkofone]

(Original post by Friar Tuck)
Rubbish. Russia's improvement since 1990s is entirely due to changing to capitalism (not one specific tax rate) and oil prices continuing to climb. The country is one oil price sneeze away from recession.



HMRC has 90,000 employees. With 30 million taxpayers and 5 million businesses to deal with, that's about 400 accounts per employee. You're overestimating the size of this 'inefficiency', and most of the actual calculating of tax will be done by computers, the staff will be doing other jobs.

No it isn't. I speak and work with Russians on an almost daily basis, and indeed, have several investments in Russian companies. I goto Moscow/St Petersberg at least 2-3 times a year, often more, and am amazed at the dynamism and entrepreneurialism of the country. Despite the factors of expensive living, shocking weather and a hugely corrupt environment, people chose to invest and Russians to stay there precisely because there is the opportunity to make so much money because of the 13% flat tax system. Your opinion also contradicts almost every Russian I do business with. If you look at most analysis of tax rates, almost every time after they have fallen significantly (be it in Canada, US, Britain, Aus etc) tax revenues have actually increased from that tax within 2-3 years. I now invest next to none of my capital in the UK, because it is so uncompetitive to do so...
This costs UK jobs (because Im not creating jobs with the capital) and also means my total tax payout to the UK gov is significantly lower than it would be were the regime more competitive.

Regards HMRC - 400 accounts per employee? I wasn't aware of this statistic but that is outrageous!!! Any business who assigned an employee only 400 accounts in a year would soon cease to exist...

Think about this. The average income in the UK is £26,000. You are saying that for every 400 accounts of that size, it takes 1 person to add up the tax on that?? And you genuinely believe that's an efficient system?

Its a tad simplistic but that's a turnover of £10.4m per employee...if I was offering low margin products for sale (the equivalent to calculating very small amounts in tax revenue) and each person was generating that, Id be firing the sales force and hiring new people!

[Friar Tuck]

(Original post by icouldntthinkofone)
No it isn't. I speak and work with Russians on an almost daily basis, and indeed, have several investments in Russian companies. I goto Moscow/St Petersberg at least 2-3 times a year, often more, and am amazed at the dynamism and entrepreneurialism of the country. Despite the factors of expensive living, shocking weather and a hugely corrupt environment, people chose to invest and Russians to stay there precisely because there is the opportunity to make so much money because of the 13% flat tax system. Your opinion also contradicts almost every Russian I do business with. If you look at most analysis of tax rates, almost every time after they have fallen significantly (be it in Canada, US, Britain, Aus etc) tax revenues have actually increased from that tax within 2-3 years. I now invest next to none of my capital in the UK, because it is so uncompetitive to do so...
This costs UK jobs (because Im not creating jobs with the capital) and also means my total tax payout to the UK gov is significantly lower than it would be were the regime more competitive.

I don't want to sound rude, but any individual's experience when comes to any science (including economics here) is one of the worst forms of evidence. Pre-2008 any banker would have said their ability to create massive profits were down to their ability, and there was no way it could go wrong.

Second, are you honestly saying that income tax rates are the sole reason behind choosing to invest in a country? So why aren't Jamaica, Palestine and Iraq economic powerhouses? Also, investment in Russia isn't much higher than Argentina currently (a very high income tax rate in comparison). In fact, if you click on 'oil exports' on the graph, you'll notice a very strong correlation between levels of investment and oil exports after the early 2000s.

Finally, some tax cuts increase revenues and some don't. Reagan's tax cuts (which also involved stripping out large amounts of loopholes) certainly did. However Bush's tax cuts didn't and helped create the hole in the once balanced US budget. IT's more complicated than you're making out. After all if tax cuts almost always payed for themselves in 2-3 years, why the hell haven't we just cut taxes to 1% over the last 40 years?

(Original post by icouldntthinkofone)
Regards HMRC - 400 accounts per employee? I wasn't aware of this statistic but that is outrageous!!! Any business who assigned an employee only 400 accounts in a year would soon cease to exist...

Think about this. The average income in the UK is £26,000. You are saying that for every 400 accounts of that size, it takes 1 person to add up the tax on that?? And you genuinely believe that's an efficient system?

Its a tad simplistic but that's a turnover of £10.4m per employee...if I was offering low margin products for sale (the equivalent to calculating very small amounts in tax revenue) and each person was generating that, Id be firing the sales force and hiring new people!

Once again, oversimplifying. First, they're not just 'adding up the tax'. They're informing the public of what they need to know, calculating, contacting, collecting, recording, maintaining the infrastructure required for all of this and chasing up on unpaid tax (the last part being where most of the effort goes). Second, it's entirely useless comparing a business, where individuals are voluntarily giving you their money, to tax collection, where no-one wants to give you their money and some are actively avoiding doing so.

Finally, you're unhappy with £10.4 million turnover per employee? So any small business with less than £10.4 million turnover is woefully inefficient? So Britains entire exports of £220 billion need to be done by just 22,000 people? What planet do you live on?

[icouldntthinkofone]

(Original post by Friar Tuck)
I don't want to sound rude, but any individual's experience when comes to any science (including economics here) is one of the worst forms of evidence. Pre-2008 any banker would have said their ability to create massive profits were down to their ability, and there was no way it could go wrong.

Second, are you honestly saying that income tax rates are the sole reason behind choosing to invest in a country? So why aren't Jamaica, Palestine and Iraq economic powerhouses? Also, investment in Russia isn't much higher than Argentina currently (a very high income tax rate in comparison). In fact, if you click on 'oil exports' on the graph, you'll notice a very strong correlation between levels of investment and oil exports after the early 2000s.

Finally, some tax cuts increase revenues and some don't. Reagan's tax cuts (which also involved stripping out large amounts of loopholes) certainly did. However Bush's tax cuts didn't and helped create the hole in the once balanced US budget. IT's more complicated than you're making out. After all if tax cuts almost always payed for themselves in 2-3 years, why the hell haven't we just cut taxes to 1% over the last 40 years?



Once again, oversimplifying. First, they're not just 'adding up the tax'. They're informing the public of what they need to know, calculating, contacting, collecting, recording, maintaining the infrastructure required for all of this and chasing up on unpaid tax (the last part being where most of the effort goes). Second, it's entirely useless comparing a business, where individuals are voluntarily giving you their money, to tax collection, where no-one wants to give you their money and some are actively avoiding doing so.

Finally, you're unhappy with £10.4 million turnover per employee? So any small business with less than £10.4 million turnover is woefully inefficient? So Britains entire exports of £220 billion need to be done by just 22,000 people? What planet do you live on?

You seem to read what I say in a very simple way. I agree with your points - but you are completely mis-understanding what I am saying. Regards what you say about bankers - sorry, but someone earning £100k-120k (as most bankers, in my experience, on average do) isn't that smart. If they were truely smart, and not just playing the system, the probability is that they would be running their own businesses, making tens of millions every year. They are acutally, in the grand scheme of thing, quite far down the pecking order...

Indeed, you illude to another bug-bear of mine. Why anyone smart would use 'Asset Management/Wealth Management' firms - basically, you have some jumped up graduate in their early 20s, probably with very little experience, doing research and analysis. You then have some guy in his 30s or 40s, probably on circa £100k a year, offering you advice on what to do with your money. Nobody smart would do that...hence the 2 and 20 structure (basically a complete rip off and illustrative of everything wrong with the system).

I don't think much of bankers, and I don't think much of applying science/Maths is really how business works - as strange as that sounds. I think its more about your analytical + evaluation skills, e.g. whether you consistently back winners, grow year on year, whether your business is based upon real profits or farcical 'expectations'...

I think many entrepreneurs and senior business people saw the recession coming - indeed, as early as 2005 Private Eye was saying as much, and certainly by mid 2008 they were making it pretty clear they expected major banking collapses. People like John Caldwell and, to a lesser extent, my father were all talking about this for many years before 2008. Many transferred and invested in the US as they saw a massive overvaluation of the £ (see MoneyWeek circa summer 08...)

As for the idea 'theres no way it could go wrong' - anyone who believes that isn't worth your time and if someone said that to me, Id have them escorted of the premises by security...seriously - dumbest thing ever. Theres always probability - the trick is in judging what the upside is and whether the probability is worth the risk.

Secondly, no - I didn't say that. They are a key factor - as are others such as education levels, population demographics, infrastructure etc etc. Regarding your point about Iraq, actually the country is doing incredibly well. Its economy is growing the fastest in the Middle East, currency has quadrupled in value, new business permits are being issued at 8,000 a month. Oil Revenues have soared - to $87 billion last year. Its low tax rates have been a major factor in driving this investment (cos have invested despite mass corruption and serious 'security' problems - and there are plenty of places to find oil... - if you read my point regarding Russia, It is the same as there). Yes there are other factors - but it is a key driver.

I said, its a massive simplification - sure - I couldnt be bothered to write an endless essay on the subject, but in life, you will have to simplify things down quickly in order to guage whether a business op is worth even investing a few hours of your time. To me, it is a disgraceful statistic.

As for the statement "no-one wants to give you their money..." - I totally disagree. I am proud of my contribution, and proud that I can help those less fortunate than myself. My father is incredibly proud of the fact he pays over £1m in tax every year, and has done for 10+ years.

The difference is, I am unwilling to contribute at that level - where I pay 50% income tax, 28% CGT, 20% on everything I buy etc. So I simply keep my income below that level, invest my money elsewhere, and reside outside the UK (spend 1/3rd the year here) to do this. I go out of my way as I want to be clear to the gov. that having a 50% tax rate will not raise more revenue, and makes the UK such an unattractive prospect in an increasingly globalized, competitive world. I always stay well within the rules and would never dream of using any avoidance scheme or the such - but I am perfectly entitled to invest money elsewhere, and do so. When they lower it to 40%, I will invest more in the UK, and under a flat tax of say 30% (even if It meant the same tax bill/even more) - I would seek to invest mainly in the UK - just because I agree with the principal and have a desire to see it succeed.

Regards your last point "Finally, you're unhappy with £10.4 million turnover per employee? So any small business with less than £10.4 million turnover is woefully inefficient? So Britains entire exports of £220 billion need to be done by just 22,000 people? What planet do you live on?" - again, read what I wrote. I said if it was a low margin product, which tax collection is the nearest equivalent too. Think about it - for the average person, it is pretty close to impossible to avoid tax (assuming they arent in a cash business...)...

They are paid via PAYE, their payslips, bank accounts etc are all traceable in a few mins. If someone earning £26k buys a Ferrari or lives in a £1m house, clearly something is a-miss, and its worth looking at. Most people don't. They drive a car worth a few £k, live in a £160k house...basically, most people are incredibly easy to process. I.e. - its the equivalent of a low margin business...

Therefore, imagine you are selling products where the margin is a fraction of a %. If your margin was 0.1%, and each sales person was turning over £10.4m, the profit from employing them would be £10,400. The cost of employing someone on £26k (by the time you account for NI, office space, etc) is about £40k. I.e. you'd be loosing money. There are plenty of businesses where a single sales person is responsible for contracts worth £100s of millions. Now thats what planet Im on, and it didnt take me a degree from Harvard and a MSc from Imperial to work that out lol!

Whether you like it or not, thats an appalling statistic. And that's from someone whose uncle is a union rep at HMRC...

Its like the statistic that the UN only costs $4b a year or something. Yes, and what does it actually do for the cash...I once did a model UN thing in NY, followed by some work experience. It was a joke - basically, a pile of people in endless committees, chatting sh-t all day, achieving very little. Im not saying the UN is a bad thing, not at all - we need it, and it does good work. But value for money...no. It could be run so much more efficiently and achieve so much more.

[Teaddict]

(Original post by FDR)
'Moral grounds'? What sort of argument is that? I could quite as easily argue that a flat tax doesn't treat humans equally in that someone earning £100,000 will pay more money in tax than someone earning £20,000 under a flat tax. Infact, I could argue that in order to ensure equality, an objective you clearly care about, that the moral thing to do would be to take £80,000 in tax from someone earning £100k, and nothing from someone earning £20k. If equality was truly your concern, you would agree, however you are clearly using a (flawed) morality argument only if it supports your view.

What exactly is your alternative to what you deem a 'crap economic system'? Follow Somalia's example without a government or any property rights?

A progressive income tax works because it raises the most revenue, and also aims to achieve a better society where those at the bottom aren't left so far behind that their children have no chance of finding success, and funds public services such as healthcare and education that we all agree are good for society.

I think you are taking too much issue with the use of morality here - what makes the appeal to morality so powerful a tool is that everyone has their own morality. What you would consider fairness in a system, I might consider unfair and what I might consider fair, you might consider the end of civilisation as we know it; the thin end of the wedge.

[Cable]

(Original post by Teaddict)
I think you are taking too much issue with the use of morality here - what makes the appeal to morality so powerful a tool is that everyone has their own morality. What you would consider fairness in a system, I might consider unfair and what I might consider fair, you might consider the end of civilisation as we know it; the thin end of the wedge.

Agreed. Morality and perception are subjective.

[Hewitt]

I don't think it is right for fairness to even be mentioned in the same sentence as taxation unless the tax is flat. A flat tax would mean that very one regardless of what they are payed would feel they are getting a fair deal as they are all being treated the same by the government. People would have a higher incentive to strive and work hard as they would feel their work was worth just as much regardless of how much they are earning.

[scottstacey]

(Original post by FDR)
Absolutely not.
would be incredibly regressive, as those earning less would likely end up paying a much larger proportion of their incomes in tax,

How would it? If it was a flat rate income tax at 20% with a higher threshold of say £12,000: 1. those earning less wouldn't pay any tax so the proportion would be 0 2. those who would pay taxes would all be paying 20% of their income so everybody's proportion would be equal.
So it is in no way a regressive tax.

[Captain Crash]

(Original post by scottstacey)
How would it? If it was a flat rate income tax at 20% with a higher threshold of say £12,000: 1. those earning less wouldn't pay any tax so the proportion would be 0 2. those who would pay taxes would all be paying 20% of their income so everybody's proportion would be equal.
So it is in no way a regressive tax.

Except the value of money changes significantly depending on how much money you earn. This is borne out by multiple psychological experiments

Without boring you with the details, here are two graphs.

First, here is a graph representing what most people perceive to be the value of money



But the reality is more like this graph:



And this shouldn't be surprising. Lets say you start with £0. The first £10,000 you earn is incredibly important - it lets you buy food to eat and a roof over your head. The second £10,000, despite having the same arbitrary value, is worth less to a person than the first £10,000. With the basics of life bought, you can know buy luxuries in life that are important to you. The next £10,000 lets you buy luxuries that are less important to you and is worth even less than the second £10,000. And so on and so on.

[Optimism]

Flat taxation is the only fair means of removing earned funds from an individual. It removes the same proportion of funds from each individual, and hence is inherently means-tested, as those with more money pay more tax. It is fair, and I would argue progressive, as in today's 'Lets-bash-the-wealthy' society taxation is inherently biased against the wealthy. Taxation should treat everyone equally, and such a concept is served perfectly via a flat tax.

[Captain Crash]

(Original post by Optimism)
Flat taxation is the only fair means of removing earned funds from an individual. It removes the same proportion of funds from each individual, and hence is inherently means-tested, as those with more money pay more tax. It is fair, and I would argue progressive, as in today's 'Lets-bash-the-wealthy' society taxation is inherently biased against the wealthy. Taxation should treat everyone equally, and such a concept is served perfectly via a flat tax.

See my post above.

[Jamie]

(Original post by Captain Crash)
Except the value of money changes significantly depending on how much money you earn. This is borne out by multiple psychological experiments

Without boring you with the details, here are two graphs.

First, here is a graph representing what most people perceive to be the value of money



But the reality is more like this graph:



And this shouldn't be surprising. Lets say you start with £0. The first £10,000 you earn is incredibly important - it lets you buy food to eat and a roof over your head. The second £10,000, despite having the same arbitrary value, is worth less to a person than the first £10,000. With the basics of life bought, you can know buy luxuries in life that are important to you. The next £10,000 lets you buy luxuries that are less important to you and is worth even less than the second £10,000. And so on and so on.

So you find the point on the grpah where the level starts to flatten off and set that as you tax free threshold (or as close to it as one can justify with regards to revenues)

[scottstacey]

(Original post by Captain Crash)
Except the value of money changes significantly depending on how much money you earn. This is borne out by multiple psychological experiments

Without boring you with the details, here are two graphs.

First, here is a graph representing what most people perceive to be the value of money



But the reality is more like this graph:



And this shouldn't be surprising. Lets say you start with £0. The first £10,000 you earn is incredibly important - it lets you buy food to eat and a roof over your head. The second £10,000, despite having the same arbitrary value, is worth less to a person than the first £10,000. With the basics of life bought, you can know buy luxuries in life that are important to you. The next £10,000 lets you buy luxuries that are less important to you and is worth even less than the second £10,000. And so on and so on.

I understand your point but currently the tax threshold is lower than what most would suggest if a flat tax was brought in and so currently those that can afford the essentials only are worse off that if there was a flat tax


This was posted from The Student Room's iPhone/iPad App

[Negaduck]

I don't see how a regressive tax system could ever be seen as a step forward.

[The_Mighty_Bush]

A flat tax would never raise enough money. I don't really care that much if a tax is considered 'regressive' or 'progressive' but I do care if the government runs out of money to pay for public services. We already have a big enough deficit as it is.

[Unkempt_One]

What about a sloping tax?

[Piprod01]

Richard Wilkinson makes a good social case for a more equal society, linking it to economic equality:
http://www.ted.com/talks/richard_wilkinson.html

A flat tax only increases the economic difference between the top 20% and bottom 20%, we'd expect a similar effect on the social divide, likely decreasing social mobillity (something the UK is already amazingly crap at). That is not the UK I want to live in.