Brilliant Analogy about Taxing the Rich

Hi all,

I just noticed this awesome (and quite relevant to students ) analogy on one of my friends' Facebook profiles, so I thought I'd share it with TSR. I'll spoiler it as it's fairly long.



For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

It's been done. Some will understand it. Some will not. The ones that don't understand it are the ones that are holding this country back.

The country has reached a tipping point where the number of people dependent on the state's largesse is about to outstrip the ability (or willingness) of the contributors to support them.

Flat tax is fair tax.

Socialists can go cry in the corner.

Hi all,

I just noticed this awesome (and quite relevant to students ) analogy on one of my friends' Facebook profiles, so I thought I'd share it with TSR. I'll spoiler it as it's fairly long.



For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

Hey OP. Here's a video on the topic that you could put into the original post. I'm guessing it will draw in more of those who are repelled by article-long analogies.

[video="youtube;Xj7nRc3_EG0"]http://www.youtube.com/watch?v=Xj7nRc3_EG0[/video]

Interesting, what rate of taxation would you propose?

I'm no economist so this is probably a bit shoddy.

Start at 30% (include national insurance in that) and gradually lower it over a period of time as the private and public sectors adapt to it. Hopefully it would end up around 20-24%. Increasing the size of the private sector through industry should allow the lowest paid to come out of tax altogether.

But isn't the point of a flat rate tax that everyone pays the same proportion of their income as taxation? How, then, would the lowest paid come out of tax - isn't what you're suggesting essentially what we have in the UK right now?

Yes, flat tax is when people pay the same percentage, but it would be cruel and uncivilized to tax the poorest who are already struggling as it is. What we currently have in the UK is: the more you pay, the higher the percentage. eg. £20,000pa pay 25% and 11% NI, £200,000pa pay 50% and 11% NI.

Yes, flat tax is when people pay the same percentage, but it would be cruel and uncivilized to tax the poorest who are already struggling as it is. What we currently have in the UK is: the more you pay, the higher the percentage. eg. £20,000pa pay 25% and 11% NI, £200,000pa pay 50% and 11% NI.

I'm really against this whole idea of completely taking people out of taxation. I completely understand that people are suffering and it's hard enough as is without the government pinching the little you have. But isn't that the whole point of a percentage-based taxation: that if you have very little, you will only be sacrificing very little? Obviously, that little may be more decisive for you than another person's contribution.

But that is the key word for me: contribution. Everyone contributes what they're able to, and takes out what they require to get by. To take someone out of taxation is to say you are so poor, you cannot contribute to society; to me, it's patronising and only reinforces the whole "scroungers" nonsense.

Everyone has their worth. No one should be told they have nothing to offer and are reliant on the rest of society.

To generate the same amount of revenue, wouldn't we have to flat tax people about 50% of their earnings anyway?

I think it would be much less than that, probably around the 25-30% mark. There are millions of people who do not pay anything in income tax as a result of earning less than the personal allowance limit, which is £9440 this financial year. If the flat tax were brought in, all of these people would pay billions, as opposed to the 0 tax, which they currently pay. Nevertheless, you have to consider living costs and therefore this would just be unfair to the poorest.

However, from anecdotal evidence, it seems that the rich are the ones who avoid tax the most frequently, as they are the ones who have to pay the majority of their income as tax.

I personally think the best solution to this problem would be to lower taxation rates overall, whilst closing tax loopholes and ending the culture of making tax 'donations' to HMRC, which has been shown recently by multinational companies such as Starbucks and Google. By lowering tax rates, you are encouraging companies to pay what they owe, as there is less of an incentive to reduce their tax liability. Additionally, by lowering their tax liability, they have more money left over, which means they can invest more capital into increasing employment and R&D, which, ultimately, is going to benefit the economy and help reduce the national debt through increased revenues from income tax overall.

I don't know, lets say as a massive over estimate, that there are 5 million people not paying any tax at the moment, because they don't earn enough. IF we were to flat tax them 25% of their sub 10k earnings that's at a maximum 2.5k per person = 12.5 billion revenue from them.
If there's 1 million people earning ON AVERAGE 200k+ by only taxing them 25% and not 50%, we lose 50 billion revenue from them.

That's not looking into all of the people between 20k and 200k and how much less they would be contributing...

I'm not an economist and I'm only in this thread to expand my understanding I'm not here to correct anyone else's. Just thought I'm throw that in, in case anyone gets cagey or defensive.