Why have higher taxation?

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    It seems to be a common argument by many on the left nowadays to massively increase taxation on the rich. I know, admittedly, very little about economics but with the findings of the laffer curve, how can high taxation be argued for?
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    (Original post by TheBirdman)
    It seems to be a common argument by many on the left nowadays to massively increase taxation on the rich. I know, admittedly, very little about economics but with the findings of the laffer curve, how can high taxation be argued for?
    The Laffer Curve is useless.
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    (Original post by BasicMistake)
    The Laffer Curve is useless.
    How so?
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    (Original post by BasicMistake)
    The Laffer Curve is useless.
    And there's your BasicMistake

    (Original post by TheBirdman)
    How so?
    Because it goes against the beliefs held, and thus must be wrong.
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    Basically the aim of taxation is to take money from those who don't need it and to redistribute it to people or important projects that do, while making sure that richer people are still richer people. Higher tax rates on the rich means taking more money from those with little need for it, and thus being able to allocate more money towards welfare. There's not much of an ethical problem with this, however if you go overboard you'll get rich people moving abroad, which is not too good for our economy.
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    (Original post by TimGB)
    Basically the aim of taxation is to take money from those who don't need it and to redistribute it to people or important projects that do, while making sure that richer people are still richer people. Higher tax rates on the rich means taking more money from those with little need for it, and thus being able to allocate more money towards welfare. There's not much of an ethical problem with this, however if you go overboard you'll get rich people moving abroad, which is not too good for our economy.
    So you don't see punishing success as an ethical issue, or even in a world where people for some reason believe everybody is and should be treated equally, advocating discrimination on the grounds of income?
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    (Original post by TimGB)
    Basically the aim of taxation is to take money from those who don't need it and to redistribute it to people or important projects that do, while making sure that richer people are still richer people. Higher tax rates on the rich means taking more money from those with little need for it, and thus being able to allocate more money towards welfare. There's not much of an ethical problem with this, however if you go overboard you'll get rich people moving abroad, which is not too good for our economy.
    Couldn't it be argued that with the current highest taxation rate being at 45%, essentially almost half, there is still the ethical problem of taking away a large amount of money from those who've often succeeded. It may not affect the incredibly wealthy but for those earning just over £150,000 it is a substantial amount.
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    (Original post by Jammy Duel)
    So you don't see punishing success as an ethical issue, or even in a world where people for some reason believe everybody is and should be treated equally, advocating discrimination on the grounds of income?
    I do not see it as punishing success. If you are richer than anyone before tax then you are richer than them after tax. Harder work and success gets you richer, what's wrong with that?
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    (Original post by TimGB)
    If you are richer than anyone before tax then you are richer than them after tax
    No you're not. Not always.


    Edited out: some nonsense written when I was half asleep.
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    (Original post by TheBirdman)
    Couldn't it be argued that with the current highest taxation rate being at 45%, essentially almost half, there is still the ethical problem of taking away a large amount of money from those who've often succeeded. It may not affect the incredibly wealthy but for those earning just over £150,000 it is a substantial amount.
    Doesn't tax work in brackets though? e.g. If you make enough to be in that top bracket, only the amount over that threshold is taxed at that 45% rate, not your whole income? Or do I have it wrong?
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    (Original post by TheBirdman)
    Couldn't it be argued that with the current highest taxation rate being at 45%, essentially almost half, there is still the ethical problem of taking away a large amount of money from those who've often succeeded. It may not affect the incredibly wealthy but for those earning just over £150,000 it is a substantial amount.
    Remember we have a progressive tax system. So the 45% is only paid on the stuff above £150,000. So someone with around £150,000 would mostly pay the lower brackets.
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    (Original post by RF_PineMarten)
    Doesn't tax work in brackets though? e.g. If you make enough to be in that top bracket, only the amount over that threshold is taxed at that 45% rate, not your whole income? Or do I have it wrong?
    It does.

    For example just because you start earning over 11k which is the personal allowance for everyone wherein you pay no tax, that doesn't mean if you earn 12k you have to pay tax on all 12k of it... you only pay tax on the 1k above your 11k allowance...
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    (Original post by Drewski)
    No you're not. Not always.

    If you earn £1 under the threshold and get taxed at one rate but someone else gets paid £1 over the threshold and gets taxed at another rate, you'll be substantially better off than them after tax has been removed.
    That's not how tax works...

    In the UK, the tax brackets are as follows:

    0% up to £11,000

    20% from £11,000 to £43,000

    40% from £43,001 to £150,000

    45% from £150,001 upwards


    Let's say you're earning £43,001.

    You pay nothing for the first £11,000

    Then you pay 20% on the next £32,000

    And finally 40% on the last £1

    You do not pay 40% on the whole thing. Looking at this it is easy to see how someone on £42,999 would still end up with less money than the person with £43,001.
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    (Original post by TimGB)
    That's not how tax works...
    Your ****ing alpaca looks like Arceus. Why lmao.
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    (Original post by TorpidPhil)
    Your ****ing alpaca looks like Arceus. Why lmao.
    I just found it on google images. It's great isn't it?
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    (Original post by TheBirdman)
    Couldn't it be argued that with the current highest taxation rate being at 45%, essentially almost half, there is still the ethical problem of taking away a large amount of money from those who've often succeeded. It may not affect the incredibly wealthy but for those earning just over £150,000 it is a substantial amount.
    Given a progressive tax system I don't think it is a great moral issue since anyone who earns more pre-tax also earns more post-tax, assuming their income is fairly standard (income from owned firms get double taxed via corporation tax and there are other niche examples like that, but for the most part it is true and hey business is not meant to be fair anyway; it is all about risk).

    I think not being able to provide a solid welfare system, infrastructure and local government thus reducing the quality of life for the greater populace by far more, is a far greater moral concern, but hey, call me a consequentialist...

    In and of itself I see very little reason to encourage "success". What's so important about it innately?

    (Original post by TheBirdman)
    How so?
    The laffer curve is entirely hypothetical and doesn't specify any specific tax rate that would be optimal. There is no reason to believe it would be near the centre either, really. What would be optimal would likely depend on many social factors. Therefore you are gonna need separate rates for everyone really - as different people have different spending habits (and of course not all pounds spent are equally as good for the economy) and elasticity of tax essentially. Annnnd that will change over time and with each part of the country nevermind which country. So it has to be simplified and a non-optimal, but fairly close to optimal amount chosen just to be realistic. Presumably the incumbent government thinks its rates are that. And sometimes the analysis needed to accurately check whether it is close or not costs more than it is worth changing it...


    (Original post by TimGB)
    It's great isn't it?
    I love it haha.
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    (Original post by TimGB)
    That's not how tax works...

    In the UK, the tax brackets are as follows:

    0% up to £11,000

    20% from £11,000 to £43,000

    40% from £43,001 to £150,000

    45% from £150,001 upwards


    Let's say you're earning £43,001.

    You pay nothing for the first £11,000

    Then you pay 20% on the next £32,000

    And finally 40% on the last £1

    You do not pay 40% on the whole thing. Looking at this it is easy to see how someone on £42,999 would still end up with less money than the person with £43,001.
    Yes. However if you're earning over £122,000 you have a £0 personal allowance.
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    (Original post by TheBirdman)
    Yes. However if you're earning over £122,000 you have a £0 personal allowance.
    This is progressive too:

    3. Income over £100,000 Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £122,000 or above.

    Since obviously 122k-100k = 22k

    22k/£2 = 11k off your personal allowance = no allowance.

    Comeon, the government isn't THAT stupid guys =P
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    (Original post by TheBirdman)
    Yes. However if you're earning over £122,000 you have a £0 personal allowance.
    I don't think that will make anyone richer than someone that they weren't richer than before though, since the allowance reduction comes into play in the middle of the 40% bracket, and happens very gradually. Still, it's an interesting thing I did not know about, and something to take into account when doing large tax calculations.
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    (Original post by TorpidPhil)
    Given a progressive tax system I don't think it is a great moral issue since anyone who earns more pre-tax also earns more post-tax, assuming their income is fairly standard (income from owned firms get double taxed via corporation tax and there are other niche examples like that, but for the most part it is true and hey business is not meant to be fair anyway; it is all about risk).

    I think not being able to provide a solid welfare system, infrastructure and local government thus reducing the quality of life for the greater populace by far more, is a far greater moral concern, but hey, call me a consequentialist...

    In and of itself I see very little reason to encourage "success". What's so important about it innately?



    The laffer curve is entirely hypothetical and doesn't specify any specific tax rate that would be optimal. There is no reason to believe it would be near the centre either, really. What would be optimal would likely depend on many social factors. Therefore you are gonna need separate rates for everyone really - as different people have different spending habits (and of course not all pounds spent are equally as good for the economy) and elasticity of tax essentially. Annnnd that will change over time and with each part of the country nevermind which country. So it has to be simplified and a non-optimal, but fairly close to optimal amount chosen just to be realistic. Presumably the incumbent government thinks its rates are that. And sometimes the analysis needed to accurately check whether it is close or not costs more than it is worth changing it...




    I love it haha.
    Thanks for the response. As for the importance of success, social inequality can be justified by the fact the most successful tend to provide a high quantity of jobs and without few very successful people/companies great multinationals and companies that currently benefit the economy would cease to exist. For example, if Bill Gates had not become successful the economy wouldn't have reaped the benefits of Microsoft, nor would consumers who benefit from the product. Although through high taxation, the rich will still be richer than those below, I do not believe taxation should be too high as it is essentially theft from those who worked for what they own: even if they still remain rich afterwards. But I guess that's more a battle of libertarianism vs authoritarianism to different extremes.
 
 
 
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