UK General Election 2015

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Originally Posted by rjbetty

So that's it. They're in power on their own; a bit of a surprise maybe. Well if they really want to encourage more people to work, they might do well to consider that abolishing of income tax for minimum wage folks.

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Average hours in the UK is 43.6

This works out to be:
£6.50 * 40 = £283.40
£260.00 * 52 = £14,736

£14,736 - £10,600 = £4136
Assessed at 20% = £827.20

That works out to be an effective rate of taxation of just 5.61%
Last year, my effective rate of taxation was 18.383%
Admittedly, I don't live in the UK but, 5.61% seems like a fairly reasonable sort of rate to pay for the trappings of civilisation like roads, schools, hospitals, the defence forces, the judiciary and what not.

Also, abolishing of income tax for minimum wage folks isn't going to encourage more people to work. Income tax is an end cost; not an initial input driver in the equilibrium position of wages.

The best solution would be to set a rate on passive income (such as dividends, rents and bonuses) at something like 50%, which would change the nature of capital flows. Then have government directly employ more people, which would have effects on labour markets.

Hmmm maybe you're right. It's just the pressure and another long night talking...

Well, leaving the EU is now a genuine risk, the Tory right wing will paralyse any attempt by Cameron to fight for staying in.

Also life is going to get very tough for anyone who relies on any form of benefits or tax breaks whatsoever. £12 billion of welfare savings isn't going to come from nowhere.

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Originally Posted by Malbec

Well, leaving the EU is now a genuine risk, the Tory right wing will paralyse any attempt by Cameron to fight for staying in.

Also life is going to get very tough for anyone who relies on any form of benefits or tax breaks whatsoever. £12 billion of welfare savings isn't going to come from nowhere.

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Yes I am rather concerned about this. It's good in some ways they want people to pull their socks up and get in to work, but some people genuinely are in situations where this would be unfeasible. For example, it is possible to be unwell yet not be able to get an official diagnosis (I know for a fact not every person is a faker).

It's a shame they won't be at all hard on the rich in any way...


As for the EU, I actually may not mind a moderate amount of distancing to happen as I do believe there is a lot of corruption in Europe.

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Originally Posted by Rollo

The best solution would be to set a rate on passive income (such as dividends, rents and bonuses) at something like 50%, which would change the nature of capital flows. Then have government directly employ more people, which would have effects on labour markets.

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Not sure how it would work there, but here that proposal would be devastating to retired people. For many, income from interest and dividends, from investments acquired over their working life, represent a substantial portion of their total income.

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Originally Posted by Starter

Not sure how it would work there, but here that proposal would be devastating to retired people. For many, income from interest and dividends, from investments acquired over their working life, represent a substantial portion of their total income.

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I wonder if such a tax would dissuade people from saving at all?

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Originally Posted by Starter

Not sure how it would work there, but here that proposal would be devastating to retired people. For many, income from interest and dividends, from investments acquired over their working life, represent a substantial portion of their total income.

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The thing is though, if you exempt retirement funds from taxation, then that's where capital gets diverted. Capital is like water, it follows the path of least resistance.

The effects of that in Australia, have been that capital from retirement funds have flowed directly into the housing market. That's fine except that the price of a house in Sydney in particular has risen from 4.3 times average wage in 2000 to more than 10 times today.
First-home buyers account for less than 2% of home loans in NSW. I mean that's cool, provided you don't mind locking an entire generation from the housing market.

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Originally Posted by Rollo

The thing is though, if you exempt retirement funds from taxation, then that's where capital gets diverted. Capital is like water, it follows the path of least resistance.

The effects of that in Australia, have been that capital from retirement funds have flowed directly into the housing market. That's fine except that the price of a house in Sydney in particular has risen from 4.3 times average wage in 2000 to more than 10 times today.
First-home buyers account for less than 2% of home loans in NSW. I mean that's cool, provided you don't mind locking an entire generation from the housing market.

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OK, so who are you going to screw? The young or the old? Or, as is the case with most politicians, both.

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Originally Posted by Starter

OK, so who are you going to screw? The young or the old? Or, as is the case with most politicians, both.

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In the UK the old are more likely to vote, so it is usually the young that get screwed.

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Originally Posted by Starter

OK, so who are you going to screw? The young or the old? Or, as is the case with most politicians, both.

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I ask the question of who it's more ethical to extract taxation from - those who actually work for a living, or those who live off of the work of others?

In principle, all the income derived from dividends, interest and rent, all comes from the real work of people who actually do work. Despite what the financial sector would like to have us believe, their income comes about by the condensation of capital to the existing pile.
When bankers and financial institutions get paid millions and derive millions in profit, where did the actual work come from to derive that profit?