[Politics] Gary's Economics

[Uh_huh_him]

The simplest way to stop entrepreneurs getting so very, very rich would be to tax employment. If there was some way to ensure that no-one was allowed to gain from the employment of perhaps 10 other people, then no-one could get rich. By and large, people get rich via employment of many, many people.

It depends how the entrepeneur is making their money though.
If an entrepeneur is generating income and jobs in teh economy, paying tax in the country, then they should be given a reasonable amount of leeway.

When an entrepeneur isn't adding to the overall growth of the economy or paying the top rate of tax, then there is a need to address the loopholes.

Nothing wrong with entrepeneurs,

Stevenson is challenging the tax breaks given to people who live off their wealth and aren't growing the economy.

 

[dsr-burnley]

I propose a 15% Employers Tax on everything paid to an employee above a base threshold of £5,000.

That's got to be a votewinner, right?

Exactly. If you can increase the cost to an employer of taking on a new member of staff, they are less likely to do it and so will not make as much profit. (It costs an employer about £1,000 more per year if they want to employ someone on £35k per year, since 1st April. It's bound to reduce employment and profits.) Bringing private businesses into IHT is another way to disincentivise entrepreneurs.

 

[Uh_huh_him]

The specific example Stevenson has quoted is soemone like Rishi Sunak who could reasonably expect a £20m pa income from his wealth.

He can expect to pay a maximum of 22% tax on that income.
And that was when he was under political scrutiny and was probably squeaky clean on many of the loopholes he would have been entitled to.

It does seem crazy to me that someone working and earning £150,000 pa, is paying 47% tax on every thing over £122k

The overall tax burden on someone earning £150k PAYE is 39%
The wealth taxes on passive income for £20m are 22%.

It's not right is it?

 

[Hotchilidog]

The specific example Stevenson has quoted is soemone like Rishi Sunak who could reasonably expect a £20m pa income from his wealth.

He can expect to pay a maximum of 22% tax on that income.
And that was when he was under political scrutiny and was probably squeaky clean on many of the loopholes he would have been entitled to.

It does seem crazy to me that someone working and earning £150,000 pa, is paying 47% tax on every thing over £122k

The overall tax burden on someone earning £150k PAYE is 39%
The wealth taxes on passive income for £20m are 22%.

It's not right is it?

It is not, and that wealth needs to be taxed.

 

[Uh_huh_him]

It is not, and that wealth needs to be taxed.

Yep.

and the point that GS makes, is that the extra income the wealthy have from not paying tax, isn't being spent in the economy.
It's going on buying assets to increase the wealth of the super rich.
Every £ untaxed of the super rich creates more wealth that's taxed (if you're lucky) at a lower rate, than if it was spent on workers paying PAYE.

Even the lowest paid workers will be paying 28% tax.

 

[Uh_huh_him]

Exactly. If you can increase the cost to an employer of taking on a new member of staff, they are less likely to do it and so will not make as much profit. (It costs an employer about £1,000 more per year if they want to employ someone on £35k per year, since 1st April. It's bound to reduce employment and profits.) Bringing private businesses into IHT is another way to disincentivise entrepreneurs.

But Stevenson isn't talking about taxing people who make their money by employing people.

 

[highflyer]

It’s more that fact that it’s a target of someone who’s from a low socioeconomic background, arguing for more financial equality. And then you continue a rumour that’s put out to undercut him. That I don’t get.

Oh. This has been taken the wrong way I think. I liked the analogy and it echoes stuff that Gary Stevenson has said, that the aim of the rich is to pit us against each other so we don't target them. It was just a (poor) play on words. Sorry.

 

[beorhthelm]

Exactly. If you can increase the cost to an employer of taking on a new member of staff, they are less likely to do it and so will not make as much profit. (It costs an employer about £1,000 more per year if they want to employ someone on £35k per year, since 1st April. It's bound to reduce employment and profits.) Bringing private businesses into IHT is another way to disincentivise entrepreneurs.

sorry you've been wooshed, the cost of employees is 15 % already and business are in scope of IHT. but suggesting limiting size and number of employees in a business has to be daftest idea ever.

 

[Uh_huh_him]

It is not, and that wealth needs to be taxed.

Well this is the problem.

It IS being taxed.
But those taxes aren't going up to meet the needs of the country.

Every time the government needs to increase it's receipts, it hits the people at the other end of the scale.

Not only do we pay a higher rate of income taxes, we spend a higher proportion of our income within the economy, paying VAT and the other sales taxes.

 

[Hotchilidog]

Well this is the problem.

It IS being taxed.
But those taxes aren't going up to meet the needs of the country.

Every time the government needs to increase it's receipts, it hits the people at the other end of the scale.

Not only do we pay a higher rate of income taxes, we spend a higher proportion of our income within the economy, paying VAT and the other sales taxes.

I agree. We need to go after that money.

 

[beorhthelm]

The specific example Stevenson has quoted is soemone like Rishi Sunak who could reasonably expect a £20m pa income from his wealth.

He can expect to pay a maximum of 22% tax on that income.
And that was when he was under political scrutiny and was probably squeaky clean on many of the loopholes he would have been entitled to.

It does seem crazy to me that someone working and earning £150,000 pa, is paying 47% tax on every thing over £122k

The overall tax burden on someone earning £150k PAYE is 39%
The wealth taxes on passive income for £20m are 22%.

It's not right is it?

its also false. if Rishi receives any income he'll be taxed 40% past the first 50k.

the issue raised is tax on gains on investments and assets. if you want to tax that at higher rate, there is less incentive to invest in growth, with risks attached, compared to simply sitting in bonds and interest accounts, where you tax the residual income but there's a lot less of it.

Gary wants higher taxes on assets and investments, so that a lot of paper wealth is taken and distributed through government. that will mean less investment and a lot of assets, property, businesses, sold to cover the taxes. that's something many would cheer but lets at least acknowledge the consequence. bear in mind Gary runs a considerably very large portfolio himself, instead of than donating 40% he does not, on the basis of he'll do so when everyone else does.

 

[nicko31]

sorry you've been wooshed, the cost of employees is 15 % already and business are in scope of IHT. but suggesting limiting size and number of employees in a business has to be daftest idea ever.

Think its a wind up TBH

 

[Barnet Seagull]

The problem with tax (in my view) is that it isn't spread widely enough and therefore income earners share too great a burden. If you were able to tax across the entirety of the economy universally, you could do so at a significantly lower rate. I think this will come in the next 20-30 years as people realise that the current economic model is ostensibly flawed. My hope is that we'll have a digital currency, we'll have an automated payment transaction tax levied on every transaction and we'll have some form of universal basic income. The overall tax burden would be felt across the entirety of society and every movement of capital would be subject to taxation. This in effect means that those moving the most money about (financial institutions) have the greatest taxation burden. It also means that the simplest transactions carry the least tax which encourages localisation and community.

 

[Uh_huh_him]

its also false. if Rishi receives any income he'll be taxed 40% past the first 50k.

the issue raised is tax on gains on investments and assets. if you want to tax that at higher rate, there is less incentive to invest in growth, with risks attached, compared to simply sitting in bonds and interest accounts, where you tax the residual income but there's a lot less of it.

Gary wants higher taxes on assets and investments, so that a lot of paper wealth is taken and distributed through government. bear in mind Gary runs a considerably larger portfolio than Rishi ever acheived, instead of than donating 40% he does not, on the basis of he'll do so when everyone else does.

Gary no longer runs a large portfolio
Unless I'm being whooshed.

Sure Rishi pays PAYE tax from his MPs salary, but that isn't the point,
Most of Rishi's income is not from employment.

The idea that the super rich need to be incentivised to invest their wealth, so theeconomy achieves the growth we need to pay for services etc, is a bit of a weak argument.
The rich have significantly increased their net worth over the past 15 years, but we aren't seeing similar increases in growth in the economy.

This is essentially trickle down economics, which is a busted flush.

We need to be looking at other models.

 

[beorhthelm]

Gary no longer runs a large portfolio
Unless I'm being whooshed.

Sure Rishi pays PAYE tax from his MPs salary, but that isn't the point,
Most of Rishi's income is not from employment.

The idea that the super rich need to be incentivised to invest their wealth, so theeconomy achieves the growth we need to pay for services etc, is a bit of a weak argument.
The rich have significantly increased their net worth over the past 15 years, but we aren't seeing similar increases in growth in the economy.

This is essentially trickle down economics, which is a busted flush.

We need to be looking at other models.

was refering to Gary's person portfolio of business and property.

yesturday trillions wiped off market value on a change in investor sentiment, highlights incentives do actually matter a lot. if you want a new model, do so understanding that and accepting the outcomes.

 

[Uh_huh_him]

was refering to Gary's person portfolio of business and property.

yesturday trillions wiped off market value on a change in investor sentiment, highlights incentives do actually matter a lot. if you want a new model, do so understanding that and accepting the outcomes.

I'm sorry, are you suggesting that Gary's personal portfolio is larger than Rishi Sunak's?

 

[dsr-burnley]

But Stevenson isn't talking about taxing people who make their money by employing people.

Badfish was. Badfish, whose post I was referring to, was specifically about entrepreneurs and asking why society as a whole rewards them. Not people who inherit wealth or live off savings income, but entrepreneurs.

 

[dsr-burnley]

sorry you've been wooshed, the cost of employees is 15 % already and business are in scope of IHT. but suggesting limiting size and number of employees in a business has to be daftest idea ever.

Double woosh, sorry. Employer's NIC already is a daft idea IMO and badfish was questioning the wealth of entrepreneurs.

 

[Uh_huh_him]

Double woosh, sorry. Employer's NIC already is a daft idea IMO and badfish was questioning the wealth of entrepreneurs.

All NIC contributions account for approximately 16% of Government revenue.

If we don't collect NIC from employers, where should we take it from?
The workers are already contributing Income tax, NI, VAT, Council tax, and these are all at record levels.

We've had 40 years of privatisation and allegedly cutting the size of the state.
It hasn't worked.

There is undeniably a need for wealth distribution.
in 1977 the average employee earnt approximately 4% of the wage of a CEO, today it is closer to 0.5%.

A far higher proportion of income is spent within the economy by the middle earners, which creates growth and increases the Government's revenue.

I'm all for entrepeneurs receiving tax breaks, but only when their businesses are growing the economy.
Not just generating extreme profits for companies who then pay the bare minimum of tax.

 

[BadFish]

Badfish was. Badfish, whose post I was referring to, was specifically about entrepreneurs and asking why society as a whole rewards them. Not people who inherit wealth or live off savings income, but entrepreneurs.

My post was more about (and I didn't explain it very well) why there seems to be a suggestion that we shouldn't complain about wage stagnation and the cost of living as we can just become entrepreneurs. This idea seems to be quite prominent among those criticising Gary's ideas.

So my question was why have we created a system that rewards entrepreneurs more than other groups of people? What about those of us who don't want to be entrepreneurs? Shouldn't we be able to live a comfortable life, own a home, go on holiday occasionally, help our kids buy a house, etc., by working hard at our preferred jobs and doing our preferred things?

To be clear I was in no way saying that we shouldn't reward entrepreneurs, they are brilliant people who drive us forward and create employment for others. I just noticed that in this discussion the only answer to the question: How can I achieve a decent life style? Is hustle hustle and become an entrepreneur.

I suggest their should be more avenues open.