That\’s much simpler Mr. Clegg

The Deputy Prime Minister said he was confident his Liberal Democrat party is persuading Conservatives to agree to new taxes on “the top 10 per cent”.

For the top 10% are, around and about, those who already pay higher rate tax. That\’s the 40% rate, not the 45. So just raise that rate then.

Hmm, what\’s that? You didn\’t mean that 10%? Sorry, but that\’s the only one this country has….

10 thoughts on “That\’s much simpler Mr. Clegg”

  1. Point taken, but there’s the top 10% of income earners, and the top 10% of wealth owners. There will be some overlap between these two sets, but they aren’t necessarily the same.

  2. A wealth tax on “the top 10%” would, to a very large extent, involve a levy on the pensions of those in their 60s as the normal course is for the middle-class to save up in order to provide an income in retirement. Some of those in the top 10% by wealth do not and never have paid higher rate tax.

  3. Would a calculation of wealth include the notional capital required to produce a final salary public sector pension? Thought not. Would it include the value of a pension scheme built up in a personal pension? Thought so.

    Thieving bastards.

  4. Some 7 million workers are in the 40% tax band. That might be around 10% of the general population, but it’s more like one in four of the working population, and one in three of the full-time working population. In London that could be around 40% of workers who are caught in the 40% tax bracket. Nice symmetry.

    So when Nick refers to the top 10%, I don’t feel that he’s referring to me. Or maybe I’m much richer than I think I am (despite all evidence to the contrary).

  5. What about the value of the notional capital required to provide a tax free income, as provided by benefits? Thats a huge amount of wealth. A person in receipt of JSA of £70/week would need capital of over £150K, invested at 3%, taxed at 20% to arrive at the same figure in interest. Add in Housing benefits and child tax credits etc and the notional capital rises towards a million very quickly.

    The ‘poor’ are actually very wealthy, in that for no effort they can get the same income that a very wealthy person can achieve from their own investments.

  6. @ Jim #5
    Don’t push it – it’s only the relatively poor who get negative real interest rates, The FTSE-100 is yielding 3.7% net for basic rate taxpayers so on capital of £150k dividend income is £106 per week – excluding capital growth. Since homeowners don’t have to pay rent it isn’t relevant to include Housing Benefit in your calculation of the investment equivalent.
    Obviously the Child Benefit and Child Tax Credits are massive subsidies from the childless (or those whose children have left school) to those with young children but that’s not just to “the poor” but to anyone below the higher rate threshold. The subsidy to middle-aged women in the public sector is, almost certainly, greater than to the poor on JSA.
    If you want real grounds for complaint – when I was working in “transition economies” post-Gorbachev, the average income for full-time workers, supporting a wife and family, was less than the benefits paid to a single mother with one child in almost any US State (in one country a week’s hotel bill for someone working for the World Bank exceeded the national GDP/head for a whole year).

  7. @john77: yes you can get more interest on shares, but that involves risk to capital. I was basing it on what you can get if you put money in the bank (or building society). You’re lucky to get much over 3% at the moment for a monthly income (which is another thing you don’t get with shares either).

    And as for Housing Benefit, it provides a house to live in. So if a home owner is going to have the capital tied up in his house counted as his wealth, a benefit claimant should have the wealth tied up in the income that provides his house counted too.

    The point it that everyone in the UK has a right to a certain level of income, dependent on their personal circumstances (more for people with kids, less for those on their own) , for housing to be provided as well, for free. No need to work, just take it. That to me is a considerable amount of wealth, that is beyond the wildest dreams of the vast majority of the worlds population.

  8. and all of this (deliberately) continues to deflect from the question about why do we have to tax more rather than spend less?

  9. @ Jim
    You have a point – and I can’t dispute it – but the wealthy are wealthy and the discrepancy between the so-called “poor” in the UK and the genuinely poor elsewhere is mind-boggling.
    As an occasional pedant (or whatever hangs from Tim’s neck) I must say that the comparative has to be the PPP income after housing costs – i.e. what can the guy/major income-earner-for-the-household buy for his/her family in the terms of food, clothing, education etc
    I am offended by the claims of poverty by Americans whose benefit cheques exceed the average income of hard-working professionals in transition economies.

  10. @ Mark T
    Wrong question We are doing both. John Redwood points out that government spending has increased in nominal terms but Osborne (mostly his colleagues) have started to reduce it in real terms despite the ratchet effect of the public sector contracts tat they inherited.

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