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Kill the lower NI rate for higher earners. That’s a rise of 10% or so of income to be paid in tax. This will hve no behavioural effects nor impact upon labour supply because:

The behavioural consequence of this proposal is likely to be small, most especially if the opportunity to avoid national charges by the creation of an investment income surcharge, which will also be recommended in this report, is enacted.

Few people will willingly reduce their contractually due incomes to avoid a tax charge despite the claim made by microeconomists that this is likely. The fact that most people have fixed financial commitments and lifestyles that they wish to maintain does in fact suggest that the opposite might well be the case. It is, therefore assumed that an overall neutral reaction to this change is likely.

Man’s a loon.

22 thoughts on “Potatonomics”

  1. The fact that most people have fixed financial commitments and lifestyles that they wish to maintain

    Must piss Ritchie off something rotten that people still have lifestyles they wish to maintain.

  2. What is his explanation of the wave of people who’ve taken early retirement? That they weren’t taxed enough? That somehow they didn’t have a “lifestyle” to maintain?

  3. After yesterdays lapse I see we’re back to the usual form of demanding tax increases he knows won’t affect him.

    He means he’d force people to work harder to stay where they are. Strip away the obfuscating verbiage from his drivellings and it’s always the same deal.

  4. A 10% rise in tax will affect my behaviours. (The upper limit isn’t that high so it’s a huge increase in tax for higher earners)

    It shows the madness of pretending NI isn’t a tax. A combined tax rate of 58% (45% and 13%) after the 13% employers NI is a tax rate over 65%.

    At what point does he think people will move abroad to places with a 10% tax rate for lower paying work? Never? As the U.K. is so wonderful?

  5. @ Andrew Again
    His next move is to go back to requiring passports for anyone *leaving* the country, not entering it, and these will only be issued to the nomenklatura so dissidents will not be able to escape to a low-tax environment

  6. Andrew C you aren’t a doctor are you, so you’re talking complete nonsense.

    The UK is an absolutely awful place to live due to decades of austerity and Tory or Tory-lite Blairite mismanagement, filled with child poverty, broken health and care, schools falling down, and everything else. But fortunately people making lots of money are absolutely delighted to live here and pay their taxes here, and would be even happier to pay more tax, so they won’t be going anywhere.

    UNLESS they’re underpaid, overworked doctors of course. Even though this the UK is the only country with an NHS and therefore the best healthcare system in the world, which surely all doctors love and cherish, it is nonetheless the case that we must pay doctors far, far more money, as they so richly deserve. Otherwise they will all be legging it to Australia or Canada or even the evil USA whose healthcare system is so awful no British doctor could possibly countenance anything remotely like it. They must be holding their noses to take that money, the poor things. And of course others are retiring early due to the huge taxes on their pensions, which could only possibly affect doctors and not anybody else. But you, sir, are not a doctor are you? So it is incumbent on you to stay here and just work harder to make up for that extra tax bill, and it isn’t even conceivable that your incentives could be anything else.

  7. Hello Anon

    “Andrew C you aren’t a doctor are you,”

    No, I’m not

    ” so you’re talking complete nonsense.”

    I often do but I haven’t commented on this thread.

    Everything else you said – I hope whatever mental seizure you’re suffering soon passes.

  8. Few people will willingly reduce their contractually due incomes to avoid a tax charge

    I’m convinced that V-P is right on the pub-banning theory: this is the kind of thing a pub bore will write when he’s no longer allowed to bore people in pubs.

  9. Absolutely no one currently has pension paid directly by the employer to avoid the NI.
    OK but no one has ever moved to the Channel Islands to avoid tax.
    The absolute fact is, from welfare recipients upwards, if you lose 60% of the next £1 earnt, it’s not worth earning it. Hence people hanging on welfare working just part time, the middle class sticking below £50k so as not to lose child benefits, and millionaires buggering off.

    Anyway there was this chap Laffer, he did some deep thinking on this a few years back.

  10. “The absolute fact is, from welfare recipients upwards, if you lose 60% of the next £1 earnt, it’s not worth earning it”

    The irony is that the same people who decry the withdrawal rate for Universal Credit (55%) as being far too high are the same people who say high tax rates never change behaviour and are a Good Thing.

  11. @ swannypol
    My former employer had a non-contributory pension scheme, primarily to save on the NI (it also saved a lot of admin hassle for employees who chose only to work there for a year or two and forfeited their trivial pension entitlement on leaving instead of having a tiny deferred pension, the administration of which over nearly 40 years of deferral cost more than it was worth).

  12. TMB

    Need to pay a visit there to the pubs in question and find out although the landlords/ managers have probably all changed post COVID. Nothing more to add to Tim’s wholly accurate assessment. Am slightly depressed at the notion there are I think 27 more of these proposals to come. Reminiscent of eating nearly stale bread – which is all we’d have as food if his proposals ever came to fruition.

  13. @VP he’s unlikely to visit any pubs, east cambs being an area that voted for brexit and we know how much he loves the eu (or more specifically the chance to mooch off it). No doubt he’d soon be complaining about brexit supporting gammons if he was to enter for his half pint of shandy. I find it strange that despite him banging the drum for labour he’s not moved to live in any labour controlled areas, his last 2 addresses being in Ely and downham market. Since he’s from Ipswich (not wandsworth) where the local labour council has spent the last few years trying to turn the town into downtown mogadishu I think his choices show his revealed preferences (not to live where labour controls the council)

  14. moquifen @ 7.53, my MP is a Con and the local council is Con and they are turning my town into downtown mogadishu.
    Some good news though. The local ropers got planning permission to extend their ‘Education Centre’ (aka mosque / terrorist training camp/platform for preaching their hate filled ideology from a country that Jordan Henderson is getting slaughtered for for choosing to play football in).

  15. I have to say I got Anon’s sarcasm. And he/she makes a reasonable point – the Laffer curve obviously only affects NHS doctors and no-one else in the UK.

  16. Jim

    I suspect most of us did. As might Andrew C, other than, to him, his name was (inexplicably) the target… Which I think happens to all of us? Ie, if we perceive ourselves being attacked more directly, the usual BS detectors might play second fiddle to something less nuanced? (difference between the comfort of observing something and being in the thick of it?)

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