Monday, March 06, 2006

Is there a missing principle?

I saw parts of Ming's speech yesterday and was particluarly interested in the part about tax policy. I wondered at the time about the 50p rate and whether or not Ming wants to drop it. I concluded that he did but only because of the three principles which he outlined as follows :

First, the tax burden must be lighter for those on lowest incomes.
Second, the tax system must provide incentives to companies and individuals to behave in a way that sustains our environment.
Third, the system must be simple – it must support enterprise and must not stifle it.

To this I would add a fourth " The tax burden should be heavier for those on the highest incomes" To me it is important to be up front about this if we genuinely believe that those who earn the largest amounts in society can and should contribute a little more to the overall tax take.

I would not take exception to dropping the 50p tax rate so long as we retain a method of ensuring that those who can afford a little more pay a little more. There are other ways that such a principle could be implemented as was outlined by Chris Huhne during his campaign where he suggested that we could limit the tax relief on pension contributions for higher earners.

Tag Lib Dems Politics


Joe Taylor said...

"The tax burden should be heavier for those on the highest incomes"

I think that's implicit from the first principle - the question is whether the overall tax burden should be lighter or heavier. Since the overall tax take is a matter of economic expediency and circumstance, rather than pure principle, I don't think it would be right to make it one of our core taxation values.

I think we'd be much better presenting all of our radical goals in specific public service commitments, rather than taxation policy per se: I think that goals and principles should inform revenue collection rather than the other way around!

Anonymous said...

I can't understand why you think it is some kind of intrinsic value to punish those, who make more money. If they are taxed more, that should be to benefit the poor, not to discourage people earning more money than you do.

As for the speech, why not read the whole thing here:

James said...

Both Ming and you are wrong. We should tax those with the least WEALTH the lowest and vice versa.

Concentrating on income is to say that people who live in vast mansions but have a fixed income should be taxed at a lower rate than a struggling family with a mortgage and 2 kids. That is unjust, and it is time the party woke up to the fact.

Tony Ferguson said...

I prefer it to be explicit but I guess you could interpret it as having been written that way, but you could also interpret it (in the context of the current tax system) to mean that there would be two rates one for the lowest paid and one for the rest. I don't believe that our intentions should be to punish those who do well for themselves but I do believe that they are in a better position to contribute to society through taxation. I think James hits the nail on the head in that he is quite right that we need to look at wealth as a whole. Certainly earned and unearned income is essential. the wealth as a whole question is doubtless harder to track and tax but we should be looking at this as well. Although we need to be slightly careful in that someone could be asset rich in terms of their house but income poor in terms of say their pension

James said...

The number of people who are asset rich but income poor is much lower than you might think - Iain McLean did a good study of this for the Party's tax commission.

But we should certainly not be forcing anyone out of their homes, that's why I support the sort of deferred payment systems that, sadly, Sarah Teather last year denounced as "death taxes".

Joe Taylor said...


I don't think it's necessarily any fairer to tax wealth rather than income, given that wealth is either acquired through income or inheirtance, and we already have a tax on inheritance... I also think it's rather dangerous, as you could end up taxing some groups at a level higher than their income - it's all very well saying that the balance could be paid of accrued wealth, but a lot of these assets are tied up in property making it difficult to do so. There could also be some unintended consequences, such as historic stately homes being demolished - a lot of these are in private hands still, and being run on a shoestring as it is.

Also, wealth is considerably more difficult to calculate than income, making the job of running the Inland Revenue a lot more costly than it is now...

I think the only real situation where wealth trumps income as a measure of prosperity is when people are heavily indebted and use a large proportion of their income to service that debt - but that should be tied up with our general approach on personal debt relief.

Tony Ferguson said...

Yes I have concerns about hoiw we would actually assess wealth in practice given the many forms that it might take - Income, cash deposits, stocks and shares, PEPs, Tessas and ISA's, Property, Land, Businesses, Gold, Jewellery and on and on. To say nothing of wealth which is held overseas. Wealth can of course be obtained other than by income or inheritance. Property may rise in value, a businesses value may grow, stocks and shares fluctuate daily on the stockmarket. And as we now know it is so difficult to tell whether ones wealth came from a gift or from income ;-)

Sugardaddy said...

so if i work my butt of and am successful then i should shoulder the burden of paying for someone else's bad choices? class envy is a nasty thing. you want fair? that means treating everyone the same. go to and learn about the national retail sales tax that would (1) treat everyone the same (b) bring in more revenue and (3) have safeguards that the "poor" would not be mistreated.
as for me, i worked my butt off for everything i have. no handouts, no government programs, no inheritance, no nothing. it pisses me off that the State can redistibute my accumulated wealth by the force of a gun to give money to the "less fortunate". wake up guys, luck has nothing to do with it. work your butt off, take risks, and become wealthy. it is that simple

Sugardaddy said...

so i should be punished for my achievment? worked my fingers to the bone, made good choices, took risks, created something that created jobs but since i am considered "rich" or "fortunate" as opposed to the poor less fortunate I should have my wealth redistibuted by the government? sorry, i earned it and it is mine. no inheritance, no gifts, no government subsidies. did it on my own.
you want fair? define it. fair is treating everyone the same way. how bout the fair tax plan? a national retail sales tax that treats everyone the same and provides safety nets for the "less fortunate" . check out their web site.