Britain to lift top income tax rate in 2011

Tax those fat cats!!! Make 'em pay!!! Smack im Kev!

When you want the economy to recover you should actually give the money to the poor because that was you can be sure it actually gets spent and stimulates the economy. Tax cuts for the rich just mean rich people will have bigger bank balances, it doesn't actually help at all. So Brown should keep the tax rate at 17.5% and increase unemployment insurance/minimum wages/tax rates for low income earners. Politically unpopular perhaps, but most effective.

A 15% VAT tax and a 45% income tax. Oh what a joy to be an Englishman.

Heh, many of those fat cats will just take their money out of the country rather than give up 45% of it to the government.

I understand Michael Winner is threatening to leave the UK if hit with what he considers punitive taxation.

For once I can say Good Work, Gordon Brown.

Yeah Britain do de right ting. Tax the rich, way to go!!!

The extra money for welfare is so cool. I heard about Britain people have good whole liofe living on welfare. Man, they make me jealos.

The rich must pay more in evry country, sell their mansion and yacht , kinda, then spread the wealth, yeah sounds kinda coooool!

As a socialist i believe the tax should pay more to society. Blimey, how much does one need to live? Tax increases are need to help our nation, oh yes, only the toffs can afford it so why shouldn't they pay? It won 'T affect them too much. You can't over tax the poor , like working class and pensioners, there would be riots and anarchy, too bleeding right too.

Suppose that every day, the same ten men go out for a few beers and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing. The fifth would pay £1. The sixth would pay £3. The seventh would pay £7. The eighth would pay £12. The ninth would pay £18. The tenth man (the richest) would pay £59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by £20.' Drinks for the ten now cost just £80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the £20 windfall so that everyone would get his 'fair share?' They realized that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid £2 instead of £3 (33%savings). The seventh now pay £5 instead of £7 (28%savings). The eighth now paid £9 instead of £12 (25% savings). The ninth now paid £14 instead of £18 (22% savings). The tenth now paid £49 instead of £59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the bar, the men began to compare their savings.

'I only got a pound out of the £20,'declared the sixth man. He pointed to the tenth man, 'but he got £10'.

'Yeah, that's right,' exclaimed the fifth man. 'I only saved a pound, too. It's unfair that he got ten times more than I got'

'That's true' shouted the seventh man. 'Why should he get £10 back when I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

as to the above post, its poorly designed and fatally flawed. First of all income tax has nothing to do with consumption. That is called a sales tax which is regressive as all pay the same. Whereas the income tax is progressive due to the simple principle of marginality.

Let me put it this way. The rich person can buy one hundred beers if he chooses, the poor only one. The satisfaction for the first beer is the same for both, the second less so for the rich person and so on until he stops drinking well before the amount he cold buy because he is rich. The one hundredth beer, if the rich person cold drink it, would have no satisfaction at all and would probably kill him.

Rich people pay more taxes at a higher level as they make more money and each dollar has less value than those dollars who are earned by the poor. Even bush/palin republicans can understand that. They might not like it because they are so greedy but government should not respect or honor greed by the few.

In reality what would happen in the above story is that the rich person would buy the bar and drink for free and then raise the prices for the poor and middle class drinkers to pay for his free beer. That is called capitalism. And the new twist now that bush has trainwrecked the economy is that if bar goes bankrupt cause the poor get too poor to pay for beer then the government will supply the money so the rich can continue to drink for free. Nice. And of course that comes from taxes that rich people do not want to pay.

zurcronium, it is hard not to enjoy your take on the situation! LOL

'zurcronium' writes:"In reality what would happen in the above story is that the rich person would buy the bar and drink for free..."

What silliness. For starters, "in reality," the Democrats are the party of the rich in America.

I would like to know if the UK has foolishly embraced the genteel liberalism now in vogue in America.

If only France, with TVA at an incredible 19.6%, will follow suit.

nandakandamanda

Excellent analogy. I don't know anyone would even dare to refute it?

It then gets more complicated where Zarc is not following. US tax payers pay for schools that their children don't go, case in point is me and many here on JT. we don't drive on those roads, use any of the states medical insurances, don't get to live in any type of government funded housing, and will never get any business help from the SMB. Yet, we are required to disclose all of our earnings, sure there are ways to get around it but that's not the point at the moment, and are then required to pay our taxes in full regardless how much taxes we pay to Japan, which is the country's whose roads we drive on, our kids attend school and pay into a national health care.

I don't see where that is fair even by a long sure, but then again, a large government has never been fair to its people.

Should I be awed or just amused by the amount of talented economists present here on JT? Perhaps I should mail the British PM and get his attention to the excellent analysis presented here?

Those earning under 40,000 pounds will be better off under the changes, but those earning between 40,000 and 10,000 pounds will pay an average of 156 pounds extra in tax per year, while those earning above 100,000 pounds will pay much higher taxes, the spokesman said.

Between 40,000 and 10,000 should be 'between 40,000 and 100,000, of course. 45% is a lot, but so is an income in excess of 200,000, and so is a VAT of 18~19% for the millions who try to live on minimum level incomes. I am pleased to see the government is trying to do something. Whether it is going to work or not we can judge that later.

In reality what would happen in the above story is that the rich person would buy the bar and drink for free and then raise the prices for the poor and middle class drinkers to pay for his free beer. That is called capitalism.

Nah....If he bought the bar and raised prices on his customers they'd go the local combini and buy a twelve pack and drink at home. He'd be out of business pretty quick. That isn't called capitalism thats called stupidity on the owners part if he wishes to stay in business.

sailwind, the rich person owns the combini too.

Once again, you lose.

Gawd, you can easily see the privilidged and spoilt on these subjects.

Blimey,if poor people are taxed less, they will spend the economy will grow.

If rich are taxed less they find other ways to hide their money to avoid taxes, the money will not go into the communitty.

Jeremy Paxman expertly made these points recently, and i totally agree with him.

zurcronium: "the rich person owns the conbini too. Once again, you lose."

You can't win with zurcronium. Nyuk nyuk nyuk!

Sarge,

that is true in your case, for others it is not true.