Scrap Income Tax Allowances?

[Lowbankclaret]

Yes I am sure.
My mother was a Head teacher as was my step dad who was a teacher.

My mother paid some AVC’s so got more than 66.6 %.

As my step father has past away my mother receives half his final salary pension.

Another rule of that pension is that who cannot earn more in retirement than you did whilst working so now her pension is capped and paying AVC’s for years is now absolutely worthless

[Paul Waine]

Those top rates of tax were applied against very high incomes - even today few people earn £20K or more in interest or dividends. The equivalent to today would be about £100K.

You talk about people not being happy having to pay high rates of tax (rather than feeling fortunate enough to earn so much in the first place). What about the many more people not happy because they're forced to choose between heating their homes and feeding their children? And those disabled people who aren't happy because services they rely on to live a reasonable life have been cut? School heads who aren't happy because funding has been cut? When we weigh up the equivalent "not happy" I'm afraid those people not happy about paying more in tax, when they already earn vastly more than average are the ones who get the least of my sympathy.

When it comes to extremely wealthy people - such as your footballer example, how is it going to materially affect their lives if they're forced to pay more tax? Will they go hungry, without clothing, or without shelter? No. Their desire to keep more of what they earn - and especially when they live within a society that has the aforementioned problems - can only be ascribed to greed. When you get to the realm of billionaires, then we have a level of wealth that is even more pointless. Someone like Abramovich (six or seven billion?), can spend a million pounds a year for five or six thousand years without earning a penny. If I had a million pounds, I could give myself an income of fifty thousand a year for twenty years - which would be like having a before tax income of eighty or so thousand a year. Most people would consider that a good gig. Given Abramovich's wealth it would take me a hundred thousand years to get through it. This is beyond the normal parameters of the ethics of property rights. I can understand someone motivated by greed and entitlement not wanting to pay more in tax if they owned this much, but the weight of moral evidence is against them.

The fact that this class of wealthy people has had successive governments running the economy to benefit them rather than everyone else adds a practical argument to the already overwhelming ethical one, as to why we as a society should not tolerate hugely wealthy people. We need a wealth ceiling. Where that ceiling fits is open to question, but there should be one.

Hi Andrew, ok, not surprised by your response. Yes, I know if you haven't got a lot life can be very tough. I agree with you it is the poor that should have our sympathy. But, over-taxing the wealthy isn't the answer to the poor. All it will do is drive the "wealth creators" to move elsewhere and create their wealth elsewhere. Either that, or lead us down the path that Venezuela has followed - and many more countries that have mistakenly believed that socialism is the way to go - so we just end up with many more poor.

"can only be ascribed to greed" - maybe so, or maybe not so. Would you cap all Premier League footballers wages at £20,000/week on the basis that any more is "greedy?" Or, is the reason that one footballer wants to earn more than another because they believe that they are a better footballer? Should Hazard earn the same as Dwight McNeill? (or Ronaldo - scored 2 tonight - except he plays in Italy)? Yes, when we get to the "serious billionaires" it's all about who's got the biggest superyacht and so on - status not so much as greed drives these guys. It's not impossible that status also drives a lot of people in the low income range also. Whatever we'd like, taxation will always fail to change human nature.

So, I take a pragmatic view, what is the level of taxation that will collect the most taxes that can be spent on the things that the people/society/state needs - and will not distort the economy to the extent that people, especially the "low income" people are worse off. I'd always keep this where the individual always keeps "more than half" of what they earn for themselves. Do you think there is "morality" in the state saying "I want to take away more than half your earnings." Who's being greedy if that is the policy?

And, I wouldn't go for a wealth ceiling - it will only lower the "wealth" of the poorest in our society.

[Paul Waine]

Yes I am sure.
My mother was a Head teacher as was my step dad who was a teacher.

My mother paid some AVC’s so got more than 66.6 %.

As my step father has past away my mother receives half his final salary pension.

Another rule of that pension is that who cannot earn more in retirement than you did whilst working so now her pension is capped and paying AVC’s for years is now absolutely worthless

Hi Lowbank, one of the things we discover is that there's never any logic, or fairness, to the pension rules - though I guess MPs are an exception.

[nil_desperandum]

Yes I am sure.
My mother was a Head teacher as was my step dad who was a teacher.

You might be sure but you are incorrect.
As I said, why not go onto the TPS website. I knew without even googling, but as you were so certain, I began to doubt myself - despite having been involved in this for years.
But anyway: This is from the actual TPS website.

Methodology

[b]Final Salary arrangement[/b]
The pension you receive is based upon your Final Average Salary, the number of years of Reckonable Service and the Accrual rate. There is a different accrual rate for the different sections of the Final Salary arrangement. For reckonable Service with a Normal Pension Age (NPA) of 60 the accrual rate is 1/80th, (whereas for reckonable service with a NPA of 65 the accrual rate is 1/60th.)

The formulas to use are therefore:

NPA60: final average salary/80 multiplied by reckonable service (divide any part year by 365 – for example 25 years and 247 days will be 25.67671233).

Example: a member with a final average salary of £30,000 and reckonable service of 25 years and 247 days will have an annual pension of 30,000/80 x 25.67671233 = £9,628.77 upon reaching their NPA of 60.............."

https://www.teacherspensions.co.uk/memb ... ology.aspx" onclick="window.open(this.href);return false;

So in the example of (e.g. Woodley) if you apply that formula he has Final Average Salary divided by 80 and multiplied by 40 for his 40 years. So as i said effectively 50% of final salary. If he worked for only 20 years it would be Final Average Salary divided by 80 and multiplied by 20, so effectively that's 25% of final salary.
Anyone who has 40 years service will be in the Final Salary Scheme formulated above.
It's only in the past decade that the new pension (which is based on career average earnings) for those who can't retire until they are 65 was introduced

[Paul Waine]

You might be sure but you are incorrect.
As I said, why not go onto the TPS website. I knew without even googling, but as you were so certain, I began to doubt myself - despite having been involved in this for years.
But anyway: This is from the actual TPS website.


https://www.teacherspensions.co.uk/memb ... ology.aspx" onclick="window.open(this.href);return false;

So in the example of (e.g. Woodley) if you apply that formula he has Final Average Salary divided by 80 and multiplied by 40 for his 40 years. So as i said effectively 50% of final salary. If he worked for only 20 years it would be Final Average Salary divided by 80 and multiplied by 20, so effectively that's 25% of final salary.
Anyone who has 40 years service will be in the Final Salary Scheme formulated above.
It's only in the past decade that the new pension (which is based on career average earnings) for those who can't retire until they are 65 was introduced

Hi nil_d, I'm sure the info you are getting from TPS is correct - except that I believe that is refering to teachers in service now. I'd expect if you are able to research back a few years you were find when "final average salary" provisions were introduced - it's not that long ago.

Any teachers with service before final average salary was introduced would have their pension split between the two periods..... though I'm not sure what the exact maths would be.

My late father was a teacher - after WWII - service from late 1940s through to late-1980s. His pension was split between different periods, where different rules applied. When he passed away I was surprised to learn that there was a large part of his service when no widow's pension applied. It didn't matter as his wife, my mother, also passed away 2 months later. (They were 89/90 and both had good lives - and you could say, got good value from his pension).

EDIT: I wonder if I am the one who's reading TPS wrongly? Am I making the mistake of mixing "final average salary" with "career average salary?" The latter being average over the period of the career. The former being an average of, possibly, the last 3 years - thus adjusting for teachers who move to part time, or change to a lower paying role?

[nil_desperandum]

Hi nil_d, I'm sure the info you are getting from TPS is correct - except that I believe that is refering to teachers in service now. I'd expect if you are able to research back a few years you were find when "final average salary" provisions were introduced - it's not that long ago.


EDIT: I wonder if I am the one who's reading TPS wrongly? Am I making the mistake of mixing "final average salary" with "career average salary?" The latter being average over the period of the career. The former being an average of, possibly, the last 3 years - thus adjusting for teachers who move to part time, or change to a lower paying role?

Hi Paul,
I tried (apparently unsuccessfully) to explain this to Lowbank, (and for anyone else like yourself who is interested).
I'll go again!
Up until 2007 the pension was based on Final Average Salary, and it was FAS / 80 then multiplied by years service. (That's why I said if you had 40 years in you would be in this scheme, because you would have had to join the scheme in the 1970s to get 40 years).
Following the changes made first in 2007 and again in 2015, it is now based your CAREER Average and is is now FCA / 65 multiplied by years service. The reason - presumably -for the increase is that there is no longer a "lump sum" paid in addition.
I don't know when the FAS / 80 x by years service was introduced, but so far as I can remember this formula was already in existence when I joined the scheme in the late 70s, and anyone with 40 years of contributions would have to be on this scheme.
You are correct incidentally in your assumption that final average salary isn't necessarily your final salary. (in my case for example I went on reduced hours for the final 4 years, so my pension was based on my "final" salary of several years earlier. And of course, as I was only 0.5 for those past 4 years, my years service was reduced by 2. [i.e. 4 years divided by 2])

[mdd2]

THat is correct about many state systems. The NHS has gone from 1/80 with a retirement of a lump sum 1.5 times your annual pension and a pension of x/80 of your final salary and able to retire at 60. Now retirement is state pension age
The new system is based on career average earnings and accruel rate of 1/54 with annual valuation based on CPI +1.5%
Fortunately I do not have to understand it as I am not in the system

[AndrewJB]

Hi Andrew, ok, not surprised by your response. Yes, I know if you haven't got a lot life can be very tough. I agree with you it is the poor that should have our sympathy. But, over-taxing the wealthy isn't the answer to the poor. All it will do is drive the "wealth creators" to move elsewhere and create their wealth elsewhere. Either that, or lead us down the path that Venezuela has followed - and many more countries that have mistakenly believed that socialism is the way to go - so we just end up with many more poor.

"can only be ascribed to greed" - maybe so, or maybe not so. Would you cap all Premier League footballers wages at £20,000/week on the basis that any more is "greedy?" Or, is the reason that one footballer wants to earn more than another because they believe that they are a better footballer? Should Hazard earn the same as Dwight McNeill? (or Ronaldo - scored 2 tonight - except he plays in Italy)? Yes, when we get to the "serious billionaires" it's all about who's got the biggest superyacht and so on - status not so much as greed drives these guys. It's not impossible that status also drives a lot of people in the low income range also. Whatever we'd like, taxation will always fail to change human nature.

So, I take a pragmatic view, what is the level of taxation that will collect the most taxes that can be spent on the things that the people/society/state needs - and will not distort the economy to the extent that people, especially the "low income" people are worse off. I'd always keep this where the individual always keeps "more than half" of what they earn for themselves. Do you think there is "morality" in the state saying "I want to take away more than half your earnings." Who's being greedy if that is the policy?

And, I wouldn't go for a wealth ceiling - it will only lower the "wealth" of the poorest in our society.

You mention footballers - so how did they cope before the maximum wage was abolished? Was football less exciting? Did footballers all suffer from low esteem? Being a supporter of Burnley, I would have thought you'd be behind the idea that players shouldn't pin their status to how much they're paid. And in a society in which nurses have had to use food banks?

An important step forward would be to decouple status from wealth. We've changed the idea of status before - when it was based around how much land and how many people a person controlled. At that time status came down to a person's ability to deploy violence, and we ended this by creating nation states, the rule of law, and eventually democracy. When people competed for status through violence, life was pretty crap for everyone else. Ending this kind of status competition involved putting constraints on what people could do, but I think you'll agree that it worked out well for the common good.

Status competition over wealth by a handful of people is damaging to everyone else. It's pointless, because as I've pointed out nobody needs that much money, and it's dangerous because we're allowing power to be concentrated in just a few unaccountable sets of hands. Putting a ceiling on wealth isn't going to kill people, like austerity has. Just as the barons and warlords of old put away their swords, the super rich will find something else (hopefully more positive) to spend their time doing.

What you don't address through your pragmatic approach to taxation is the issue of need. Poor people won't feed themselves or heat their homes on your sympathy. And nor will disabled people get back their mobility scooters taken away under austerity. You say the government shouldn't take away more than half a person's earnings - regardless of the fact those earnings might be ten million pounds. Let's be honest then, and say that austerity - which has blighted the lives of many disadvantaged people (I would argue most ordinary people too), and even led to suicides and preventable early deaths - is the price we pay for keeping the taxes of the rich low.

[Lowbankclaret]

Hi Paul,
I tried (apparently unsuccessfully) to explain this to Lowbank, (and for anyone else like yourself who is interested).
I'll go again!
Up until 2007 the pension was based on Final Average Salary, and it was FAS / 80 then multiplied by years service. (That's why I said if you had 40 years in you would be in this scheme, because you would have had to join the scheme in the 1970s to get 40 years).
Following the changes made first in 2007 and again in 2015, it is now based your CAREER Average and is is now FCA / 65 multiplied by years service. The reason - presumably -for the increase is that there is no longer a "lump sum" paid in addition.
I don't know when the FAS / 80 x by years service was introduced, but so far as I can remember this formula was already in existence when I joined the scheme in the late 70s, and anyone with 40 years of contributions would have to be on this scheme.
You are correct incidentally in your assumption that final average salary isn't necessarily your final salary. (in my case for example I went on reduced hours for the final 4 years, so my pension was based on my "final" salary of several years earlier. And of course, as I was only 0.5 for those past 4 years, my years service was reduced by 2. [i.e. 4 years divided by 2])

Pensions have changed in many industries over the last few years.

My Mother retired 10 years ago.

I can assure you she got 2/3rds of her salary, will slightly above due to paying AVC’s.
I have looked at she is paid and what she got due to her husband passing away and it now being capped at her final salary on the day she retired.
Today’s rules could well be different, under today’s rules she could never get to a point where her pension was capped.
Ie getting about half her salary and a quarter of her husbands.

[nil_desperandum]

Pensions have changed in many industries over the last few years.

My Mother retired 10 years ago.

I can assure you she got 2/3rds of her salary, will slightly above due to paying AVC’s.
I have looked at she is paid and what she got due to her husband passing away and it now being capped at her final salary on the day she retired.
Today’s rules could well be different, under today’s rules she could never get to a point where her pension was capped.
Ie getting about half her salary and a quarter of her husbands.

Hi.
It's not an argument I wish to pursue, as I don't want to suggest that the figure your mother got is incorrect.
I do however suspect that it was AVCs, and / or other additional contributions that took it to this level since the Final Av Salary / 80 x years service was the scheme operative 10 years ago when she retired.
(As I said, it's all there on the TPS website along with a calculator and methodology, and the dates when it changed to the new Career Av / 65 scheme.)
I will however look into this further to try to find out when the FAS / 80 Scheme was introduced.

[gtclaret]

What has scrapping the tax allowance got to do with pension. The issue is would this being replaced by a £48/week unconditional payment work. It wouldn't, it's a stupid idea

[Hipper]

Whilst I agree it is difficult to change our current financial system as an individual country to me it is clearly necessary and we should look at how to do it.

It is simply not right, if we have any care for others, that there are such extremes of wealth - that is where a few have lots and many have very little.

In the past there were restrictions on movement of money - remember when you could only take £x abroad for your holidays. Maybe we should look along those lines first.

We currently live in what is called a meritocracy. No longer are you wealthy because of inheritance or class. Now it's mostly because of intelligence, talent, hard work, and a fair bit of luck. In the past it was easy to argue that you shouldn't have wealth by dint of your birth. It's less easy to make the case that someone who has a special talent, or who has worked really hard, should not have a fair reward.

The question of course is 'what is fair'. Obscene wealth on the scale of Bill Gates and the rest (not to mention the Royals here) is not fair.

[Lowbankclaret]

Hi.
It's not an argument I wish to pursue, as I don't want to suggest that the figure your mother got is incorrect.
I do however suspect that it was AVCs, and / or other additional contributions that took it to this level since the Final Av Salary / 80 x years service was the scheme operative 10 years ago when she retired.
(As I said, it's all there on the TPS website along with a calculator and methodology, and the dates when it changed to the new Career Av / 65 scheme.)
I will however look into this further to try to find out when the FAS / 80 Scheme was introduced.

I suggest that’s unlikely the level of AVC’ you need to pay to get monthly pension is rediculus.

I have £9000 in my AVC account and that’s going to pay me £20 per month at age 65.

Just so you are also aware, it’s not normal to able to change pension rules on pension paid. It can happen but it’s not normal.

So if you agree a change in 2012, payments and benefits up to that date are calculated at that rate and payments and benefits after 2012 are calculated at the new agreed rate.

Kinda normally how it works.

[Paul Waine]

You mention footballers - so how did they cope before the maximum wage was abolished? Was football less exciting? Did footballers all suffer from low esteem? Being a supporter of Burnley, I would have thought you'd be behind the idea that players shouldn't pin their status to how much they're paid. And in a society in which nurses have had to use food banks?

An important step forward would be to decouple status from wealth. We've changed the idea of status before - when it was based around how much land and how many people a person controlled. At that time status came down to a person's ability to deploy violence, and we ended this by creating nation states, the rule of law, and eventually democracy. When people competed for status through violence, life was pretty crap for everyone else. Ending this kind of status competition involved putting constraints on what people could do, but I think you'll agree that it worked out well for the common good.

Status competition over wealth by a handful of people is damaging to everyone else. It's pointless, because as I've pointed out nobody needs that much money, and it's dangerous because we're allowing power to be concentrated in just a few unaccountable sets of hands. Putting a ceiling on wealth isn't going to kill people, like austerity has. Just as the barons and warlords of old put away their swords, the super rich will find something else (hopefully more positive) to spend their time doing.

What you don't address through your pragmatic approach to taxation is the issue of need. Poor people won't feed themselves or heat their homes on your sympathy. And nor will disabled people get back their mobility scooters taken away under austerity. You say the government shouldn't take away more than half a person's earnings - regardless of the fact those earnings might be ten million pounds. Let's be honest then, and say that austerity - which has blighted the lives of many disadvantaged people (I would argue most ordinary people too), and even led to suicides and preventable early deaths - is the price we pay for keeping the taxes of the rich low.

Hi Andrew, thanks for your detailed response.

Footballers - I think they all caught the bus/tram to the ground when wages were capped. I guess today they'd be driving Ford Mondeo's at best if their wages were still cappend today. The point I'm making about status is it's their status relative to other footballers: the forward who scores hat-tricks would want to be paid more than the forward who wasn't very good at scoring goals.

I believe you are mistaken about "we've changed the idea of status before." When somone controlled land and people that was still wealth that they had - however far back you are going. It's a nice idea "nation states, the rule of law and eventually democracy....." but, it's very much idealised
and not yet true for many countries.

And, why is "status competition over wealth" necessarily damaging to everyone else? It doens't bother me how much Bill Gates made, or Warren Buffet. It doesn't bother me how much Jim Ratcliffe has made - except that I am happy for him, a Lancashire council house kid, who has worked hard (and clever) and made a success - and given well paid work to many.

Have we really experienced "austerity" in the past 10 years, or just a slowing down in the rate of growth of UK government spending? All we've had is necessary constraints because the previous Labour government spent so "high on the hog" - mainly on the taxes that the financial services paid, but then this came to an end when the financial crisis hit.

All "putting a ceiling on wealth" will do is put a ceiling on the money available for the government to tax and the government to spend - and that is what may have the impact that you ascribe to "keeping the taxes of the rich low."

By all means, let's keep taxes fair. That's the way to maximise the money available for the government to spend on the things we need the gov't to spend our taxes on.

[barba]

Not sure if its been covered but its possible under some schemes to take the AVC as a lump sum to replace some of all of the tax free element under the main scheme.

[dsr]

Whilst I agree it is difficult to change our current financial system as an individual country to me it is clearly necessary and we should look at how to do it.

It is simply not right, if we have any care for others, that there are such extremes of wealth - that is where a few have lots and many have very little.

In the past there were restrictions on movement of money - remember when you could only take £x abroad for your holidays. Maybe we should look along those lines first.

We currently live in what is called a meritocracy. No longer are you wealthy because of inheritance or class. Now it's mostly because of intelligence, talent, hard work, and a fair bit of luck. In the past it was easy to argue that you shouldn't have wealth by dint of your birth. It's less easy to make the case that someone who has a special talent, or who has worked really hard, should not have a fair reward.

The question of course is 'what is fair'. Obscene wealth on the scale of Bill Gates and the rest (not to mention the Royals here) is not fair.

As far as wealth goes, from my point of view it makes no difference whether someone owns Gates' billions or a "paltry" million. The man with £1m (if he's my age with my taste in extravagance) has all he needs for the rest of his life; so has Gates. Is it unfair that a man of my age has sold his business and retired, while I never had a business and can't retire yet? No, in that he has practically unlimited wealth and I don't; yes, because he has earned it himself and has provided employment for many.

If procedures were put in place to stop Gates earning billions in the USA, what would he have done? Would he (a) stop developing Microsoft Windows at about Windows 95? (b ) decide that since he couldn't earn any extra money, to lay off the staff and work as a rich one-man band? (c) move somewhere else in the world and develop his computers and pay his taxes and employ his workforce in another country? None of those suggestions would help the economy, even though all three of them may help fairness. Fairness isn't everything.

[Clarets4me]

You mention footballers - so how did they cope before the maximum wage was abolished? Was football less exciting? Did footballers all suffer from low esteem? Being a supporter of Burnley, I would have thought you'd be behind the idea that players shouldn't pin their status to how much they're paid. And in a society in which nurses have had to use food banks?

An important step forward would be to decouple status from wealth. We've changed the idea of status before - when it was based around how much land and how many people a person controlled. At that time status came down to a person's ability to deploy violence, and we ended this by creating nation states, the rule of law, and eventually democracy. When people competed for status through violence, life was pretty crap for everyone else. Ending this kind of status competition involved putting constraints on what people could do, but I think you'll agree that it worked out well for the common good.

Status competition over wealth by a handful of people is damaging to everyone else. It's pointless, because as I've pointed out nobody needs that much money, and it's dangerous because we're allowing power to be concentrated in just a few unaccountable sets of hands. Putting a ceiling on wealth isn't going to kill people, like austerity has. Just as the barons and warlords of old put away their swords, the super rich will find something else (hopefully more positive) to spend their time doing.

What you don't address through your pragmatic approach to taxation is the issue of need. Poor people won't feed themselves or heat their homes on your sympathy. And nor will disabled people get back their mobility scooters taken away under austerity. You say the government shouldn't take away more than half a person's earnings - regardless of the fact those earnings might be ten million pounds. Let's be honest then, and say that austerity - which has blighted the lives of many disadvantaged people (I would argue most ordinary people too), and even led to suicides and preventable early deaths - is the price we pay for keeping the taxes of the rich low.

Whilst I accept you come to this debate with the very best of intentions, you are arguing against human nature, and the natural effect of market forces.

The maximum wage was an abomination, as was the old system of player registration. As now, professional footballers were often from " working class " or even " deprived " backgrounds, and their's is and was a precarious career. Football is often their biggest skill, and to argue that a young man should have his earning potential artificially capped, at, say £20,000 a week, is not right. Our talent would move abroad, and overseas talent would not come here, and so on...

The Income Tax receipts for January 2019, were the highest on record, and as I've mentioned before, the richest 10% pay nearly 60% of all Income Tax, whilst the highest earning 1% pay 27% of all I.T. received. A punative Tax system would also stifle innovation and new business start-ups. Take a moment to do some research into " Starting a business in France " or what happens there once a business employs more than say, 50 people ...

I remember reading of a Russian, who settled in the UK shortly after the Berlin Wall fell, who was astonished when he went to a store and found there was 8 different cork-screws to choose from, in Russia, there was just the " cork-screw ", which hadn't changed in decades, and was still produced by the one factory ..

[dsr]

Status competition over wealth by a handful of people is damaging to everyone else. It's pointless, because as I've pointed out nobody needs that much money, and it's dangerous because we're allowing power to be concentrated in just a few unaccountable sets of hands. Putting a ceiling on wealth isn't going to kill people, like austerity has. Just as the barons and warlords of old put away their swords, the super rich will find something else (hopefully more positive) to spend their time doing.

There are serious implications to this idea. Suppose you limit Bill Gates' wealth, and you stop him making more. Then indeed he will find something else to do with his time. But that "something else" won't involve employing 120,000 people, all of whom will also have to find something else to do with their time. Any suggestions what they can do?

[Hipper]

Perhaps, as someone mentioned above, our ideas of wealth, and progress, should be changed. Just look where we are going with this.

[dsr]

Perhaps, as someone mentioned above, our ideas of wealth, and progress, should be changed. Just look where we are going with this.

Problem is, you can tell people that in theory as a global population that we would be better without our cars, our holidays, our TV and internet, etc etc. But how do you persuade an individual that they will be better off if they don't have holidays or cars or TV?

[AndrewJB]

Hi Andrew, thanks for your detailed response.

Footballers - I think they all caught the bus/tram to the ground when wages were capped. I guess today they'd be driving Ford Mondeo's at best if their wages were still cappend today. The point I'm making about status is it's their status relative to other footballers: the forward who scores hat-tricks would want to be paid more than the forward who wasn't very good at scoring goals.

I believe you are mistaken about "we've changed the idea of status before." When somone controlled land and people that was still wealth that they had - however far back you are going. It's a nice idea "nation states, the rule of law and eventually democracy....." but, it's very much idealised
and not yet true for many countries.

And, why is "status competition over wealth" necessarily damaging to everyone else? It doens't bother me how much Bill Gates made, or Warren Buffet. It doesn't bother me how much Jim Ratcliffe has made - except that I am happy for him, a Lancashire council house kid, who has worked hard (and clever) and made a success - and given well paid work to many.

Have we really experienced "austerity" in the past 10 years, or just a slowing down in the rate of growth of UK government spending? All we've had is necessary constraints because the previous Labour government spent so "high on the hog" - mainly on the taxes that the financial services paid, but then this came to an end when the financial crisis hit.

All "putting a ceiling on wealth" will do is put a ceiling on the money available for the government to tax and the government to spend - and that is what may have the impact that you ascribe to "keeping the taxes of the rich low."

By all means, let's keep taxes fair. That's the way to maximise the money available for the government to spend on the things we need the gov't to spend our taxes on.

When I described us changing the idea of status before I was talking about people using armed force to acquire and hold land, and control populations. No longer do barons or chieftains have small standing armies. Put another way, the freedom of those barons and chieftains was curbed, and we all benefited as a result.

I haven't suggested that we pay everyone the same, or have no role for the free market, but merely that we put a ceiling on wealth (and that ceiling might be in the tens or hundreds of millions). Stratospheric wealth is a danger to our social fabric. The owner of it has the means to subvert democracy, and we already see this. Look at all the "think tanks" (so called taxpayer's alliance, and such) that propagate policies that work to the advantage of the super rich. The newspapers that do the same - again all owned by billionaires. When did you ever read calls for higher taxes on the rich, or a raising of the minimum wage in any of these papers? Rupert Murdoch once described his opposition to Europe as based on the fact UK prime ministers listen to him when he speaks, but nobody in Brussels will. The Tory party is the most obvious culprit - funded by very rich people, and enacts legislation to the benefit of very rich people - but Labour has also courted the very rich. If we enact a ceiling on wealth there will still be people who believe we should privatise the NHS, but they just won't be able to deliver these views into peoples houses on a daily basis.

I don't think most people would share your view of austerity, but the facts are there about cuts to local government and the growth in various kinds (child for example) of poverty. You might not see the link between the huge government bailouts, and the propping up of asset prices through quantitative easing; and then the burden of austerity falling on those who can least afford it, so I'd guess you see it as a coincidence.

[AndrewJB]

Whilst I accept you come to this debate with the very best of intentions, you are arguing against human nature, and the natural effect of market forces.

The maximum wage was an abomination, as was the old system of player registration. As now, professional footballers were often from " working class " or even " deprived " backgrounds, and their's is and was a precarious career. Football is often their biggest skill, and to argue that a young man should have his earning potential artificially capped, at, say £20,000 a week, is not right. Our talent would move abroad, and overseas talent would not come here, and so on...

The Income Tax receipts for January 2019, were the highest on record, and as I've mentioned before, the richest 10% pay nearly 60% of all Income Tax, whilst the highest earning 1% pay 27% of all I.T. received. A punative Tax system would also stifle innovation and new business start-ups. Take a moment to do some research into " Starting a business in France " or what happens there once a business employs more than say, 50 people ...

I remember reading of a Russian, who settled in the UK shortly after the Berlin Wall fell, who was astonished when he went to a store and found there was 8 different cork-screws to choose from, in Russia, there was just the " cork-screw ", which hadn't changed in decades, and was still produced by the one factory ..

I am arguing against human nature and market forces - though market forces themselves are a human construct based around the respect for property rights. Market forces are already constrained in many ways - and arguably these constraints are in place so that capitalism doesn't eat itself (laws against monopolies, etc). Other constraints on market forces are in place for ethical reasons (food standards). Having a ceiling on wealth might fit both of those reasons. Ethical, for preventing a concentration of unelected power, and practical because a billionaire grossly distorts a market.

I'm not proposing ending the free market, but your corkscrew story was interesting anyway.

[AndrewJB]

There are serious implications to this idea. Suppose you limit Bill Gates' wealth, and you stop him making more. Then indeed he will find something else to do with his time. But that "something else" won't involve employing 120,000 people, all of whom will also have to find something else to do with their time. Any suggestions what they can do?

Bill Gates is often brought up as a reason why people should be allowed to get as rich as they can. Inherited wealth less so. Bill Gates didn't work as hard as forty-thousand millionaires. A lot of his fortune came from buying up other companies that invented things. Most self-made people say their first million was earned by a lot of hard work, but the next few rolled in easily. Maybe this is part of the problem?

I agree that a wealth ceiling could act as a disincentive to work - which is why I think it should be set at a level at which very few people would reach it. Would someone like Gates just quit? Who knows? But the need for his product would continue, so I can't see why his (ex) employees would end up without work. Why just ask Bill Gates? Why can we not ask ourselves? Would I agree to having my personal wealth capped at twenty-five million pounds if this was part of a government policy to keep individuals from becoming overly powerful, and as part of an effort to make the economy more fair? My answer would be yes. What would you say?

[dsr]

I agree that a wealth ceiling could act as a disincentive to work - which is why I think it should be set at a level at which very few people would reach it. Would someone like Gates just quit? Who knows? But the need for his product would continue, so I can't see why his (ex) employees would end up without work. Why just ask Bill Gates? Why can we not ask ourselves? Would I agree to having my personal wealth capped at twenty-five million pounds if this was part of a government policy to keep individuals from becoming overly powerful, and as part of an effort to make the economy more fair? My answer would be yes. What would you say?

In common with communists the world over, I would ensure that any such deal I agreed to would not affect me, only people richer than me.

Bill Gates has actually given £28 billion away, and plans to give a lot lot more.

Your policy would stop nice, kindly moguls from building fortunes. It wouldn't stop more mercenary types from leaving the country and employing people elsewhere.

[Paul Waine]

When I described us changing the idea of status before I was talking about people using armed force to acquire and hold land, and control populations. No longer do barons or chieftains have small standing armies. Put another way, the freedom of those barons and chieftains was curbed, and we all benefited as a result.

I haven't suggested that we pay everyone the same, or have no role for the free market, but merely that we put a ceiling on wealth (and that ceiling might be in the tens or hundreds of millions). Stratospheric wealth is a danger to our social fabric. The owner of it has the means to subvert democracy, and we already see this. Look at all the "think tanks" (so called taxpayer's alliance, and such) that propagate policies that work to the advantage of the super rich. The newspapers that do the same - again all owned by billionaires. When did you ever read calls for higher taxes on the rich, or a raising of the minimum wage in any of these papers? Rupert Murdoch once described his opposition to Europe as based on the fact UK prime ministers listen to him when he speaks, but nobody in Brussels will. The Tory party is the most obvious culprit - funded by very rich people, and enacts legislation to the benefit of very rich people - but Labour has also courted the very rich. If we enact a ceiling on wealth there will still be people who believe we should privatise the NHS, but they just won't be able to deliver these views into peoples houses on a daily basis.

I don't think most people would share your view of austerity, but the facts are there about cuts to local government and the growth in various kinds (child for example) of poverty. You might not see the link between the huge government bailouts, and the propping up of asset prices through quantitative easing; and then the burden of austerity falling on those who can least afford it, so I'd guess you see it as a coincidence.

Hi Andrew, ok, if we take "curbing barons or chieftains" as applying the rule of law, equally and without favour, to all, then I'm in full agreement with you. My proposition that the desire for status being no more than human nature is not arguing for the existence of "barons or chieftains." Status can be within a small group, whether this is the football team, the Burnley fans who post on this mb, or any other "social group." I've posted a number of times on here that the UK should abolish the House of Lords - and replace it with an Assembly of Knowledgeable Persons (because the legislature can perform better with a second chamber to debate and scrutinise draft laws, preferably without the "taint" of political bias). I've also posted that all honours, whether knighthoods, OBEs, MBEs (and whatever else they have) should be abolished - for all. Yes, I wouldn't even give them to "world cup" winning captains or retired football managers, and, of course, most definitely not to any businessperson (whether or not we believed at the time they've been paying their taxes and maintaining the health of their pension funds....) and, doubly not, if they have ever given as much as one penny to a political party.

So, I woudn't elevate anyone over the rest of us in society. But, equally I woudn't discriminate against anyone's ability to earn money and accumulate wealth. I will treat them equally in terms of their taxation as with everyone elses taxation.

I've no idea why you would think "stratospheric wealth is a danger to our social fabric." (I'm certainly no Pikkety fan). I think we can stop any concerns of anyone's wealth "subverting democracy" by abolishing all the honours - and any other sense of deference to people because of their wealth. (We often make the same mistake of courting the views of people because they've appeared on tv or films and the like. I feel Gary Lineker feels that hosting MotD gives his political views stronger credence than others).

And, on the NHS, yes, I think we would all have a better health care system in the UK if it wasn't run and owned by the government. Most of the countries in Europe operate their health care systems through compulsory health insurance - with protections that ensure the poor have their insurance provided for them. The UK would be better off if we copied from the systems in Europe. This "making the NHS stand for all things holy and sacred" gives the impression that very few of our politicians have left the shores of Great Britain and discovered how much better the national health systems are for our European neighbours. Strange one that, don't you think, when most of our politicians favour "remaining" in the EU.

Anyway, I'm sure we can agree to disagree, Andrew.

Let's enjoy the game - and 3 points, please.

UTC

[Paul Waine]

Bill Gates is often brought up as a reason why people should be allowed to get as rich as they can. Inherited wealth less so. Bill Gates didn't work as hard as forty-thousand millionaires. A lot of his fortune came from buying up other companies that invented things. Most self-made people say their first million was earned by a lot of hard work, but the next few rolled in easily. Maybe this is part of the problem?

I agree that a wealth ceiling could act as a disincentive to work - which is why I think it should be set at a level at which very few people would reach it. Would someone like Gates just quit? Who knows? But the need for his product would continue, so I can't see why his (ex) employees would end up without work. Why just ask Bill Gates? Why can we not ask ourselves? Would I agree to having my personal wealth capped at twenty-five million pounds if this was part of a government policy to keep individuals from becoming overly powerful, and as part of an effort to make the economy more fair? My answer would be yes. What would you say?

Hi Andrew, pure coincidence, there was an article about Bill Gates in yesterday's Times Magazine. Well worth a read - and explains what 1 billionaire is doing with his money.

Bill Gates: from Microsoft to saving lives with Gavi and the Global Fund

It's long - I'm hoping this link will work:

https://www.thetimes.co.uk/article/bill ... 9c02dd1a57" onclick="window.open(this.href);return false;

[AndrewJB]

Hi Andrew, pure coincidence, there was an article about Bill Gates in yesterday's Times Magazine. Well worth a read - and explains what 1 billionaire is doing with his money.

Bill Gates: from Microsoft to saving lives with Gavi and the Global Fund

It's long - I'm hoping this link will work:

https://www.thetimes.co.uk/article/bill ... 9c02dd1a57" onclick="window.open(this.href);return false;

Shame about the football this weekend.

I think most billionaires have charities they fund, and considering the vastness of what a billion is I'd be surprised if their donations weren't enormous by an ordinary person's standard. Dashing off a cheque for thirty, fifty, or a hundred thousand pounds is nothing to the very rich. That's not the sort of money I would hazard anyone on this board just has down the back of their sofas. With such wealth it's also possible to (and many do this) fund economic think tanks, political parties, media campaigns, and meet with politicians to ensure the interests of their tiny class are looked after. Beyond this they can employ accountants, lawyers, and fund legal challenges in order to look after their own financial interests - and this includes ensuring their tax obligations are kept low.

You've said it's unfair for someone to have to contribute more than half their income in taxation. George Soros has talked about having paid less tax as a percentage of his income than his own secretary - who earns only a tiny fraction of what he does. When Philip Green (or his wife who is the legal owner of the company) took out a £2.5 Billion dividend, no income taxes were due, because his wife lives in Monaco. It's legal, but it's a massive tax loophole, and one ordinary people could never take advantage of.

Nobody who is very rich is paying anywhere near half their income in taxes. It's people on average and low incomes who pay the greatest percentage of their incomes in taxes. How does your sense of fairness engage with this?

My argument is the reason the system is set up this way is that the very rich have lobbied for decades for a little change here and a little change there that benefit them, and when the crash came they lobbied to get the cost of the problem paid out of public spending, rather than to cough up themselves. The newspapers they owned went on a lot about "welfare scroungers" and disabled people who were ripping off the country, but it was all a distraction from what little they were paying in tax.

You've mentioned before, "don't tax people too much, or they'll leave" during these discussions. People leave the UK for many reasons all the time, but I don't see you advocating we take steps to make them all stay. This is because you feel the very rich are important to this country because of what they own. I would say that if they already have so much economic power, then it proves my point that we shouldn't tolerate the power of billionaires.

[Paul Waine]

Shame about the football this weekend.

I think most billionaires have charities they fund, and considering the vastness of what a billion is I'd be surprised if their donations weren't enormous by an ordinary person's standard. Dashing off a cheque for thirty, fifty, or a hundred thousand pounds is nothing to the very rich. That's not the sort of money I would hazard anyone on this board just has down the back of their sofas. With such wealth it's also possible to (and many do this) fund economic think tanks, political parties, media campaigns, and meet with politicians to ensure the interests of their tiny class are looked after. Beyond this they can employ accountants, lawyers, and fund legal challenges in order to look after their own financial interests - and this includes ensuring their tax obligations are kept low.

You've said it's unfair for someone to have to contribute more than half their income in taxation. George Soros has talked about having paid less tax as a percentage of his income than his own secretary - who earns only a tiny fraction of what he does. When Philip Green (or his wife who is the legal owner of the company) took out a £2.5 Billion dividend, no income taxes were due, because his wife lives in Monaco. It's legal, but it's a massive tax loophole, and one ordinary people could never take advantage of.

Nobody who is very rich is paying anywhere near half their income in taxes. It's people on average and low incomes who pay the greatest percentage of their incomes in taxes. How does your sense of fairness engage with this?

My argument is the reason the system is set up this way is that the very rich have lobbied for decades for a little change here and a little change there that benefit them, and when the crash came they lobbied to get the cost of the problem paid out of public spending, rather than to cough up themselves. The newspapers they owned went on a lot about "welfare scroungers" and disabled people who were ripping off the country, but it was all a distraction from what little they were paying in tax.

You've mentioned before, "don't tax people too much, or they'll leave" during these discussions. People leave the UK for many reasons all the time, but I don't see you advocating we take steps to make them all stay. This is because you feel the very rich are important to this country because of what they own. I would say that if they already have so much economic power, then it proves my point that we shouldn't tolerate the power of billionaires.

Hi Andrew, I can see we are on very different wave lengths. Bill Gates is a citizen of USA, George Soros is Hungarian, I believe, by birth. I'm not sure where he is now a citizen of, or where he is "tax resident."

Yes, you recognise that Mrs Green lives in Monaco - I believe the big dividend ws £1.2 billion. Maybe she's taken out more, since... I don't know.

my point is that you've got to think of the international scene. I'm not sure what you are arguing with "people leave the UK for many reasons all the time, but I don't see you advocating we take steps to make them all stay." Ah, now, I get it. You are contrasting the UK's tax policies, which you believe are set to persuade billionaires to stay, with allowing "ordinary people" the right to emigrate and not develop policies that will make them stay. Is that logical?

I believe in freedom. Anyone can come to the UK, anyone can choose to leave the UK - so long as they comply with the immigration regs of the country they are moving to. You are mistaken that this means I am arguing that we should "favour" billionaires - we should do no more than treat them the same as everyone else.

So, of course, it's also logical for me to suggest that we have an income tax policy that doesn't drive away the people with the highest incomes who have got the freedom to move elsewhere. There are international agreements on the taxation of dividend which, generally, mean that dividend income is subject to tax in the country of the owner of the shares. As Monaco's income tax rate is zero, then Mrs Green paid zero tax.

Percentage of income paid in taxes? Yes, we have too many "tax relief" schemes. These schemes - which people with ordinary levels of income can never benefit from - should be ended. I'm not in favour of trust schemes, tax relief on film "investments" (introduced by Gordon Brown - exploited by footballers and others with high incomes), similarly "employee benefit trust" payment via loan schemes (again, developed under Gordon Brown). I'd also ban anyone who is in the UK on a "non-domiciled" tax basis from taking part in UK political life. (Yes, that would get rid of some Tory peers).

Again, Soros isn't a UK tax payer (so far as I'm aware) - so, I don't know what tax regime he was comparing his own income and tax percentage with the income and tax percentage of his secretary. My guess is he's in the US - and, in the US there are no income tax allowances for the first slice of income - so, arrange your tax affairs to take advantage of "allowances" it is quite possible that the percentage paid in tax is higher on the person on the lower income. I don't know, has anyone made the same claim in the UK? (apart from the Jimmy Carr style arrangements - that should never have been possible).

And, yes, I'm with you - we should "clean up" our tax system. It is over complicated and stuffed full of illogical and contradictory rules. You will never get any argument from me about simplifying the tax system. But, I still be happy with a top rate of income tax of 40%.

Have a great day.