Whilst I agree a flat percentage on principle, it also has the potential to lose billions from various avenues.
Football players make on average £86000 a week in the premiership. They are taxed at 50%, which means £43000 goes to the government per week. If we had say a flat 20% (for example) then on the footballers wages, the government would only get £17200, thereby making a deficit.
Factor in most footballers also import food, drink, cars, and pay for houses through a corporation and "gift" them to themselves, they pay no stamp duty etc. It isn't a good system.
I still believe that things would balance out. Forget about the business tax for a moment, ideally all of those loop holes would be closed.
Let’s focus on the individuals tax.
First the government should balance the books better and not spend what they don’t have, much like us individuals must do.
Second the money that will be lost because the footballers will not pay as much will be made up for in other avenues.
The organized crime rings / drug rings who spend their money on the latest because they don’t want that much cash lying around, and a deposit like that at the bank would be suspicious.
Free lancers that do side jobs or individuals, some may report properly some will not.
Folks that work for cash only because if they were on the books it would interfere with their benefits.
Your 1.5% of people on benefits not working, that can afford to get their kids the latest phones and TV’s etc.
Illegal aliens that are not paying income tax because they are not a citizen and working for a company that will pay them cash off the books.
Tourism, visitors to your country that otherwise wouldn’t pay income tax would pay sales tax.
All of these additional streams of tax revenue would be picked up if the tax was sales only.
Finally as others have said I too look for local first, I like to save money, but something made here is my preference over something made abroad.
Progressive tax recognises that entrepreneurs stand on the shoulders of the society that has provided educated, healthy workers, good transport, communications and infrastructure. They are able to make good profits for themselves and live extremely comfortably by virtue of that and their hard work. The former often seems overlooked.
Flat tax serves nobody well unless there is no debt in the country, and the infrastructure in place, healthcare is paid for as a percentage of the earnings of everyone, and education system is covered by various taxes (gains tax, corporation tax, etc). You will never find a perfect system, because in this day and age, nothing so perfect can exist. There will always be loopholes which people/businesses will exploit.
When a perfect system is created, let me know, I'll be the first to champion its adoption.
FYI, the system you are proposing @ADMaster is communism.
We must have a misunderstanding somewhere, I am not advocating communism at all. Communism simply defined is a government structure in which the government owns everything, no private property.
If you took the first sentence of my last post as government owning everything, apologies that is not the case. I only meant for the sake of this discussion forget businesses, because I’ve not fully thought out how a fair business tax would work.
I am for capitalism, the tax structure I suggest would allow for personal success and not punish it, that is not communism.
As you say there will always be loop holes in any system. We may have to agree to disagree. Apologies to the OP for hijacking your thread.
Ahh no...I agree...shouldn't punish the wealthy because they worked for it/born into it. A fair tax system is needed, no doubt, but again, you'll never make a system that everyone agrees on.
Although not a good example in many other areas, Russia has shown leadership in tax reform and economic management over the past 10-12 years (http://www.forbes.com/sites/markadom...lmost-no-debt/). How ironic.
Quite simply, having a company and getting it to pay for everything is simply not going to happen. Please note that this is not the same as tax breaks and allowances.
nephilim is right. Top footballers and their clubs use all sorts of tax avoidance schemes (and they're all perfectly legal). For example...
And before that...Quote:
It is understood that many leading Premier League clubs, including Manchester City and Chelsea, have used EFRBS Ė employer-financed retirement benefit schemes Ė in order to make their offers to players even more attractive. Completely legal, the scheme allows players to sacrifice up to 50 per cent of their wages at source to be placed in a trust that is set aside for their retirement.
It was first used by City bankers to avoid paying tax on their bonuses but has become very popular with footballers after the Inland Revenue closed down the "image rights" loophole that was used to great effect in the late 1990s and early part of the last decade to give predominantly foreign players tax relief.
The EFRBS scheme also allows clubs to save on National Insurance payments Ė an extra 12.8 per cent on top of the player's salary Ė because the money is paid straight into an EFRBS and is therefore not liable. With wage costs going inexorably upwards for the elite players, fuelled by City's willingness to break the wage ceiling, clubs are increasingly looking around for more tax-efficient ways of paying their players.
Industry experts believe that there is a very good chance that Wayne Rooney's new deal at Manchester United, understood to earn him up to £200,000 a week including bonuses, would have included an EFRBS. It would potentially mean that the Manchester United striker will have a substantial retirement fund when he finishes playing. (Source)
Every time the government closes a loophole, another is found. The more you earn the easier it is to avoid paying tax. :)Quote:
Scores of top footballers launched their own companies eligible to take image rights payments after Labour Chancellor announced the 50p top rate tax.
The players have two contracts with their clubs. They get a salary as a player and the other is for 'image rights' - earnings from shirts and other merchandising.
These royalties are paid into a company which is only liable for 28 per cent corporation tax rather than the 50 per cent income tax.
And players can take out loans from their companies where they only pay two per cent tax on the sum because it is regarded as a benefit in kind. (Source)
Yes, there are some very complicated tax schemes out there helping very, very wealthy people avoid paying taxes, but what you have to remember is that, footballers aside, high earners are often those who have companies and employ people and pay way more tax than most anyway. I agree it may seem unfair to see a UK earner paying next to nothing in tax, but once you factor in the tax they have generated and paid via their company then they are often paying many, many times more than the average tax payer.
Some good points raised in this thread. How many have actually complained to your local MP or written to parliament?
But norway is the exception rather than the rule, Japan has for decades been a big export driven economy, but because of it's demographics it's government has to run a large deficit just to get the economy ticking over.
I think it's just mad for a government like ours or the US to focus on reducing an already insubstantial deficit of between 5%-9% to 0, through counterproductive tax rises that hit ordinary working people the hardest. Government borrowing only goes up anyway as a result of ill-timed tax rises.
I agree the loopholes are a problem, but to me that suggests an overly complex domestic tax situation, I wouldn't argue for a flat tax to correct that, and a race to the bottom to encourage business investment seems pointless because your competing with offshore havens and tax structures that can offer a lower rate, the only way to change that is international agreement....
it'd be more beneficial to domestically take a lot more people out of paying tax completely. And find a way through taxation to put more money in people's pockets, where that money could circulate through the economy via spending and investment.
At the moment more money than is necessary goes into the blackhole that is taxation - and amongst the worst is long term tax burdens like the graduate tax. Just as much of a blackhole are excessive corporate profits.
Our government should be relaxed about the deficit and debt and realise that if they cut Ni, income taxes, do something about excessive costs of utilities, you'd get a far fairer outcome when it comes to wealth creation.
Just about the only strategy that's working for me at the moment are the moves to raise the income tax threshold and 0.5% interest rates. It's not enough though.