Tuesday, October 03, 2006

UKIP Flat Tax Policy document

As regular readers will know, I have for some time supported the concept of a Flat Tax; indeed, a great many people around the blogosphere can see the inherent sense in simplifying tax all round. As has been said before, tax should be low, simple and compulsory. However, for the Flat Tax to be progressive, rather than regressive, it has long been acknowledged that there are other measures that need to be implemented if the Flat Tax is not to punish the poorest in our society.

The fact that is becoming increasingly clear, however, is that something needs to be done. It is not so much the ever-increasing tax burden—up from roughly 37% of GDP to 42% in the last nine years—but the burgeoning complexity of the rules governing taxation. In essence, it is the rich who can afford the lawyers and accountants to find the loopholes and dodges in the rules, and thus avoid paying as much as some think that they should.

This complexity also leads to the poor not claiming the benefits that they are entitled too; the interminable, prying forms to fill in, the necessity to evaluate so often (monthly, in the case of Tax Credits) and the, now proven, lack of responsibility or liability by HMRC have combined to make people worse off than even they should be. It has also made them deeply distrustful of the government and even the general public are now beginning to realise that simply hosing down the public services with money will not do.

This state of affairs needs to be rectified—I believe that the public at large have grasped that tax cuts do not necessarily mean a degredation in public services (in the same way that massively increased funding has not improved them) and they ready to hear the argument for planned and funded tax cuts—but, alas, the Tories seem to be paralysed by inaction. A recent poll showed that people do not know what it is that Spam and the Tories stand for; in the old days, it was a pretty much a certainty that the Tories stood for tax cuts. This is now something that the public want to hear, and the Tories have announced… nothing.

Thus, the UK Indepedence Party have stepped in with their Flat Tax Policy document which, by the time that you read this, will have been announced. The place—Bournemouth—and the timing—during the Tory Party Conference—are not coincidental; the release will be in stark contrast to the Tories' lack of concrete policy announcements.

So, what does the UKIP Flat Tax document (PDF)* propose? Well, it is not a full tax policy and only deals in detail with the implementation of a Flat Tax, but it does contain discussion of other proposals for overall tax simplification. So, what are the main proposals?
  1. Make all taxpayers better off (mostly by £1,100 per year) and take a further 4.5 million lower paid out of income tax altogether
    • by raising the tax-free personal allowance to £9,000

    • and merging existing income tax bands and employee’s National Insurance contributions into a single flat income tax at a rate of 33%.

  2. Reduce the rate for capital gains tax to 33% and scrap inheritance tax altogether.

  3. Finance the revenue shortfall by halting the growth in government spending.

Nothing, I think, very controversial here although, personally, I would like to see a rather higher Personal Tax Allowance (PTA).

The minimum wage is currently £5.35 an hour and someone working full-time (at 40 hours per week) would therefore earn £11,128. I would like to see the PTA taken up to, say, £11,500—even were it to be financed by an extra 0.5% or 1% on the Flat Tax level after that. This would ensure that the poorest get to keep their money and would also mean that the staff that are employed are actually collecting an amount of tax that is half-way worth it. However, for the present, £9,000 is a great improvement on the current derisory PTA of £5,000 or so.

Scrapping employee NICs and incorporating it into an Income Tax makes far more sense than the present system, which hits the poorest hardest. This would make sense if NI were actually used for the purpose for which it was introduced in 1911—as insurance against illness and unemployment—but no one believes that this is actually what it is for anymore; it is simply another income tax and thus it makes sense to treat it as such.

Whatever your view of the morality of Inheritance Tax, it is very expensive to collect and raises a piddling sum of money (whilst causing immense bad feeling) and therefore would be a popular tax to abolish. The rate of Capital Gains Tax is brought down to 33% in order to maintain the simplicity of the Flat Tax level.

So, that is the summary; let us investigate the document in a little more detail.
During the past 6 years, British government spending has risen by an astounding 51%, or 30% in real terms (after adjusting for inflation) and a further real increase of 6.7% is planned over the next 3 years. Our government now spends 45% of national income, equal to £9,000 per man, woman and child.

High government spending means high taxation and, while most major economies have been reducing tax burdens, the British government has been taxing more. From being a low tax-and-spend economy relative to our EU neighbours, we are catching up fast.

And, as we have all been blogging over the last couple of years, this massive rise in spending has been accompanied by little or no rise in the benefits accrued.
However, it is becoming harder and harder for our government to raise the necessary revenue to support its spending binge. As a result, government borrowing has now been driven up to £44bn per year or 3.6% of GDP, despite concealing a large proportion of spending under the veil of Private Finance Initiatives.

If you consider that an enormous amount of the government's capital expenditure—mainly on schools, hospitals and the like—has been concealed, kept off the books, through PFI, an extraordinary amount of money has been spent. PFI's benefits are highly dubious—often with a considerable amount of jiggery-pokery going on to "prove" that the PFI scheme is going to be better value for money than ordinary public procurement—and so one might wonder what might be the continuing motive; it is simple: to keep the capital expenditure off the government books (it is convenient that the private companies are often able to keep the PFI assets off their books too). Although the government admits only £4.95bn of PFI debt, as Wat Tyler conveniently points out, it is actually rather closer to £90bn. (Indeed, Wat puts total government debt at £1,800 BILLION, or 144% of GDP. Needless to say,this is not sustainable.)
This is not sustainable. If the government’s share of the economy continues to rise at these rates, we shall continue to lose international competitiveness and our businesses will continue to move offshore, attracted by lower tax rates in other countries and particularly the emerging economies.

Quite a nice summation, methinks. Anyone disagree?
Much of the extra spending has gone into public services, notably the NHS and education, but only a fraction of this has paid for new ‘front line’ staff. In spite of repeated claims by the government that public services are improving, the extra resources have largely been dissipated on waste and low productivity.4 UKIP believes that the disarray and low morale in all our public services is the result of the government’s obsession with micro-management, with streams of new centrally-imposed initiatives, restructuring and performance targets. Our public services need a change in management style to allow more control by the professionals that run the services, rather than more money.

According to the Office of National Statistics, productivity in the NHS has dropped by 1.6% per annum. And it is not just in the NHS that this has happened: it is throughout the country.

One only has to read Doc Crippen for a little while to realise the truth of the assertion that "the disarray and low morale in all our public services is the result of the government’s obsession with micro-management"; the government is the consistent factor in any assessment of shite fucking service.
The other major cause of expansion in government spending is the social security budget which now absorbs £150bn or over a quarter of total spending, with means-tested benefits accounting for much of recent increases. State help must be available for those who cannot help themselves. However, it is painfully obvious that the current over-complicated benefit system is very poor at directing funds to those who need them and it provides powerful incentives against working. Again, the system needs drastic reform (see Section 3), not more money.

Again, little to argue about here, I think. Stumbling and Mumbling notes the ludicrous marginal tax rates, from information published by the Department of Work and Pensions, no less.
Here’s a question: Take a married couple with two children under 11 and pre-tax earnings of £200 a week. If they get a better job, raising their earnings to £300 a week, by how much does their net income rise?

£60? £50? £40?

Nope. £8.52.

Yes. £8.52. That’s a marginal deduction rate of 91.5 per cent.

Now, does anyone want to try to tell me that this is in any way a sensible policy? Because you are going to lose that argument, my friend. It's completely fucking stupid.

Anyway, how are UKIP's proposals to be paid for and how much, in fact, will they cost? Because they will probably end up bringing in less tax to the government and one needs to persuade the unthinking, pig-ignorant monkeys who make up the bulk of our population that you are not going to close their local (hospital, pub, whatever) to pay for it.
The static loss in revenue from these proposals is about £34bn, equivalent to 7% of total revenue collected in 2005-06. But this static loss is based on the assumption that the changes in rates have no effect on economic activity; it is calculated by multiplying the percentage cut in tax rates by the number of taxpayers currently paying the tax.

In practice, cuts in tax rates stimulate activity by raising the reward from working and they reduce avoidance and under-reporting of income.8 As a result of these dynamic effects, the loss of revenue from a cut in tax rates is never as severe as would be predicted by static calculations. There is widespread experience of this, including several historical episodes of tax cutting in the United States, the recent cuts under President Bush and the Thatcher reforms in Britain.

However, the magnitude of these dynamic effects is uncertain: taking account of a variety of evidence and model predictions, a conservative mid-range estimate is that the revenue loss would fall to half of this amount, or £17bn, within, say, 2 years with further falls as the tax cut stimulates economic growth.

The saving from freezing government spending so that it remains constant in real terms over the next three years would be roughly £12bn per year, cumulative, i.e. the government would be spending £36bn less than projected by 2009/10. Hence, by the second year in operation this source alone would be sufficient to fund the flat tax.

The initial shortfall in revenue (£34bn) would be taken up by an increase in government borrowing.

This still remains practical, especially as we are not bound by the EU Stability Pact. In any case, government spending can be easily trimmed in other directions which I have talked about at length before (sacking enormous swathes of lazy, useless cunt bureaucrats is usually a popular start, I find) but that is a discussion for another time. (Well, I say "discussion", I mean "rant".)

However, there are other issues that rise from the Flat Tax as proposed; generally, the whole is a good idea.
[A]ll taxpayers are better off under the new regime. In particular, taxpayers with incomes in the range £9,000 to £33,000 (77% of all taxpayers) will gain £1106 per year. The 11% of taxpayers who now pay at the higher rate will enjoy a reduction in this rate from an effective 41% (tax plus NI) to 33%, but income tax remains highly progressive – the rich pay continue to pay more than the poor, as a proportion of their income. These changes will improve incentives across the income spectrum and help to drive economic growth.

The rich, of course, are the one's who fund political parties (assuming that, like most sane people, you are against parties being funded by the taxpayer) and so they are likely to be happy with the reduction in their tax. But, further we can hope for the "Lawson Effect", i.e. that the lower a tax is, the less money people will spend to avoid it. Lawson found that, when he dropped the top rate of tax from 60% to 40%, that the tax take actually increased: it was no longer financially viable for the rich to pay accountants to find a way around the tax.

And this, of course, is one of the main drives for simpler taxation. The fewer concessions and special circumstances that are allowed, the fewer loopholes there are; the ore compllicated you make everything, the more avoidance schemes there are. Consider a sheet of metal: damn difficult to find a way through. Now consider a knitted blanket (with tax law making up all of the threads): there are an almost infinite number of holes through it, and was to slip between the threads.

Taxes: low, simple, compulsory.

However, much as I like this idea, there are other considerations. These are ones that I had not thought about because I have always considered the introduction of a Flat Tax as being accompanied by a total overall of every sinngle aspect of government spending, particularly in the area of benefits and particularly within the context of a Citizens' Basic Income. (My fantasy plan was to get into government, announce the required changes, and then give everyone a year to get used to the idea and to start planning—for their redundancy, in the case of many public sector workers—for the reforms.)

UKIP, however, does not have the luxury of my fantasy, and so other things must be considered (if only temporarily).
Treating employee’s NI contributions as a pure income tax requires some further changes:
  1. Since pensioners do not pay NI, a 33% tax rate would imply higher tax payments (specifically, on incomes above £15,000). To prevent this, there would be a special flat rate of 25% for pensioners only, pending a review of overall pension arrangements. Given the £9,000 threshold, this would amount to a tax reduction for all pensioners with incomes up to £30,000.

  2. The state pension would no longer be ‘contributory’, i.e. dependent on NI contributions, allowing for a reduction in means-tested pension credits.

  3. ‘Contracting out’ would no longer be possible. Existing obligations under the Second State Pension would be upheld.

  4. Income from self-employment would be taxed at the same rates as income from employment (no more class 2 and class 4 NI contributions and no more arguments about who is self-employed and who is an employee).

The first three are common sense under the current situuation, but really need to be addressed in a proper Pension Review (which UKIP are currently working on). Pensions in this country are a fucking mess, frankly, and so a review is long overdue.

Point 4, however, is very important as I am sure Allan, amongst others, will be aware: the concept of disguised employee's was the reason for the introduction of IR35.
Barely two years into Gordon Brown’s stewardship of the economy and all of that changed. Gordon decided that contractors selling their services to other companies were nothing more than tax cheating scumbags who were really disguised employees of their clients.

IR35 has been disastrous, hitting the construction and IT industries particularly hard; it is incredibly unfair, based (like most socialist initiatives) on spite. And the result?
In return for a massive tax bill you got: no job security, no holiday pay, no sick pay, no employer pension rights and as director of a limited company, no right to unemployment benefit if the work dried up. It was still a case of no work, no pay, no food. Suddenly, the risk versus reward formula was stacked heavily against self-employment.

Frankly, a disgusting state of affairs but only to be expected from the piece of shit in human form that is the Cyclopean Gobblin' King.

Now, if NICs is abolished, then there are no "disguised employees" and IR35 can be repealed. Good news all round, and great news for contractors. Good news for Britain too, as many of our IT contractors, for instance, take their expertise all over the world.

Anyway, back to UKIP for some more detailed information on Capital Gains Tax and Inheritance Tax.
With income tax levied at a maximum rate of 33%, it would be inconsistent to continue charging tax on capital gains and investment income at the higher rate of 40%. These rates would simultaneously be reduced from 40% to 33%, giving a further boost to saving.

Actually, of course, the sensible thing would be to abolish CGT totally and simply tax any personal gain as income. Were you to sell shares at a profit and then reinvest the money into more shares, then you pay no tax. If, however, you take that money out and pay it to yourself, you simply tax the profit at 33%, as though it were income (which, of course, it is).
Inheritance tax (IHT) is also currently charged at 40% on estates above £285,000 but, with increasing values of houses, more families with modest wealth are now becoming liable for IHT. As a result, there have been many justifiable calls for raising the threshold to, say, £500,000 or £1 million. There have also been suggestions to replace IHT with some form of wealth tax.

However, the small amount of IHT that is actually collected (£3.2bn per year) is evidence of the extent to which this tax is avoided by higher wealth individuals who can afford to pay for tax planning. Given this low yield, and since IHT is poorly directed and expensive to collect, UKIP’s simple solution is to abolish it altogether with immediate effect.

And that will be one of the most popular things that any political party has ever done. Major promised to do it at one point: it never happened. Even NuLabour have promised to look at either abolishing it or raising the threshold considerably: they have not. Currently, the threshold is about to rise to £325,000 which is still a pathetic amount. Some people feel that IHT is an entirely moral tax, fairer even than income tax, because it taxes something that they call "luck" and which I call "foresight"; but regular readers will know how I feel about these people, i.e. I think that they are jealous, spiteful cunts who should shut their fucking faces.

Anyway, the above are the concrete proposals that UKIP are laying down. However, the document does deal in a vague way with some other suggestions.
Our proposal for flat income tax covers only a small part of the overall tax-benefit
system and comprehensive reform is also necessary in several other areas. Some suggestions follow, without any attempt to cover detail. We do not address pensions or the interaction of pension arrangements with the tax-benefit system.

OK, and on with the fun.
Allowances, reliefs and exemptions

The amalgamation of income tax and employee’s NI in this flat tax proposal will bring some welcome simplification. However, the main source of complexity is the many allowances, reliefs and exemptions from income tax, which are hard to justify and impose a tremendous bureaucratic cost. This is illustrated by the guide to completing the standard income tax return which runs to 56 pages or some 60,000 words. ‘Self-assessment’ is an attempt to offload some of this cost on to the private sector.

UKIP’s attitude is generally to scrap reliefs and allowances (apart from the personal allowance) and some, like the Enterprise Investment Scheme and Venture Capital Trusts should go without delay. The question of relief for contributions to private pension schemes (costing £13bn per year) would have to form part of a review of pension arrangements.

As I have said, tax should be simple. You pay the income tax and there are no exceptions; once you introduce reliefs and exemptions you end up making your tax policy like the knitted blanket again and we would end up in precisely the same place that we are now.
Taxes on companies
Corporation tax (tax on company profit) is currently at the rate of 19% for small companies (profit up to £300,000 per year), rising to 30% for large companies (profit over £1.5 million per year). There are several reliefs of doubtful merit (notably for research and development) and complicated rules governing depreciation.

While other countries generally have been reducing their corporation tax rates, Britain has not. This is unquestionably a major factor in firms’ decisions to relocate their operations to lower taxed countries. As with income tax, there is an urgent need to both reduce and simplify corporation tax.

As Timmy, amongst others, has consistently pointed out, companies do not pay tax, individuals do in the form of lower wages (about 70% of the total) or reduced dividends. The company simply provides a convenient bank account from which to remove the cash.

And, as Timmy pointed out recently, that has become effectively optional in any case.
Until now, any company wanting to move its tax domicile outside the UK has had to jump through several legal hoops in order to demonstrate that its decision-making executives are genuinely located offshore.

But a landmark ruling from the European Court of Justice last week is set to make life much easier for companies that want to take advantage of EU states with lower tax rates. In response to a case against Cadbury Schweppes, the top European court judged it was perfectly legal for companies to deliberately exploit tax differentials so long as the employees based abroad are carrying out genuine economic activities.

Given this latest ruling, I think you could in fact make the argument that directors of a company would in fact be breaking the law if they did not move domicile out of the UK. Handing over 30% of the profits to El Gordo when you don’t have to would, in my mind at least, clearly be a breach of their fiduciary duty.

So, you want inward investment, then abolish Corporation Tax on reinvested profits (as Estonia has, for instance). 70% of the lost revenue, if the Congressional Report is to be believed, should then come to the workers in the form of higher wages which, of course, the government will then tax. It's better than nothing after all, for if the company moves out of Britain then the government will get bugger all anyway.
The other tax on companies is employers’ national insurance contributions (12.8% of wages), which is the most senseless tax as it taxes the payroll – it is a direct tax on employment. Employers’ NI must be a deserving candidate for abolition or for combining into corporation tax as part of a reduction in the overall burden of taxation on business. We want to encourage businesses to grow and to provide jobs.

Oh, just fucking abolish it. Look, it's really simple: abolish this lot and then tinker with the tax levels. If you only have two variables to deal with—the PTA and the Flat Tax level—it makes the whole process much easier. Abolish all of these excess, complicated taxes; then work out how much you need to run government services (which would be a tiny amount by the time that I had finished with it) and then, to help the working poor, raise the PTA at the same time as raising the Flat Tax.

Still, maybe a little too radical at present.
Other Taxes
The main sources of government revenue are income tax and National Insurance, Company tax, VAT and excise duty. These taxes together raise £373bn or 77% of all revenue. In comparison, inheritance tax raises only £3.2bn, capital gains tax raises £2.9bn and tax on dividends £6.2bn.

Taxes on dividends and capital gains tax (on financial assets) represent double taxation because the company profits that gave rise to the dividends and capital gains have already been taxed. Moreover, the rules for the capital taxes – on inheritance and capital gains – are perhaps the most complicated of all, often absorbing large amounts of expensive professional time in administration, in estimating values of
assets and in legitimate avoidance activities.

We have recommended the elimination of inheritance tax and a reduction in the rate for capital gains tax to 33% as part of our main proposal. However, given the damaging effect that all these taxes have on earning and saving and the comparatively small of amount of revenue that is collected, there is a strong case for removing the taxation of dividends and capital gains as well.

No, abolish Corporation Tax then tax the dividends as personal income. Much, much easier (and fairer). Deal with Capital Gains in the same way, as I outlined above. Keep it simple.
The indirect taxes, VAT and excise duty, are regressive in that the poor pay far more
as a proportion of their incomes than the rich. As part of the exercise of reducing tax, there is therefore a good case for reducing the rates for these taxes before seeking further cuts in income tax, which is progressive. To reduce the administrative burden of VAT, UKIP would consider replacing it with a sales tax payable at the wholesale point (not possible whilst Britain remains bound by EU tax rules).

Precisely. Although collected by the government, VAT is an EU-imposed tax. Further, it is a massive fraud magnet. The Treasury reckons that VAT fraud will cost £8.4 billion this year, mostly through carousel fraud (and this is money actually paid out, not simply monies not collected) although Wat Tyler reckons that it is closer to £30 billion (or, to put it another way, almost enough to pay for this Flat Tax proposal). Or, rather, it is close to £10 billion per quarter, which will, of course, amount to £40 billion a year: enough to pay for this Flat Tax scheme and abolish Inheritance Tax and Capital Gains Tax. Sound scary yet?
The benefit system

For a large range of below-average earners, the combined effect of the tax system and means-tested benefits is that working brings only a tiny reward. For example, the head of a family earning up to £11,000 per year and drawing the main benefits and tax credits can face a marginal deduction rate of up to 95% (see Fig.2). This means the family is only 5p better off from each £1-worth of extra work after accounting for tax, national insurance and the withdrawal of tax credits and benefits. This reward is eroded further by travelling costs and other ‘costs’ of working. At present, there are some 5 million claimants of major benefits who face this sort of ‘poverty trap’.
...

To restore incentives, UKIP envisages a large reduction in the range of existing means-tested benefits which together cause the ludicrously high marginal deduction rates for low income families. We would consider replacing them with an income-related ‘basic cash benefit’ payable to all unemployed and low-income adults13 (transferable between spouses) and would aim for a maximum marginal deduction rate of, say, 50% after accounting for tax and the withdrawal of benefits.

Nope: introduce the Citizens' Basic Income from the age of sixteen. This covers all of the problems with pensions (the state pension is the CBI) and benefits. Set at about £100 per week, the CBI would cost roughly £250 billion but, given that you simply use the current National Insurance database and there is absolutely no means-testing whatsoever, you can—yes, you guessed it—sack so many civil servants that you can have a slap-up cruise on the proseeds. And the best bit of all?

Once you are paying the CBI, sacking these lazy fucks—and the fact that Spam has praised their hard work only convinces me further that they are lazy shites—costs you sod all, since you are paying their unemployment benefit, the CBI, anyway. The real beauty of the CBI though, is that it presents no disincentives to get work because this allowance is paid whether you work or not. So there is no marginal tax deduction because you get a job; the rate of benefit is precisely the same; you have no disincentive to get a job because you will have the income from the job as well as the income from the CBI. It's such a beautifully elegant idea and all that is needed is the money to fund it, which can very easily be found.

Anyway, now to the document's conclusion, which is reproduced here in full.
The key to revitalising the British economy lies in removing the many incentives against working, employing and investing that arise from onerous taxation, meanstested benefits and regulation. Economic health does not lie, as the European Union and our own government would have us believe, in spending more public money on enterprise conferences, entrepreneurship workshops, regionalised bureaucracies, ‘trans-European co-ordination networks’ and the like.

This policy statement has outlined a proposal for flat income tax – paid for by halting the real growth in government spending – and has indicated some other feasible reforms. These sorts of changes are not just desirable. They will be forced on us if we want to continue to support any reasonable standards of public services and welfare provision and if we are to remain internationally competitive.

Changes to tax regimes should always be undertaken cautiously because of the uncertainty that they cause. However, the changes proposed here can hardly be more disturbing than the incessant ill-considered meddling with taxation – quite often putting previous decisions into reverse – that has become the norm.

We need to deregulate, reduce taxation and begin to unravel the complex web of tax and benefit rules. Above all we need to resist further moves towards EU tax harmonisation.

The UK Independence Party believes in smaller government. Let us make a start by limiting the growth of the government budget and by making some modest tax reductions.

I say again: taxes should be low, simple and compusory. Let us make it so.

I shall be in Bournemouth at the launch of this document by the time that you read this. I shall report on the event later on, but do not expect too much blogging for the rest of the day as I shall be seeing H later on in the evening. However, tune in for Wednesday's installment and, should any of my Kitchen colleagues like to make a contribution, then please feel free to rake over tomorrow.

Advance thanks to Mr Eugenides for posting this up whilst I am travelling.


* I am at a foreign computer: this address should work but, should it not, then I shall rectify that late on Tuesday evening. No matter, I quote all of the pertinent points in any case.

9 comments:

Mark T said...

One extra twist. make the CBI eleigible for everyone over the age of 2, except below 16 it comes in the form of an education voucher. Removes the incentive to have children on benefit. Also if the courts can sequestrate half of the fathers CBI to pay for his children, and half the rest for the next family and half the rest for the next, then not only does the serial father face a cost to support his baby mothers, but the mothers themselves have an incentive to breed with someone without dependents already. Just like in the real (working) world.

AntiCitizenOne said...

Mark T,

The childs parents should be the one's paying for the education of the children they produce. The CBI should build up from birth for citizens and provide a postive balance to be used for purchasing a University place, or benefits etc.

Dismantle the "welfare state" and let people withdraw from their state account (or go overdrawn and pay interest from their future CBI) when they are down on their luck.

archduke said...

IR35 single handedly f***ked up the IT contract market in the UK. However, contractors have figured out that you can still be self employed if you have just one other customer - i know of many who do the 9 to 5 contract job, but at the weekends /spare time build PCs or do local tech support, thereby allowing them to remain limited companies.

But still -the point remains. You SHOULD be fucking allowed to just have ONE customer. Now you can't because of Gordon the Cyclops.

lizziejbarrett said...

Some people feel that IHT is an entirely moral tax, fairer even than income tax, because it taxes something that they call "luck" and which I call "foresight"; but regular readers will know how I feel about these people, i.e. I think that they are jealous, spiteful cunts who should shut their fucking faces.

Ha! I loved that so much I made my dad read it, and now he wants to meet you again.

I simply don't understand that, at a time when everyone is ploughing their money into property, the idiots who think this is luck haven't cottoned on to the fact that property increases in value and they too will be hit by this awful fucking tax.

Dammit, DK, you're almost convincing me about UKIP! Now if only I could get rid of those disturbingly erotic dreams about Spam that I keep having...

james higham said...

This is an immense amount of work, DK and you are to be congratulated. Took me a hell of a time to go through the overview. Mariginal taxrates are not just ludicrous in the UK - they're actually criminal.

Umbongo said...

DK

Excellent proposal: of course it makes too much sense and attacks so many vested interests. You can expect an avalanche of ad hominem (or, at least, ad UKIP) abuse which will not address any of the good points you make.

Victor Meldrew said...

Great thing someone is thinking properly about this. Here in HK the simple tax comes in bands i.e 1st 50k taxable at 2% next at 5% etc up to 20% max or 16% overall maximum.
Very fair and extremely simple.
33% is still too high a starting rate i think, and still might discourage the terminally workshy.

shergar said...

Good work, DKman!

Roger Thornhill said...

Thanks DK. You will see from my "Roger's Manifesto" that I heartily warm to the UKIP tax proposals, being a flat-taxer myself. I too agree that the basic allowance should be circa £12k. I also think marrieds shoudl be free to pool their tax allowances if kids are involved.

CBI: £250bln will still need some finding and we would really have to make sure our NI database is not scamable. It would have to go, dare I say it, biometric to stop multiple claimants. CBI woudl have to exclude EU citizens.

Having lived for many years in Singapore and HK I have seen and lived the small state low flat tax dream. It works IMHO. I do think 33% would end up being too high as long as all the holes are plugged.

IR35 robbery being whacked is good and having income taxed as income and not CG is the right way - this should also cover property. The US has a 6 month grace period while you seek to re-invest your profits from a property sale of a non-prime residence.