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Lower The Poverty Line

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This looks a pretty good analysis by TPA:

And that my friends is why it really is time to lower the poverty line. The current official target of 60% of median income is a major obstacle to improving work incentives for the workless poor. Reducing it to 50% would not only increase the incentive to work directly, it would also free up £20-£30bn pa to spend on allowing the poor to keep more of what they earn for themselves.

http://burningourmoney.blogspot.com/2010/07/time-to-lower-poverty-line.html

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a NIT makes so much sense from a simplicity and targeting point of view.

Probably why it will never be implemented really.

Edit - they could make it even simpler though by harmonising the Negative income tax rate and the actual income tax rate so that everyone faced the same disincentive to work from taxation.

Doing so at around 50% with a £7.5k maximum individual benefit would be perfectly possible and could hand a massive tax cut to anyone earning less than £40k at the moment.

Edited by LJAR

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It's time to take some of those really tough decisions.

Funny how 'tough decisions' always involve poor people getting shafted somehow. Where were all these hard men when Sir Fred Goodwin and his ilk walked off into the sunset with pensions and loot intact?

We could not apparently touch a hair on a bankers head, we were powerless, utterly helpless to prevent them walking away unscathed from the burning wreckage of the companies they managed.

But as soon as it's the incomes of the poor in the frame, it's time for 'toughness' and 'hard decisions' and all manner of macho bullshite.

Pathetic.

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Funny how 'tough decisions' always involve poor people getting shafted somehow. Where were all these hard men when Sir Fred Goodwin and his ilk walked off into the sunset with pensions and loot intact?

We could not apparently touch a hair on a bankers head, we were powerless, utterly helpless to prevent them walking away unscathed from the burning wreckage of the companies they managed.

But as soon as it's the incomes of the poor in the frame, it's time for 'toughness' and 'hard decisions' and all manner of macho bullshite.

Pathetic.

So you don't think a lower effective tax rate for the poor would help them, rather than keep them trapped?

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Funny how 'tough decisions' always involve poor people getting shafted somehow. Where were all these hard men when Sir Fred Goodwin and his ilk walked off into the sunset with pensions and loot intact?

We could not apparently touch a hair on a bankers head, we were powerless, utterly helpless to prevent them walking away unscathed from the burning wreckage of the companies they managed.

But as soon as it's the incomes of the poor in the frame, it's time for 'toughness' and 'hard decisions' and all manner of macho bullshite.

Pathetic.

It was a Labour government that was guilty of the faults that you list above.

There is no way to know whether a Tory government would have been better or worse.

As someone on the right wing of the political spectrum, I would have forced employees (including those with guarantees), pensioners, senior bond holders, subordinated bond holders and deposits over 50k to take a haircut had I had the chance.

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Funny how 'tough decisions' always involve poor people getting shafted somehow. Where were all these hard men when Sir Fred Goodwin and his ilk walked off into the sunset with pensions and loot intact?

We could not apparently touch a hair on a bankers head, we were powerless, utterly helpless to prevent them walking away unscathed from the burning wreckage of the companies they managed.

But as soon as it's the incomes of the poor in the frame, it's time for 'toughness' and 'hard decisions' and all manner of macho bullshite.

Pathetic.

It's a Plutocracy and you still want to feed it . :blink: ,

in the hope your tossed crumbs-sycophant.

pathetic

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So you don't think a lower effective tax rate for the poor would help them, rather than keep them trapped?

I think lowering the actual tax rate for the poor would help them- but that's not what's being proposed is it. What we have here is a number juggling trick that fails to address the absurdity that at the bottom of society people are paying income tax on incomes of less than 10.000 pounds, while our largest corporations are engaged in widespread tax evasion that costs this country billions;

British taxpayers are being left to plug a multibillion-pound hole in the public finances as hundreds of the country's biggest companies increasingly employ complex and secretive tax arrangements to limit the amount they hand over to the exchequer.

An extensive Guardian investigation has examined the accounts of the UK's biggest companies - many of them household names - and discovered a series of sophisticated tax strategies which, critics say, amount to an almost unstoppable tide of perfectly legal corporate tax avoidance.

The veil of confidentiality that covers these tax avoidance schemes is so difficult to penetrate that nobody knows exactly how much tax goes missing each year. But HM Revenue & Customs estimated that the size of the tax gap could be anything between £3.7bn and £13bn.

http://www.guardian.co.uk/business/2009/feb/02/tax-gap-avoidance

If the aim were to help the poor, then why not simply raise that threshold at the bottom and make up the difference by asking the 'Sir Freds' of this world to do a little less tax 'avoidence'?

Here's what out friends at the taxpayers alliance think about that idea;

Far too many companies are being driven abroad by this country's punitive and complex tax system. As a result, our economy and our public finances are losing out. The Government should be doing all it can to bring business back, and the best way to do this would be to lower tax rates and make the system much simpler. We can't expect companies to bring investment and job opportunities to Britain if the only thing they get in return is excessive bureaucracy and high tax rates. Lower taxes would tempt business to Britain, and help ordinary families to pay the bills at the same time

So to incentivise the wealthy we need reduce their taxes. Why then is this simple solution not applied to incentivising the poor?

Anyone?

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I think lowering the actual tax rate for the poor would help them- but that's not what's being proposed is it. What we have here is a number juggling trick that fails to address the absurdity that at the bottom of society people are paying income tax on incomes of less than 10.000 pounds, while our largest corporations are engaged in widespread tax evasion that costs this country billions;

http://www.guardian.co.uk/business/2009/feb/02/tax-gap-avoidance

If the aim were to help the poor, then why not simply raise that threshold at the bottom and make up the difference by asking the 'Sir Freds' of this world to do a little less tax 'avoidence'?

Here's what out friends at the taxpayers alliance think about that idea;

So to incentivise the wealthy we need reduce their taxes. Why then is this simple solution not applied to incentivising the poor?

Anyone?

http://www.statistics.gov.uk/downloads/theme_social/Taxes_Benefits_2005-2006/Taxes_Benefits_2005_06.pdf

The graphic on page 1 seems to show that the bottom 3 quintiles are net recipients of income from the top two quintiles if I am reading it correctly.

The poor currently enjoy effective negative tax rates.

The current level of income redistribution to the bottom one or two quintiles through the tax system is already creating disincentives to work.

This is the problem that IDS has to solve.

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The graphic on page 1 seems to show that the bottom 3 quintiles are net recipients of income from the top two quintiles if I am reading it correctly.

The poor currently enjoy effective negative tax rates.

The current level of income redistribution to the bottom one or two quintiles through the tax system is already creating disincentives to work.

This is the problem that IDS has to solve.

Right- so the problem is all those taxpayers at the bottom- not those tax avoiders at the top.

I can agree with you that the system is a mess- but as I said, all this talk of 'taking the tough decisions' rings a little hollow to me while we have multinational corporates and their executives playing tax avoidence games to the tune of billions in lost revenue.

As always it's the soft targets that will be hit, while the well connected dodge the bullet.

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Right- so the problem is all those taxpayers at the bottom- not those tax avoiders at the top.

I can agree with you that the system is a mess- but as I said, all this talk of 'taking the tough decisions' rings a little hollow to me while we have multinational corporates and their executives playing tax avoidence games to the tune of billions in lost revenue.

As always it's the soft targets that will be hit, while the well connected dodge the bullet.

There are no net taxpayers at the bottom.

That said, you did get me thinking about VAT which is why I came up with this :

http://www.housepricecrash.co.uk/forum/index.php?showtopic=147821

I forgot to add that VAT is mandatory while income tax is somewhat voluntary.

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So you don't think a lower effective tax rate for the poor would help them, rather than keep them trapped?

As far as i can gather, he thinks the banksters were rewarded for screwing up, thus we all should be.

Id rather we stop rewarding the banksters, but to each their own.

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There are no net taxpayers at the bottom.

This sophistry does not address the incentive issue though- which is the supposed aim of TPA's scheme. I think it's true to say that when all tax/benefit rules are factored in the true beneficiarys of the system are not the poor but the middle class- but again this does not address the incentive issue.

If the TPA were sincere in trying to incentivise the poor they would be in favour of collecting the taxes currently being avoided to facilitate reducing income tax at the bottom- not 'effectively'- but actually. But in reality all this concern with the motivation of the poor to work is but a smokescreen to justify shafting them.

That said, you did get me thinking about VAT which is why I came up with this :

http://www.housepric...howtopic=147821

I forgot to add that VAT is mandatory while income tax is somewhat voluntary.

VAT is recognised to be a regressive tax- but so is income tax to the degree that only the wealthy enjoy the flexibility to avoid taxes on their incomes- the PAYE wage earner has no such opportunities.

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This sophistry does not address the incentive issue though- which is the supposed aim of TPA's scheme. I think it's true to say that when all tax/benefit rules are factored in the true beneficiarys of the system are not the poor but the middle class- but again this does not address the incentive issue.

If the TPA were sincere in trying to incentivise the poor they would be in favour of collecting the taxes currently being avoided to facilitate reducing income tax at the bottom- not 'effectively'- but actually. But in reality all this concern with the motivation of the poor to work is but a smokescreen to justify shafting them.

VAT is recognised to be a regressive tax- but so is income tax to the degree that only the wealthy enjoy the flexibility to avoid taxes on their incomes- the PAYE wage earner has no such opportunities.

I must be missing something.

I thought that everyone earning 10k or less will be taxed at zero. There is no more incentive left to give.

I also thought that the breakeven between working and not working was somewhere in the region of 14k.

The incentive that we need is for anyone who does one hour of marginal work is always better off than someone who doesn't. For many beneficiaries of our income redistribution structure, this is simply not true.

Put another way, our current system is binary for many recipients which creates massive disincentives at the boundaries.

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I think lowering the actual tax rate for the poor would help them- but that's not what's being proposed is it. What we have here is a number juggling trick that fails to address the absurdity that at the bottom of society people are paying income tax on incomes of less than 10.000 pounds, while our largest corporations are engaged in widespread tax evasion that costs this country billions;

The Guardian's take on the tax gap is at odds with the Treasury. We have allowances and credits for the purpose of encouraging economic activity and reimbursing people when they are out of pocket due to Government behaviour (ie businesses claiming VAT back, Tate & Lyle being compensated for the cost of paying import levies on the unrefined sugar they import into the EU and then export out of the EU as refined sugar.). They are conflating avoidance and evasion. Which is rich coming from them as the Guardian Media Group is based in a tax haven.

Corporations do not pay tax their customers do. In a long winded way such tax avoidance is good imo. It means the Government is required to think carefully about tax legislation. It has not done so under Labour. Private enterprise has millions of people with an interest in reducing their tax liability whereas the Government has a few actuaries in a room somewhere mulling over the sums. Private enterprise is a distributed problem solving machine in that it can try lots of different things. When something works lots of people can ape it. When something goes wrong lots of people can see what to avoid.

Such tax evasion also increases the need to raise revenue through income tax. I do not like income tax in the slightest but the simpler the tax system can be the better imo, for businesses and taxpayers alike. The Government has actively been resisting this when it would be better for everyone if it worked with the flow rather than against it. The tax system is so complicated it is difficult for people to understand how much the Government takes from them in one form or another. It disadvantages the low paid as they cannot arrange their finances to take advantage of the many loopholes the Government is content to allow. The nuclear option for dealing with tax avoidance is therefore to scrap armfuls of taxes and raise more money from income. It all becomes someone's income eventually whether it is wages for staff, payments to suppliers which become wages for staff, share dividends, bonuses and on and on. If more people were paying whatever is deemed a fair share the overall rates could be lower than they would otherwise need to be and it would reduce the opportunities and incentives for avoidance.

Forget the ponzi National Insurance scheme as it is just income tax by another name, abolish business taxes and set income taxes at a higher levels. No Government would ever do such a thing. It loses them the leverage to fiddle with all the different tax rates and introduce or remove all kinds of allowances to curry favour with vested interest. It would cost less to collect. It would also make it inescapable how much the Government was costing each of us and we would begin demanding better value for money.

This sophistry does not address the incentive issue though- which is the supposed aim of TPA's scheme. I think it's true to say that when all tax/benefit rules are factored in the true beneficiarys of the system are not the poor but the middle class- but again this does not address the incentive issue.

If the TPA were sincere in trying to incentivise the poor they would be in favour of collecting the taxes currently being avoided to facilitate reducing income tax at the bottom- not 'effectively'- but actually. But in reality all this concern with the motivation of the poor to work is but a smokescreen to justify shafting them.

Avoidance is legal, even the Treasury understand that. There is nothing wrong with reducing your tax liability by legal means. Nothing whatsoever. There is no moral imperative for people to pay tax, merely a legal obligation.

VAT is recognised to be a regressive tax- but so is income tax to the degree that only the wealthy enjoy the flexibility to avoid taxes on their incomes- the PAYE wage earner has no such opportunities.

VAT is not universally recognised as always being regressive. VAT *is* regressive when considered in isolation of benefits and tax credits and if there were no goods you could buy VAT free. In the UK this is not the case.

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I think lowering the actual tax rate for the poor would help them- but that's not what's being proposed is it. What we have here is a number juggling trick that fails to address the absurdity that at the bottom of society people are paying income tax on incomes of less than 10.000 pounds, while our largest corporations are engaged in widespread tax evasion that costs this country billions;

http://www.guardian....x-gap-avoidance

If the aim were to help the poor, then why not simply raise that threshold at the bottom and make up the difference by asking the 'Sir Freds' of this world to do a little less tax 'avoidence'?

Here's what out friends at the taxpayers alliance think about that idea;

So to incentivise the wealthy we need reduce their taxes. Why then is this simple solution not applied to incentivising the poor?

Anyone?

'They' manipulate our laws at will - whilst Govt/rich-owned media keep having a go at the little people who are least able to defend themselves!

Why do you think all the football millionaires get found 'not guilty' for drink driving/causing crashes etc

If they weren't rich/powerful/part of Big Business + having Advocate/political plants 'friends' in high places, ALL these "avoidance schemes" would be ILLEGAL!

Even thieving "duck-house" was a barrister!

From post above - sounds like Tate & Lyle is a complete corruption of a company - they also take/receive the largest EU farming 'rebates' in the UK, (above the Royal family) paid directly from your taxes.

Then they use Big Business parasitic leaching/avoidance measures to avoid contributing back to the UK 'host'.

Who owns/major shareholders in Tate & Lyle?

Edited by erranta

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Funny how 'tough decisions' always involve poor people getting shafted somehow. Where were all these hard men when Sir Fred Goodwin and his ilk walked off into the sunset with pensions and loot intact?

We could not apparently touch a hair on a bankers head, we were powerless, utterly helpless to prevent them walking away unscathed from the burning wreckage of the companies they managed.

But as soon as it's the incomes of the poor in the frame, it's time for 'toughness' and 'hard decisions' and all manner of macho bullshite.

Pathetic.

I think you need to distinguish between the working poor, and the idle poor.

If someone is working and poor, I want the tax regime changed to help them. We can reduce the tax rates at the lower end to assist, if we didnt have to pay so much money to the idle poor. I favour a citizens income, abolish all other benefits other than a benefit for those disabled/incapacitated (would have a new system for this if I was da boss), and that would be it. No pensions, no retirement age, no housing benefit, no child benefit, all gone.

This change could allow the marginal rate of tax at lower levels of income to be zero or 10%, and encourage those people to work and earn more.

I think such a change would also encourage a lot of 'non-working poor' to choose work instead. Once they are working, their lives will be better, and so will the lives of everyone around them as they can contribute to the nations wealth, rather than drain it.

Now, there may be some people in this country that are just happy to claim benefits as their right, and they have no intention of working. It is a shame that a citizens income would give them 'help' at everyone else's expense. But there it is, I suppose no system is perfect.

So there ya go, we all want to help the poor. We want to make them better off, through their own efforts. If there are people who dont want to work, I am quite happy to let the suffer. We need to change the system, because at the moment, we dont know if there is a difference between these two groups of people.

Isnt this a positive change that we should strive for? Why is it that such thinking is considered an attack on the poor?

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Tax avoiders are seen as smart guys and are often admired by the gormless suits who wish they earned enough to be able to do it, but when a lad earns £25 for a job on the side he is treated as a scum criminal.... go figure.. :angry:

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If someone is working and poor, I want the tax regime changed to help them.

One of the best ways to do this is to scrap housing benefit altogether. Once someone gets stuck needing this they face marginal tax rates that will approach 100%.

As has been argued to death here housing benefit only benefits the landlords and puts the tenants in a welfare benefits trap.

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I must be missing something.

I thought that everyone earning 10k or less will be taxed at zero. There is no more incentive left to give.

The 10k limit fell at the first fence- it's still about 6 grand then taxation starts.

I also thought that the breakeven between working and not working was somewhere in the region of 14k.

The TPA example uses a two parent two child family as their example. My quick search for two bedroom flats in london came up with a low end of about 500 a month- so about 8 grand a year after that for the four to live on- 160 quid a week. But there is no council tax benefit or child benefit or tax credits- it's all been subsumed into the NI scheme.

Is it possible for a family of four to live on 160 quid a week- I don't know the answer to that to be honest- but as incentives to work go it lacks a certain undefinable appeal, don't you think?

The incentive that we need is for anyone who does one hour of marginal work is always better off than someone who doesn't. For many beneficiaries of our income redistribution structure, this is simply not true.

Put another way, our current system is binary for many recipients which creates massive disincentives at the boundaries.

I agree with the binary thing- my favourite analogy of the benefits system is that of a one armed man hanging from a cliff. Yes we can lower him a rope but to grab it he must first let go of the cliff and risk falling.

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I think you need to distinguish between the working poor, and the idle poor.

Is someone who makes the rational decision that he and his family will be better off if he does not work idle or simply responding to the incentives of his environment?

The term 'idle' is pejorative and strangely anachronistic in world where 'incentives' are deemed essential to the motivation of today's busy executive. You almost give the impression that you believe that there is an ethical dimension to the issue. Rest assured, there is not- that's why we see people on six figure salaries demanding and receiving 'bonus' pay- the idea that they might have an ethical responsibility to do the job they are paid for without being bribed is ludicrous- next you'll be telling me that poor people should work because it's the 'morally' correct thing to do- such a sense of humour.

The problem the Tax payers Alliance have is they want to create incentives to work for people who have no incentives to work because their income is taxed at rates their masters would deem outrageous if applied to themselves.

But then it's a bit difficult to do a convincing display of moral outrage with ones face stuck in a trough. Funny how the TPA instinctively align themselves with the taxpayers at the top and not those at the bottom. Obviously the taxpayers they have in mind are the ones who habitually avoid paying tax. Maybe a name change is in order?

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  • 144 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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