U.K. Government Abandons Plan to Cut Rate of Income Tax for Top Earners

U.K. Chancellor of the Exchequer scrapped Truss's key economic policy, following the slide in the UK currency's value, turmoil in the country's financial markets, and the threat of large scale rebellion within Truss's party.

Will this be known as the Truss Doctrine? Release a new economic policy on a weekly basis, and see if it sticks?

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ArishMell · 70-79, M

I don't know why the tax paid by the highest paid is judged really so important, or perhaps significant. (Provided they are not doing anything illegal such as tax-evasion, of course.) The income from them would be tiny, in the grand scheme of things - the higher the income the fewer the people affected.

Besides, even if some of such people can afford expensive accountants and off-shore accounts, they still pay a lot of indirect tax in this country as the VAT and Council Tax on their much more flamboyant private expenditure.

What will matter instead is how the Government deals with the problems of the overall national and international economic situation; and how well they deal with them. That is not easy, and I do not pretend to know the best approaches to these. I doubt many of us here know, but destructive criticism is oh so easy and oh so pointless.

I do think though, that mere jealously of anyone on some stratospheric wage - whether a merchant-bank director or a First Division star ball-kicker - won't solve anything.

What worries me more seriously is this idea, from Labour as well as Conservative politicians, that somehow we need "attract overseas investors". When are they going to wake up to what that means, every time another British company and its trading profits vanishes abroad to the so-called, American-sounding, "inward investors"; i.e. the money-traders in America, the Middle East or the People's Republic of China?

Ye Gods - having alluded to it, its genuine supporters even narrowly fought off a bunch of spivs in the USA wanting to destroy our country's national sport's league structure, just to make money from its ruins!

Northwest · M

@ArishMell

the higher the income the fewer the people affected.

Yes. but the small number of people affected, does not translate into less money. Bill Gates and Jeff Bezos, and I, live in the same "neighborhood", but if you take me out, it would not make a dent, if you take both of them out, there goes 10% of the property taxes in the neighborhood.

ArishMell · 70-79, M

@Northwest Are those taxes based on an assessment of house value or of householder's wealth?

Northwest · M

@ArishMell I'm talking about property value. Houses are assessed property taxes, based on the assessed value of the property. These taxes usually go to local schools, hospitals, and local levies. That's separate from federal income taxes. My state does not have a state income tax.

Sales tax, on good and services, are assessed based on rates at the locale where you purchase them. In a lot countries, that's called VAT. If Bezos buys a $300M yacht in Holland, little good that does to the community he lives in, and then he can register it in Panama.

ArishMell · 70-79, M

@Northwest I see.

The UK has a slightly similar, 'Council Tax' which helps support local services, adding to central funds. It is based on property values divided into bands.

Personal taxes (Income Tax, National Insurance and Capital Gains Tax) are paid into the central Treasury. Capital Gains affects things like home sales, but above a threshold higher than most sales.

Value Added Tax (presently a hefty 20% in Britain) is a horrendously complicated gift for bureaucrats and accountants! In most countries using VAT, it is set and collected nationally, not at the equivalent of State level; and is irrespective of the product's source. It is on the selling price of products and services, but in a sort of chain that follows the costs of its manufacture or provision from source or importer, to user. Hence the "value added" term.

In the UK it is not levied on certain, vital things like food (with certain exceptions including prepared and served in restaurants); those areas of health-care that are subsidised but not wholly via the NHS, and prescription medicines. (What we pay at the counter for those up to the age of 60, is a nationally-set rate that may be well below their real retail cost, and it goes to the NHS).

Some goods are subject to VAT but that is set at 0%, so effectively tax-free. I think children's clothes are in that category.

There are not many as wealthy as Jeff Bezos, but most us have things made in other countries, so which do not benefit our own communities apart from the sales tax on their retail cost. On the other hand we normally buy the consumables for using and servicing these possessions, locally, even if those consumables are also imported.

If Bezos buys his yacht in Holland, it might not be quite as generous to Holland as appears: who owns the builders, so where do the profits go? The luxury-yacht builder 'Sunseeker' was established in my own Southern English county and it still makes the boats here.... but it was owned for a while by some bunch of venture-capitalists in Ireland (I don't know if Northern or Republic of), who sold it some years ago to a Chinese company!

Northwest · M

@ArishMell

If Bezos buys his yacht in Holland, it might not be quite as generous to Holland as appears

That's not the point I was making. I was referring to how purchases by individuals, may not have anything to do with where they live.

I traveled quite frequently to the UK, and most of Europe. My point also, was the yacht purchase, does not benefit the people of Holland, because the 21% VAT is not collected, as the boat is registered in Panama, where the a flat low fee, although he can also register it in Holland, where he will pay less than $1K per year as a non-EU citizen. And he does not pay the VAT either. Bottom line, Bellevue, Washington, get $0.

ArishMell · 70-79, M

@Northwest Oh,, sorry!

Yes, I understand your point now.

I can see no-one in the USA would benefit from such a yacht purchase and registration, Presumably though he would still pay the builders for the boat itself, which is effectively an export from Holland wherever kept?

I don't know why the port of registration should affect the VAT on purchase though. It must be something to do with Holland's own tax system.

I think VAT was an EU invention - or concoction - but it is up to individual states to set their own rates and exemptions.

damselfly · 100+, F

@ArishMell yes

Northwest · M

@ArishMell VAT is not the same thing as our sales tax in the US. There is a minimum sales tax set by the state, and each city gets to add to it, using rates set by local elections. If I buy a product from a different state, and have it shipped to me, and the company I buy it from does not have a presence in my state, then I don't pay a sales tax.

My state borders Oregon, so if I go to dinner in Oregon, no sales tax is added to my check.

Things like groceries, milk, etc. do not have sales tax added.

When I'm in Europe, I get to have my VAT refunded at the airport (though they don't make it easy), because I don't live in Europe, and some stores handle it in store.