Clegg Middle Class Tax Squeeze
 

Hmmm.

http://www.telegraph.co.uk/news/news...ick-Clegg.html

http://www.telegraph.co.uk/news/news...help-poor.html

Add that to the Child Benefit cut and it'll hurt some people quite grievously.

It's 'progressive' but also strongly anti-growth. Typical Liberal Democrat policy actually :)

Thoughts? Will anyone making around that sum notice the pain?

EDIT: This one could be phrased better but I largely agree - http://www.telegraph.co.uk/comment/c...stupidity.html

Shuffling money from one group to another isn't going to reboot the economy, increasing opportunities for everyone to keep more of their money and generate their wealth more easily will.

Calculating the impact all of this will have on this household it's far from inconsiderable, over 2,000 quid a year ignoring VAT rises, doesn't really make me feel overly motivated to go and work that bit more and make that bit more money when the government is eating 51% of a large proportion of it before I see it.

Re: Clegg Middle Class Tax Squeeze
 

Shuffling money about is not economic policy,agreed...
the coalition should have cut much more brutally into the welfare state;and by that I mean welfare for EVERYONE!!!
Industry,the poor,the middle-classes,the rich,charities,NGOs and what-not...far too many people rely on hand-outs here and in Europe,and I don't know why?
I wish we would let people take responsibility for their own poor behaviour,let them work their way out of whatever situation they're in.

but that's too Libertarian for most people,I guess...

Re: Clegg Middle Class Tax Squeeze
 

I wish. :)

Re: Clegg Middle Class Tax Squeeze
 

Really? I make it a lowering of the threshold of ~ £2,500, meaning you will pay an additional 20% on that amount. That's £500 a year instead of £2,000.

Re: Clegg Middle Class Tax Squeeze
 

I was referring to other things as well as this but excluding anything based on consumption.

Re: Clegg Middle Class Tax Squeeze
 

Could you give us a rundown of what you included then?

You mentioned child benefits and 'shufflling money around'. I'd be interested to hear your thoughts on the eligibility of higher earners for child benefits. You also mention making it worthwhile for people to work, and this move being anti-growth. What you don't mention (but what is in the linked article) is that this bracket change is meant to pay for reducing the tax burden for low earners by increasing the personal allowance by £1,000, thus putting £200 in the pockets of everyone except those who are affected by the lowering of the 40% threshold. So how exactly is this anti-growth, and how does it disencentivise working, when it is meant to pay for lowering the tax burden (and increasing the income) of low income workers?

Sorry, but it just sounds like you are having a moan because you are personally affected. You are very vocal on these forums about needing to balance the books. Why the apparent hesitance to contribute? The reality is that the cuts in public services are going to disproportionately affect those on lower incomes. I think it's only right that those on higher incomes contribute.

Re: Clegg Middle Class Tax Squeeze
 

I wrote a huge response, the forum lost it.

Happy to contribute to balancing books, happy to pay for essential municipal services well in excess of those we actually use, not so happy to pay purely to supply a tax cut to others, that's redistribution of wealth plain and simple.

It's anti-growth as every tax increase is, and like it or not while those who benefit from this cut are the engine they are not going to be the main source of growth. This purely strikes me as compensating lower earners for loss of some other welfare by taking it straight from the pockets of higher rate tax payers, who have consistently been paying more for years anyway as the 40% threshold hasn't come close to keeping pace with inflation so to say it's only right we contribute is disingenuous.

Far better to deliver this tax cut by reducing spending elsewhere, not by simply shifting the tax burden. The tax burden is already far higher than it was 13 years ago - absolutely no need for it to be.

As a reminder I thought my receiving CB was ridiculous anyway, which it is.

36.865% of my income goes to the tax man, I don't see it. This ignoring all indirect taxes. How much is enough?

Lastly I'm apparently, despite my income slightly below the average person's wealth, and for the pleasure of living where I do in a 2 bedroom maisonette I pay 1,360 / month.

Of course none of this is taken into account and I'm clearly super-rich and worth wringing some cash out of.

Re: Clegg Middle Class Tax Squeeze
 

I'm still not convinced it's anti-growth. While low earners may not be the 'engine', they are far more likely to spend the extra income they receive. For many (by no means all) high earners the reduction (which incidentally is £300 rather than £500 as I forgot to take the increased personal allowance into consideration) will simply mean less savings. And I don't think it's disingenuous to say that at all, as I'm simply comparing to last year. We are all facing cuts in real terms. The fact that you've been paying more for longer is neither here nor there.

Ermm, yes. As a country we are facing the most brutal cuts in public spending for generations. It seems a bit silly (or rather egotistical) to me to simply suggest more cuts as the magic bullet. We are all in this together, and the cuts were going to be brutal but fair.

I don't know. All I'm saying is that we should all share some of the pain and contributing an additional £300 isn't the end of the world, and it's certainly not anti-growth when it pays for putting money in the pockets of people that, on average, are more likely to spend it.

I've never stated you are super-rich, and I appreciate that money may be tight even on a high salary. I'm a bit puzzled about the housing comment though. Being the Libertarian that you are, you presumably have a choice in where you live (and work)? I seem to recall you extolling the virtues of renting a home rather than being one on account of your flexibility on the job market not too long ago?

Oh, I appreciate that you copied the thread title from the Telegraph, but don't you think 'LIBCON Middle Class Tax Squeeze' would be more appropriate? The tax cut may be the result of a LibDem manifesto pledge, but at the end of the day, it's a coalition measure.

Re: Clegg Middle Class Tax Squeeze
 

I have my doubts that most higher earners are saving - zero incentive to right now, they are investing. There's less money for them to invest with.

No idea of the net impact of the policy as a whole, but taxing one income group to supply tax cuts to the other, regardless of which direction up the income scale, is wrong.

After the most sustained increase in spending for generations. More cuts are absolutely the way things should go, many other things that should be chopped to reduce the state further in size. Even post-cut 40% of national income is too large.

It's not the end of the world, of course not, but it's another tax increase on a pile of them over the last 14 years that there's absolutely no need for.

All tax increases are anti-growth, whether the increase in consumption from those less well off offsets it or not I do not know, we'll see.

Of course I chose to live here, however my point was that income and essential expenditure can be quite related. I am paid more because it is more expensive to live in this part of the country, so while my income is higher my outgoings are likewise higher.

I have little flexibility right now actually for family reasons, can't move too far :(

You are absolutely right there. This is the action of both the Lib Dems and their pretend Conservative coalition partners. :)

FYI I would actually have absolutely no issue with the government running up deficits if they were incurred through cutting taxes along with services in order to balance the economy back to its historical footings, and I remain utterly convinced that the deficit should be wiped out through 100% cuts not 80% cuts 20% tax increases.

These cuts are poorly thought out, which is frustrating as hell. They could be done so much better and cause far less grief for people even if they were 25% larger, but that would require competent government along with a civil service that serves only the populace rather than itself and it's been a while since we had either of those.

Re: Clegg Middle Class Tax Squeeze
 

Well, we are simply using any surplus we have to pay off the mortgage early. If we earn more, we are unlikely to spend or invest it. It simply goes into the house. It might go into an ISA with a view to increasing interest rates in the future, but we're unlikely to invest.

Ok, that's something that we can agree to disagree on, but it's rather different from the measure being anti-growth, which clearly is debatable.

Maybe, but there still is the issue of the speed of cuts, and the extent to which they are borne by the population as a whole. I still think it's right that higher earners contribute. Seeing they will feel the pinch of the cuts less than low earners, I have no problem with this move.

Indeed we'll see. But, as we've established, it's an increase that pays for a decrease, so it's debatable if we should call it an increase.

Yes, I understand that. I also said earlier, that I appreciate that money can be tight even on a high salary.

Yeah, I blame the Telegraph there. It reeks of smear to single out the LibDems for this. I don't see them harping on about the Tories increasing tuiton fees.

Hmm, I think it's well established that we have different viewpoints on what the role of the state should and should not be, and whether historical footing is an appropriate benchmark. Something for a different thread I think ;)

Re: Clegg Middle Class Tax Squeeze
 

Gosh, what a polite, well-considered and thoughtful exchange of views in a political CF thread. Well done both of you. :tu:

As for me and my house ... well, starting a couple of businesses from scratch (B&B and freelance copywriting) has put us right at the bottom of the income ladder, so we stand to gain out of these changes for the forseeable future. We were nowhere near the threshold for paying any kind of income tax as it was, shifting that threshold further upwards and eventually as far as £10,000 will allow us to get ourselves well established before we're asked to make a contribution to the running of UK plc. If that experience is repeated for other struggling self-employed families, it can only be a good thing IMO.

I should add, by the way, that contributing to society is firmly on my agenda - I'm grateful for the help we've been getting but anxious not to need it any more.

Re: Clegg Middle Class Tax Squeeze
 

Surely it is only the middle classes that can be attacked with tax rises. The lower classes are already subsidised and the upper classes can always choose to move on. I think its time that governments stop being commited to unfunded obligations to reduce the burden on future generations

Re: Clegg Middle Class Tax Squeeze
 

Indeed, and I think we'll agree to disagree and see what happens.

A pleasure as always :)

---------- Post added at 12:20 ---------- Previous post was at 12:17 ----------

Some of the middle classes can move on too. I will be once Mrs Igni has finished her education and Mini-Igni has finished junior school :tu:

Re: Clegg Middle Class Tax Squeeze
 

OK Ignoring the anti-growth repercussions of this an article in the Wall Street Journal has reminded us of the social implications.

His numbers are out of course, he forgot to include the personal allowance within his calculations for higher rate tax payers so the gap will actually narrow to £25,000 which is, nonetheless, very low indeed.

Re: Clegg Middle Class Tax Squeeze
 

http://www.bbc.co.uk/news/business-12389416

Good news for some people here

Re: Clegg Middle Class Tax Squeeze
 

I don't see good news for anyone just a feeble politically motivated opportunistic act that isn't going to help relations with the banks whose lending the coalition are going to be increasingly relying on.

Typical of Osborne actually, transparent attempt to give himself some ammunition in today's debate with Balls and to hell with the consequences, which handed Balls the argument before it had even started.

Re: Clegg Middle Class Tax Squeeze
 

Whats wrong with it.

If you move into the higher tax band, your entire salary doesnt suddenly get taxed at 40%, its just the little bit above the threshold. So as a % of earnings the pain felt by those affected by this is significantly less than the pain would be to lower earners for scrapping the 10k threshold. So its shifting a burden onto a part of society with more ability to pay it. I think the article you linked to which rambles on about productive people is an insult to low earners, as who is to say someone on 45k a year is more productive than someone on 10k a year?

Also those only right at the threshold will probably balance out anyway as they also get the higher no tax threshold.

Re: Clegg Middle Class Tax Squeeze
 

Err the people paying them the 45k a year are the ones to say someone on 45k a year is more productive. Most people are paid by their employer according to the value they provide the company.

---------- Post added at 08:44 ---------- Previous post was at 08:41 ----------

Redistributing wealth transparently through the tax system isn't the government's job. If they want people on lower incomes to pay less tax they can stop spending their money and reduce taxes on them without taking it from other tax payers.

---------- Post added at 08:47 ---------- Previous post was at 08:44 ----------

It's yet another tax on higher earning people, part of a long series of taxes that make it less and less worthwhile to aspire to earn higher amounts. Again if the government wants to make the tax system fairer they can start spending it more wisely instead of having parts of the coalition obsessing over progressivism and other parts playing one-upsmanship with the opposition over who can tax the most and spend the most in some areas.

EDIT: Of course there's also been a load of regressive tax increases as well - our tax burden as a % of the economy has increased by 25% thanks to the previous government, public sector spending by 50%.

Re: Clegg Middle Class Tax Squeeze
 

On productivity tho it will always be a personal view, it is of course possible these 45k earners may well be more productive, however its not like comparing someone who works full time to someone who doesnt want to work, in this case we are comparing two sets of full time workers who are in different wage brackets. There can be various reasons for the difference in salary.