Who set up our current tax laws!

[Richie]

Southstand, you understand almost all companies charge 20p in the pound in VAT to the government. If you think adding 1% VAT on to food would magically solve our deficit you're very wrong. We are in over £100bn of debt, and Tesco turned over £67bn last year. If sales stayed the same (which they most likely wouldn't as prices rose) a 1% VAT implementation would raise £670m, or <0.5% of the deficit. Raising taxes cannot fix the deficit, it has to come from cuts.

Plus I'll say it again, the burden of taxation is NEVER on companies which makes the idea of taxing a company so ridiculous. They pass on the cost to consumers, employees and shareholders.

 

[southstand1882]

Southstand, you understand almost all companies charge 20p in the pound in VAT to the government. If you think adding 1% VAT on to food would magically solve our deficit you're very wrong. We are in over £100bn of debt, and Tesco turned over £67bn last year. If sales stayed the same (which they most likely wouldn't as prices rose) a 1% VAT implementation would raise £670m, or <0.5% of the deficit. Raising taxes cannot fix the deficit, it has to come from cuts.

Plus I'll say it again, the burden of taxation is NEVER on companies which makes the idea of taxing a company so ridiculous. They pass on the cost to consumers, employees and shareholders.

1% of all revenues in the UK is £25 billion

4 years and the entire DEBT is gone

 

[southstand1882]

EDIT: $25 billion

Still, I've solved the crisis

Or we can all wallow in debt for the next 30 fudging years

 

[Leeds Spur]

So you're ok with BAE sending most of it's corporate tax to the USA? Because 80% of the business is done with the United States, surely we owe them a whole load of corporation tax.

They already pay all taxes due in the US. It's a separate company over there.

 

[Leeds Spur]

One of the very few things that economists have a consensus on is that protectionism is bad for everyone.

Take a look at it from the business perspective. It's better for businesses to buy from abroad if it is cheaper and then those UK firms can pass on savings to the consumer. For example if a builder can buy foreign bricks at half the price abroad then he can do it and make cheaper houses. Therefore the person buying the house has more money to spend on other things.

Listen to Milton Friedman on Protectionism, he explains it far better than I ever could http://www.youtube.com/watch?v=6qqG6OurHaM

Just tell the Germans that.

And they've done we'll put of state sponsored economic policy as well

 

[P.D.]

Its an interesting topic and from what I've seen the tax system was constructed so long ago that it really needs a huge rewrite to take into account how society has developed etc.

If anyone is really interested in this topic they should read the guide released here - http://www.ifs.org.uk/mirrleesReview

Its a review done by a load of economists and researchers and published by the oxford press on what a modern tax system should look like, well worth a flick through

 

[Richie]

EDIT: $25 billion

Still, I've solved the crisis

Or we can all wallow in debt for the next 30 fudging years

Sorry, but you clearly don't understand the difference between deficit and debt.

We are in over £700bn of debt and increasing. The deficit is how much we need to borrow to keep up with current spending levels. Even if your maths is correct (which I doubt it is tbh), we would still have a £75bn+ deficit. If a 1% rise in VAT would raise £25bn, we would do it. The coalition raised VAT by 2.5% in its first budget and look where we are now.

 

[southstand1882]

Sorry, but you clearly don't understand the difference between deficit and debt.

We are in over £700bn of debt and increasing. The deficit is how much we need to borrow to keep up with current spending levels. Even if your maths is correct (which I doubt it is tbh), we would still have a £75bn+ deficit. If a 1% rise in VAT would raise £25bn, we would do it. The coalition raised VAT by 2.5% in its first budget and look where we are now.

I do understand the difference. sorry, forgot the debt is a trillion!!!

The maths is crude. I just did 1% of GDP

So I'm right about one thing. We are fudged

 

[papaspur]

Southstand, you understand almost all companies charge 20p in the pound in VAT to the government. If you think adding 1% VAT on to food would magically solve our deficit you're very wrong. We are in over £100bn of debt, and Tesco turned over £67bn last year. If sales stayed the same (which they most likely wouldn't as prices rose) a 1% VAT implementation would raise £670m, or <0.5% of the deficit. Raising taxes cannot fix the deficit, it has to come from cuts.

Plus I'll say it again, the burden of taxation is NEVER on companies which makes the idea of taxing a company so ridiculous. They pass on the cost to consumers, employees and shareholders.

I think the fundamental problem is this: the wages of the higher-up executives have skyrocketed, especially when you factor in bonuses. CEOs in particular make stupid amounts of money. Many corporations and financials are getting record profits. At the very least, things aren't bad for them.

I don't understand when you say that the burden of taxation never being on companies. Can you please explain the logic for this? And not just the fact that they're not people because that still doesn't help me understand.

The way I see it is that the burden of taxes isn't on them because they get to decide what the tax code is for them. Wealthy political donors hold sway over politicians whom they endorse, and they can also afford lawyers, accountants and lobbyists to ensure they keep more of their money.

Also, if companies RECEIVE money from the government, shouldn't the government be able to get some sort of return on that money? After all, I did get bent over when we bailed out the banks. If my tax-money goes to bailing those ****suckers out, I will expect them to bail the rest us of out when times are bricky.

 

[jts1882]

Its not true that the burden of taxation was never on companies. In 1950s, corporation tax contributed almost as much to the federal tax take as personal income taxes (I forget the exact numbers, something like 35% and 45%). This was at a time when the top personal rate was 70%. Now personal income tax contributes four times as much as corporation tax, with the latter down to 10%. That's a big shift in the balance. Why does corporation tax contribute a third of what it used to?

And don't forget the 50s is supposed to be the golden age of the American economy.

 

[southstand1882]

Its not true that the burden of taxation was never on companies. In 1950s, corporation tax contributed almost as much to the federal tax take as personal income taxes (I forget the exact numbers, something like 35% and 45%). This was at a time when the top personal rate was 70%. Now personal income tax contributes four times as much as corporation tax, with the latter down to 10%. That's a big shift in the balance. Why does corporation tax contribute a third of what it used to?

And don't forget the 50s is supposed to be the golden age of the American economy.

Palms. Trough. Politicians. Snouts. Greased

Reorganised

 

[Richie]

Its not true that the burden of taxation was never on companies. In 1950s, corporation tax contributed almost as much to the federal tax take as personal income taxes (I forget the exact numbers, something like 35% and 45%). This was at a time when the top personal rate was 70%. Now personal income tax contributes four times as much as corporation tax, with the latter down to 10%. That's a big shift in the balance. Why does corporation tax contribute a third of what it used to?

And don't forget the 50s is supposed to be the golden age of the American economy.

You clearly aren't understanding the difference between who writes the cheque and who pays.

An obvious example is petrol prices. Sure BP writes a cheque to the government, but they aren't paying for it. It is you and me paying for it at the pumps in higher prices. The same is true of corporation tax, it results in higher prices and lower wages, thus the burden of the taxation is on you and me regardless of who's writing the cheque

 

[jts1882]

You clearly aren't understanding the difference between who writes the cheque and who pays.

An obvious example is petrol prices. Sure BP writes a cheque to the government, but they aren't paying for it. It is you and me paying for it at the pumps in higher prices. The same is true of corporation tax, it results in higher prices and lower wages, thus the burden of the taxation is on you and me regardless of who's writing the cheque

Let's pretend that your answer has any relevance to my post and follow your thought through.

You say the consumer pays regardless so it doesn't matter who pays the taxes (individual v corporation). Even if the relationship of price and wages was that simple, it does make a difference to who (which individuals) pay. With corporation tax, like a sales tax, I only pay towards it if I buy the product. If you use a lot of petrol, you pay more. If you use less, you pay less. It's only "you and me paying for it at the pumps in higher prices" if we both choose to buy petrol. Now with your system of removing corporation tax, everyone contributes regardless of how much petrol they consume or which company they choose to buy from. This undermines both the markets and personal liberties in that everyone pays regardless of what products they consume. How very socialist.

 

[Richie]

Let's pretend that your answer has any relevance to my post and follow your thought through.

You say the consumer pays regardless so it doesn't matter who pays the taxes (individual v corporation). Even if the relationship of price and wages was that simple, it does make a difference to who (which individuals) pay. With corporation tax, like a sales tax, I only pay towards it if I buy the product. If you use a lot of petrol, you pay more. If you use less, you pay less. It's only "you and me paying for it at the pumps in higher prices" if we both choose to buy petrol. Now with your system of removing corporation tax, everyone contributes regardless of how much petrol they consume or which company they choose to buy from. This undermines both the markets and personal liberties in that everyone pays regardless of what products they consume. How very socialist.

So you consider all income tax to be socialist policy? That way everyone pays regardless of what they consume. Personally I think there is an argument to be made for all taxation to be through VAT but that's another debate.

You are completely misunderstanding my argument. I have no problem with the system you are suggesting of people paying tax on what they consume. My problem comes when people think corporation tax is a tax on the rich and the wealthiest, which it is not. If you want to continue to tax people in this way then raise VAT and remove corporation tax as it's much more transparent to the consumer, but don't pretend that corporation tax is a tax on the wealthy because it isn't.

 

[papaspur]

Maybe the question should be: "Should corporations be taxed?"

Perhaps the mechanism in place to tax corporations is faulty (obviously it is because their lobbyists wrote the loopholes).

What do we do to fix it?

 

[Richie]

You don't understand. It isn't a loophole, and it is nothing to do with lobbyists. It's very simple, a businesses costs go up through a tax therefore that money needs to come from somewhere, so prices go up, pay goes down and dividends gets smaller. The costs are offset by some mix of these 3 things.

It is the concept of a corporation tax that is flawed, not the implementation. It simply doesn't and will never do what people want it to do, which is tax the rich.

 

[papaspur]

My point is that despite corporations having to pay tax, they don't pay it anyway. But you're saying corporations shouldn't pay tax because consumers will ultimately end up paying it.

OK, should corporations get tax-payer money? Who pays when there are protestors outside a bank's headquarters and the police are standing outside guarding the entrance?

 

[Richie]

I don't believe government should be subsidising or bailing out any companies. As I've said previously, I'm happy for government to stop guaranteeing peoples bank deposits so if a bank goes under people lose money. Then people will care more about what banks are doing, just as shareholders care about how a company operates because their capital is at risk.

 

[Leeds Spur]

Naive

You don't have a fudging clue what your bank is doing.

 

[spursman17]

I have mentioned in the past on this board and I'll mention it again. Read up on a man called Sir John James Cowperthwaite. He knew the basis of prosperity was through minimal taxation and this provided the drive for small businesses and competition.

You may ask 'how does paying lower tax provide greater taxable income'? The answer is easy, although not obvious for some. Taxation discourages people to peruse business ideas as the rewards are not worth the risk associated with setting up a business.

How can this change? One way is to lower the cost of taxable spending. Take a look at some of the costs below;

Total Spending £676.6 billion
Pensions £138.1 billion
Health Care £126.2 billion
Education £97.2 billion
Defence £46.3 billion
Welfare £116.4 billion

If these numbers can be reduced then the government will not require to demand such high tax amounts from company profits and personal incomes. What this country really needs is to come down harder than ever on some of these areas of spending. Welfare needs an overhaul, people need to take some own responsibility and the government should be doing all they can to ignite prosperity.

Pensions are another areas that needs tough restructuring. One in three people born today are expected to live to the age of 100 years. It only makes sense that the pension age rises. I personally believe the pension age should reflect a percentage of the expected life expectancy for the year you are born. Of course it would be great for people to have a long happy retirement but this is not sustainable with other countries and World competition.