So then, what is the ideal top level tax rate (hint: not Denmark's 62% morriss) Page 6

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  • MightyMouse 2 Jan 2013 17:35:40 1,127 posts
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    There has been research done into this. I'll just leave this here since it says pretty much everything I'd say on the topic.

    http://krugman.blogs.nytimes.com/2011/11/22/taxing-job-creators/
  • ResidentKnievel 2 Jan 2013 17:36:48 6,162 posts
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    I made a thoroughly researched graph in excel:



    The red x is what I think the top band tax rate should be at. It's not what I think the other tax bands should be at cos social reasons and that i dunno

    [code]Armoured_Bear wrote:
    Unlike yourself, I don't have a weird obsession with any platform.[/code]

  • Khanivor 2 Jan 2013 17:37:22 40,490 posts
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    elstoof wrote:
    LeoliansBro wrote:
    Khanivor wrote:
    Again, I'd like to see some examples of countries whose economies - not media - were greatly effected by high tax rates on the rich.
    Like I said, it was only in theory because no government has been that stupid until now.
    I don't know, the Mitterrand government caused quite an exodus. At one point my father in law was paying 150% of his income on tax during his reign.
    Did that materially effect the economy all on its own? Same with the UK in the 70s. Tax rates may have been high but there were many other issues also effecting the economy.

    There have been a few studies in the US which categorically show that lowering top taxes does not bring about more jobs or growth. This does not mean the opposite is true, the higher taxes equals more growth. Yet if the problem is not enough money and one part of society can be taxed higher without hurting the economy then why not do it?

    There's a nearly indestructible argument to be made that those with the most have benefited the most from the society they live so should be willing to put more back into it. Which makes moves like Depardieu's so monumentally dickish. I'm not saying people would hand over all their cash but when you've already got a few hundred million then throwing a strop because you might have to pay an extra million a year out of millions a year is really sad.
  • LeoliansBro 2 Jan 2013 17:41:49 43,632 posts
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    Khani, the high US tax rate and GDP growth in the 50s are undoubtedly cause and effect. Yep. Nothing to do with the end of the second world war and the need to a) pay for it and b) rebuild a peacetime economy with all these GDP-creating soldiers suddenly getting good at their post war jobs.

    LB, you really are a massive geek.

  • elstoof 2 Jan 2013 17:44:02 6,928 posts
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    Perhaps in 1950's USA people were a bit more willing to pay for the post war rebuilding but I suspect also, I you didn't like the tax to be paid there, where exactly would you go? Comparing that climate to today's is a fruitless excercise.
  • morriss 2 Jan 2013 17:45:02 70,913 posts
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    LeoliansBro wrote:


    Too high and you remove the incentive to excel, and run the risk of having no successful taxpayers at all.

    Too low and you remove the basis for excellence, and promote a world where inheritence is more important than natural ability or hard work.
    Nope and nope. Both sound like political scaremongering at election time but none that are true in practice. You only need to look at Scandinavia and the USA to see both argument roundly disproved.

    But carry on having a discussion based on a false premise.
  • LeoliansBro 2 Jan 2013 17:45:37 43,632 posts
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    MightyMouse wrote:
    There has been research done into this. I'll just leave this here since it says pretty much everything I'd say on the topic.

    http://krugman.blogs.nytimes.com/2011/11/22/taxing-job-creators/
    Very interesting, ta. Any idea what the threshold for the 70% tax was set at (I can't open the pdf on my phone)?

    LB, you really are a massive geek.

  • LeoliansBro 2 Jan 2013 17:48:42 43,632 posts
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    morriss wrote:

    But carry on having a discussion based on a false premise.
    Thanks, I will. Carry on posting passive aggressive vague assertions without actually backing them up.

    Alternatively, tell me what support there is for the poor and needy if the tax rate is 0%? Or what incentive there is to work hard, or at all, if the tax rate is 100%?

    LB, you really are a massive geek.

  • Dangerous_Dan 2 Jan 2013 17:52:12 2,380 posts
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    @Khanivor Let me make a few conclusions from that chart.
    So between 1940 and 1945 the US was prospering, hell they shouldn't have ended that war so early, every american was getting richer and richer because of GDP growth, right??

    What your chart also doesn't show is the top marginal tax rate between WW 1 and 2 which was lower than today and before WW 1 where it was about 10%.

    From 1875 to 1920 American steel production grew from 380,000 tons to 60 million tons annually. (about 157 times as much).
    Same amazing numbers go for population, private wealth, median income and so on. The real deal not some GDP equals wealth for the average Joe reasoning.

    Must have been a terrible time for the americans between 1945 to 1950, look at the GDP in your chart. Thank god the Korean war started around 1950, that gave all an upward trend for the wealth of the average american.

    And what your chart doesn't show either is the level where the top marginal rate starts kicking in and if those numbers got pushed enough over the years to keep up with inflation - not by far is the answer.

    But yes, definitely people are drones and it doesn't matter what the top marginal tax rate is - it's all about consumption not working, right?
  • Dante_Cubit 2 Jan 2013 18:14:14 1,908 posts
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    The whole disincentive to excel stuff is bullshit. The more you earn, the more you keep. No-one gets to a quid below the higher rate threshold and says "That's it, I'm treading water from now on". That just isn't how it works. You might not like paying more tax but it isn't unfair. As people have suggested, the fairness argument is about where those thresholds are.

    If people really operated according to a utility maximisation approach then everyone would leave Britain and go live somewhere that offered the best return for their effort. They don't. A few might go, but gearing your society towards pleasing the most mercenary characters is flat out madness. If international financiers want to go live in Luxembourg then let them.

    Appropriate tax levels are more about perceived value. If you feel you are receiving sufficient benefit for the expense then you are less likely to think things unfair (as is the case with the Scandanavian countries). Unemployment benefit is a joke in this country compared to more civilised regions. Losing your job is instantly catastrophic for many and you are left on a pittance. 50-70% salary for a year is the norm in some countries and certainly doesn't promote long-term skiving or poverty traps.

    What I really resent is taxes being spent on clearly unethical pursuits. Credit export guarantees for arms deals with dictators harms everyone involved. There is an opportunity cost for UK taxpayers and people living under those regimes. Plus, the dead kids and that. Hypothocating all tax isn't workable but huge gains could be made in terms of both tax expenditure and human suffering if some things could be opt in/out.
  • Khanivor 2 Jan 2013 18:19:22 40,490 posts
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    I'm not the one saying there's a casual link between tax rates on the rich and economic growth. Just thought a wee bit of historical data might be relevant in countering the assertion that a) it's never been done before and b) it will lead to economic decline.

    Interesting, though, how apparently the rich were willing to pay for post war-rebuilding, (of what? I don't think Pearl Harbour cost that much to repair) after WWII yet after the Iraq and Afghanistan wars apparently they can't afford it, even if the richest have never done better than they have been doing over the last few decades.

    LeoliansBro wrote:
    Alternatively, tell me what support there is for the poor and needy if the tax rate is 0%? Or what incentive there is to work hard, or at all, if the tax rate is 100%?
    Is this you know saying that the poorer you are the harder you work, with the richest people being the most idle?
  • MightyMouse 2 Jan 2013 18:24:23 1,127 posts
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    LeoliansBro wrote:
    MightyMouse wrote:
    There has been research done into this. I'll just leave this here since it says pretty much everything I'd say on the topic.

    http://krugman.blogs.nytimes.com/2011/11/22/taxing-job-creators/
    Very interesting, ta. Any idea what the threshold for the 70% tax was set at (I can't open the pdf on my phone)?
    They got the threshold by optimizing the tradeoff between increased deadweight burden at the income level and the increased revenue from all higher levels. It came out as $300,000.
  • morriss 2 Jan 2013 18:33:43 70,913 posts
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    Also worth noting that Danish top tax is around 52% as far as I can tell. I could be wrong there as taxation isn't an exact science, but I can't get it near 62% with the figures from the Danish tax office.
  • LeoliansBro 2 Jan 2013 22:26:11 43,632 posts
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    Khanivor wrote:
    LeoliansBro wrote:
    Alternatively, tell me what support there is for the poor and needy if the tax rate is 0%? Or what incentive there is to work hard, or at all, if the tax rate is 100%?
    Is this you know saying that the poorer you are the harder you work, with the richest people being the most idle?
    No. Try harder.

    LB, you really are a massive geek.

  • Psychotext 2 Jan 2013 22:30:51 53,915 posts
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    Dante_Cubit wrote:
    No-one gets to a quid below the higher rate threshold and says "That's it, I'm treading water from now on". That just isn't how it works.
    You might think so, but I personally know two people who decided that their time was better spent on leisure at that point rather than earning more (both self employed).

    Now that's not quite the same as just "treading water", but the tax rate did basically push them to the decision of not working any harder.

    Edit - I know a third person who started a charity in another country and donates all of his income to that instead... it doesn't really take a brane scientician to work out something fishy is going on there.

    Edited by Psychotext at 22:32:36 02-01-2013
  • elstoof 2 Jan 2013 22:38:42 6,928 posts
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    You're mates with Jimmy Carr?
  • Psychotext 2 Jan 2013 22:40:07 53,915 posts
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    I wouldn't call him a mate.

    /spits
  • Dante_Cubit 2 Jan 2013 22:58:16 1,908 posts
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    Psychotext wrote:
    Dante_Cubit wrote:
    No-one gets to a quid below the higher rate threshold and says "That's it, I'm treading water from now on". That just isn't how it works.
    You might think so, but I personally know two people who decided that their time was better spent on leisure at that point rather than earning more (both self employed).

    Now that's not quite the same as just "treading water", but the tax rate did basically push them to the decision of not working any harder.

    Edit - I know a third person who started a charity in another country and donates all of his income to that instead... it doesn't really take a brane scientician to work out something fishy is going on there.
    This is just diminishing returns, it would happen regardless of tax rate. Where your basic needs are met at some point the additional effort you make stops being worth the reward (unless you are person who lives to work as most of the great entrepreneurs are). As you have less free time it becomes more valuable and your friends just made an intelligent trade off.

    And let's be honest, the world would be a better place if people spent more time doing things other than paid work. Time with family or spent on artistic or intellectual pursuits enriches society as a whole. The notion that GDP is a good measure of anything other than economic activity has been disproven time and time again.

    Edited by Dante_Cubit at 23:02:17 02-01-2013
  • Deleted user 2 January 2013 22:59:45
    If anyone cares, here in sun-kissed Belgium for those earning 30K or more it's 50%, plus 12.5% social contributions, so 62.5%.

    My xmas bonus last week was taxed at 65%, from 2k I ended up with 842 euros. \o/
  • Psychotext 2 Jan 2013 23:00:37 53,915 posts
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    Sure, but in this case the tax rate was the specific trigger point. Maybe that matched where their comfort zone was financially, maybe not.
  • Dante_Cubit 2 Jan 2013 23:00:51 1,908 posts
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    Greggywocky... wrote:
    If anyone cares, here in sun-kissed Belgium for those earning 30K or more it's 50%, plus 12.5% social contributions, so 62.5%.

    My xmas bonus last week was taxed at 65%, from 2k I ended up with 842 euros. \o/
    Good beer though.
  • Deleted user 2 January 2013 23:06:51
    And he got an Xmas bonus!
  • elstoof 2 Jan 2013 23:09:15 6,928 posts
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    Psychotext wrote:
    I wouldn't call him a mate.

    /spits
    Maybe if he swallowed?
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