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Thread: Austerity and tax and the pot.

  1. #1
    Senior Member mikeydt1's Avatar
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    Post Austerity tax and the pot.

    watching the news here and something is not making any sense to me.

    When the Coalition came to power 3 years ago it was claimed that there was no money left in the pot (so they claimed) and along with it they brought in Austerity.

    since then many know that most of this was aimed at poor people along with cutting services which they promised to protect.

    although they claim there isn't much money around one thing which doesn't make sense is cutting the top level tax from 50 to 45 pence.

    Danny Alexander claims that the rich would pay more this morning but according to the BBC it is claimed that the rich esp the millionaires would be even better off by 50 to 100,000 pounds, as far as Alexander was concerned he refused to accept this.

    http://www.itn.co.uk/UK/72986/labour...nt-tax-reforms

    also it seems very strange that this government can also in times of austerity, again saying not much in the pot to go and increase foreign aid while hitting their own poor of the UK.

    it is good to have tax cuts but not good if there is clear signs now that greed is taking from the poor of the UK. all i can see from this is that the Conservatives while out of power were all the time creating a master plan to simply take away as many things from the poor as possible (total disgrace on them), also saw a warning before they came in about what their hidden intentions were.
    Last edited by mikeydt1; 06-04-13 at 07:58. Reason: forgot to add news link

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    the tory motto,god bless the rich and the devil take the poor. i predict a riot.

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    Labour originally planned to introduce a 45% rate but then upped it to 50%. The estimate was it would raise £2.4B in extra revenue, although a lot of people suggest it would be much lower. About 300,000 people would be liable, about 1% of taxpayers. However, this 1% account for 30% of tax paid.

    The theory is this types of people can and will move, the loss of tax across the board is skewed so if they do leave less tax is recived overall and more damage is done to the economy. So, again the theory is, have a lower rate and HMRC gets more tax overall.

    However, when you see the individual figures it does look unjust. Individuals gain, however the economy gains overall. Guess only time will tell!!

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    Senior Member RaeUK's Avatar
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    I found this elsewhere which seems to make sense of how tax works ...
    Suppose that every day, ten men go out for beer and the bill for all ten comes to £100...

    If they paid their bill the way we pay our taxes, it would go something like this...

    The first four men (the poorest) would pay nothing.
    The fifth would pay £1.
    The sixth would pay £3.
    The seventh would pay £7..
    The eighth would pay £12.
    The ninth would pay £18.
    The tenth man (the richest) would pay £59.

    So, that's what they decided to do..
    The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.
    "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.
    The group still wanted to pay their bill the way we pay our taxes.
    So the first four men were unaffected.
    They would still drink for free. But what about the other six men?
    The paying customers?
    How could they divide the £20 windfall so that everyone would get his fair share?
    They realised that £20 divided by six is £3.33. But if they
    subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
    So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

    And so the fifth man, like the first four, now paid nothing (100% saving).
    The sixth now paid £2 instead of £3 (33% saving).
    The seventh now paid £5 instead of £7 (28% saving).
    The eighth now paid £9 instead of £12 (25% saving).
    The ninth now paid £14 instead of £18 (22% saving).
    The tenth now paid £49 instead of £59 (16% saving).

    Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
    "I only got a pound out of the £20 saving," declared the sixth man.
    He pointed to the tenth man,"but he got £10!"
    "Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"
    "That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"
    "Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"
    The nine men surrounded the tenth and beat him up.
    The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

    And that, boys and girls, journalists and government ministers, is how our tax system works.
    The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.
    Tax them too much, attack them for being wealthy, and they just may not show up anymore.
    In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

    David R. Kamerschen, Ph.D.
    Professor of Economics.

    For those who understand, no explanation is needed.
    For those who do not understand, no explanation is possible

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    Thanks RaeUK, somebody sent me this at work a while ago. I think there is a version where the bar owner because they are such good customers lets them continue drinking and build up a bar tab. The bar is doing well as the customers continue to drink etc etc. Then one day the debt is so big, well we know the rest

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