UK Tax breakdown
I attach if anyone interested it shows the actual breakdown of which taxes generate most for the Treasury, who pays what and how that compares to other countries.
Direct Taxes (Income Tax, NIC, Council Tax) are already Progressive, in that the higher the income, the higher the marginal and overall rate of tax. (Substitute property value for income with Council Tax)
Obviously those who earn most pay the highest share of their income in Direct Taxes.
The top 1% of all earners, earn 12.5% of all income and pay 29.1% of all income tax.
You can play about with groups however you want.
The bottom 50% of all earners, earn 25.5% of all income and pay 9.4% of all income tax.
The top 20% of earners pay about 30% of their earnings in Direct Tax, the bottom 20% pay about 17.5%.
Indirect Taxes (VAT, Fuel Duty, Tobacco & Alcohol Duty) are Regressive, in that the higher the income (or wealth) the lower the overall rate of tax.
The top 20% of earners pay in c16% of what they spend on Indirect Taxes.
The bottom 20% spend 18% of what they spend on Indirect Taxes.
Those who earn least pay a much higher share of their Disposable income on these taxes.
Overall UK remains a low overall tax country. Most Western European countries see Tax being 5-10% more of GDP than we do in UK. That is an awful lot more money.
We have a low overall tax burden, with a progressive direct tax system and relatively low indirect tax burden and relatively high property tax burden.
The truth is that we can't afford the society we want, but are too selfish to pay more towards it.
I find the idea of regressive taxes such as Duties and VAT as morally repugnant.
I would much prefer Direct Taxes to be significantly more progressive AND there to be real taxation of obscene wealth with massive penalties for those who avoid let alone evade, and huge access problems to these shores for those that don't agree to contribute.
The difficult matter is HOW MUCH more progressive? How much higher should top rates be and from what Income Tax, NI, Property Value or Inheritance Tax rate?
IMHO we have to incentivise success, but also eliminate poverty and narrow the gap between the richest and poorest.
We are far too focussed on the former and are failing badly at the latter.
I am for:
Higher top rate income tax rate. I say this as some one who was snared by Brown's 50% rate as my earnings peaked!
Higher limit before any tax is paid. Take more people out of Income Tax who literally can't afford to pay it.
Reduce VAT. Have a higher rate on "luxury items".
Switch more to higher Inheritance Tax rates above reasonable limits.
Add VAT and increase Stamp duty to second homes and tighten legislation on occupancy. Make Council Tax extremely progressive on Second Homes. Increase Capital Gains Tax significantly on non first homes.
Re-structure Corporation Tax dramatically - though I accept without international cooperation this is difficult. It currently scandalously generates little over what we pay in tobacco, alcohol and fuel duties to the Treasury.
What I struggle with is why the above is so scary to the vast majority of the electorate who would benefit from it.