If there ever was a year for teenagers to earn some money and learn a little about the world of work before getting themselves tens of thousands in debt this was it. Yet:
Record numbers of 18-year-olds in the UK have accepted university places this year, according to updated figures from the Ucas admissions service.
There will be 272,500 of this age cohort starting at UK universities - up by 7% on last year.
That’s totally nuts, and will lead in future to a whole generation of massively indebted people with not enough graduate jobs to go round.
Advice to any 18 year old looking for a white-collar career, get a very junior job for a local accountant, lawyer or IT support firm. If you’re a more practical type, learn a trade - most tradesmen are higher-rate taxpayers now after an apprenticeship, especially in the south.
If you’re firmly set on being a doctor, engineer or academic, then go to university. If not, don’t, and learn on the job instead.
(((Dan Hodges))) @DPJHodges · 2h Not sure why people are still talking about the Social Care tax hike. Up until the weekend it was a Social Care tax hike. But then there was the backlash from Tory MPs and Sunak. So now it's the NHS Waiting List Tax Hike.
If there ever was a year for teenagers to earn some money and learn a little about the world of work before getting themselves tens of thousands in debt this was it. Yet:
Record numbers of 18-year-olds in the UK have accepted university places this year, according to updated figures from the Ucas admissions service.
There will be 272,500 of this age cohort starting at UK universities - up by 7% on last year.
They're not needed in the quantities received, but you're at a competitive disadvantage if you have no degree entering the world of work these days as all your peers do. That's most of it tbh - obviously every VC screeches on about how everyone needs to go.
That depends on whether the degree is relevant to the job.
Make the wrong choice about the university course and it might not be but the debt will still be there.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
One way of looking at it, for those who think £1m is not rich, that is about a whole working lifetime of post tax median salary, being received tax free.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
The squeeze for rentier & non working income SURELY has to come next.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
There will be continuing upward pressure on NHS spending, that it absolutely so. But there is a particular crisis right now that needs to be addressed and this does that.
I thought your point, with which I have some sympathy, is that this additional income should be coming from capital taxes as well as income taxes. I completely agree that the burden of taxes on income is excessive and taxes on capital are far too light. The massive gains people make on their homes tax free is distorting inter generational wealth and opportunity too. But this is a different argument from whether this money is needed. It clearly is.
A point made by quite a few people is that if this really was a one-off Covid related cost, the normal thing is to incur the debt and pay it off over years.
I think there is a perceived need for a big political gesture, which I suspect is driven by the prospect of an utterly grim NHS winter coming up. The government wants to get ahead of that curve.
In fiscal terms this has almost nothing to do with social care and not much to do with the general NHS. It is a general tax increase that is nominally hypothecated to spending that is seen as desirable, but which essentially is happening (or in the case of social care, not happening) anyway.
The thing is - even if the money did go into social care, the whole lot is swallowed by the care provider market, who make significant profits and are unable to justify the costs when challenged line by line.
Like children’s social care at the moment - you won’t solve the care problem until you tackle the real issue, and that’s the provider market
So is the alternative to raising NI to pay for social care is to take the equity in older persons houses...
That will happen anyway since a large number of people do not have £85k in assets outside of their houses. Councils will still end up having a charge on a significant number of homes.
We may see a private insurance market for the £86K now that it is capped. Dilnot thought it could happen with a cap.
We will if it's only 1:5 or 1:10 people who need it; if it's half then the premiums will be so high that it won't be worth it.
It will be interesting to see how it develops. In the meantime, be prepared to set aside £200k from your lifetime pension pots or do an equity release for that instead of the cruise.
What I find remarkable about this plan is that with a father in care, he won't be better off.
I have been discussing this with my wife re: mother in law aged 92, and we came to the same conclusion.
I would probably always find and focus on Tory policy negatives, but Mrs M is a blue blooded Conservative.
So in some cases at least, it fails to meet its primary objective. However, I suppose if the sound bites and the smoke and mirrors work, I daresay that is good enough.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
*Coughs*
I wonder if he reads PB?
Surely he needs to add in employers pension contribution and the rent of the building he works in!
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Those with asset wealth.
We've got to stop squeezing workers.
Agree with your concerns.
How does one define asset wealth? Those who own houses have assets. So tax them. But that includes people like you and the tax would have to be paid out of income or savings.
Pension pots? Again this will hit workers.
Etc.
Not saying that this shouldn't be done. From what I understand, these proposals seem to be incoherent and unfair. I just think that taxing wealth will also hit workers as well. There is no option that won't hit some group or other.
The problem seems to be three-fold in my mind:-
1. First, work out what social care system we want. 2. Then work out how to pay for it in a way that is fair and effective. 3. Additionally, work out a way to pay for other public services and the cost of Covid.
This seems to be a mish-mash of social care and NHS, with little regard for fairness or effectiveness and doesn't deal with point 1 at all, as fas I can see.
God knows what happens on 3. Presumably we'll learn that in October.
Tax unearned income the same as earned income, tax pension income the same as earned income. Those two changes will bring in tens of billions per year. It can be achieved by merging NI and income tax. Keep the £12.5k threshold so lower paid workers and low income pensioners actually see a net reduction/no change in tax, most workers see no change while well off pensioners and rentier types see a huge increase in their tax bills.
The way we treat unearned income is ridiculous, investment is already incentivised with CGT being 20%. We don't need to also give income from investments a tax break.
Why would you lock up money in a pension for 30+ years if there are no tax breaks?
Saving is a good thing. It should be incentivised.
Absolutely, people will always do what they can to avoid tax, if a pension is seen to be tax inefficient, people will not put as much money in them.
We do seem to be demonising pensioners who have worked all their lives and put money away from their already taxed income to provide for themselves in retirement.
Demonise = Make them the richest generation ever, and on average richer than their kids and grandkids will be in retirement.
So the current 65+ generation is richer than any generation before and will be richer than any after?
So is the alternative to raising NI to pay for social care is to take the equity in older persons houses...
That will happen anyway since a large number of people do not have £85k in assets outside of their houses. Councils will still end up having a charge on a significant number of homes.
We may see a private insurance market for the £86K now that it is capped. Dilnot thought it could happen with a cap.
We will if it's only 1:5 or 1:10 people who need it; if it's half then the premiums will be so high that it won't be worth it.
It will be interesting to see how it develops. In the meantime, be prepared to set aside £200k from your lifetime pension pots or do an equity release for that instead of the cruise.
If I get that bad I will be off to Switzerland
Seems you finally have something in common with Max!
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Those with asset wealth.
We've got to stop squeezing workers.
Agree with your concerns.
How does one define asset wealth? Those who own houses have assets. So tax them. But that includes people like you and the tax would have to be paid out of income or savings.
Pension pots? Again this will hit workers.
Etc.
Not saying that this shouldn't be done. From what I understand, these proposals seem to be incoherent and unfair. I just think that taxing wealth will also hit workers as well. There is no option that won't hit some group or other.
The problem seems to be three-fold in my mind:-
1. First, work out what social care system we want. 2. Then work out how to pay for it in a way that is fair and effective. 3. Additionally, work out a way to pay for other public services and the cost of Covid.
This seems to be a mish-mash of social care and NHS, with little regard for fairness or effectiveness and doesn't deal with point 1 at all, as fas I can see.
God knows what happens on 3. Presumably we'll learn that in October.
Tax unearned income the same as earned income, tax pension income the same as earned income. Those two changes will bring in tens of billions per year. It can be achieved by merging NI and income tax. Keep the £12.5k threshold so lower paid workers and low income pensioners actually see a net reduction/no change in tax, most workers see no change while well off pensioners and rentier types see a huge increase in their tax bills.
The way we treat unearned income is ridiculous, investment is already incentivised with CGT being 20%. We don't need to also give income from investments a tax break.
Why would you lock up money in a pension for 30+ years if there are no tax breaks?
Saving is a good thing. It should be incentivised.
Get rid of the opt-out option for NEST and raise it to 8% employee and 5% employer contributions. Pension and savings crisis resolved.
So c a 10% increase in deductions from working people.
If there ever was a year for teenagers to earn some money and learn a little about the world of work before getting themselves tens of thousands in debt this was it. Yet:
Record numbers of 18-year-olds in the UK have accepted university places this year, according to updated figures from the Ucas admissions service.
There will be 272,500 of this age cohort starting at UK universities - up by 7% on last year.
That’s totally nuts, and will lead in future to a whole generation of massively indebted people with not enough graduate jobs to go round.
Advice to any 18 year old looking for a white-collar career, get a very junior job for a local accountant, lawyer or IT support firm. If you’re a more practical type, learn a trade - most tradesmen are higher-rate taxpayers now after an apprenticeship, especially in the south.
If you’re firmly set on being a doctor, engineer or academic, then go to university. If not, don’t, and learn on the job instead.
And the advantage of that route is that if you don't like your initial choice you can change it without being stuck with tens of thousands of debt,
If they still want to go to university they can do so a year or two later - possibly even with their employer contributing financially.
A small pedantic point no doubt - but wasn't "Levelling Up" meant to refer to helping the North of England?
Yes - taxes are high and likely to get higher. The country has spent a huge amount in the last 2 years and before then too. The Tories have abandoned their previous policies and approach but this has been known ever since Boris and his brand became a thing in the modern day Tory party.
Add @Philip_Thompson to the ever growing list of people let down by Boris.
On topic, the young are being treated abysmally. And I doubt these proposals will do much to help with social care either anyway. Even worse, neither of the other parties seem to have any ideas either and they're not much better on the trust front either.
A mess.
It's not a pedantic point to say that "Levelling Up", if it means anything, referred to helping the North. I too have noticed that it is being warped to mean something else. One of the podcasts I listen to (Red Box I think) had an episode about it and invited local leaders to give their funding requirements to help "level up". Most of the contributors were from the South, including one from Canterbury.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Those with asset wealth.
We've got to stop squeezing workers.
Agree with your concerns.
How does one define asset wealth? Those who own houses have assets. So tax them. But that includes people like you and the tax would have to be paid out of income or savings.
Pension pots? Again this will hit workers.
Etc.
Not saying that this shouldn't be done. From what I understand, these proposals seem to be incoherent and unfair. I just think that taxing wealth will also hit workers as well. There is no option that won't hit some group or other.
The problem seems to be three-fold in my mind:-
1. First, work out what social care system we want. 2. Then work out how to pay for it in a way that is fair and effective. 3. Additionally, work out a way to pay for other public services and the cost of Covid.
This seems to be a mish-mash of social care and NHS, with little regard for fairness or effectiveness and doesn't deal with point 1 at all, as fas I can see.
God knows what happens on 3. Presumably we'll learn that in October.
Tax unearned income the same as earned income, tax pension income the same as earned income. Those two changes will bring in tens of billions per year. It can be achieved by merging NI and income tax. Keep the £12.5k threshold so lower paid workers and low income pensioners actually see a net reduction/no change in tax, most workers see no change while well off pensioners and rentier types see a huge increase in their tax bills.
The way we treat unearned income is ridiculous, investment is already incentivised with CGT being 20%. We don't need to also give income from investments a tax break.
Why would you lock up money in a pension for 30+ years if there are no tax breaks?
Saving is a good thing. It should be incentivised.
Absolutely, people will always do what they can to avoid tax, if a pension is seen to be tax inefficient, people will not put as much money in them.
We do seem to be demonising pensioners who have worked all their lives and put money away from their already taxed income to provide for themselves in retirement.
Demonise = Make them the richest generation ever, and on average richer than their kids and grandkids will be in retirement.
So the current 65+ generation is richer than any generation before and will be richer than any after?
Richer than any before and expected to be richer than anyone born at the moment, yes. If we avoid climate disaster, nuclear war and robots taking over, I would imagine sooner or later future generations will be better off eventually.
The thing is - even if the money did go into social care, the whole lot is swallowed by the care provider market, who make significant profits and are unable to justify the costs when challenged line by line.
Like children’s social care at the moment - you won’t solve the care problem until you tackle the real issue, and that’s the provider market
Labour should come in with a National Care Service. The public sector shouldn't be squeamish about getting involved and charging people directly who can afford it either - not just paying for the least fortunate.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
I agree that a tax on wages is a tax on wages. I also agree that our taxes on incomes are too high and our taxes on capital are too low. But the government needs this money and it needs it now. Our borrowing is simply not sustainable. Eventually we will need even more money for health. Those taxes really need to be wealth taxes. But this is not wrong for me. This needed to be done and I commend Boris for doing it just as I commended Osborne for taking away my personal allowance and Child Benefit. It is the price of a civilised society and I for one am willing to pay it.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
*Coughs*
I wonder if he reads PB?
Surely he needs to add in employers pension contribution and the rent of the building he works in!
The rent of the building is an overhead, it is a fixed cost. Paying someone an extra £100, £500 or £1000 does not increase your Overheads.
Wage taxes whatever you call them by are not overheads, they are not fixed costs, they scale with the wages.
The employers and employees pension contributions do indeed come out too which does indeed take the calculation past 50% - but I excluded them as they do not go to the Treasury.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
The squeeze for rentier & non working income SURELY has to come next.
Why should it?
I mean, I agree, it would be the fair thing to do, but why should the tories squeeze their supporters? There’s no pressing need.
Make the workers pay. They can get away with it, so why wouldn’t they?
Interesting snippet from the BBC report on Javid's intervalew earlier.
'Asked about "hotel costs" - which will not be included in the £86,000 care costs cap - such as food and accommodation, Javid says it is "fair" to exclude these because "whether we need care or not, we all have to eat and we all have to have a roof over our heads".'
So the cap ISN"T £86k, but quite a lot less. I can hear howls of rage in the distance.
FWIW I agree, but that's not what the headlines are saying.
The 2019 Tory PB vote does seem to be splitting on age, broadly the under 50s seem against the proposal and the over 50s more mixed, either supportive or "wait and see, better than nothing" viewpoint.
I wonder if that fragility exists in the real world as well, or if it is down to this being a particularly analytical/geeky place that focuses more on the numbers than the story. Boris fixing care storyline does hold up, and if you believe it I can see why people think it might be a good thing. The numbers are both from fantasy land and unfair though.
"This has been a problem for ages. At least Boris is having a go."
I rather fear this (exceedingly charitable) sentiment is widespread amongst his base.
What can you do? I really don't know. He has them in his pocket and because of this has the rest of us by the balls.
If there ever was a year for teenagers to earn some money and learn a little about the world of work before getting themselves tens of thousands in debt this was it. Yet:
Record numbers of 18-year-olds in the UK have accepted university places this year, according to updated figures from the Ucas admissions service.
There will be 272,500 of this age cohort starting at UK universities - up by 7% on last year.
That’s totally nuts, and will lead in future to a whole generation of massively indebted people with not enough graduate jobs to go round.
Advice to any 18 year old looking for a white-collar career, get a very junior job for a local accountant, lawyer or IT support firm. If you’re a more practical type, learn a trade - most tradesmen are higher-rate taxpayers now after an apprenticeship, especially in the south.
If you’re firmly set on being a doctor, engineer or academic, then go to university. If not, don’t, and learn on the job instead.
Going to a University is now a lifestyle choice paid for by the students parents and by a long term student debt. For 90% of the students the degree they earn will make no difference to their long term earning potential, but they will have enjoyed 3 great years that they will never forget.
Students are also now a massive requirement for the economics of major cities, including construction and maintenance of Halls, the rental costs of these halls and the amount of money students spend.
Mr. Charles, I must respectfully disagree. It's perfectly legitimate to be displeased by having taxes raised, particularly when they hit the shrinking but working population to benefit the rising and non-working retired population.
As a Scotsman once said: "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury."
It’s very difficult to respond as I have no idea which comment you are referring to
It would be much easier if you used the quote function like everyone else
Plus he was talking bollox , given the majority of the money will go on benefits to those NOT working and those working but getting benefits. Nothing in it for pensioners other than having their increase chopped and having to start paying NI. He is either addled or has been too near the brewers horse's rear end.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
The squeeze for rentier & non working income SURELY has to come next.
Why should it?
I mean, I agree, it would be the fair thing to do, but why should the tories squeeze their supporters? There’s no pressing need.
Make the workers pay. They can get away with it, so why wouldn’t they?
I certainly don't expect all my suggestions to be taken up by the Tories ! I think extending the levy to divi and working pension income was an acknowledgement that young workers can't be bled much more. Labour has to get power at some point, maybe they'll do it.
Given the author has also voted for Tony Blair and Nigel Farage, we should remember he has frequently failed to support the Conservative Party in the past so what is new? It is true that under Cameron the Tory Party won most voters over 35 in 2015, indeed in 2010 the Tories won most voters over 25 so Cameron would probably have had more reservations about raising NI by 1.25% than Boris did.
However the money the NHS needs from Covid and the cost of social care at home in particular needs to come from somewhere. As a result of the Brexit the author also voted for most under 45s voted Labour in both 2017 and 2019. Even Boris in 2019 lost the vote of workers to Labour, it was only the Tories huge lead amongst pensioners in 2019 which won them a majority. So now Boris will put the interest of pensioners and those 45 to 65 year olds waiting for an inheritance first, that it just the nature of the Tory coalition now post Brexit
I am not sure you have understood why @Philip_Thompson wrote the piece. Politics should be about politicians making life work for the voters, and if it doesn't work for them they look elsewhere. Although in my mind's eye I have Philip as The Terminator, "I'll be back!"
You are more than welcome to believe the NI increase is the best method of raising the required revenue for social care, but that is not how you frame your argument. Your point is whether it works or not is irrelevant so long as it doesn't lose too many votes.
If all that matters in politics is retaining power one might as well cut to the chase and go the full Bolsanaro and prepare to call in the troops to offset waning popularity.
NI was set up to fund healthcare, state pensions and unemployment insurance, if more of it is used to fund healthcare and social care in line with what it was set up for all to the good as far as I am concerned
I hate to be agreeing with @Philip_Thompson and @MaxPB but NI should be added into the income tax pot. Easier and cheaper to administrate and we all know what percentages we are paying without a calculator.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Notes from my meeting with HR and finance on Monday in advance of this suggest otherwise. This tax rise for employers is almost exclusively coming out of pay budgets. The company is going to take precisely zero of the increase and is set to pass it onto employees (including me) by reducing salary increases.
Given salary inflation in the City at the moment that might be unwise
But they are not taking it from you. They are just not giving you more than you currently get
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
There will be continuing upward pressure on NHS spending, that it absolutely so. But there is a particular crisis right now that needs to be addressed and this does that.
I thought your point, with which I have some sympathy, is that this additional income should be coming from capital taxes as well as income taxes. I completely agree that the burden of taxes on income is excessive and taxes on capital are far too light. The massive gains people make on their homes tax free is distorting inter generational wealth and opportunity too. But this is a different argument from whether this money is needed. It clearly is.
A point made by quite a few people is that if this really was a one-off Covid related cost, the normal thing is to incur the debt and pay it off over years.
I think there is a perceived need for a big political gesture, which I suspect is driven by the prospect of an utterly grim NHS winter coming up. The government wants to get ahead of that curve.
In fiscal terms this has almost nothing to do with social care and not much to do with the general NHS. It is a general tax increase that is nominally hypothecated to spending that is seen as desirable, but which essentially is happening (or in the case of social care, not happening) anyway.
By all accounts, this plan was developed by Johnson, Sunak and Javid and is being bounced through everyone else. What do we know of their main wants?
Javid: enough money to stop the NHS falling apart Sunak: no more borrowing Johnson: be popular with his supporters
Put those red lines in place, and this plan is probably the only possible solution.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
I agree that a tax on wages is a tax on wages. I also agree that our taxes on incomes are too high and our taxes on capital are too low. But the government needs this money and it needs it now. Our borrowing is simply not sustainable. Eventually we will need even more money for health. Those taxes really need to be wealth taxes. But this is not wrong for me. This needed to be done and I commend Boris for doing it just as I commended Osborne for taking away my personal allowance and Child Benefit. It is the price of a civilised society and I for one am willing to pay it.
How is taxing a struggling graduate who has to pay rent 49.8% tax on their marginal income when they're only supposed to be on basic rate tax, while taxing their landlord or pensioner grandparents who have the exact same gross income only pay 20.0% tax on theirs "civilised"?
Wouldn't it be "civilised" to tax all income the same, not just screw over those who have salaries?
Given the author has also voted for Tony Blair and Nigel Farage, we should remember he has frequently failed to support the Conservative Party in the past so what is new? It is true that under Cameron the Tory Party won most voters over 35 in 2015, indeed in 2010 the Tories won most voters over 25 so Cameron would probably have had more reservations about raising NI by 1.25% than Boris did.
However the money the NHS needs from Covid and the cost of social care at home in particular needs to come from somewhere. As a result of the Brexit the author also voted for most under 45s voted Labour in both 2017 and 2019. Even Boris in 2019 lost the vote of workers to Labour, it was only the Tories huge lead amongst pensioners in 2019 which won them a majority. So now Boris will put the interest of pensioners and those 45 to 65 year olds waiting for an inheritance first, that it just the nature of the Tory coalition now post Brexit
I am not sure you have understood why @Philip_Thompson wrote the piece. Politics should be about politicians making life work for the voters, and if it doesn't work for them they look elsewhere. Although in my mind's eye I have Philip as The Terminator, "I'll be back!"
You are more than welcome to believe the NI increase is the best method of raising the required revenue for social care, but that is not how you frame your argument. Your point is whether it works or not is irrelevant so long as it doesn't lose too many votes.
If all that matters in politics is retaining power one might as well cut to the chase and go the full Bolsanaro and prepare to call in the troops to offset waning popularity.
NI was set up to fund healthcare, state pensions and unemployment insurance, if more of it is used to fund healthcare and social care in line with what it was set up for all to the good as far as I am concerned
By a Liberal government against the vociferous and sometimes, I understand, vicious, opposition of the Conservatives.
The Conservatives were opposed to the 1909 Liberal Budget because of the big rise in death duties as well as income tax it imposed, with many preferring to raise funds via tariffs instead. The National Insurance Act 1911 was not the focus of Conservative opposition
If there ever was a year for teenagers to earn some money and learn a little about the world of work before getting themselves tens of thousands in debt this was it. Yet:
Record numbers of 18-year-olds in the UK have accepted university places this year, according to updated figures from the Ucas admissions service.
There will be 272,500 of this age cohort starting at UK universities - up by 7% on last year.
That’s totally nuts, and will lead in future to a whole generation of massively indebted people with not enough graduate jobs to go round.
Advice to any 18 year old looking for a white-collar career, get a very junior job for a local accountant, lawyer or IT support firm. If you’re a more practical type, learn a trade - most tradesmen are higher-rate taxpayers now after an apprenticeship, especially in the south.
If you’re firmly set on being a doctor, engineer or academic, then go to university. If not, don’t, and learn on the job instead.
And the advantage of that route is that if you don't like your initial choice you can change it without being stuck with tens of thousands of debt,
If they still want to go to university they can do so a year or two later - possibly even with their employer contributing financially.
Absolutely. There’s lots of useful professional certifications, and there’s the Open University among others. Prove yourself to an employer, and get them to buy in to your education in a way that’s useful to them as well. Hell, even McDonalds sponsors part-time degrees for burger-flippers who want to become regional managers.
Getting yourself £50k or £60k in debt, to have a three year party before facing an uncertain job market, just seems like a silly decision. Maybe I’m just getting old.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Notes from my meeting with HR and finance on Monday in advance of this suggest otherwise. This tax rise for employers is almost exclusively coming out of pay budgets. The company is going to take precisely zero of the increase and is set to pass it onto employees (including me) by reducing salary increases.
Then your firm will lose competitiveness as an employer in what is already a tight employment market.
The thing is - even if the money did go into social care, the whole lot is swallowed by the care provider market, who make significant profits and are unable to justify the costs when challenged line by line.
Like children’s social care at the moment - you won’t solve the care problem until you tackle the real issue, and that’s the provider market
Labour should come in with a National Care Service. The public sector shouldn't be squeamish about getting involved and charging people directly who can afford it either - not just paying for the least fortunate.
It absolutely should - the privatisation of the social care sector is an absolute disaster that has led to a monopoly of providers. It seems to me this levy is attempting to put a small sticking plaster on the problems created by - you guessed it - the Tories.
And I say that as someone who has traditionally voted conservative. Labour have a real opportunity here (not that I would expect them to take it)
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Notes from my meeting with HR and finance on Monday in advance of this suggest otherwise. This tax rise for employers is almost exclusively coming out of pay budgets. The company is going to take precisely zero of the increase and is set to pass it onto employees (including me) by reducing salary increases.
Given salary inflation in the City at the moment that might be unwise
But they are not taking it from you. They are just not giving you more than you currently get
What is the difference ultimately between taking away the income from a pay rise and giving it to HMRC, and giving a pay rise and taxing it and giving it to HMRC? Its the exact same thing, its a distinction without a difference.
If we abolished Income Tax and Employee National Insurance altogether, putting 100% of the wage taxation on Employers NI, and wages were able to adjust, then would that mean wages were now untaxed in your eyes?
A tax on wages is a tax on wages, whatever name you use.
Just flying by and was surprised to read your announcement. Although not of your political persuasion I take no joy in it and hope that this does not lead to a disenchantment with the political process and cause you to detach from political engagement generally and this site in particular. Your wit, wisdom and honesty would be sorely missed.
Keep well and I hope to be engaging with you again in due course, in the best sense naturally!
PtP
That was nice, so ditto.
I both enjoy and get challenged by discussions with you @Philip_Thompson We agree on a lot but also have had some humdinger disagreement on a number of topics. It is funny that when we agree I think you are putting forward brilliant arguments and when we disagree I think you are being completely dogmatic (I was going to say irrational, but I don't think I could ever call you that). I think that might say more about me than you.
You would be welcome in the LDs, but I suspect you may struggle on a few issues (eg FPTP) so in a way I hope the Tory party changes to fit people like you and @TSE better.
Philip Thompson voted for Brexit in 2016 thus changing the Tory Party from the coalition of workers it was under Cameron to the coalition of pensioners and their heirs it is now. Due to Brexit the Tories have lost many voters under 45 who voted Remain to Labour and the LDs but the Tories have gained lots of pensioners and those over 45 who voted Leave from UKIP and Labour.
He has nobody to blame but himself
Not a bad point at all. What are you still doing in the party (not a facetious question - genuinely curious).
I am a loyal Tory.
I voted for Cameron, I voted Remain in 2016 but I accepted the result and I still back the Tories. I always vote Tory and am a Tory member, even voting Tory in 2001 under Hague when Philip Thompson was voting Labour.
However I also recognise Brexit has changed the nature of the Tory coalition from the party mainly of workers under Cameron who had only a small lead amongst pensioners (with some of the latter in particular also voting UKIP in 2015) to a party with a huge lead amongst pensioners but which has lost the vote of most under 45s. It was Brexit which did that and it was Philip Thompson who voted for it not me, he should accept the consequences of his actions
I understand your point but at what point is the "Tory Party" not enacting "Tory" policies. It would be interesting to compare, say, this Tory govt's policies with those of a) previous Tory govts' policies; and b) previous Lab opposition and govts' policies.
My guess is that big statism would have more in common with past Labour than past Conservative.
So at what point does a "Tory" government cease being one. If all its policies are those which would have been advocated by Labour then the term is meaningless.
The serious part of the donkey with a blue rosette jibe is that the donkey doesn't have any policies.
In the 1950s and 1960s and early 1970s we had Tory governments with most big industries nationalised and indeed a higher top rate of income tax than now. In those pre Thatcherite years the Tories might have been slightly less statist than Labour but it was the Liberals that were the least statist party of all, certainly pre SDP. Now with Davey an Orange Book LD and ex Minister in Cameron's austerity coalition government as Liberal leader and the LDs opposing the NI rise and Boris a Tory PM reliant on the pensioner client vote we may be going back to the days of the Liberals being the least statist of the main parties. So inevitably the Tories will lose some classical liberals. https://twitter.com/LibDems/status/1435190630427373572?s=20
In the 1870s it was also Gladstone's Liberals who were the party of the small state and free trade more than Disraeli's Tories.
The Tory Party is historically the party of the Crown, the Church of England and rural England and landed estates and on occasion British Nationalism and indeed in the 19th century the Empire.
The Tory Party only really became the small state party in the 20th century because Labour not the Liberals became its main opponent and that accelerated under Thatcher, now we are seeing some rowing back on that post Brexit under Boris
So "the Crown, the Church of England and rural England and landed estates". That is what you are voting for.
As I understand it, you are not part of the royal family, nor the Church of England and you are a normal bloke living in Essex and hence not part of the landed gentry (I may be wrong of course). And you are certainly not a pensioner whether well off or not.
And yet you are supporting a party which benefits those parts of society that are not you. You are voting against your own interests for, to use shorthand and it's only shorthand, your "betters".
If we can't proceed from an assumption of homo economicus then we are all screwed and you don't appear to be one of those.
I am an active member of the Church of England, my wife is more involved still and we own property as do our parents
Just flying by and was surprised to read your announcement. Although not of your political persuasion I take no joy in it and hope that this does not lead to a disenchantment with the political process and cause you to detach from political engagement generally and this site in particular. Your wit, wisdom and honesty would be sorely missed.
Keep well and I hope to be engaging with you again in due course, in the best sense naturally!
PtP
That was nice, so ditto.
I both enjoy and get challenged by discussions with you @Philip_Thompson We agree on a lot but also have had some humdinger disagreement on a number of topics. It is funny that when we agree I think you are putting forward brilliant arguments and when we disagree I think you are being completely dogmatic (I was going to say irrational, but I don't think I could ever call you that). I think that might say more about me than you.
You would be welcome in the LDs, but I suspect you may struggle on a few issues (eg FPTP) so in a way I hope the Tory party changes to fit people like you and @TSE better.
Philip Thompson voted for Brexit in 2016 thus changing the Tory Party from the coalition of workers it was under Cameron to the coalition of pensioners and their heirs it is now. Due to Brexit the Tories have lost many voters under 45 who voted Remain to Labour and the LDs but the Tories have gained lots of pensioners and those over 45 who voted Leave from UKIP and Labour.
He has nobody to blame but himself
Not a bad point at all. What are you still doing in the party (not a facetious question - genuinely curious).
I am a loyal Tory.
I voted for Cameron, I voted Remain in 2016 but I accepted the result and I still back the Tories. I always vote Tory and am a Tory member, even voting Tory in 2001 under Hague when Philip Thompson was voting Labour.
However I also recognise Brexit has changed the nature of the Tory coalition from the party mainly of workers under Cameron who had only a small lead amongst pensioners (with some of the latter in particular also voting UKIP in 2015) to a party with a huge lead amongst pensioners but which has lost the vote of most under 45s. It was Brexit which did that and it was Philip Thompson who voted for it not me, he should accept the consequences of his actions
I understand your point but at what point is the "Tory Party" not enacting "Tory" policies. It would be interesting to compare, say, this Tory govt's policies with those of a) previous Tory govts' policies; and b) previous Lab opposition and govts' policies.
My guess is that big statism would have more in common with past Labour than past Conservative.
So at what point does a "Tory" government cease being one. If all its policies are those which would have been advocated by Labour then the term is meaningless.
The serious part of the donkey with a blue rosette jibe is that the donkey doesn't have any policies.
In the 1950s and 1960s and early 1970s we had Tory governments with most big industries nationalised and indeed a higher top rate of income tax than now. In those pre Thatcherite years the Tories might have been slightly less statist than Labour but it was the Liberals that were the least statist party of all, certainly pre SDP. Now with Davey an Orange Book LD and ex Minister in Cameron's austerity coalition government as Liberal leader and the LDs opposing the NI rise and Boris a Tory PM reliant on the pensioner client vote we may be going back to the days of the Liberals being the least statist of the main parties. So inevitably the Tories will lose some classical liberals. https://twitter.com/LibDems/status/1435190630427373572?s=20
In the 1870s it was also Gladstone's Liberals who were the party of the small state and free trade more than Disraeli's Tories.
The Tory Party is historically the party of the Crown, the Church of England and rural England and landed estates and on occasion British Nationalism and indeed in the 19th century the Empire.
The Tory Party only really became the small state party in the 20th century because Labour not the Liberals became its main opponent and that accelerated under Thatcher, now we are seeing some rowing back on that post Brexit under Boris
So "the Crown, the Church of England and rural England and landed estates". That is what you are voting for.
As I understand it, you are not part of the royal family, nor the Church of England and you are a normal bloke living in Essex and hence not part of the landed gentry (I may be wrong of course). And you are certainly not a pensioner whether well off or not.
And yet you are supporting a party which benefits those parts of society that are not you. You are voting against your own interests for, to use shorthand and it's only shorthand, your "betters".
If we can't proceed from an assumption of homo economicus then we are all screwed and you don't appear to be one of those.
I am an active member of the Church of England, my wife is more involved still and we own property as do our parents
Given the author has also voted for Tony Blair and Nigel Farage, we should remember he has frequently failed to support the Conservative Party in the past so what is new? It is true that under Cameron the Tory Party won most voters over 35 in 2015, indeed in 2010 the Tories won most voters over 25 so Cameron would probably have had more reservations about raising NI by 1.25% than Boris did.
However the money the NHS needs from Covid and the cost of social care at home in particular needs to come from somewhere. As a result of the Brexit the author also voted for most under 45s voted Labour in both 2017 and 2019. Even Boris in 2019 lost the vote of workers to Labour, it was only the Tories huge lead amongst pensioners in 2019 which won them a majority. So now Boris will put the interest of pensioners and those 45 to 65 year olds waiting for an inheritance first, that it just the nature of the Tory coalition now post Brexit
I am not sure you have understood why @Philip_Thompson wrote the piece. Politics should be about politicians making life work for the voters, and if it doesn't work for them they look elsewhere. Although in my mind's eye I have Philip as The Terminator, "I'll be back!"
You are more than welcome to believe the NI increase is the best method of raising the required revenue for social care, but that is not how you frame your argument. Your point is whether it works or not is irrelevant so long as it doesn't lose too many votes.
If all that matters in politics is retaining power one might as well cut to the chase and go the full Bolsanaro and prepare to call in the troops to offset waning popularity.
NI was set up to fund healthcare, state pensions and unemployment insurance, if more of it is used to fund healthcare and social care in line with what it was set up for all to the good as far as I am concerned
I hate to be agreeing with @Philip_Thompson and @MaxPB but NI should be added into the income tax pot. Easier and cheaper to administrate and we all know what percentages we are paying without a calculator.
No it should not.
Indeed state pensions, JSA and healthcare now NHS should be removed from income tax funding altogether and funded entirely by NI as originally intended
Just flying by and was surprised to read your announcement. Although not of your political persuasion I take no joy in it and hope that this does not lead to a disenchantment with the political process and cause you to detach from political engagement generally and this site in particular. Your wit, wisdom and honesty would be sorely missed.
Keep well and I hope to be engaging with you again in due course, in the best sense naturally!
PtP
That was nice, so ditto.
I both enjoy and get challenged by discussions with you @Philip_Thompson We agree on a lot but also have had some humdinger disagreement on a number of topics. It is funny that when we agree I think you are putting forward brilliant arguments and when we disagree I think you are being completely dogmatic (I was going to say irrational, but I don't think I could ever call you that). I think that might say more about me than you.
You would be welcome in the LDs, but I suspect you may struggle on a few issues (eg FPTP) so in a way I hope the Tory party changes to fit people like you and @TSE better.
Philip Thompson voted for Brexit in 2016 thus changing the Tory Party from the coalition of workers it was under Cameron to the coalition of pensioners and their heirs it is now. Due to Brexit the Tories have lost many voters under 45 who voted Remain to Labour and the LDs but the Tories have gained lots of pensioners and those over 45 who voted Leave from UKIP and Labour.
He has nobody to blame but himself
Not a bad point at all. What are you still doing in the party (not a facetious question - genuinely curious).
I am a loyal Tory.
I voted for Cameron, I voted Remain in 2016 but I accepted the result and I still back the Tories. I always vote Tory and am a Tory member, even voting Tory in 2001 under Hague when Philip Thompson was voting Labour.
However I also recognise Brexit has changed the nature of the Tory coalition from the party mainly of workers under Cameron who had only a small lead amongst pensioners (with some of the latter in particular also voting UKIP in 2015) to a party with a huge lead amongst pensioners but which has lost the vote of most under 45s. It was Brexit which did that and it was Philip Thompson who voted for it not me, he should accept the consequences of his actions
I understand your point but at what point is the "Tory Party" not enacting "Tory" policies. It would be interesting to compare, say, this Tory govt's policies with those of a) previous Tory govts' policies; and b) previous Lab opposition and govts' policies.
My guess is that big statism would have more in common with past Labour than past Conservative.
So at what point does a "Tory" government cease being one. If all its policies are those which would have been advocated by Labour then the term is meaningless.
The serious part of the donkey with a blue rosette jibe is that the donkey doesn't have any policies.
In the 1950s and 1960s and early 1970s we had Tory governments with most big industries nationalised and indeed a higher top rate of income tax than now. In those pre Thatcherite years the Tories might have been slightly less statist than Labour but it was the Liberals that were the least statist party of all, certainly pre SDP. Now with Davey an Orange Book LD and ex Minister in Cameron's austerity coalition government as Liberal leader and the LDs opposing the NI rise and Boris a Tory PM reliant on the pensioner client vote we may be going back to the days of the Liberals being the least statist of the main parties. So inevitably the Tories will lose some classical liberals. https://twitter.com/LibDems/status/1435190630427373572?s=20
In the 1870s it was also Gladstone's Liberals who were the party of the small state and free trade more than Disraeli's Tories.
The Tory Party is historically the party of the Crown, the Church of England and rural England and landed estates and on occasion British Nationalism and indeed in the 19th century the Empire.
The Tory Party only really became the small state party in the 20th century because Labour not the Liberals became its main opponent and that accelerated under Thatcher, now we are seeing some rowing back on that post Brexit under Boris
So "the Crown, the Church of England and rural England and landed estates". That is what you are voting for.
As I understand it, you are not part of the royal family, nor the Church of England and you are a normal bloke living in Essex and hence not part of the landed gentry (I may be wrong of course). And you are certainly not a pensioner whether well off or not.
And yet you are supporting a party which benefits those parts of society that are not you. You are voting against your own interests for, to use shorthand and it's only shorthand, your "betters".
If we can't proceed from an assumption of homo economicus then we are all screwed and you don't appear to be one of those.
I am an active member of the Church of England, my wife is more involved still and we own property as do our parents
The 2019 Tory PB vote does seem to be splitting on age, broadly the under 50s seem against the proposal and the over 50s more mixed, either supportive or "wait and see, better than nothing" viewpoint.
I wonder if that fragility exists in the real world as well, or if it is down to this being a particularly analytical/geeky place that focuses more on the numbers than the story. Boris fixing care storyline does hold up, and if you believe it I can see why people think it might be a good thing. The numbers are both from fantasy land and unfair though.
"This has been a problem for ages. At least Boris is having a go."
I rather fear this (exceedingly charitable) sentiment is widespread amongst his base.
What can you do? I really don't know. He has them in his pocket and because of this has the rest of us by the balls.
Well they've set the ball rolling - it may be insufficient, flawed and unfair - but its something.
If other parties think they can do better then they have the opportunity and responsibility to offer alternatives.
Exactly. Labour's total failure to have anything to say about their own plan is a disaster for the party imho:
Andrew Adonis @Andrew_Adonis · 1h Labour’s official reaction to the NHS levy is worryingly amateur. In criticising the Tories for putting up taxes for the NHS, are we saying we wouldn’t? If we would, & we don’t like this levy, which other taxes would we put up? None has been named
Just flying by and was surprised to read your announcement. Although not of your political persuasion I take no joy in it and hope that this does not lead to a disenchantment with the political process and cause you to detach from political engagement generally and this site in particular. Your wit, wisdom and honesty would be sorely missed.
Keep well and I hope to be engaging with you again in due course, in the best sense naturally!
PtP
That was nice, so ditto.
I both enjoy and get challenged by discussions with you @Philip_Thompson We agree on a lot but also have had some humdinger disagreement on a number of topics. It is funny that when we agree I think you are putting forward brilliant arguments and when we disagree I think you are being completely dogmatic (I was going to say irrational, but I don't think I could ever call you that). I think that might say more about me than you.
You would be welcome in the LDs, but I suspect you may struggle on a few issues (eg FPTP) so in a way I hope the Tory party changes to fit people like you and @TSE better.
Philip Thompson voted for Brexit in 2016 thus changing the Tory Party from the coalition of workers it was under Cameron to the coalition of pensioners and their heirs it is now. Due to Brexit the Tories have lost many voters under 45 who voted Remain to Labour and the LDs but the Tories have gained lots of pensioners and those over 45 who voted Leave from UKIP and Labour.
He has nobody to blame but himself
Not a bad point at all. What are you still doing in the party (not a facetious question - genuinely curious).
I am a loyal Tory.
I voted for Cameron, I voted Remain in 2016 but I accepted the result and I still back the Tories. I always vote Tory and am a Tory member, even voting Tory in 2001 under Hague when Philip Thompson was voting Labour.
However I also recognise Brexit has changed the nature of the Tory coalition from the party mainly of workers under Cameron who had only a small lead amongst pensioners (with some of the latter in particular also voting UKIP in 2015) to a party with a huge lead amongst pensioners but which has lost the vote of most under 45s. It was Brexit which did that and it was Philip Thompson who voted for it not me, he should accept the consequences of his actions
I understand your point but at what point is the "Tory Party" not enacting "Tory" policies. It would be interesting to compare, say, this Tory govt's policies with those of a) previous Tory govts' policies; and b) previous Lab opposition and govts' policies.
My guess is that big statism would have more in common with past Labour than past Conservative.
So at what point does a "Tory" government cease being one. If all its policies are those which would have been advocated by Labour then the term is meaningless.
The serious part of the donkey with a blue rosette jibe is that the donkey doesn't have any policies.
In the 1950s and 1960s and early 1970s we had Tory governments with most big industries nationalised and indeed a higher top rate of income tax than now. In those pre Thatcherite years the Tories might have been slightly less statist than Labour but it was the Liberals that were the least statist party of all, certainly pre SDP. Now with Davey an Orange Book LD and ex Minister in Cameron's austerity coalition government as Liberal leader and the LDs opposing the NI rise and Boris a Tory PM reliant on the pensioner client vote we may be going back to the days of the Liberals being the least statist of the main parties. So inevitably the Tories will lose some classical liberals. https://twitter.com/LibDems/status/1435190630427373572?s=20
In the 1870s it was also Gladstone's Liberals who were the party of the small state and free trade more than Disraeli's Tories.
The Tory Party is historically the party of the Crown, the Church of England and rural England and landed estates and on occasion British Nationalism and indeed in the 19th century the Empire.
The Tory Party only really became the small state party in the 20th century because Labour not the Liberals became its main opponent and that accelerated under Thatcher, now we are seeing some rowing back on that post Brexit under Boris
So "the Crown, the Church of England and rural England and landed estates". That is what you are voting for.
As I understand it, you are not part of the royal family, nor the Church of England and you are a normal bloke living in Essex and hence not part of the landed gentry (I may be wrong of course). And you are certainly not a pensioner whether well off or not.
And yet you are supporting a party which benefits those parts of society that are not you. You are voting against your own interests for, to use shorthand and it's only shorthand, your "betters".
If we can't proceed from an assumption of homo economicus then we are all screwed and you don't appear to be one of those.
I am an active member of the Church of England, my wife is more involved still and we own property as do our parents
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Notes from my meeting with HR and finance on Monday in advance of this suggest otherwise. This tax rise for employers is almost exclusively coming out of pay budgets. The company is going to take precisely zero of the increase and is set to pass it onto employees (including me) by reducing salary increases.
Given salary inflation in the City at the moment that might be unwise
But they are not taking it from you. They are just not giving you more than you currently get
What is the difference ultimately between taking away the income from a pay rise and giving it to HMRC, and giving a pay rise and taxing it and giving it to HMRC? Its the exact same thing, its a distinction without a difference.
If we abolished Income Tax and Employee National Insurance altogether, putting 100% of the wage taxation on Employers NI, and wages were able to adjust, then would that mean wages were now untaxed in your eyes?
A tax on wages is a tax on wages, whatever name you use.
Given the author has also voted for Tony Blair and Nigel Farage, we should remember he has frequently failed to support the Conservative Party in the past so what is new? It is true that under Cameron the Tory Party won most voters over 35 in 2015, indeed in 2010 the Tories won most voters over 25 so Cameron would probably have had more reservations about raising NI by 1.25% than Boris did.
However the money the NHS needs from Covid and the cost of social care at home in particular needs to come from somewhere. As a result of the Brexit the author also voted for most under 45s voted Labour in both 2017 and 2019. Even Boris in 2019 lost the vote of workers to Labour, it was only the Tories huge lead amongst pensioners in 2019 which won them a majority. So now Boris will put the interest of pensioners and those 45 to 65 year olds waiting for an inheritance first, that it just the nature of the Tory coalition now post Brexit
I am not sure you have understood why @Philip_Thompson wrote the piece. Politics should be about politicians making life work for the voters, and if it doesn't work for them they look elsewhere. Although in my mind's eye I have Philip as The Terminator, "I'll be back!"
You are more than welcome to believe the NI increase is the best method of raising the required revenue for social care, but that is not how you frame your argument. Your point is whether it works or not is irrelevant so long as it doesn't lose too many votes.
If all that matters in politics is retaining power one might as well cut to the chase and go the full Bolsanaro and prepare to call in the troops to offset waning popularity.
NI was set up to fund healthcare, state pensions and unemployment insurance, if more of it is used to fund healthcare and social care in line with what it was set up for all to the good as far as I am concerned
I hate to be agreeing with @Philip_Thompson and @MaxPB but NI should be added into the income tax pot. Easier and cheaper to administrate and we all know what percentages we are paying without a calculator.
It should be ringfenced and only be able to be used for what it says on the tin.
Given the author has also voted for Tony Blair and Nigel Farage, we should remember he has frequently failed to support the Conservative Party in the past so what is new? It is true that under Cameron the Tory Party won most voters over 35 in 2015, indeed in 2010 the Tories won most voters over 25 so Cameron would probably have had more reservations about raising NI by 1.25% than Boris did.
However the money the NHS needs from Covid and the cost of social care at home in particular needs to come from somewhere. As a result of the Brexit the author also voted for most under 45s voted Labour in both 2017 and 2019. Even Boris in 2019 lost the vote of workers to Labour, it was only the Tories huge lead amongst pensioners in 2019 which won them a majority. So now Boris will put the interest of pensioners and those 45 to 65 year olds waiting for an inheritance first, that it just the nature of the Tory coalition now post Brexit
I am not sure you have understood why @Philip_Thompson wrote the piece. Politics should be about politicians making life work for the voters, and if it doesn't work for them they look elsewhere. Although in my mind's eye I have Philip as The Terminator, "I'll be back!"
You are more than welcome to believe the NI increase is the best method of raising the required revenue for social care, but that is not how you frame your argument. Your point is whether it works or not is irrelevant so long as it doesn't lose too many votes.
If all that matters in politics is retaining power one might as well cut to the chase and go the full Bolsanaro and prepare to call in the troops to offset waning popularity.
NI was set up to fund healthcare, state pensions and unemployment insurance, if more of it is used to fund healthcare and social care in line with what it was set up for all to the good as far as I am concerned
I hate to be agreeing with @Philip_Thompson and @MaxPB but NI should be added into the income tax pot. Easier and cheaper to administrate and we all know what percentages we are paying without a calculator.
No it should not.
Indeed state pensions, JSA and healthcare now NHS should be removed from income tax funding altogether and funded entirely by NI as originally intended
The major issue with that approach was highlighted in the header, which is that it treats income from employment more severely than income from investment.
Government should have taken the opportunity to abolish employee NI completely, and merge it into income tax.
A small pedantic point no doubt - but wasn't "Levelling Up" meant to refer to helping the North of England?
Yes - taxes are high and likely to get higher. The country has spent a huge amount in the last 2 years and before then too. The Tories have abandoned their previous policies and approach but this has been known ever since Boris and his brand became a thing in the modern day Tory party.
Add @Philip_Thompson to the ever growing list of people let down by Boris.
On topic, the young are being treated abysmally. And I doubt these proposals will do much to help with social care either anyway. Even worse, neither of the other parties seem to have any ideas either and they're not much better on the trust front either.
A mess.
You're right that Levelling Up was about regional disparities - but how are we supposed to level up?
If people in the North don't have much wealth, and people in the South do, then how are the people in the North supposed to get it?
For me it meant not redistributing from South to North, but instead means the people in the North should have the opportunities available to them to work hard, get a good income, get a good home, and accumulate wealth.
But if we're further taxing those in work who don't have much wealth, in order to redistribute that money to those who already had wealth tied up in assets, then how does that help regional disparities? How does that enable Northerners (or poor Scots, Welsh or even poor Southerners too) to be "Levelled Up" if their labours are going to be redistribute to pay for bigger inheritances in the South?
This isn't Levelling Up under any definition, its the opposite.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
And giving the NHS the money it demands will be electorally popular.
The problem is this country wants higher government spending than it is willing to pay tax for.
And the country wants to consume more wealth than it is willing to create.
Yep. And there are only 2 solutions. We find a way to squeeze more tax per annum out of wealth and the wealthy or we scale back what we expect the state to provide as regards health & social care. This is the big picture choice imo. Until we make it, all we'll get is this sort of nonsense.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
I agree that a tax on wages is a tax on wages. I also agree that our taxes on incomes are too high and our taxes on capital are too low. But the government needs this money and it needs it now. Our borrowing is simply not sustainable. Eventually we will need even more money for health. Those taxes really need to be wealth taxes. But this is not wrong for me. This needed to be done and I commend Boris for doing it just as I commended Osborne for taking away my personal allowance and Child Benefit. It is the price of a civilised society and I for one am willing to pay it.
How is taxing a struggling graduate who has to pay rent 49.8% tax on their marginal income when they're only supposed to be on basic rate tax, while taxing their landlord or pensioner grandparents who have the exact same gross income only pay 20.0% tax on theirs "civilised"?
Wouldn't it be "civilised" to tax all income the same, not just screw over those who have salaries?
Yes, and I have argued for that over previous days. The government has tried to fix some of the obvious unfairness on this by taxing dividend income and those of retirement age in work but there is still plenty of investment income which will not bear the charge and that is wrong.
I would very much have preferred this to be an IT increase but from what Rishi said yesterday at the press conference that was fraught with difficulties given the way that Scotland now fixes its rates and the way that the money raised is then divvied up. This is unfortunate and I hope that the budget looks to address the differential way in which investment income is taxed.
I am old enough to remember Investment Income Surcharge, which was abolished by Howe, I think, possibly Lawson. It was 15% and was designed to ensure that investment income was taxed at the same rate as earned income was as a result of NI. We need something of that type back as the burden of NI increases.
What I find remarkable about this plan is that with a father in care, he won't be better off.
Not strictly true but it is small beer. The Personal Expenses Allowance has been frozen at £24.90 pw for over ten years. This will increase in future. The PEA is the amount a resident in a care home can keep of their income, the rest has to be passed over to the local authority.
The other change is that the self-funder subsidy is being tackled. It has long been a bone of contention that self-funders are charged more pw than councils for the same thing. In the future councils will be obliged to arrange care in a care home on behalf of self-funders - and so self-funders will also get the council's bulk purchasing power. This could of course lead to higher fees overall.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
Why should the government get a second dip at already taxed money?
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Remarkable to see the conversion of some on here to wealth taxes. Fantastic to see. Wish I could bottle whatever led to this change of heart.
Please don't bottle it, it is 15 years of the young getting shafted by the state!
Right, but why now?
As you say, this has been going on for ages, the left have been making this point for ages, so what is causing the conversion? Is it going to be more widespread?
My pessimistic hunch is that for most people these tax changes are sufficiently small/complicated that they won't notice too much. But I hope I'm wrong, and this is the start of the way back for a Labour govt (with the Lib Dems if they are interested) that will shift the balance of taxation from workers towards the wealthy.
A small pedantic point no doubt - but wasn't "Levelling Up" meant to refer to helping the North of England?
Yes - taxes are high and likely to get higher. The country has spent a huge amount in the last 2 years and before then too. The Tories have abandoned their previous policies and approach but this has been known ever since Boris and his brand became a thing in the modern day Tory party.
Add @Philip_Thompson to the ever growing list of people let down by Boris.
On topic, the young are being treated abysmally. And I doubt these proposals will do much to help with social care either anyway. Even worse, neither of the other parties seem to have any ideas either and they're not much better on the trust front either.
A mess.
You're right that Levelling Up was about regional disparities - but how are we supposed to level up?
If people in the North don't have much wealth, and people in the South do, then how are the people in the North supposed to get it?
For me it meant not redistributing from South to North, but instead means the people in the North should have the opportunities available to them to work hard, get a good income, get a good home, and accumulate wealth.
But if we're further taxing those in work who don't have much wealth, in order to redistribute that money to those who already had wealth tied up in assets, then how does that help regional disparities? How does that enable Northerners (or poor Scots, Welsh or even poor Southerners too) to be "Levelled Up" if their labours are going to be redistribute to pay for bigger inheritances in the South?
This isn't Levelling Up under any definition, its the opposite.
Not true now, certainly in terms of Londoners. The median Northerner has more assets than the median Londoner now as the median Northerner owns their own property and the median Londoner does not.
Indeed Northerners are closer to Southerners outside London in terms of home ownership too than they were 40 years ago
Remarkable to see the conversion of some on here to wealth taxes. Fantastic to see. Wish I could bottle whatever led to this change of heart.
Please don't bottle it, it is 15 years of the young getting shafted by the state!
Right, but why now?
As you say, this has been going on for ages, the left have been making this point for ages, so what is causing the conversion? Is it going to be more widespread?
My pessimistic hunch is that for most people these tax changes are sufficiently small/complicated that they won't notice too much. But I hope I'm wrong, and this is the start of the way back for a Labour govt (with the Lib Dems if they are interested) that will shift the balance of taxation from workers towards the wealthy.
Watching the Lib Dems campaign in Surrey, on increasing taxation on property wealth would be, err, interesting. Maybe even ‘brave’, as Sir Humphrey might have said.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
Why should the government get a second dip at already taxed money?
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Net proceeds of £310,500 - a 68.5% tax rate
Bit in Bold: Says the person who is arguing there's no issue with taxing wages three ways.
Incomes are already taxed so why add two additional taxes on top with Employee and Employer National Insurance?
Or alternatively if Employer National Insurance means the wages have already been taxed, shouldn't you be advocating the entire abolition of Income Tax and Employee NI since that money is "already taxed"?
Its currently triple dipped not double dipped. All at the same time too.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
Why should the government get a second dip at already taxed money?
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Net proceeds of £310,500 - a 68.5% tax rate
"Why should the government get a second dip at already taxed money?" I'm surprised to see you come up with that old trope Charles.
You against VAT, council tax and excise duties as well then?
I am thrilled - absolutely thrilled - to have now pay for individuals - such as those in my family - who bought their house for 30k - now worth in excess of 500k - barely spend anything day to day and have accumulated so much wealth they can live comfortably knowing that a big chunk of their care costs are now covered.
Of course - they’ll argue they’ve earned that right - but i don’t feel the offer on the table is particularly fair
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
Except it’s not a tax on wages.
It’s an increase in the total cost of employment. That may be pushed on to wages but it may not be
I am thrilled - absolutely thrilled - to have now pay for individuals - such as those in my family - who bought their house for 30k - now worth in excess of 500k - barely spend anything day to day and have accumulated so much wealth they can live comfortably knowing that a big chunk of their care costs are now covered.
Of course - they’ll argue they’ve earned that right - but i don’t feel the offer on the table is particularly fair
You know that only a small fraction of people exceed the £86k right? I believe it is less than one in ten and I believe around half are under the age of 65 (or were when they started to require care).
As a retiree I nevertheless sympathise greatly with PT and his thread header.
Also on topic (unsurprisingly) is Stephen Bush in the Staggers email today:
"[As well as the risk of the social care system falling over before the election,] The second risk is that the broken manifesto promise and the reality that, for all the talk of ending austerity, the rest of the parliament is going to be one in which spending restraint continues, gives the government a reputation for shiftiness: for breaking its promises and failing to deliver. The comparison that Johnson’s inner circle and the Treasury have kept making is to Gordon Brown’s increase in National Insurance following the 2001 election. The equally important part of Brown’s tax increase is that he didn’t need to do the same thing in 2003, and that by 2005, the NHS was, visibly, in a better state of repair than it had been in 2001.
The big bet that Johnson is making is that, when the next election rolls around, the United Kingdom will feel and look like a country where the crisis in health and social care is being addressed, even if it isn’t really, and even if the difficult decisions are still being put off and the actual task of fixing social care has been kicked into the next parliament."
Superb piece by Philip and as I said in another thread - and happy to make clear again - I would like to apologise to him for calling him a troll or unprincipled in previous times. I was greatly mistaken.
Given the author has also voted for Tony Blair and Nigel Farage, we should remember he has frequently failed to support the Conservative Party in the past so what is new? It is true that under Cameron the Tory Party won most voters over 35 in 2015, indeed in 2010 the Tories won most voters over 25 so Cameron would probably have had more reservations about raising NI by 1.25% than Boris did.
However the money the NHS needs from Covid and the cost of social care at home in particular needs to come from somewhere. As a result of the Brexit the author also voted for most under 45s voted Labour in both 2017 and 2019. Even Boris in 2019 lost the vote of workers to Labour, it was only the Tories huge lead amongst pensioners in 2019 which won them a majority. So now Boris will put the interest of pensioners and those 45 to 65 year olds waiting for an inheritance first, that it just the nature of the Tory coalition now post Brexit
I am not sure you have understood why @Philip_Thompson wrote the piece. Politics should be about politicians making life work for the voters, and if it doesn't work for them they look elsewhere. Although in my mind's eye I have Philip as The Terminator, "I'll be back!"
You are more than welcome to believe the NI increase is the best method of raising the required revenue for social care, but that is not how you frame your argument. Your point is whether it works or not is irrelevant so long as it doesn't lose too many votes.
If all that matters in politics is retaining power one might as well cut to the chase and go the full Bolsanaro and prepare to call in the troops to offset waning popularity.
NI was set up to fund healthcare, state pensions and unemployment insurance, if more of it is used to fund healthcare and social care in line with what it was set up for all to the good as far as I am concerned
I hate to be agreeing with @Philip_Thompson and @MaxPB but NI should be added into the income tax pot. Easier and cheaper to administrate and we all know what percentages we are paying without a calculator.
No it should not.
Indeed state pensions, JSA and healthcare now NHS should be removed from income tax funding altogether and funded entirely by NI as originally intended
The major issue with that approach was highlighted in the header, which is that it treats income from employment more severely than income from investment.
Government should have taken the opportunity to abolish employee NI completely, and merge it into income tax.
No, just increase tax separately on investment income.
Of course dividends income did see a tax rise yesterday too
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
Why should the government get a second dip at already taxed money?
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Net proceeds of £310,500 - a 68.5% tax rate
"Why should the government get a second dip at already taxed money?" I'm surprised to see you come up with that old trope Charles.
You against VAT, council tax and excise duties as well then?
If only it was double dip...
Gross income -> Income tax, Student loan, NI (Both of them), social care levy, council tax, VAT, inheritance tax.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
Except it’s not a tax on wages.
It’s an increase in the total cost of employment. That may be pushed on to wages but it may not be
It is a tax on wages. It is literally a tax on wages.
If you want to pay an extra £1000 or £1150 from your wage budget to an individual then how much does the individual get? Do the maths.
I am thrilled - absolutely thrilled - to have now pay for individuals - such as those in my family - who bought their house for 30k - now worth in excess of 500k - barely spend anything day to day and have accumulated so much wealth they can live comfortably knowing that a big chunk of their care costs are now covered.
Of course - they’ll argue they’ve earned that right - but i don’t feel the offer on the table is particularly fair
They will have to pay £86k (potentially x 2 for a couple) towards their care. There are no answers which will please everyone. The Dilnot proposals try to find a middle way.
Boris full of beans like a young Roman emperor and raring to "crack on" with reshuffle, I'm told. The muted response from Tory MPs to the massive tax hike may be related to this.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
Why should the government get a second dip at already taxed money?
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Net proceeds of £310,500 - a 68.5% tax rate
"Why should the government get a second dip at already taxed money?" I'm surprised to see you come up with that old trope Charles.
You against VAT, council tax and excise duties as well then?
If only it was double dip...
Gross income -> Income tax, Student loan, NI (Both of them), social care levy, council tax, VAT, inheritance tax.
More like octuple dipping !
Yes but plucking the maximum amount of feathers without too much hissing requires all sorts of subtle and not so subtle taxation, both direct and indirect.
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
Except it’s not a tax on wages.
It’s an increase in the total cost of employment. That may be pushed on to wages but it may not be
If your budget next year is for a 3% rise in salaries, you’d likely note that a 1.25% linear increase in employee on-costs should really be included in the 3%.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Over the next decade 6000 people are forecast to inherit £200bn. How about those people?
Yes, personally I'm a fan of inheritance tax. It's my favourite tax. Unfortunately the lumpen don't agree. And we know who this government listens to.
The problem is that IHT is to easy to dodge. Annual property taxes cover the vast majority of wealth, and would hit BTL and second homes as well as most inheiritances, and spread the burden over years rather than as a lump sum.
Recipients should have it taxed as income, with some option for spreading the hit over a number of years. Much harder to dodge, then.
Yes, exactly. The current inheritance tax isn't an inheritance tax. It is a death duty. The tax should be at the recipient end not the estate end. This would iron out another unfairness: multiple siblings vs only child.
I would argue for a system which taxed beneficiaries in receipt of inheritances at, say, 10% for the first £50k and 20% thereafter. So someone dies with an estate of £1m in property = £195k tax, £805k net inheritance.
At the moment a £1m property can be inherited tax free which IMO is nothing short of obscene.
Why should the government get a second dip at already taxed money?
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Net proceeds of £310,500 - a 68.5% tax rate
Bit in Bold: Says the person who is arguing there's no issue with taxing wages three ways.
Incomes are already taxed so why add two additional taxes on top with Employee and Employer National Insurance?
Or alternatively if Employer National Insurance means the wages have already been taxed, shouldn't you be advocating the entire abolition of Income Tax and Employee NI since that money is "already taxed"?
Its currently triple dipped not double dipped. All at the same time too.
Also, if the person doesn't die in the short term and buys a few ferraris, the government gets another 20% dip*. Why should that hit the person selling the cars but not the person simply given the money for nothing?
I agree with stocky, tax the recipient. That way the original person gets taxed once and the recipient gets taxed once on the extra income (and fairer with multiple recipients etc)
*Yep, oversimplification, but the money is taxed again
If I have calculated this right, excluding employer contributions to pensions and appretiship levy, the marginal tax rate for a basic rate taxpaying graduate is now basically 50%
CALCS BELOW
Paybill increase = £1,150.50
Salary increase = £1,000 Income tax increase = £200 National Insurance increase = £132.50 Employer NI increase = £150.50 Student loan repayment = £90
So increase in Paybill = £1,150.50 Tax increase = £573.00
Marginal tax rate = 49.8%
Two points in relation to this. The first is the flaw in Philip's reasoning too. The cost of employers NI does not necessarily come from the employee. It can be an increase in overhead which can be passed on to the customer. So the "pot" for paying wages is not fixed. The competitive pressure which might make it so do not apply if all your competitors are having to pay it too.
Secondly, in both that example and in Philip's the much larger difference is the repayment of student loans. When I went to University my fees were paid and I got a grant. I came out of University debt free, dirt poor but ready for the world of work. The real brutality on our young is not an increase in NI, it is the additional tax that they pay in repayment of their student loans that all too often were mis-sold to them on the basis that it was going to give them additional income.
Of course the cost of Employers NI comes out of Employees wages ultimately. It is quite literally a tax on wages, that scales with wages, it isn't a fixed cost like "a desk" as @Charles used as an analogy earlier which is an actual Overhead.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
I agree that a tax on wages is a tax on wages. I also agree that our taxes on incomes are too high and our taxes on capital are too low. But the government needs this money and it needs it now. Our borrowing is simply not sustainable. Eventually we will need even more money for health. Those taxes really need to be wealth taxes. But this is not wrong for me. This needed to be done and I commend Boris for doing it just as I commended Osborne for taking away my personal allowance and Child Benefit. It is the price of a civilised society and I for one am willing to pay it.
How is taxing a struggling graduate who has to pay rent 49.8% tax on their marginal income when they're only supposed to be on basic rate tax, while taxing their landlord or pensioner grandparents who have the exact same gross income only pay 20.0% tax on theirs "civilised"?
Wouldn't it be "civilised" to tax all income the same, not just screw over those who have salaries?
Yes, and I have argued for that over previous days. The government has tried to fix some of the obvious unfairness on this by taxing dividend income and those of retirement age in work but there is still plenty of investment income which will not bear the charge and that is wrong.
I would very much have preferred this to be an IT increase but from what Rishi said yesterday at the press conference that was fraught with difficulties given the way that Scotland now fixes its rates and the way that the money raised is then divvied up. This is unfortunate and I hope that the budget looks to address the differential way in which investment income is taxed.
I am old enough to remember Investment Income Surcharge, which was abolished by Howe, I think, possibly Lawson. It was 15% and was designed to ensure that investment income was taxed at the same rate as earned income was as a result of NI. We need something of that type back as the burden of NI increases.
IIRC the original Blair settlement was simple: for Westminster to fix IT and let Scotland vary IT by one percentage point up or down. It was a Conservative administration (before the coalition with the LDs? I can't remember) which brought in the complications as a result of the Smith Commission. Rather surprising nobody thought of the ensuing problems we have just seen [edit], as indeed that Fraser of Allander Institute report I dug out yesterday more or less commented.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Those with asset wealth.
We've got to stop squeezing workers.
Agree with your concerns.
How does one define asset wealth? Those who own houses have assets. So tax them. But that includes people like you and the tax would have to be paid out of income or savings.
Pension pots? Again this will hit workers.
Etc.
Not saying that this shouldn't be done. From what I understand, these proposals seem to be incoherent and unfair. I just think that taxing wealth will also hit workers as well. There is no option that won't hit some group or other.
The problem seems to be three-fold in my mind:-
1. First, work out what social care system we want. 2. Then work out how to pay for it in a way that is fair and effective. 3. Additionally, work out a way to pay for other public services and the cost of Covid.
This seems to be a mish-mash of social care and NHS, with little regard for fairness or effectiveness and doesn't deal with point 1 at all, as fas I can see.
God knows what happens on 3. Presumably we'll learn that in October.
Tax unearned income the same as earned income, tax pension income the same as earned income. Those two changes will bring in tens of billions per year. It can be achieved by merging NI and income tax. Keep the £12.5k threshold so lower paid workers and low income pensioners actually see a net reduction/no change in tax, most workers see no change while well off pensioners and rentier types see a huge increase in their tax bills.
The way we treat unearned income is ridiculous, investment is already incentivised with CGT being 20%. We don't need to also give income from investments a tax break.
Why would you lock up money in a pension for 30+ years if there are no tax breaks?
Saving is a good thing. It should be incentivised.
Absolutely, people will always do what they can to avoid tax, if a pension is seen to be tax inefficient, people will not put as much money in them.
We do seem to be demonising pensioners who have worked all their lives and put money away from their already taxed income to provide for themselves in retirement.
Demonise = Make them the richest generation ever, and on average richer than their kids and grandkids will be in retirement.
So the current 65+ generation is richer than any generation before and will be richer than any after?
It's certainly looking that way.
Ultimately we just need to abolish the state pension, or vastly increase the eligible age. Pensioners have their entire lives to prepare for retirement, and if they're feckless enough to not have done so, then I see no reason why the state should pay for them instead. 20 hours a week on min wage in Tesco should be enough to keep them fed and watered.
Just flying by and was surprised to read your announcement. Although not of your political persuasion I take no joy in it and hope that this does not lead to a disenchantment with the political process and cause you to detach from political engagement generally and this site in particular. Your wit, wisdom and honesty would be sorely missed.
Keep well and I hope to be engaging with you again in due course, in the best sense naturally!
PtP
That was nice, so ditto.
I both enjoy and get challenged by discussions with you @Philip_Thompson We agree on a lot but also have had some humdinger disagreement on a number of topics. It is funny that when we agree I think you are putting forward brilliant arguments and when we disagree I think you are being completely dogmatic (I was going to say irrational, but I don't think I could ever call you that). I think that might say more about me than you.
You would be welcome in the LDs, but I suspect you may struggle on a few issues (eg FPTP) so in a way I hope the Tory party changes to fit people like you and @TSE better.
Philip Thompson voted for Brexit in 2016 thus changing the Tory Party from the coalition of workers it was under Cameron to the coalition of pensioners and their heirs it is now. Due to Brexit the Tories have lost many voters under 45 who voted Remain to Labour and the LDs but the Tories have gained lots of pensioners and those over 45 who voted Leave from UKIP and Labour.
He has nobody to blame but himself
Not a bad point at all. What are you still doing in the party (not a facetious question - genuinely curious).
I am a loyal Tory.
I voted for Cameron, I voted Remain in 2016 but I accepted the result and I still back the Tories. I always vote Tory and am a Tory member, even voting Tory in 2001 under Hague when Philip Thompson was voting Labour.
However I also recognise Brexit has changed the nature of the Tory coalition from the party mainly of workers under Cameron who had only a small lead amongst pensioners (with some of the latter in particular also voting UKIP in 2015) to a party with a huge lead amongst pensioners but which has lost the vote of most under 45s. It was Brexit which did that and it was Philip Thompson who voted for it not me, he should accept the consequences of his actions
I understand your point but at what point is the "Tory Party" not enacting "Tory" policies. It would be interesting to compare, say, this Tory govt's policies with those of a) previous Tory govts' policies; and b) previous Lab opposition and govts' policies.
My guess is that big statism would have more in common with past Labour than past Conservative.
So at what point does a "Tory" government cease being one. If all its policies are those which would have been advocated by Labour then the term is meaningless.
The serious part of the donkey with a blue rosette jibe is that the donkey doesn't have any policies.
In the 1950s and 1960s and early 1970s we had Tory governments with most big industries nationalised and indeed a higher top rate of income tax than now. In those pre Thatcherite years the Tories might have been slightly less statist than Labour but it was the Liberals that were the least statist party of all, certainly pre SDP. Now with Davey an Orange Book LD and ex Minister in Cameron's austerity coalition government as Liberal leader and the LDs opposing the NI rise and Boris a Tory PM reliant on the pensioner client vote we may be going back to the days of the Liberals being the least statist of the main parties. So inevitably the Tories will lose some classical liberals. https://twitter.com/LibDems/status/1435190630427373572?s=20
In the 1870s it was also Gladstone's Liberals who were the party of the small state and free trade more than Disraeli's Tories.
The Tory Party is historically the party of the Crown, the Church of England and rural England and landed estates and on occasion British Nationalism and indeed in the 19th century the Empire.
The Tory Party only really became the small state party in the 20th century because Labour not the Liberals became its main opponent and that accelerated under Thatcher, now we are seeing some rowing back on that post Brexit under Boris
So "the Crown, the Church of England and rural England and landed estates". That is what you are voting for.
As I understand it, you are not part of the royal family, nor the Church of England and you are a normal bloke living in Essex and hence not part of the landed gentry (I may be wrong of course). And you are certainly not a pensioner whether well off or not.
And yet you are supporting a party which benefits those parts of society that are not you. You are voting against your own interests for, to use shorthand and it's only shorthand, your "betters".
If we can't proceed from an assumption of homo economicus then we are all screwed and you don't appear to be one of those.
In fairness some of us vote against our own interest for the greater good, however the greater good does not normally mean the Crown, Church of England and Landed Gentry or as you well put it 'our betters'.
Remarkable to see the conversion of some on here to wealth taxes. Fantastic to see. Wish I could bottle whatever led to this change of heart.
Please don't bottle it, it is 15 years of the young getting shafted by the state!
Right, but why now?
As you say, this has been going on for ages, the left have been making this point for ages, so what is causing the conversion? Is it going to be more widespread?
My pessimistic hunch is that for most people these tax changes are sufficiently small/complicated that they won't notice too much. But I hope I'm wrong, and this is the start of the way back for a Labour govt (with the Lib Dems if they are interested) that will shift the balance of taxation from workers towards the wealthy.
It is not just now, the polarisation of the parties by age has been happening sharply since the Brexit vote and started before that. This is a further continuation with different people reaching breaking point at different times. It is probably harder for the govt when belts need to be tightened and people feel strongly about the differential impacts of the pandemic as well as taxation.
Also as I keep saying, Labour do not have the answers here either, they are supporting the triple lock and not saying what taxes they would raise instead.
Focus groups: "We aren't sure about Starmer. What does he stand for? Where's his vision? We've not heard many ideas. Bit of an empty suit to be honest."
Social care opportunity.
Labour: There needs to be a plan and we will tell you what it is at the next election in our manifesto.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
There will be continuing upward pressure on NHS spending, that it absolutely so. But there is a particular crisis right now that needs to be addressed and this does that.
I thought your point, with which I have some sympathy, is that this additional income should be coming from capital taxes as well as income taxes. I completely agree that the burden of taxes on income is excessive and taxes on capital are far too light. The massive gains people make on their homes tax free is distorting inter generational wealth and opportunity too. But this is a different argument from whether this money is needed. It clearly is.
A point made by quite a few people is that if this really was a one-off Covid related cost, the normal thing is to incur the debt and pay it off over years.
I think there is a perceived need for a big political gesture, which I suspect is driven by the prospect of an utterly grim NHS winter coming up. The government wants to get ahead of that curve.
In fiscal terms this has almost nothing to do with social care and not much to do with the general NHS. It is a general tax increase that is nominally hypothecated to spending that is seen as desirable, but which essentially is happening (or in the case of social care, not happening) anyway.
By all accounts, this plan was developed by Johnson, Sunak and Javid and is being bounced through everyone else. What do we know of their main wants?
Javid: enough money to stop the NHS falling apart Sunak: no more borrowing Johnson: be popular with his supporters
Put those red lines in place, and this plan is probably the only possible solution.
Agree, with the slight qualification that the NHS is quite likely to fall apart anyway. When it happens the government don't want to vulnerable to the attack that they underfunded it. If they are perceived to be throwing money at the NHS, Starmer can't convincingly claim he would spend more to sort the problem out.
This is the apocalypseofuck of policy disasters. Breaking the manifesto. Breaking their long-standing position on tax. To make the NHS worse and do nothing at all for social care.
And the backbenchers will all vote for it today
And the polls tomorrow and next month will show MOE changes.
Most people don’t pay close attention to what politicians have to say. This is a policy that will only bite politically when it impacts pay packets. So before the next election then. Possibly for the Tories uncomfortably close to it.
Before they vote on this today, Tory MPs would do well to note the mood of erstwhile supporters on here. We’re the weirdos paying attention to a political speech during a beautiful Indian summer week, coinciding with back to school and for many back to the office.
Polls might not look so clever when everyone else catches up with us.
Robert Rea @robertrea · 20h Journalists: if National Insurance is rising from 12% to 13.25% it is NOT rising by 1.25%. It is rising by 1.25 percentage points. if you want to describe its rise in percentage terms, it is rising by just over 10%. It is a 10% tax hike.
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Those with asset wealth.
We've got to stop squeezing workers.
Agree with your concerns.
How does one define asset wealth? Those who own houses have assets. So tax them. But that includes people like you and the tax would have to be paid out of income or savings.
Pension pots? Again this will hit workers.
Etc.
Not saying that this shouldn't be done. From what I understand, these proposals seem to be incoherent and unfair. I just think that taxing wealth will also hit workers as well. There is no option that won't hit some group or other.
The problem seems to be three-fold in my mind:-
1. First, work out what social care system we want. 2. Then work out how to pay for it in a way that is fair and effective. 3. Additionally, work out a way to pay for other public services and the cost of Covid.
This seems to be a mish-mash of social care and NHS, with little regard for fairness or effectiveness and doesn't deal with point 1 at all, as fas I can see.
God knows what happens on 3. Presumably we'll learn that in October.
Tax unearned income the same as earned income, tax pension income the same as earned income. Those two changes will bring in tens of billions per year. It can be achieved by merging NI and income tax. Keep the £12.5k threshold so lower paid workers and low income pensioners actually see a net reduction/no change in tax, most workers see no change while well off pensioners and rentier types see a huge increase in their tax bills.
The way we treat unearned income is ridiculous, investment is already incentivised with CGT being 20%. We don't need to also give income from investments a tax break.
Why would you lock up money in a pension for 30+ years if there are no tax breaks?
Saving is a good thing. It should be incentivised.
Absolutely, people will always do what they can to avoid tax, if a pension is seen to be tax inefficient, people will not put as much money in them.
We do seem to be demonising pensioners who have worked all their lives and put money away from their already taxed income to provide for themselves in retirement.
Demonise = Make them the richest generation ever, and on average richer than their kids and grandkids will be in retirement.
So the current 65+ generation is richer than any generation before and will be richer than any after?
It's certainly looking that way.
Ultimately we just need to abolish the state pension, or vastly increase the eligible age. Pensioners have their entire lives to prepare for retirement, and if they're feckless enough to not have done so, then I see no reason why the state should pay for them instead.
No as that would lead to severe poverty for some pensioners.
Better to target increases in funds going forward for the poorest pensioners so the richest pensioners with the biggest private pension pots do not automatically get the same rise overall
Miss Vance, young Roman emperors did not always grow old in the purple.
Mr. Borough, Labour don't need an alternative right now but they do need one earlier than the election, I think, otherwise they'll just be shaking their head and tutting instead of looking like an alternative government.
If the Lib Dems get in there first, it may get them some much needed publicity.
Jeremy Cliffe @JeremyCliffe · 22h - CDU/CSU falls to 19%, its lowest poll result of all time - Laschet relaunch showing no signs of success - SPD and Greens creeping towards two-party majority territory
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
The squeeze for rentier & non working income SURELY has to come next.
If by "rentier" you mean "private rental owners", then the "squeeze" started when George Osborne went beserk in 2014 (and I think regrets not thinking it through properly, as he has lost 10s of billions of investment into housing and created a Grande Complication).
It is now as big a mess as IR35. For example, there are now nearly a quarter of a million Buy to Let investment companies. 42000 were set up in 2020. How will these be targeted?
There are only really 4 ways that rental works tax-wise on a personal basis now:
1 - One property as a supplement, as Ydoethur (?) was explaining. 2 - More properties with little or no borrowing. 3 - Incorporate. 4 - Up to 2 lodgers, where it can be tax free income.
Hamptons calculated some potentially huge savings for landlords who choose the company route to purchase their rental investments.
It said that someone buying a:
£250,000 property with a mortgage that covers 75 per cent of the value of the investment generating £1,000 a month in rent via a company could pay around £1,033 a year in tax This contrasts with a lower rate taxpayer owning the same property in their own name, potentially paying 42 per cent more – or £1,463 a year.
Robert Rea @robertrea · 20h Journalists: if National Insurance is rising from 12% to 13.25% it is NOT rising by 1.25%. It is rising by 1.25 percentage points. if you want to describe its rise in percentage terms, it is rising by just over 10%. It is a 10% tax hike.
I don't think this is correct. Both interpretations are valid linguistically imo.
Robert Rea @robertrea · 20h Journalists: if National Insurance is rising from 12% to 13.25% it is NOT rising by 1.25%. It is rising by 1.25 percentage points. if you want to describe its rise in percentage terms, it is rising by just over 10%. It is a 10% tax hike.
Quite the thing when such Viz Magazine-like helpful hints have to be stated in all seriousness.
I am thrilled - absolutely thrilled - to have now pay for individuals - such as those in my family - who bought their house for 30k - now worth in excess of 500k - barely spend anything day to day and have accumulated so much wealth they can live comfortably knowing that a big chunk of their care costs are now covered.
Of course - they’ll argue they’ve earned that right - but i don’t feel the offer on the table is particularly fair
You know that only a small fraction of people exceed the £86k right? I believe it is less than one in ten and I believe around half are under the age of 65 (or were when they started to require care).
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
The squeeze for rentier & non working income SURELY has to come next.
If by "rentier" you mean "private rental owners", then the "squeeze" started when George Osborne went beserk in 2014 (and I think regrets not thinking it through properly, as he has lost 10s of billions of investment into housing and created a Grande Complication).
It is now as big a mess as IR35. For example, there are now nearly a quarter of a million Buy to Let investment companies. 42000 were set up in 2020. How will these be targeted?
There are only really 4 ways that rental works tax-wise on a personal basis now:
1 - One property as a supplement, as Ydoethur (?) was explaining. 2 - More properties with little or no borrowing. 3 - Incorporate. 4 - Up to 2 lodgers, where it can be tax free income.
Hamptons calculated some potentially huge savings for landlords who choose the company route to purchase their rental investments.
It said that someone buying a:
£250,000 property with a mortgage that covers 75 per cent of the value of the investment generating £1,000 a month in rent via a company could pay around £1,033 a year in tax This contrasts with a lower rate taxpayer owning the same property in their own name, potentially paying 42 per cent more – or £1,463 a year.
I was having real trouble working out how the figures added up yesterday. The yield seemed to be far more than 1.25p would generate. The answer is that there is a further 1.25p increase in the Employers NI as well. As someone who is self employed I only pay this levy once so my tax bill just went up by about £1200. I will also have to pay a small amount of Employer NI for my wife.
But I think that this is worth it (assuming Scotland gives equivalent cover). I do not see how else the awful sequelae of Covid can be dealt with in the short term and the costs of anything like civilised social care can be provided in the longer term. These are both going to be expensive and it will take some time for tax revenues generally to get back to anything like "normal" post pandemic.
I also think that asking people to pay the first £86k of their care costs over their lifetime is enough. If they were in hospital receiving expensive treatments for a difficult medical condition they would of course pay nothing. Dementia is a lottery and there should be a limit to the extent to which the unlucky fork out. This level is high enough that most will never reach it. The elderly with resources will be paying their "hotel" bills in addition.
I think that the government has been brave to finally seize this nettle. Several other governments both before and since Dilnot looked at this and backed off. I commend Boris for his courage.
In Scotland social care has been "free" but it has also been incredibly underfunded and scarce. Many needs have simply not been met, not just for the elderly but for the disabled as well. Yesterday, on the back of this, Sturgeon promised another £800m for Social Care. I was not immediately clear if this was over a Parliament or annual, I think the latter, but it should ensure that Social Care is more of a practical reality and less of a theoretical right. We shall see. The Scottish government is rather an old hand at announcing expenditure that never actually gets spent.
But he hasn't fixed social care. The money is going overwhelmingly to the NHS. We have 100k care vacancies and the council coffers are still overdrawn before we recruit those. The total number of staff needed rises with our demographics. They all need to be paid a lot more, not just out of fairness but practically to compete for staff with labour shortages across many sectors. Social care will get a lot worse, not better, over the next decade if this is the solution.
The money will go to fund extra NHS spending over the next 18 months and then go to Social Care. I agree that wages in the SC sector need to improve but they are a consequence of the penny pinching we have had in that sector to date. This will not go away but it will be eased by these additional resources.
You don't really believe that do you? The much more likely scenario is that the NHS comes begging for more money and social care sits unresolved so this 1.25% quickly rises to 5%.
There will be continuing upward pressure on NHS spending, that it absolutely so. But there is a particular crisis right now that needs to be addressed and this does that.
I thought your point, with which I have some sympathy, is that this additional income should be coming from capital taxes as well as income taxes. I completely agree that the burden of taxes on income is excessive and taxes on capital are far too light. The massive gains people make on their homes tax free is distorting inter generational wealth and opportunity too. But this is a different argument from whether this money is needed. It clearly is.
A point made by quite a few people is that if this really was a one-off Covid related cost, the normal thing is to incur the debt and pay it off over years.
I think there is a perceived need for a big political gesture, which I suspect is driven by the prospect of an utterly grim NHS winter coming up. The government wants to get ahead of that curve.
In fiscal terms this has almost nothing to do with social care and not much to do with the general NHS. It is a general tax increase that is nominally hypothecated to spending that is seen as desirable, but which essentially is happening (or in the case of social care, not happening) anyway.
The best take, I think. This isn't in essence a Social Care or an NHS story. It's deficit reduction packaged in the way judged best politically. The Treasury needs more funds because Covid has messed up the public finances. NI works best politically as the source of the funds. And Health & Social Care works best politically as their earmarked destination.
Robert Rea @robertrea · 20h Journalists: if National Insurance is rising from 12% to 13.25% it is NOT rising by 1.25%. It is rising by 1.25 percentage points. if you want to describe its rise in percentage terms, it is rising by just over 10%. It is a 10% tax hike.
I don't think this is correct. Both interpretations are valid linguistically imo.
Only because of the sloppiness of current practice; Mr REa is quite right, in fact. The ambiguity of current practice however is such that any competent writer or speaker has to confront it and deal with it by making the intended meaning crystal clear.
If there ever was a year for teenagers to earn some money and learn a little about the world of work before getting themselves tens of thousands in debt this was it. Yet:
Record numbers of 18-year-olds in the UK have accepted university places this year, according to updated figures from the Ucas admissions service.
There will be 272,500 of this age cohort starting at UK universities - up by 7% on last year.
That’s totally nuts, and will lead in future to a whole generation of massively indebted people with not enough graduate jobs to go round.
Advice to any 18 year old looking for a white-collar career, get a very junior job for a local accountant, lawyer or IT support firm. If you’re a more practical type, learn a trade - most tradesmen are higher-rate taxpayers now after an apprenticeship, especially in the south.
If you’re firmly set on being a doctor, engineer or academic, then go to university. If not, don’t, and learn on the job instead.
And the advantage of that route is that if you don't like your initial choice you can change it without being stuck with tens of thousands of debt,
If they still want to go to university they can do so a year or two later - possibly even with their employer contributing financially.
Absolutely. There’s lots of useful professional certifications, and there’s the Open University among others. Prove yourself to an employer, and get them to buy in to your education in a way that’s useful to them as well. Hell, even McDonalds sponsors part-time degrees for burger-flippers who want to become regional managers.
Getting yourself £50k or £60k in debt, to have a three year party before facing an uncertain job market, just seems like a silly decision. Maybe I’m just getting old.
McDonalds are a remarkable company.
Was hearing the story the other day of a local lady who started on the shop floor there and worked up to area manager. Then was leaving the business and let her have a local franchise in her 50s.
Now late 60s and owns 5 local franchises, with a 6th now building. Including the one directly across from the entrance to our local MacArthur Glen, which has somewhere above 3 million visitors a year.
Jeremy Cliffe @JeremyCliffe · 22h - CDU/CSU falls to 19%, its lowest poll result of all time - Laschet relaunch showing no signs of success - SPD and Greens creeping towards two-party majority territory
The latest poll has the SPD and Greens on 41.5% combined, well short of a majority.
They would still likely need the FDP who are on 12.5% too
Apart from Saxony where the AfD lead, the latest INSA also has the SPD ahead in every state in Germany north of Bavaria which the CSU will still win, with Baden Wurttemberg the only state the CDU still lead in https://twitter.com/JeremyCliffe/status/1435230013314506752?s=20
My wife and I are rather well paid but we calculated the impact of this last night and our household will be over £2,000 worse off a year under these new proposals.
As you can imagine neither of us are happy about it.
Yes, I get you but but fixing social care was always going to cost money and if people like you don't cough up then who else is?
Those with asset wealth.
We've got to stop squeezing workers.
Agree with your concerns.
How does one define asset wealth? Those who own houses have assets. So tax them. But that includes people like you and the tax would have to be paid out of income or savings.
Pension pots? Again this will hit workers.
Etc.
Not saying that this shouldn't be done. From what I understand, these proposals seem to be incoherent and unfair. I just think that taxing wealth will also hit workers as well. There is no option that won't hit some group or other.
The problem seems to be three-fold in my mind:-
1. First, work out what social care system we want. 2. Then work out how to pay for it in a way that is fair and effective. 3. Additionally, work out a way to pay for other public services and the cost of Covid.
This seems to be a mish-mash of social care and NHS, with little regard for fairness or effectiveness and doesn't deal with point 1 at all, as fas I can see.
God knows what happens on 3. Presumably we'll learn that in October.
Tax unearned income the same as earned income, tax pension income the same as earned income. Those two changes will bring in tens of billions per year. It can be achieved by merging NI and income tax. Keep the £12.5k threshold so lower paid workers and low income pensioners actually see a net reduction/no change in tax, most workers see no change while well off pensioners and rentier types see a huge increase in their tax bills.
The way we treat unearned income is ridiculous, investment is already incentivised with CGT being 20%. We don't need to also give income from investments a tax break.
Why would you lock up money in a pension for 30+ years if there are no tax breaks?
Saving is a good thing. It should be incentivised.
Absolutely, people will always do what they can to avoid tax, if a pension is seen to be tax inefficient, people will not put as much money in them.
We do seem to be demonising pensioners who have worked all their lives and put money away from their already taxed income to provide for themselves in retirement.
Demonise = Make them the richest generation ever, and on average richer than their kids and grandkids will be in retirement.
So the current 65+ generation is richer than any generation before and will be richer than any after?
It's certainly looking that way.
Ultimately we just need to abolish the state pension, or vastly increase the eligible age. Pensioners have their entire lives to prepare for retirement, and if they're feckless enough to not have done so, then I see no reason why the state should pay for them instead.
No as that would lead to severe poverty for some pensioners.
Better to target increases in funds going forward for the poorest pensioners so the richest pensioners with the biggest private pension pots do not automatically get the same rise overall
It would lead to a lot of pensioners having to make choices - the state pension is £130/week, which is just 15-18 hours working retail, which given that they've failed to privately store away enough isn't too bad. In addition most pensioners have significant equity in their home, so a Govt led pensioner equity release programme would also probably have to be implemented. Neither demand is unfair or excessive given the advantages they've had throughout their life.
They got free University, I've got £60k of tuition debt.
They had low tax rates, I'm at over 50% once you include pension money being locked away for 45 years.
They had house prices that were 2-3x average salary, I'm looking at 10.5x average salary and growing.
For their benefit the entire country was put into lockdown, while the young sacrificed far more despite essentially 0 risk of death.
It is only fair for pensioners to start paying their way in life, and to stop being leaches on society.
Remarkable to see the conversion of some on here to wealth taxes. Fantastic to see. Wish I could bottle whatever led to this change of heart.
Please don't bottle it, it is 15 years of the young getting shafted by the state!
Right, but why now?
As you say, this has been going on for ages, the left have been making this point for ages, so what is causing the conversion? Is it going to be more widespread?
My pessimistic hunch is that for most people these tax changes are sufficiently small/complicated that they won't notice too much. But I hope I'm wrong, and this is the start of the way back for a Labour govt (with the Lib Dems if they are interested) that will shift the balance of taxation from workers towards the wealthy.
It is not just now, the polarisation of the parties by age has been happening sharply since the Brexit vote and started before that. This is a further continuation with different people reaching breaking point at different times. It is probably harder for the govt when belts need to be tightened and people feel strongly about the differential impacts of the pandemic as well as taxation.
Also as I keep saying, Labour do not have the answers here either, they are supporting the triple lock and not saying what taxes they would raise instead.
I think you're on to something when you talk about belts being tightened. Sharpens the focus on who is paying and who is not.
I agree Labour needs to come out with some bolder proposals on this. Perhaps better to do it now rather than waiting. They must offer the public a real choice if they want people to pay attention.
Comments
Advice to any 18 year old looking for a white-collar career, get a very junior job for a local accountant, lawyer or IT support firm. If you’re a more practical type, learn a trade - most tradesmen are higher-rate taxpayers now after an apprenticeship, especially in the south.
If you’re firmly set on being a doctor, engineer or academic, then go to university. If not, don’t, and learn on the job instead.
(((Dan Hodges)))
@DPJHodges
·
2h
Not sure why people are still talking about the Social Care tax hike. Up until the weekend it was a Social Care tax hike. But then there was the backlash from Tory MPs and Sunak. So now it's the NHS Waiting List Tax Hike.
Make the wrong choice about the university course and it might not be but the debt will still be there.
A rose by any other name is still a rose, and a tax by any other name is still a tax. The way some people try to convince themselves that National Insurance [both parts to it] isn't Income Tax for Employees is really quite convoluted.
I wonder if we could apply that to other disliked taxes and if people would realise what the issue is?
EG how about we cut Inheritance Tax by 5% - yay Inheritance Tax has gone down. But introduce a new "National Estate Insurance" at a 5% threshold that operates just like Inheritance Tax but with 5% coming from the Estate people leave before it can be distributed, and a further 5% coming from the Estate people receive after it is distributed. Then going forward a Chancellor could say he is increasing National Estate Insurance by 1%, which really means 1% on the legacy left behind, and 1% on the legacy received as well.
Would Inheritance Tax really be cut if that happened? Would someone receiving an inheritance really only be down the %age they get taxed and not affected by the tax paid by the person leaving the inheritance?
A tax on wages is a tax on wages, whatever name you call it by.
I think there is a perceived need for a big political gesture, which I suspect is driven by the prospect of an utterly grim NHS winter coming up. The government wants to get ahead of that curve.
In fiscal terms this has almost nothing to do with social care and not much to do with the general NHS. It is a general tax increase that is nominally hypothecated to spending that is seen as desirable, but which essentially is happening (or in the case of social care, not happening) anyway.
Like children’s social care at the moment - you won’t solve the care problem until you tackle the real issue, and that’s the provider market
I would probably always find and focus on Tory policy negatives, but Mrs M is a blue blooded Conservative.
So in some cases at least, it fails to meet its primary objective. However, I suppose if the sound bites and the smoke and mirrors work, I daresay that is good enough.
@Philip_Thompson will be out for your blood
If they still want to go to university they can do so a year or two later - possibly even with their employer contributing financially.
Wage taxes whatever you call them by are not overheads, they are not fixed costs, they scale with the wages.
The employers and employees pension contributions do indeed come out too which does indeed take the calculation past 50% - but I excluded them as they do not go to the Treasury.
I mean, I agree, it would be the fair thing to do, but why should the tories squeeze their supporters? There’s no pressing need.
Make the workers pay. They can get away with it, so why wouldn’t they?
'Asked about "hotel costs" - which will not be included in the £86,000 care costs cap - such as food and accommodation, Javid says it is "fair" to exclude these because "whether we need care or not, we all have to eat and we all have to have a roof over our heads".'
So the cap ISN"T £86k, but quite a lot less. I can hear howls of rage in the distance.
FWIW I agree, but that's not what the headlines are saying.
I rather fear this (exceedingly charitable) sentiment is widespread amongst his base.
What can you do? I really don't know. He has them in his pocket and because of this has the rest of us by the balls.
Students are also now a massive requirement for the economics of major cities, including construction and maintenance of Halls, the rental costs of these halls and the amount of money students spend.
But they are not taking it from you. They are just not giving you more than you currently get
Javid: enough money to stop the NHS falling apart
Sunak: no more borrowing
Johnson: be popular with his supporters
Put those red lines in place, and this plan is probably the only possible solution.
Wouldn't it be "civilised" to tax all income the same, not just screw over those who have salaries?
Getting yourself £50k or £60k in debt, to have a three year party before facing an uncertain job market, just seems like a silly decision. Maybe I’m just getting old.
Wish I could bottle whatever led to this change of heart.
And I say that as someone who has traditionally voted conservative. Labour have a real opportunity here (not that I would expect them to take it)
If we abolished Income Tax and Employee National Insurance altogether, putting 100% of the wage taxation on Employers NI, and wages were able to adjust, then would that mean wages were now untaxed in your eyes?
A tax on wages is a tax on wages, whatever name you use.
Indeed state pensions, JSA and healthcare now NHS should be removed from income tax funding altogether and funded entirely by NI as originally intended
If other parties think they can do better then they have the opportunity and responsibility to offer alternatives.
Andrew Adonis
@Andrew_Adonis
·
1h
Labour’s official reaction to the NHS levy is worryingly amateur. In criticising the Tories for putting up taxes for the NHS, are we saying we wouldn’t? If we would, & we don’t like this levy, which other taxes would we put up? None has been named
The voters notice these things
Government should have taken the opportunity to abolish employee NI completely, and merge it into income tax.
If people in the North don't have much wealth, and people in the South do, then how are the people in the North supposed to get it?
For me it meant not redistributing from South to North, but instead means the people in the North should have the opportunities available to them to work hard, get a good income, get a good home, and accumulate wealth.
But if we're further taxing those in work who don't have much wealth, in order to redistribute that money to those who already had wealth tied up in assets, then how does that help regional disparities? How does that enable Northerners (or poor Scots, Welsh or even poor Southerners too) to be "Levelled Up" if their labours are going to be redistribute to pay for bigger inheritances in the South?
This isn't Levelling Up under any definition, its the opposite.
I would very much have preferred this to be an IT increase but from what Rishi said yesterday at the press conference that was fraught with difficulties given the way that Scotland now fixes its rates and the way that the money raised is then divvied up. This is unfortunate and I hope that the budget looks to address the differential way in which investment income is taxed.
I am old enough to remember Investment Income Surcharge, which was abolished by Howe, I think, possibly Lawson. It was 15% and was designed to ensure that investment income was taxed at the same rate as earned income was as a result of NI. We need something of that type back as the burden of NI increases.
The other change is that the self-funder subsidy is being tackled. It has long been a bone of contention that self-funders are charged more pw than councils for the same thing. In the future councils will be obliged to arrange care in a care home on behalf of self-funders - and so self-funders will also get the council's bulk purchasing power. This could of course lead to higher fees overall.
Take someone above the IHT threshold.
The day before he dies he gets a £1m gross bonus. Net bonus of £517,500.
He died and the estate pays a further £207,000 in tax
Net proceeds of £310,500 - a 68.5% tax rate
As you say, this has been going on for ages, the left have been making this point for ages, so what is causing the conversion? Is it going to be more widespread?
My pessimistic hunch is that for most people these tax changes are sufficiently small/complicated that they won't notice too much. But I hope I'm wrong, and this is the start of the way back for a Labour govt (with the Lib Dems if they are interested) that will shift the balance of taxation from workers towards the wealthy.
Are you the guy on Epping council who owns 400 acres?
Indeed Northerners are closer to Southerners outside London in terms of home ownership too than they were 40 years ago
Incomes are already taxed so why add two additional taxes on top with Employee and Employer National Insurance?
Or alternatively if Employer National Insurance means the wages have already been taxed, shouldn't you be advocating the entire abolition of Income Tax and Employee NI since that money is "already taxed"?
Its currently triple dipped not double dipped. All at the same time too.
You against VAT, council tax and excise duties as well then?
Of course - they’ll argue they’ve earned that right - but i don’t feel the offer on the table is particularly fair
It’s an increase in the total cost of employment. That may be pushed on to wages but it may not be
As a retiree I nevertheless sympathise greatly with PT and his thread header.
Also on topic (unsurprisingly) is Stephen Bush in the Staggers email today:
"[As well as the risk of the social care system falling over before the election,] The second risk is that the broken manifesto promise and the reality that, for all the talk of ending austerity, the rest of the parliament is going to be one in which spending restraint continues, gives the government a reputation for shiftiness: for breaking its promises and failing to deliver. The comparison that Johnson’s inner circle and the Treasury have kept making is to Gordon Brown’s increase in National Insurance following the 2001 election. The equally important part of Brown’s tax increase is that he didn’t need to do the same thing in 2003, and that by 2005, the NHS was, visibly, in a better state of repair than it had been in 2001.
The big bet that Johnson is making is that, when the next election rolls around, the United Kingdom will feel and look like a country where the crisis in health and social care is being addressed, even if it isn’t really, and even if the difficult decisions are still being put off and the actual task of fixing social care has been kicked into the next parliament."
I hugely respect and admire what you have done.
Of course dividends income did see a tax rise yesterday too
Gross income -> Income tax, Student loan, NI (Both of them), social care levy, council tax, VAT, inheritance tax.
More like octuple dipping !
If you want to pay an extra £1000 or £1150 from your wage budget to an individual then how much does the individual get? Do the maths.
https://twitter.com/iainmartin1/status/1435526292691165185?s=20
I agree with stocky, tax the recipient. That way the original person gets taxed once and the recipient gets taxed once on the extra income (and fairer with multiple recipients etc)
*Yep, oversimplification, but the money is taxed again
Ultimately we just need to abolish the state pension, or vastly increase the eligible age. Pensioners have their entire lives to prepare for retirement, and if they're feckless enough to not have done so, then I see no reason why the state should pay for them instead. 20 hours a week on min wage in Tesco should be enough to keep them fed and watered.
Also as I keep saying, Labour do not have the answers here either, they are supporting the triple lock and not saying what taxes they would raise instead.
Social care opportunity.
Labour: There needs to be a plan and we will tell you what it is at the next election in our manifesto.
Before they vote on this today, Tory MPs would do well to note the mood of erstwhile supporters on here. We’re the weirdos paying attention to a political speech during a beautiful Indian summer week, coinciding with back to school and for many back to the office.
Polls might not look so clever when everyone else catches up with us.
Robert Rea
@robertrea
·
20h
Journalists: if National Insurance is rising from 12% to 13.25% it is NOT rising by 1.25%. It is rising by 1.25 percentage points. if you want to describe its rise in percentage terms, it is rising by just over 10%. It is a 10% tax hike.
Better to target increases in funds going forward for the poorest pensioners so the richest pensioners with the biggest private pension pots do not automatically get the same rise overall
Mr. Borough, Labour don't need an alternative right now but they do need one earlier than the election, I think, otherwise they'll just be shaking their head and tutting instead of looking like an alternative government.
If the Lib Dems get in there first, it may get them some much needed publicity.
Jeremy Cliffe
@JeremyCliffe
·
22h
- CDU/CSU falls to 19%, its lowest poll result of all time
- Laschet relaunch showing no signs of success
- SPD and Greens creeping towards two-party majority territory
It is now as big a mess as IR35. For example, there are now nearly a quarter of a million Buy to Let investment companies. 42000 were set up in 2020. How will these be targeted?
There are only really 4 ways that rental works tax-wise on a personal basis now:
1 - One property as a supplement, as Ydoethur (?) was explaining.
2 - More properties with little or no borrowing.
3 - Incorporate.
4 - Up to 2 lodgers, where it can be tax free income.
Hamptons calculated some potentially huge savings for landlords who choose the company route to purchase their rental investments.
It said that someone buying a:
£250,000 property
with a mortgage that covers 75 per cent of the value of the investment
generating £1,000 a month in rent via a company
could pay around £1,033 a year in tax
This contrasts with a lower rate taxpayer owning the same property in their own name, potentially paying 42 per cent more – or £1,463 a year.
A higher rate taxpayer could end up paying 274 per cent more – or £3,863 a year.
https://www.simplybusiness.co.uk/knowledge/articles/2021/02/record-number-of-buy-to-let-limited-companies/
Political journalists were confused about deficits and debt a decade and a half ago.
Was hearing the story the other day of a local lady who started on the shop floor there and worked up to area manager. Then was leaving the business and let her have a local franchise in her 50s.
Now late 60s and owns 5 local franchises, with a 6th now building. Including the one directly across from the entrance to our local MacArthur Glen, which has somewhere above 3 million visitors a year.
They would still likely need the FDP who are on 12.5% too
https://www.wahlrecht.de/umfragen/insa.htm
Apart from Saxony where the AfD lead, the latest INSA also has the SPD ahead in every state in Germany north of Bavaria which the CSU will still win, with Baden Wurttemberg the only state the CDU still lead in
https://twitter.com/JeremyCliffe/status/1435230013314506752?s=20
They got free University, I've got £60k of tuition debt.
They had low tax rates, I'm at over 50% once you include pension money being locked away for 45 years.
They had house prices that were 2-3x average salary, I'm looking at 10.5x average salary and growing.
For their benefit the entire country was put into lockdown, while the young sacrificed far more despite essentially 0 risk of death.
It is only fair for pensioners to start paying their way in life, and to stop being leaches on society.
Sharpens the focus on who is paying and who is not.
I agree Labour needs to come out with some bolder proposals on this. Perhaps better to do it now rather than waiting. They must offer the public a real choice if they want people to pay attention.