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Originally Posted by Hereward the Wake
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Originally Posted by harryaldridge
Also with regard to savings & Investment tax of 20%. As i undertand it, UKIPs policy is base donthe Rabushka-Hall model of the flat tax which should lead to abolition of tax on savings and investment.
The R-H model is essentially a consumption tax, but levied on income (ie. throughout the flow of money through the economy it does not tax saving and investment, but taxes wages etc. It is a very celever concept once you get your head round it.
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We should definitely not go for the Rabushka-Hall model.
Why should a hard working person pay taxes yet a millionaire living off investments not?
I became involved in centre-right politics because I want to reduce taxes for ordinary people, not millionaires.
I am against such regressive taxes. |
Wow there! I didn;t mean the very rich get let off paying taxes. They would still get taxed at a 33% rate. Simply that if you put money away in your bank account to save, or invest in a company, you would not pay tax on interest from savings, or pay capital gains tax on the value of your shares.
The idea of Rabushka-Hall is to tax evey £ in the economy once and only once. e..g at the moment a large company makes an extra £100 of profit; they pay 30%, leaving £70; £70 then get spaid as dividens to shareholders, a high rate shareholder paying up to 32.5%, meaning a total tax rate of 52.75% (potentially).
R-H would tax the companies profits but not dividends. We could actually re-balance this so that corporation tax is less than 33% and dividend income tax is higher to compensate.
R-H delivers economic efficency and a very progressive tax system as the well off end up paying a far greater proportion of tax revenues, because tax loopholes close and they are encouraged to invest. This is not a get-rich-quick scheme for millionaires, just good economic policy.
03-10-2006, 03:29 PM
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