Income Tax

I used to work in Bermuda where there was no income tax. Everything you buy there is more expensive because it has purchase tax on it. Would you prefer to not pay income tax and pay more for the products you buy in the UK?

No.

There's a theory that such an economic model could work for a number of reasons:

1) It's simple to calculate and collect the tax.

2) It's harder to dodge (apart from your cash in hand 'vat free' transactions'), which means that the rich have a harder time avoiding tax because it's based on expenditure, and you capture a lot of income that's generated in the black market that you wouldn't otherwise (drug dealers etc probably don't file tax returns)

3) People have more money in their pockets and are therefore more likely to go and spend it.

I guess the issue would be whether the tax generated would be sufficient to offset the lost income tax revenue. We already have VAT of 20%, so not sure whether it would work here though is obviously much more sustainable in somewhere like Bermuda.

Dinae Moe Humm wrote:There's a theory that such an economic model could work for a number of reasons:

1) It's simple to calculate and collect the tax.

2) It's harder to dodge (apart from your cash in hand 'vat free' transactions'), which means that the rich have a harder time avoiding tax because it's based on expenditure, and you capture a lot of income that's generated in the black market that you wouldn't otherwise (drug dealers etc probably don't file tax returns)

3) People have more money in their pockets and are therefore more likely to go and spend it.

I guess the issue would be whether the tax generated would be sufficient to offset the lost income tax revenue. We already have VAT of 20%, so not sure whether it would work here though is obviously much more sustainable in somewhere like Bermuda.

You do have some control though, if you buy a bit less it means you pay less tax and if you spend more you pay more.

The main argument in favour of income tax is that it is supposed to be fairer i.e. the more income you have the more tax you pay. The problem is that the rich find it very easy to avoid (legal) or evade (illegal) income tax. It is also much easier for the self employed to avoid/evade than it is for employees.

On the other hand if we had no income tax life would be much tougher for the poor as they would have to pay the same price as the rich for everything.

We already have one of the highest VAT rates so I don't think any politician is going to abolish income tax in the near future.

xmiles wrote:The main argument in favour of income tax is that it is supposed to be fairer i.e. the more income you have the more tax you pay. The problem is that the rich find it very easy to avoid (legal) or evade (illegal) income tax. It is also much easier for the self employed to avoid/evade than it is for employees.

On the other hand if we had no income tax life would be much tougher for the poor as they would have to pay the same price as the rich for everything.

We already have one of the highest VAT rates so I don't think any politician is going to abolish income tax in the near future.

Actually we have one of the lowest VAT rates in Europe! In Spain, Italy and Greece its around 25%, The Netherlands is 21%, Germany, last time I heard were upping it to 23%, France is over 20% and in teh Eastern part of Europe it is on average 23.4%

The income tax rate here in the States is pretty much the same as in the UK (25%), but we don't have VAT. Believe it or not, but more than half the people here don't pay any income tax. There is a big push right now by the Republicans for a 'flat tax' where everybody pays the same rate. This way if you make a lot you pay a lot and if you don't you don't. There are lots of 'loopholes' which the wealthier take advantage of, with the 'flat tax' those would be eliminated.

waynagain wrote:The income tax rate here in the States is pretty much the same as in the UK (25%), but we don't have VAT. Believe it or not, but more than half the people here don't pay any income tax. There is a big push right now by the Republicans for a 'flat tax' where everybody pays the same rate. This way if you make a lot you pay a lot and if you don't you don't. There are lots of 'loopholes' which the wealthier take advantage of, with the 'flat tax' those would be eliminated.

But there is State tax which actually makes the stated price of goods higher at the check-outs - but that tax does vary between each state - very much akin to VAT between the different countries in Europe, except we include it in teh price you see.

bwfc71 wrote:

waynagain wrote:The income tax rate here in the States is pretty much the same as in the UK (25%), but we don't have VAT. Believe it or not, but more than half the people here don't pay any income tax. There is a big push right now by the Republicans for a 'flat tax' where everybody pays the same rate. This way if you make a lot you pay a lot and if you don't you don't. There are lots of 'loopholes' which the wealthier take advantage of, with the 'flat tax' those would be eliminated.

But there is State tax which actually makes the stated price of goods higher at the check-outs - but that tax does vary between each state - very much akin to VAT between the different countries in Europe, except we include it in teh price you see.

Some states have no sales tax - Florida is one, it's only 7% where I live and very few are higher than that. Many items are tax free, clothing, food etc in all states.

waynagain wrote:

bwfc71 wrote:

waynagain wrote:The income tax rate here in the States is pretty much the same as in the UK (25%), but we don't have VAT. Believe it or not, but more than half the people here don't pay any income tax. There is a big push right now by the Republicans for a 'flat tax' where everybody pays the same rate. This way if you make a lot you pay a lot and if you don't you don't. There are lots of 'loopholes' which the wealthier take advantage of, with the 'flat tax' those would be eliminated.

But there is State tax which actually makes the stated price of goods higher at the check-outs - but that tax does vary between each state - very much akin to VAT between the different countries in Europe, except we include it in teh price you see.

Some states have no sales tax - Florida is one, it's only 7% where I live and very few are higher than that. Many items are tax free, clothing, food etc in all states.

Sounds like a stupid question but, just for clarification, are you saying that Florida does not have a Sales Tax?

Not sure if it's all of Florida, but I know Fort Lauderdale and some other cities don't. Some of the cities in Florida which have Universities don't have a sales/state tax in an effort to help students who don't have much money. I believe that Delaware doesn't have state tax.

UK has purchase tax just like here in the States, VAT is actually a luxury tax which the States don't have. I recently bought some shirts from the Wanderers shop, there was VAT added and then taken off because I don't live in the UK. Those football shirts would not be subject to any kind of tax in the US.

I know that Miami, Orlando and St Petes definitely have a Sales Tax.

In The Netherlands the BTW is currently 21% but going up to 25% in July, but for food, non-alcoholic drinks and services (such as water, lecccy and gas) teh BTW is being reduced from 6% to 2%