Crikey - the Google alerts are fair going daft this morning...
Someone called Mark Wadsworth is having a bit of a go here and here. The crux of it is he believes in a Land Value Tax, while I think LIT is the way to go. We've had a disagreement in his comments section about the effects of LIT, but it seems to be getting a wee bit lively. Anyway, go and take a look and let us know where you think one, the other or perhaps even both are going wrong.
Of greater consequence, my good pal Angus MacNeil MP has been busy scribbling away on LIT for 'Comment is Free' over at the Guardian, and he's been kind enough to give me a little mention. I knew all those hours trawling Treasury and HMRC reports would reap a dividend one day... :-)
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3 comments:
Fair do's. I'll link back to yours.
Interesting links, I have one point regarding Angus ManNeil's though.
Angus says:
"The standard Labour criticism surrounding LIT is that attaches only to earned income, meaning that other income and assets (particularly of the wealthy) are immune from the taxman in the way that was not the case under a property tax. However, if that complaint can be made of an LIT at 3%, surely those voices, to be logically consistent, will be in the same breath criticising a national income tax at a 10 times greater rate. "
However, it is my understanding that the current tax system has "earned income" and "unearned income" with the same tax rates applying to each.
Earned income is the standard PAYE and unearned income is share dividends and bank interest etc.
Is it not the case that LIT will only impact upon PAYE? That is, upon earned income? As a result it is quite right to criticise the current SNP plans as they currently stand as LIT will not hit the unearned income, typically accruing to the super-rich with no jobs.
The UK Income tax catches the earnings from shares, the Local Income tax (if I understand it correctly) doesn't.
(of course, as it's early days there is plenty of scope to plug the gap but I just thought Angus MacNeil might have got that one wrong. I hope not, of course.)
However, it is my understanding that the current tax system has "earned income" and "unearned income" with the same tax rates applying to each.
Not quite. See: http://www.hmrc.gov.uk/rates/it.htm
Is it not the case that LIT will only impact upon PAYE? That is, upon earned income?
It'll apply to earned income, PAYE or not.
As a result it is quite right to criticise the current SNP plans as they currently stand as LIT will not hit the unearned income, typically accruing to the super-rich with no jobs.
It can be certainly be criticised on these grounds, but as to whether it's right to do so is another matter!
The UK Income tax catches the earnings from shares, the Local Income tax (if I understand it correctly) doesn't.
That's right.
My argument against trying to catch unearned income is this. According to the HMRC survey of personal incomes, there are roughly 2m Scots who pay income tax on unearned income. The median amount taxed is £160, which means about a million Scots earn less than this from their investments.
3% of £160 comes to less than a fiver. Is it really worth examining the bank accounts and BT shares of a million Scots just to obtain less than a fiver from each, when the accountants of the seriously wealthy can probably find a way of putting quite a bit of their wealth out of reach?
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