WHY THE RICH SHOULD PAY 75% TAX

Firstly I wish to explain the reasons for having taxation.

It is very simple and totally reasonable yet taxation is the most controversial of all political subjects. Everyone has a view and it has never been popular. There are so many common misconceptions regarding taxation that politicians love to perpetuate deliberately or more likely through ignorance.

Properly applied tax is actually very cuddly, but so often has been used as a weapon to subjugate populaces by governments since biblical times. It is no wonder there is an instinctive dislike of almost all forms of taxation.

Taxation creates a common pool of money to provide the infrastructures and services that everyone relies on to go about their everyday lives which, individually, nobody would be unable to pay for themselves. You will almost certainly believe that you don't use or feel you need 99.9999% of what taxation actually pays for and provides. Perception is very different to reality. Analyse it and you will probably agree that you do need and use a far larger proportion of the infrastructures and services that are in the public domain. You'll agree that when not actually using something your neighbour does. Taxation helped create and maintains our society.

The true beauty of our tax system is how it is applied. Over time it has been modelled to fit the society we have chosen. It is a Western European model which is different to the American version.

We all pay tax or create taxable opportunities from cradle to grave. That is right, every one of us, often conveniently forgotten, when it suits the, by politicians and the right wing press.

What is a created taxable opportunity? Simply something you may do that causes taxation. Hospitalisation is a good example because a taxpayer will likely become a net user of tax revenues, but in the process will be looked after by people, employed by the hospital, who will also pay tax. All the equipment used by the hospital will attract tax at some stage and so it goes on.

In a fair and decent society taxation should be structured so that the poorest pay the least proportionally. Although the poorest may proportionately receive a greater slice of the tax revenues there is a fairness in this as in many cases the poor often contribute more to the basic quality of our society than most of us realise. At the end of the day it is the quality of our society that is important to most of us.

Wealthier people pay more tax, often as a larger percentage of their income. That is how it should be. The wealthier someone is the more they rely on others for the creation and maintenance of that wealth so are paying for the proportion of the tax revenues those who facilitated it couldn't afford to pay themselves. Someone earning £150,000 per annum relies on the contribution of a large number of individuals to create the opportunity for that remuneration. In the process all those individuals will need to use the communal infrastructures and services to function.

Someone who invests their wealth must never forget that they are totally reliant on others for their investment income, therefore must pay tax. The same basic principles described above still apply.

Corporate taxation is very complex. It should not be. All business enterprises are far greater proportional users and cause greater wear and tear of communal infrastructures and services. Businesses enterprises are totally reliant on people and other companies to exist and prosper yet they pay proportionately less tax; in many cases little at all. Whereas whether or not individuals manage to keep their heads above water they are still liable to taxation which is not necessarily the case for business enterprises. This is fundamentally wrong.

The society you choose and share with others is governed by taxation. Your way of life is styled by the society or societies that contribute to your wealth. For that reason you have a responsibility to society. The best system for distributing that responsibility is taxation.

But there are many people from all walks of life that believe they have no responsibility towards the society that supports them. Understandably but not reasonably many of those in our society who earn more or are wealthier feel they have less responsibility to contribute. This is a myth that is inadvertently and continually promoted by our politicians.

There are very simple truths about taxation. If everyone paid all taxes due we would pay less tax. Consequently we would all be wealthier and our society better. Also if taxation was simpler more tax would be collected at less cost to taxpayers in general. The complexity of taxation invites abuse and condemnation. Why is our tax system so complex? Simple, it was designed by the very people that hope to benefit most from that fact - accountants - most of whom work for the big four accountancy firms.

Okay, so what is my solution. Keep it simple and for the reasons I've stated above make sure tax is progressive.

I believe that National Insurance should remain because it is a reminder to the State of its obligations to the populace - welfare and pensions. 

Taxation should start at 10% for those earning £12,500 to £20,000. £20,000 to £30,000 should pay 25%. £30,000 to £50,000 - 35%. £50,000 to £75,000 - 45%. £75,000 to £125,000 - 50%. £125,000 to £250,000 - 60%. Above £250,000 should be taxed at 75%. National Insurance should stop at £75,000.

The old rule that investment income was taxed at a higher rate than earned income should be restored with a premium of about 2.5%. There should also be an allowance for investments that are held for long periods.

Capital Gains Tax should be time graduated as at present and only be able to be offset against losses that have been accrued on investments that had been held over a year.

VAT should be reduced to 15%.

Corporation Tax should be reduced to less than 20% but must be paid by all enterprises that do business in the UK. No offsets to be allowed against offshore intra-company borrowings or shareholdings.

Companies should be subject to a turnover tax. Turnover Tax could be in the region of 3% to 5%. What ever they do within the UK they will have to pay Turnover Tax. This will allow for a lowering of VAT and corporation tax. The tax will not be related to profits but will have to be factored into costs. Certain enterprises will be allowed to pay a lower tax on certain types of transactions like banks and insurance companies. Turnover Tax would not be offset-able. It would raise about £40 billion.

In reality if a Chancellor did change taxation to something similar to my system tax rates could be reduced quickly as the National Debt and Budget Deficits are lowered.

Ultimately the greatest benefit for almost everyone would be that taxes could be reduced by nearly 25% across the board. Only tax avoiders and evaders will not benefit. Excise Duty on fuel, which is the greatest brake on the economy in the UK, could be cut by 50%. 

At the end of the day it is all down to what kind of society everyone wishes to live in.