UK brings in a new 50% tax rate for top earners

[Cromulent]

http://news.bbc.co.uk/1/hi/uk_politics/8011321.stm

Alistair Darling has announced a new top tax rate of 50% for those earning more than £150,000 from next April.

Interesting news. I always thought we would need to do something to claw back some money after the ridiculous amount of public spending that we have been doing recently.

While the tax rate does not effect me I would be hurting if I was in the that tax bracket.

Also a 3.5% shrinkage in the economy is pretty dire. Interesting times lay ahead I think.

[edesignuk]

The day I'm making any where close to that I'll worry. Think I'm "safe" for a good while yet though :(

They can just sting me in many other weird, complicated and stealthy ways :rolleyes:

[OllyW]

While the tax rate does not effect me I would be hurting if I was in the that tax bracket.

I would love to pay that tax rate. ;)

[AdeFowler]

I would love to pay that tax rate. ;)

+1. It is a hell of a lot of your earnings to give away though.

[edesignuk]

+1. It is a hell of a lot of your earnings to give away though.Won't the 50% only be for the amount you earn over the £150k?

[OllyW]

Won't the 50% only be for the amount you earn over the £150k?

Yes.

[sammich]

Why should the rich bother to donate to a charity, they're being forced to do it already.

[iBlue]

Why should the rich bother to donate to a charity, they're being forced to do it already.

That's not charity, that's the government taking what they want from where they want it. Poor folk are getting poorer, I'm sure the gov is a bit worried about their wells drying up draining it from the ever-diminishing middle class.

[iBecks]

£150,000 a year is approx.

Per month

£12,500 Gross
- £2,600 Tax
- £1,300 National Insurance

£8600 Nett pay


Therefore anything above £12,500 per month will be taxed at 50%

[robbieduncan]

It's not just a 50% rate though. They also loose their personal tax allowance (the bit of income on which you pay 0% tax) and have had the tax relief on pension contributions reduced too.

The pension contributions thing is really pretty shocking. I understand that this may have been used to effectively reduce the amount of tax paid (as you can make pension contributions using your gross income thus reducing your taxable income) but the government keeps going on about us paying for our own pensions then does this.

If I was in this tax band I'd be seriously looking at ways to get out of it if it was close or simply leaving the country.

[.Andy]

£8600 Nett pay
Toast and beans for dinner again.

[sammich]

That's not charity, that's the government taking what they want from where they want it. Poor folk are getting poorer, I'm sure the gov is a bit worried about their wells drying up draining it from the ever-diminishing middle class.

I understand the economics and rationale, everyone in society will play their part, but would really suck to be wealthy, I mean you probably worked really hard, but most of your effort goes back to the government. So, yes, in these times the government is making sure your success has somewhere to succeed in the future, but in the good times, you are basically subsiding a good portion of people who refuse to contribute to society.

(sorry for the rant, my parents are business people and as their income falls, the bills go up because, the bureaucrats income is falling too).

[robbieduncan]

Just to point out what the loss of the personal allowance will mean. If you are successful enough (there is no way I'm going to say lucky enough) to be earning £150001 then your total deductions (tax+NI) before today assuming no pension contributions would have been £55,532.56. Now after today you will have to pay an additional £6,035.00 due to the loss of your personal allowance. So that takes your effective tax rate to 41.45% from 37.02%.

This does not take into account the extra few pence you have to pay for the £1 that is now in the 50% tax band. It gets even worse if you were a prudent person and had been contributing to a personal pension plan...

Now does it really seem right to be expecting people to pay over 40% on their entire income?

[Cromulent]

Now does it really seem right to be expecting people to pay over 40% on their entire income?

Denmark or Sweden I think have a 60% upper tax bracket, but then they have one of the best living standards in the world.

It's a tough question, do we go the American route of lower taxation but a worse social system (or rather an abhorrent social system) or do we go the Scandinavian route of higher taxation but a really excellent social system?

Personally I would lean towards the Scandinavian system myself.

[robbieduncan]

Denmark or Sweden I think have a 60% upper tax bracket, but then they have one of the best living standards in the world.

It's a tough question, do we go the American route of lower taxation but a worse social system (or rather an abhorrent social system) or do we go the Scandinavian route of higher taxation but a really excellent social system?

Yet somehow in Scandinavia they don't seem to have the hoards that we have who are content to live off the state for their entire lives and pass on the same values to their children (of which they seem to have lots).

[Cromulent]

Yet somehow in Scandinavia they don't seem to have the hoards that we have who are content to live off the state for their entire lives and pass on the same values to their children (of which they seem to have lots).

I think that is partly because this country has lost any concept of self respect (as a nation).

[iBlue]

I completely see your point Robbie and I think it's crappy too. However, the government was going to take its money from somewhere and it doesn't surprise or horrify me TOO much that they're taking it more so from the higher end.

I think they (big bad gov) take ENTIRELY TOO MUCH. I think they need to look more carefully at all their BS spending and budget like that instead of ripping everyone in the UK off more and more. That's just apparently too much to ask of them. They just take more and more. :rolleyes:

V for Vendetta anyone?

[.Andy]

Yet somehow in Scandinavia they don't seem to have the hoards that we have who are content to live off the state for their entire lives and pass on the same values to their children (of which they seem to have lots).
Having a lower percentage in the highest tax bracket won't change that though. However spending tax dollars more wisely on education and job incentives will change that. It seems the latter is what you really want to achieve.

[notjustjay]

Meanwhile, the Canadians are thinking, "Hey, that's pretty good!" :p

[robbieduncan]

Having a lower percentage in the highest tax bracket won't change that though. However spending tax dollars more wisely on education and job incentives will change that. It seems the latter is what you really want to achieve.

Most of these sorts of people choose to mess around in school, see qualifications as "uncool" and generally waste the opportunities given to them. I fail to see how spending more in education will help that.

With respect to jobs I still remember the TV program shown last year where some of these sorts of people were stopped outside the Job Centre in Peterbourgh. The interviewer said he had a job they could start tomorrow. When he told them it was picking cabbages they laughed in his face and said they were happy claiming dole money as it was free money and they could sit at home playing on their playstations. Again I fail to see how this can be altered without making claiming the dole less attractive.

[iJohnHenry]

The poor cheer, and the rich boo.

At what point do we just declare a return to the feudal system??

[.Andy]

Most of these sorts of people choose to mess around in school, see qualifications as "uncool" and generally waste the opportunities given to them. I fail to see how spending more in education will help that.
I said more wisely. Not more. How it's something that will be achieved is beyond me. It's not my expertise but it's what is needed to get people out of the poverty trap. However spending less money isn't likely to achieve a suitable outcome. Nor is cutting taxes on the most rich.

With respect to jobs I still remember the TV program shown last year where some of these sorts of people were stopped outside the Job Centre in Peterbourgh. The interviewer said he had a job they could start tomorrow. When he told them it was picking cabbages they laughed in his face and said they were happy claiming dole money as it was free money and they could sit at home playing on their playstations. Again I fail to see how this can be altered without making claiming the dole less attractive.
Best not to shape your societal views based on television programs.

[trule]

Its the power to tax that is behind the ability of the Government to issue new debt. This is the UK Governments way of telling the markets that they are good for the money and its safe to turn up at the next Gilts auction.

It would be quite reasonable to say the the UK Government is close to bankrupt if it has anymore bond auction failures. OK, they can QE their way along but the Pound will collapse in the process.

[robbieduncan]

This was just posted elsewhere. I'm sure it's been seen by many before, but I feel it's relevant and illustrates where this is all going so here we go (allegedly the numbers work out pretty well for the UK too with the 10 men representing the tax paying public at large):

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100.

If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beers by £20.

Drinks for the ten now cost just £80.'The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers?

How could they divide the £20 windfall so that everyone would get his 'fair share?'

They realized that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid £2 instead of £3 (33%savings).
The seventh now pay £5 instead of £7 (28%savings).
The eighth now paid £9 instead of £12 (25% savings).
The ninth now paid £14 instead of £18 (22% savings).
The tenth now paid £49 instead of £59 (16% savings).

Each of the six was better off than before and the first four continued to drink for free, but once outside the restaurant, the men began to compare their savings.

"I only got a pound out of the £20," declared the sixth man. He pointed to the tenth man, "but he got £10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a pound, too. It's unfair that he got TEN times more than I!"
"That's true!!" shouted the seventh man. "Why should he get £10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something very important....

they didn't have enough money between all of them for even half of the bill!And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

[j26]

Ah, yer pussies in the UK

I'm on
41% income Tax
4% Health Levy
2% Income Levy (allegedly temporary)
10.5% Pension Levy
4% National Insurance

Being a grand total of 62.5% - and my income is WAY less than 150k (and social services are buggered)

[adom]

Nice find Robbie. What a brilliant explanation and interpretation!

[Chip NoVaMac]

From a Yank, I would not mind the tax if I had what some of you all have in terms of health care and pensions perhaps.

Back in the beginning of March I had a fall on some ice. Despite my health insurance I am now looking at $50US for the ER visit; and $200US that for the doctor that saw me for all of 15 minutes in the ER. Could have been worse; the total bill for my visit like $2500US + !!!!

While 10% of the bill is not bad overall... on limited income it hurts... much the reason for many of us in the States seek medical help only as a last resort....

[iBecks]

From a Yank, I would not mind the tax if I had what some of you all have in terms of health care and pensions perhaps.

Back in the beginning of March I had a fall on some ice. Despite my health insurance I am now looking at $50US for the ER visit; and $200US that for the doctor that saw me for all of 15 minutes in the ER. Could have been worse; the total bill for my visit like $2500US + !!!!

While 10% of the bill is not bad overall... on limited income it hurts... much the reason for many of us in the States seek medical help only as a last resort....

Fair point, we are lucky to some degree with the health service and those that have state benefits.

However, we are paying £5.50 a gallon for fuel, of which roughly 60% is tax.

[Eraserhead]

Just to point out what the loss of the personal allowance will mean. If you are successful enough (there is no way I'm going to say lucky enough) to be earning £150001 then your total deductions (tax+NI) before today assuming no pension contributions would have been £55,532.56. Now after today you will have to pay an additional £6,035.00 due to the loss of your personal allowance. So that takes your effective tax rate to 41.45% from 37.02%.

Who else are they going to take money off to pay the deficit? The rich are the only people who can afford it.

they didn't have enough money between all of them for even half of the bill!And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

Except that at the moment (excluding this new measure) the richest 10% actually pay *less* tax as a percentage than the poorest 10% (source (http://www.guardian.co.uk/commentisfree/2009/apr/11/tax-alistair-darling)) so its frankly whining by the rich to complain about this.

Its not like the late 1970's where the marginal rate for the rich is 90% or something...

EDIT: And if you have taxed the rich more, you can then politically increase the standard rate a bit too, which does bring in a lot of extra money.

[Chip NoVaMac]

Fair point, we are lucky to some degree with the health service and those that have state benefits.

However, we are paying £5.50 a gallon for fuel, of which roughly 60% is tax.

While my travel overseas is limited; I see the potential for better mass transit that would make £5.50 a gallon easier to deal with here in the States.

Here in the US mass trans is looked upon as those that work 9-5 as an easier way to get around. But not as a way to for day to day travel. I am one of those that try to limit my time in my car. 6 years with my Baja and only have 41K miles on it. Many friends of mine have triple that in the same time.

[iPhoneNYC]

We need a higher tax rate in the US. I think 50% would be great for over 500K. All this corporate greed is killing this country. And many in the banking community pay less than the average worker because they are taxed at the Capital Gains rate. Those who helped ruin the country should help fixx it...

[Chip NoVaMac]

We need a higher tax rate in the US. I think 50% would be great for over 500K. All this corporate greed is killing this country. And many in the banking community pay less than the average worker because they are taxed at the Capital Gains rate. Those who helped ruin the country should help fixx it...

Amen there. Look at the news that Chrysler exec's turned down a Govt loan over wage issues....

[MOFS]

This is a realistic choice, and could prove popular amongst core Labour voters. At that level of income, most people have enough nous and ability to reduce their own tax burden (unlike the lower income families). As a nation we have no clue about the cost of things: we want an American private health service available to all but don't want to be taxed. This is the best way to fund improvements in government services without disadvantaging the poor. The only other option would be to cut services such as the police, NHS and schools: absolute political suicide.

EDIT: How about a move to PRSI?

[Chip NoVaMac]

This is a realistic choice, and could prove popular amongst core Labour voters. At that level of income, most people have enough nous and ability to reduce their own tax burden (unlike the lower income families). As a nation we have no clue about the cost of things: we want an American private health service available to all but don't want to be taxed. This is the best way to fund improvements in government services without disadvantaging the poor. The only other option would be to cut services such as the police, NHS and schools: absolute political suicide.

You hit on a point from what I hear from those in the US; lower taxes.... but where to cut the funding? In my county of Fairfax, do we cut out up keep of the soccer fields? Or do we cut out the dog parks?

The grass is always greener on the other side. You mentioned the US healthcare system as being something you might want. But in my case a simple contusion ran me $250US even after insurance. Or a friend of mine that is facing $100K US after a serious bout in the the hospital - this AFTER his insurance paid out to their cap!

[MOFS]

You hit on a point from what I hear from those in the US; lower taxes.... but where to cut the funding? In my county of Fairfax, do we cut out up keep of the soccer fields? Or do we cut out the dog parks?

The grass is always greener on the other side. You mentioned the US healthcare system as being something you might want. But in my case a simple contusion ran me $250US even after insurance. Or a friend of mine that is facing $100K US after a serious bout in the the hospital - this AFTER his insurance paid out to their cap!

I agree with you Chip, but my point re the US system was that people in this country want the "no limits barred" way of the high end of the US system (full body scans, bleeding edge medicine) without paying more for it. A universal private insurance model wouldn't work in this country because of the intrinsic flaw in it that is that the poor get shafted, hence the shift I understand Obama is trying to kickstart. In the UK, social class in itself creates a huge difference in life expectancy, according to the official government statistics (http://www.statistics.gov.uk/downloads/theme_population/Life_Expect_Social_class_1972-05/life_expect_social_class.pdf), with the average life expectancy at birth and at age 65 for men 80.0 for social class I (doctors, chartered accountants, professionally qualified engineers) while only 73.8 for social class V (Labourers, cleaners and messengers) - a 6 year difference in a country with a free health service.

[Shivetya]

We need a higher tax rate in the US. I think 50% would be great for over 500K. All this corporate greed is killing this country. And many in the banking community pay less than the average worker because they are taxed at the Capital Gains rate. Those who helped ruin the country should help fixx it...

We already do.

The bulk of those earning over 500K are not corporate types. So your wealth envy fix won't touch those.

If you make 50k a year you pay taxes until the middle of April. 100k, till sometime in May, 200K and your looking to June. Get nearer a million and it takes you to the end of July to satisfy your tax requirements.

Sorry, but it already is there. The press and government rely on your ignorance of all the taxes in place that already are soaking those who work.

[Chip NoVaMac]

I agree with you Chip, but my point re the US system was that people in this country want the "no limits barred" way of the high end of the US system (full body scans, bleeding edge medicine) without paying more for it. A universal private insurance model wouldn't work in this country because of the intrinsic flaw in it that is that the poor get shafted, hence the shift I understand Obama is trying to kickstart. In the UK, social class in itself creates a huge difference in life expectancy, according to the official government statistics (http://www.statistics.gov.uk/downloads/theme_population/Life_Expect_Social_class_1972-05/life_expect_social_class.pdf), with the average life expectancy at birth and at age 65 for men 80.0 for social class I (doctors, chartered accountants, professionally qualified engineers) while only 73.8 for social class V (Labourers, cleaners and messengers) - a 6 year difference in a country with a free health service.

Thanks for the wake up call.... in the end the lower class ends up suffering. My example and my friends example are to show what having insurance means here in the US. What I gather from your comments is that in my friends case - he would have lost his life - save the insurance system we have in the US - for those that have it....

[mactastic]

...but would really suck to be wealthy...
LOL! Too funny.

[SactoGuy18]

Let's see how many British citizens seriously consider looking at moving to a country with a low tax rate in response. :) And you wonder why some Formula One race car drivers hold Monaco citizenships--income tax purposes.

[Sun Baked]

In the US, i can really see the time shifting away from LLCs and income pass through companies ... where it made sense to skip double taxes and shift to the low marginal rates offered directly to the individual taxpayer. Allowing the wealthy taxpayer to build a sizable after tax cash nest egg.

With the stigma of wealth and the spending they do, I can see quite a few turning the LLCs back into old fashioned corporations and letting them retain earnings and build their wealth in closely held stock, while reducing your income to under $250k and living modestly -- until the government makes it favorable to release the wealth trapped in your stock.

If this happens the rich will still get rich as the value of the corporation explodes and they reinvest a good chunk of earnings, and if they don't borrow against the stock due to it being bad form. We should have the same net effect as the 10% luxury tax ... aka, the rich just stopped buying and we can watch their portion of GDP sputter as the trickle down effect evaporates.

[Scarlet Fever]

What if you earn £149,999?

(damn American keyboard with no £ symbol on it...)

[Sun Baked]

What if you earn £149,999?

(damn American keyboard with no £ symbol on it...)

Nothing, the tax rate is for the amount earned over that.

Would be more like overtime after 40hours going from 1.5x base pay to .5x base pay... the incentive for some to kick in an extra 30 hours a week might decline. While if you work 39.99 hours and you still get normal pay.

At 50% some will still bust ass, while others while take an extra couple weeks vacation a year and say hell with it.

[Eraserhead]

Let's see how many British citizens seriously consider looking at moving to a country with a low tax rate in response. :)

Probably virtually zero.

And you wonder why some Formula One race car drivers hold Monaco citizenships--income tax purposes.

I think the European governments are going to want to tighten up on that one to be honest as they are all going to want to do the same thing.

[Metatron]

In the US, i can really see the time shifting away from LLCs and income pass through companies ... where it made sense to skip double taxes and shift to the low marginal rates offered directly to the individual taxpayer. Allowing the wealthy taxpayer to build a sizable after tax cash nest egg.

With the stigma of wealth and the spending they do, I can see quite a few turning the LLCs back into old fashioned corporations and letting them retain earnings and build their wealth in closely held stock, while reducing your income to under $250k and living modestly -- until the government makes it favorable to release the wealth trapped in your stock.

If this happens the rich will still get rich as the value of the corporation explodes and they reinvest a good chunk of earnings, and if they don't borrow against the stock due to it being bad form. We should have the same net effect as the 10% luxury tax ... aka, the rich just stopped buying and we can watch their portion of GDP sputter as the trickle down effect evaporates.

The rich get richer and the poor get poorer. This will be the way of things for some time to come . The moment you use law to keep the rich from obtaining wealth, they will leave. Then the middle class with join the poor.

The beer analogy earlier was good...

[Saladinos]

We need a higher tax rate in the US. I think 50% would be great for over 500K. All this corporate greed is killing this country. And many in the banking community pay less than the average worker because they are taxed at the Capital Gains rate. Those who helped ruin the country should help fixx it...

Corporate greed is what MADE your country. The only way you're getting out of it is to go to Europe. Government in Europe is better, but still very far from perfect.

[SactoGuy18]

If I were President Obama, I would change our financial laws so it does the following:

1) Encourage personal savings and investments in capital and labor with massive tax reform. Whether by simplified income tax with much smaller types of deductions (and with a 20% maximum marginal rate), a 4-6% no-deductions flat tax, or the FairTax consumption tax system to completely replace the income tax, we need massive tax reform because our current income tax system is causing a lot of capital flight and goods production flight out of the USA. Right now, some have estimated American citizens and companies funneled as much as a mind-boggling US$17 TRILLION out of the USA for income tax reasons, and it's also why you have a lot of "corporate headquarters" in the Bahamas, Bermuda, Cayman Islands, Panama, etc. and why so much goods production for American consumption are being done in Mexico or even China. Massive tax reform will mean Americans will favor savings over debt financing (always a good idea!), and American businesses will keep as much of their operations inside the USA as possible, both of which will do wonders for the US economy, not to mention bringing back the vast majority of that US$17 TRILLION sitting outside the USA, which helps every sector of our economy financially.

2) Reign in the out-of-control financial sector that caused the mess in the first place. The following steps should be taken:

a) Impose tight monitoring controls on hedge funds.
b) Increase the minimum margin requirements to trade commodities and stock futures to as high as 30% if necessary. This will discourge the "make a fast buck" trading that caused the housing bubble and the run-up in the price of oil recently.
c) Completely re-write the Sarbanes-Oxley Act to better balance the need for more initial public offerings of stock versus accounting reporting requirements.
d) Reimpose the Glass-Steagall Act provisions to shield banking institutions from the up and downs of the stock market.

The British idea is going to end up being a bad one, because it will cause capital flight out of the UK as wealthier British citizens renounce their British citizenship and move themselves to countries to with lower tax rates, taking their personal liquid assets with them.

[sushi]

Denmark or Sweden I think have a 60% upper tax bracket
Let's say someone qualifies for that bracket. For discussions sake, let's say that averages out to 50% of their total income.

This means that if they work 50 weeks per year with 2 weeks vacation, they are working 25 weeks for the government before they start working for themselves. IMHO, that hurts.

[robbieduncan]

Let's say someone qualifies for that bracket. For discussions sake, let's say that averages out to 50% of their total income.

This means that if they work 50 weeks per year with 2 weeks vacation, they are working 25 weeks for the government before they start working for themselves. IMHO, that hurts.

In the UK the Adam Smith Institute track the "tax freedom day" of the UK as whole. So this is averaged out across the high and low earners. For us we spend over 40% of the year, on average, working for the government.

You can read about it here (http://www.adamsmith.org/tax-freedom-day/) (and how tax freedom day is getting later in the year)...

Edit: not this is all taxes: direct, indirect and "stealth"

[iJohnHenry]

Tax Freedom Day (http://en.wikipedia.org/wiki/Tax_Freedom_Day), around the World.

Social benefits must be considered, as well as self-pay/co-pay.

[Cromulent]

Let's say someone qualifies for that bracket. For discussions sake, let's say that averages out to 50% of their total income.

This means that if they work 50 weeks per year with 2 weeks vacation, they are working 25 weeks for the government before they start working for themselves. IMHO, that hurts.

First of all I am assuming you are American so correct me if I am wrong.

How much do you spend on health insurance, personal pension and the plethora of other things that the Swedes and the Danes get for free? I wouldn't be surprised if it worked out about the same after all is said and done.

The only difference is that the government deals with all that for you rather than you having to do it yourself. Oh, and another thing in America you need to do your own tax return the majority of people (in the UK at least) don't even need to think about it. It is all done for them automatically so that saves a few quid either because you don't need to spend so much time doing your tax or you don't need to hire an accountant.

I'm a firm believer in the idea that if the government don't tax you for something, you just need to go out and spend the money on exactly the same thing yourself. So why waste the time doing the leg work yourself when you can get civil servants to deal with it for you?

[robbieduncan]

So why waste the time doing the leg work yourself when you can get civil servants to deal with it for you?

Because as soon as you get more than one civil servant together they invent a vast, expensive bureaucracy that costs way more. Oh and they have very expensive pensions too.

If a private company was run like the civil service it'd have no customers as it's prices would have to be too high to support the staffing levels and it'd go bankrupt.

[geese]

This means that if they work 50 weeks per year with 2 weeks vacation, they are working 25 weeks for the government before they start working for themselves. IMHO, that hurts.

Bear in mind that in Europe, average holidays are much longer. On average European workers are entitled to 34 days holiday (http://www.management-issues.com/2006/8/24/research/uk-has-shortest-holiday-entitlement-in-europe.asp). So make that 45/46 weeks a year. Not so bad is it?

[Cromulent]

Because as soon as you get more than one civil servant together they invent a vast, expensive bureaucracy that costs way more. Oh and they have very expensive pensions too.

That's true. Just look at America with a private health care system and the highest level of government spending per person on health care of any western nation. Oh, wait...

[sushi]

In the UK the Adam Smith Institute track the "tax freedom day" of the UK as whole. So this is averaged out across the high and low earners. For us we spend over 40% of the year, on average, working for the government.

You can read about it here (http://www.adamsmith.org/tax-freedom-day/) (and how tax freedom day is getting later in the year)...

Edit: not this is all taxes: direct, indirect and "stealth"
Thanks for the link. Seems like a lot to pay.

Tax Freedom Day (http://en.wikipedia.org/wiki/Tax_Freedom_Day), around the World.
Thanks for the link.

Social benefits must be considered, as well as self-pay/co-pay.
Understand. This is definitely a consideration.

First of all I am assuming you are American so correct me if I am wrong.

How much do you spend on health insurance, personal pension and the plethora of other things that the Swedes and the Danes get for free? I wouldn't be surprised if it worked out about the same after all is said and done.

The only difference is that the government deals with all that for you rather than you having to do it yourself. Oh, and another thing in America you need to do your own tax return the majority of people (in the UK at least) don't even need to think about it. It is all done for them automatically so that saves a few quid either because you don't need to spend so much time doing your tax or you don't need to hire an accountant.
Yes I am an American.

I get to choose my healthcare system, my pension, etc. When the government controls an area, many times your choice is more limited. So there are pros and cons with each system.

I'm a firm believer in the idea that if the government don't tax you for something, you just need to go out and spend the money on exactly the same thing yourself. So why waste the time doing the leg work yourself when you can get civil servants to deal with it for you?
Ideally this sounds great. Unfortunately, there is a lot of waste in governmental agencies. Nature of the beast.

Because as soon as you get more than one civil servant together they invent a vast, expensive bureaucracy that costs way more. Oh and they have very expensive pensions too.
And civil servants are notorious for building empires to protect their position. If I am in a one deep position, and can create 1 or more subordinate positions, then I've just increased my job security during RIFs, BRACs, etc. If I expand enough, I can get an increase in my position. :)

There are some good civil servants out there for sure. But there are many who do the bare minimum and would have trouble making it outside of the civil service system.

Bear in mind that in Europe, average holidays are much longer. On average European workers are entitled to 34 days holiday (http://www.management-issues.com/2006/8/24/research/uk-has-shortest-holiday-entitlement-in-europe.asp). So make that 45/46 weeks a year. Not so bad is it?
I just used 2 weeks for ease of calculation. :)

I don't know the number of holidays for the average American worker. I know that it varies based upon industry and type of position. It also depends on years worked so you may start out with 10 days and increase up to 20 or even 30 in some cases. Some also receive Federal holidays in addition to their holidays/vacation time which adds a few days.

[geese]

I just used 2 weeks for ease of calculation. :)

I don't know the number of holidays for the average American worker. I know that it varies based upon industry and type of position. It also depends on years worked so you may start out with 10 days and increase up to 20 or even 30 in some cases. Some also receive Federal holidays in addition to their holidays/vacation time which adds a few days.

Its 16 days (http://books.google.co.uk/books?id=wgPSUQ873scC&pg=PA341&lpg=PA341&dq=average+american+worker+holiday+entitlement&source=bl&ots=x8yvdO0FxI&sig=koESg1oHz08rUGK5voK7ZnvVcsM&hl=en&ei=I4HwSZu6K9iZjAet5uDTDA&sa=X&oi=book_result&ct=result&resnum=5), apparently

[Cromulent]

Ideally this sounds great. Unfortunately, there is a lot of waste in governmental agencies. Nature of the beast.

Unfortunately as I have pointed out above there is more waste when it is done privately than there is when the government does it. As shown quite clearly in America in regards to health.

[trule]

How much do you spend on health insurance, personal pension and the plethora of other things that the Swedes and the Danes get for free?
...


Free, you seem confused dear chap! Ask the Swedes about tax and you will get more than an earful as well as an understanding that health care is not free.


I'm a firm believer in the idea that if the government don't tax you for something, you just need to go out and spend the money on exactly the same thing yourself. So why waste the time doing the leg work yourself when you can get civil servants to deal with it for you?

Its a choice between "get what you want" or "get what your given". The latter, your choice, eventually ends up as a socialist failure. Ration cards anyone :D that's where it ends up...

[Cromulent]

Free, you seem confused dear chap! Ask the Swedes about tax and you will get more than an earful as well as an understanding that health care is not free.

I don't even consider the money I pay in tax as I mine as I never get to see it. Still, I see your point.

Its a choice between "get what you want" or "get what your given". The latter, your choice, eventually ends up as a socialist failure. Ration cards anyone :D that's where it ends up...

Most of the time the services the government provide are better than what private companies provide. Have you ever wondered why private hospitals don't offer A&E facilities?

[trule]

That's true. Just look at America with a private health care system and the highest level of government spending per person on health care of any western nation. Oh, wait...


Unfortunately as I have pointed out above there is more waste when it is done privately than there is when the government does it. As shown quite clearly in America in regards to health.

No, several other nations have higher government spending per person, mostly European. Overall spending the US is significantly higher, but for example is it waste to offer a cancer patient the latest expensive drugs OR is it more prudent to take the NHS approach and disallow expensive treatment?

The person with cancer would not think it was waste.


Your position on Goverment spending reminds me of the "compassionate society" - http://en.wikipedia.org/wiki/The_Compassionate_Society - which turned out to be more than true in real life...

Although it was written from the imaginations of Lynn and Jay, they later discovered that "there were six such hospitals (or very large empty wings of hospitals) exactly as we had described them in our episode, notably one in Cambridgeshire in which there was only one patient: the Matron (head of nursing staff) who had fallen over some scaffolding and broken her leg."

:p

[trule]

I don't even consider the money I pay in tax as I mine as I never get to see it.

That dear Sir is exactly what the Government wants you to think.

If you ever work for yourself or start a business then you will have to go through the soul destroying task of writing cheques to the Treasury and understanding tax law, and then you will think a little more if the system is that great and perhaps if you really are getting better value.

In some regards taxation is fine, but if you look where that money sometimes goes...you end up wondering if they are making things more complex for the sake of needing more Government.

[Cromulent]

No, several other nations have higher government spending per person, mostly European.

No.

http://www.nationmaster.com/graph/hea_spe_per_per-health-spending-per-person

America is number one on spending. With the UK a lowly number 18 on the chart.

Overall spending the US is significantly higher, but for example is it waste to offer a cancer patient the latest expensive drugs OR is it more prudent to take the NHS approach and disallow expensive treatment?

The person with cancer would not think it was waste.

Personally I have always thought is was better to treat everyone than only the people who can afford it. Sure, in the US you can get the best, most expensive cancer treatment. But only if you can afford it. In the UK at least you can get some cancer treatment no matter what your income. If you are dirt poor in America you might as well just curl up and die.

Your position on Goverment spending reminds me of the "compassionate society" - http://en.wikipedia.org/wiki/The_Compassionate_Society - which turned out to be more than true in real life...


:p

What rot. My stance is nothing like that.

[Cromulent]

If you ever work for yourself or start a business then you will have to go through the soul destroying task of writing cheques to the Treasury and understanding tax law, and then you will think a little more if the system is that great and perhaps if you really are getting better value.

Funny that. I am a Director of a Private Limited Company (which I started).

[sushi]

Its 16 days (http://books.google.co.uk/books?id=wgPSUQ873scC&pg=PA341&lpg=PA341&dq=average+american+worker+holiday+entitlement&source=bl&ots=x8yvdO0FxI&sig=koESg1oHz08rUGK5voK7ZnvVcsM&hl=en&ei=I4HwSZu6K9iZjAet5uDTDA&sa=X&oi=book_result&ct=result&resnum=5), apparently
Thanks for the link. Seems a bit low.

Unfortunately as I have pointed out above there is more waste when it is done privately than there is when the government does it. As shown quite clearly in America in regards to health.
I would beg to differ.

In reality, we probably will never know the true cost either way. Having worked in and around the US Government for many years, I see waste and more waste. In many cases there is a lack of urgency to get things done. It's easy to stall any activity with all the red tape requirements. Government, by it's very nature is not streamlined nor efficient.

I don't even consider the money I pay in tax as I mine as I never get to see it. Still, I see your point.
I am completely amazed by your comment. No wonder you consider everything to be grand and perfect with government involvement. You believe that you are not paying for services ... but you are and probably much more than you realize.

Can you imagine a company like Apple, Intel, Microsoft, etc. being run by the government? Yikes. I shiver at the thought.

[Cromulent]

I am completely amazed by your comment. No wonder you consider everything to be grand and perfect with government involvement. You believe that you are not paying for services ... but you are and probably much more than you realize.

Can you imagine a company like Apple, Intel, Microsoft, etc. being run by the government? Yikes. I shiver at the thought.

Can you imagine a company like Microsoft running the health care system? Or Apple running the police force? Or Intel running the army?

Swings and roundabouts.

[sushi]

Can you imagine a company like Microsoft running the health care system? Or Apple running the police force? Or Intel running the army?

Swings and roundabouts.
IMHO, Government running or doing a private company's functions is not the same as a private company doing the government's functions. So your example is moot to me.

I believe that healthcare is better done through private institutions.

Health care insurance and insurability might be an area that I would be willing to acquiesce to the government.

The two areas are definitely linked but need to remain separate in my mind. I don't want the government dictating where I can go, what treatments that I can get and when I can get them.

[Zombie Acorn]

Can you imagine a company like Microsoft running the health care system? Or Apple running the police force? Or Intel running the army?

Swings and roundabouts.

I can imagine a private company running a health care system, I can also imagine a private police force, in fact if you pay people well enough you will get a much better product than most police departments (ex military need jobs too after all)

[Cromulent]

I think this really comes down to my belief that companies are not intrinsically better at things than the government are. I've yet to see a private company run a privatised industry significantly better than the government did.

Just look at the trains. Sure, British Rail was pretty rubbish but at least they didn't raise ticket prices to astronomical levels meaning that citizens paid less effective tax (because lets face it, just because a private company is charging you for something it does not make it any less a tax).

The government still had to put significant amounts of money into the privatised rail network and then had to fine the companies because they couldn't reach the goals set for them. How ridiculous is that? Then there are all the other privatised industries that are still struggling.

[mactastic]

I don't want the government dictating where I can go, what treatments that I can get and when I can get them.
But you're OK with a for-profit corporation dictating where you can go, what treatments that you can get and when you can get them? :confused:

[Cromulent]

But you're OK with a for-profit corporation dictating where you can go, what treatments that you can get and when you can get them? :confused:

Exactly. At least a government just needs to break even (haha fat chance) a corporation needs to adds its profit margins on top of that. You think things are expensive now? Just wait until a corporation tries to add their 20 - 50% profit margin.

[kastenbrust]

People who earn over 150k are usually clever or lucky, the clever ones know about things like offshore bank accounts and capital gains loopholes. This new tax wont bring in much income for the government, its just a gimmick to say "hey we're actually doing something about these insane debt levels".

[Zombie Acorn]

Exactly. At least a government just needs to break even (haha fat chance) a corporation needs to adds its profit margins on top of that. You think things are expensive now? Just wait until a corporation tries to add their 20 - 50% profit margin.

You pay it either way, the private train raises its prices, the government raises its taxes. The government is not good at micromanagement though and are less likely to steam roll inefficiencies that would be taken care of on a local level. When you want to figure out how to streamline operations you don't go to the manager, you go to the floor.

Not to mention that on the government side you are forcing everyone to pay for your train ride when I might have a car I drive to work everyday instead.

[trule]

No.

http://www.nationmaster.com/graph/hea_spe_per_per-health-spending-per-person

America is number one on spending. With the UK a lowly number 18 on the chart.



No, you originally said "government spending on health care" where the US is not the highest.

[trule]

Funny that. I am a Director of a Private Limited Company (which I started).

But you said you never paid taxes directly, so I guess you never made a profit. Well, one day you will have the pleasure of writing a cheque to your Government ;)

Perhaps if you pay enough tax you will even have the pleasure of paying tax in advance...when the Government asks you for that they will even tell you that they are trying to help you manage your obligations and make paying tax easier...whether you asked for help or not, they don't care, after all its really their money even though you worked for it :mad:

[Desertrat]

I read an article just today with the comment that the tax take from this new rate will take in about 3.5% of the proposed new spending.

Reducing the amount of investment capital or disposable income always leads to job losses. And this increased deficit oughta prove interesting as the inevitable consumer price inflation builds.

But, hey, "Tax the rich!"

:D:D:D

'Rat

[mactastic]

You pay it either way, the private train raises its prices, the government raises its taxes. The government is not good at micromanagement though and are less likely to steam roll inefficiencies that would be taken care of on a local level. When you want to figure out how to streamline operations you don't go to the manager, you go to the floor.
Then why is it that Medicare is able to maintain a 2% overhead cost, while the supposedly efficient private insurers overhead rates are in the high teens?

[toontra]

But, hey, "Tax the rich!"


This is certainly as much about politics as it is about economics. Labour are hoping that this will play well with their core voters at the next election - and let's face it, they'll need all the help they can get

[MOFS]

No.

http://www.nationmaster.com/graph/hea_spe_per_per-health-spending-per-person

America is number one on spending. With the UK a lowly number 18 on the chart.


Its not really fair comparing those statistics. The UK caps its pay for doctors (hospital consultants earn about £85,000 with GP's earning about £120,000 on average), whereas other countries don't. In this country healthcare's primary expense is in fact staffing (nurses and doctors, mind, not managers), with stroke victims costing the most to the NHS due to services such as speech therapists and physios.

[anjinha]

Its a choice between "get what you want" or "get what your given". The latter, your choice, eventually ends up as a socialist failure. Ration cards anyone :D that's where it ends up...

I don't think that's true. Here in Portugal we have free health care but people can also choose to go to private clinics if they can afford it.

[Eraserhead]

I don't think that's true. Here in Portugal we have free health care but people can also choose to go to private clinics if they can afford it.

Actually here in the UK if you are ill you are forced to use the NHS, if you decide to go private you are in fact shot and your body is shipped over to France.

[sushi]

But you're OK with a for-profit corporation dictating where you can go, what treatments that you can get and when you can get them? :confused:
Fair question.

On the private side, I can choose my health insurance company and hence their policy structure and support. I have choice in the matter.

[mactastic]

Fair question.

On the private side, I can choose my health insurance company and hence their policy structure and support. I have choice in the matter.
So you get to choose between companies that dictate where you can go, what treatments you can get, and when you can get them. What kind of choice is that? If they all restrict where you can go, what treatments they will cover, and when those treatments are available, then what?

I'd argue that choosing between a crap taco and a rusty nail taco isn't much of a choice at all. To me, the issue is how do we get the decisions on where, what, and when made between you and your doctor without the government OR a corporation sticking their nose in.

[kastenbrust]

Fair question.

On the private side, I can choose my health insurance company and hence their policy structure and support. I have choice in the matter.

You would rather have a company out to make profits, cut costs and make money look after your health than the NHS?

The NHS is the lesser of two evils, sometimes we dont know what we've got until we've lost it.

[Chip NoVaMac]

First of all I am assuming you are American so correct me if I am wrong.

How much do you spend on health insurance, personal pension and the plethora of other things that the Swedes and the Danes get for free? I wouldn't be surprised if it worked out about the same after all is said and done.

Right you are! Just did the math and all the insurance, taxes, and 401K contributions amount to about 35% of my income! :( And by some definitions I am in the lower Middle-Class here in the States. I am single so I miss the mark of being in the middle; unless I find a partner.

Bear in mind that in Europe, average holidays are much longer. On average European workers are entitled to 34 days holiday (http://www.management-issues.com/2006/8/24/research/uk-has-shortest-holiday-entitlement-in-europe.asp). So make that 45/46 weeks a year. Not so bad is it?

For me I get three weeks vacation; been there for over 5 years. But the norm in the retail sector I work in is 2 weeks regardless of time worked. And in my shop we only get three days sick leave - a improvement of zero days a few years ago. Otherwise we use vacation time for our sick time. Other than that we get six paid holidays. Not that we can take some of them off, save Thanksgiving and Christmas. So by my count I get 23 days off each year. Not bad by US standards. But took me 5+ years to get to that point.

Personally I have always thought is was better to treat everyone than only the people who can afford it. Sure, in the US you can get the best, most expensive cancer treatment. But only if you can afford it. In the UK at least you can get some cancer treatment no matter what your income. If you are dirt poor in America you might as well just curl up and die.

Sad, but true IMO...

Was on holiday in the UK a few years ago. Had a slight bout with some food poisoning on the flight over. Not sure if it is true; but I was reminded by more than a few folk that medical care was free if I needed it.

In reality, we probably will never know the true cost either way. Having worked in and around the US Government for many years, I see waste and more waste. In many cases there is a lack of urgency to get things done. It's easy to stall any activity with all the red tape requirements. Government, by it's very nature is not streamlined nor efficient.

Had a contusion on my arm from a fall on some ice in early March. Got the bill from the ER. The hospital charges for under an hour and half were $1600. Cost "adjustments" brought that down to my $50 copay. BUT I get a separate bill for the Doctor that attended me. That bill was for a total of $290, with my ONLY needing to $120!

Exactly. At least a government just needs to break even (haha fat chance) a corporation needs to adds its profit margins on top of that. You think things are expensive now? Just wait until a corporation tries to add their 20 - 50% profit margin.

I might be branded as a "socialist" or even a "communist"; but healthcare is a basic "commodity" that should not be based on profits for their providers. In particular when it comes from ER care.

I have a friend that reached his cap on expenditures (not sure if it is yearly or lifetime). He was in the hospital for a month and a half. He is now staring at $100KUS out of his pocket!

[Eraserhead]

For me I get three weeks vacation; been there for over 5 years. But the norm in the retail sector I work in is 2 weeks regardless of time worked. And in my shop we only get three days sick leave - a improvement of zero days a few years ago. Otherwise we use vacation time for our sick time. Other than that we get six paid holidays. Not that we can take some of them off, save Thanksgiving and Christmas. So by my count I get 23 days off each year.

Whereas the legal UK minimum is 28 days including bank holidays.