I referred to the necessity to tax capital positive factors at greater charges yesterday if any occasion was critical about tackling inequality within the UK.

This isn’t the one tax reform required to realize that objective. One other deeply inequitable tax within the UK is nationwide insurance coverage. That is for 2 causes. First, the speed falls as individuals enter greater charges of earnings tax, fairly negating the aim for these greater tax charges, the commencement of which may very well be a lot better managed if nationwide insurance coverage was not lower after they start.

At the very least as importantly, nationwide insurance coverage isn’t charged on unearned earnings (rents, curiosity, dividends, capital positive factors, and many others.). The result’s a substantial bonus for individuals who can prepare their earnings on this method. This has, after all, been the idea for a lot tax planning by contractors and others over a few years, who’ve used dividend funds from restricted firms that they personal, which have been paid in lieu of salaries, to scale back their general tax charges.

There may be an apparent solution to deal with this inequality. It’s known as an funding earnings surcharge. We had one within the UK for greater than 20 years, however Margaret Thatcher removed it. It’s time that we had one once more, creating a further 15% tax cost on earnings from wealth of greater than £10,000 a 12 months. It’s absurd that those that dwell off unearned earnings within the UK pay much less tax than those that should exit to work to earn the identical cash. 

The video was made in 2021. It stays as related now.

And what do you suppose? A ballot:

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