Following on from the hijack in the Thread on Thatchers legacy, which appears to have turned into a discussion on economics, and Labour policy.
Quote: “Before the 1998 Budget there were 760,000 suffering an effective tax rate of more than 60p in the pound. But this figure has now grown to 1.68 million.”
The number paying 70%+ has dropped. However the number paying extortionate tax rates (by my definition anything over 50%) has grown.
However we have the bankruptcy rate rise year on year - I’d like to know how many people are no longer paying 70%+ because their rates are capped (I suspect at circa 60%) as they have now gone bankrupt, had to give up work, or are on IVAs. I know of three cases where this has occurred, and strongly suspect it has been responsible for most of the drop.
In 1995 I have vivid memories of a guy I knew saying that he would need £15k to get off the dole, paid rent and a bit of casual cash work, and be better off.
As it was he hated not working - he just could not get a job that would make him better off than living on benefits. He was not thick, he was a very good chess player, and a good grafter - I employed him to do some assembly work (annoyingly paid for out of my post tax income) and he was good.
I reckon that the rise in bankruptcies is simply because more people are aware that they can use it to slide out of debts. Lenders have been irresponsible, but I have little sympathy for them.
My inclination is to stamp firmly on the amount that the State pays for accommodation, give people a basic income and then flat tax them on all additional earnings. Clawback is pretty stupid.
Sounds like a case I was peripherally involved in, where an accountant/councellor had to tell someone to leave a £13K job for similar reasons this December. After ten years you’d think the situation would be better.
I disagree about the rise in bankruptcies being purely because people think it is an easy way out (3). A lot of people are very reluctant to go down that route even if it is the best choice, and want to try anything first (1) (there are always exceptions to this). What I have noticed happening is an increase in IVAs being declined or failed leading to bankruptcy(2) - often as lenders now refuse amounts they would previously have accepted.
I agree clawback doesn’t work. Personally I’d prefer a system where you either get benefits or pay tax - e.g. full benefits up to £3,000, then taper off up to £9,000 and start paying income tax at £10,000 (figures need work). At least it would deal with the “giving with one hand, taking with the other” that seems to be going on, and might make room for some reduced bureaucracy at the top.
I’ve seen this before in the late 1980s and early 1990s when people got into negative equity and impossible mortgage repayments due to rising interest rates. They simply walked away.
Financial institutions have been overlending, partly because USA banks turned up over here offering (relatively) low interest rates especially on credit cards.
I have long reckoned that we should have a law that makes any loan to someone who cannot afford it void.