Land Value Taxation Campaign

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Jobs Tax - what next?

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We wre pleased to see that National Insurance has came to the fore as an election issue, and re-publish here the arithmetic of the jobs tax. The Campaign has no party political allegiance but in this instance we agree with the Conservatives who came out against the forthcoming National Insurance increase. However, since it is possible that the Conservatives, if they form a government, will end up by raising VAT, which would be just as damaging, we cannot support their policies. However, we should all recognise when someone - anyone - is saying what is true. National Insurance - all of it - is nothing more than an income tax supplement that operates as a jobs tax.

How is it that union leaders, in fact the entire labour movement, have failed to notice this more than sixty years after the wretched thing was introduced? Simple arithmetic applies here. The burden of PAYE income tax and all national insurance contributions falls on employers. It means that gross labour costs are about 80% higher than net pay. Then we wonder why workers are replaced by machines or the jobs go to the third world. It is not a matter of principle or point of view. These taxes are job destroyers. What a pity that Britain's eminent economics commentators have never picked up this point. They do the poor and unemployed no favours by attacking anyone who happens to be correct on this point.

Employers burden

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Tories propose tax cuts for firms that create jobs

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New businesses would get big tax breaks for job creation under Conservative proposals announced today. George Osborne told the Tory party conference  that 60,000 jobs would be created by the scheme, intended to encourage investment in new ventures. The Shadow Chancellor said that employers creating new jobs would not have to pay National Insurance contributions for the first two years of a Conservative government. He estimated that cutting the charge, which amounts to 12.8 per cent of an employee’s salary, would cost the Government around £250million a year.

“We will send a message loud and clear that this country is open for business,” he said. “Invest here, set up your business here, come and make your enterprise here and we will support you.” Mr Osborne said the tax cut would be funded by savings to be announced during the remainder of the conference. “This is just another example of the Conservatives being the party of jobs at a time when Labour are the party of mass unemployment,” he said.

The exemption would apply to the first ten employees hired by a business during its first year, up to the upper earning limit of £844 a week per employee, or about £44,000 a year. Osborne calculates that a new small business with ten employees on an average salary of £25,000 could save up to £25,000 a year at current tax rates.

Well-intended this might be, but the proposal is proof positive that the Conservatives' policies are no more grounded in principle than Labours'. The scheme itself could indeed be expected to produce new jobs, but
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Employers' Burden of Tax

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Business | Page 3

EMPLOYERS' BURDEN OF TAX 2008/9

Tax Rates








% of


Employers NI




Gross

max

a

£0.00

---

£5435.00

0%

£0.00

b

£5435.01

---

no limit

12.8%








Employees NI






a

£0.00

---

£5435.00

0%

£0.00

b

£5435.01

---

£40040.00

11%

£3806.55

c

£40040.01



1%








Income Tax






a

£0.00

---

£6035.00

0%

£0.00

b






c

£6035.00

---

£34800.00

22%

£7656.00

d

£34800.01

---

no limit

40%








Self-employed NI






a

£0

---

£5435.00

0%

£0.00

b

£5435.01

---

£40040.00

8.0%

£2768.40

c

£26000.01

=

no limit

1%


GROSS PAY/INDIRECT TAX PAID

Gross Pay

Indirect Tax

10000

30%

20000

23%

40000

20%

50000

20%

60000

20%

70000

18%

80000

18%

100000

14%

500000

14%



 

Economist backs property taxes to prevent boom and bust

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Adam Posen, the newest member of the Bank's Monetary Policy Committee, has said that the Government should consider imposing extra taxes on properties, suggesting that in future homeowners should have to pay an extra charge if prices rise too fast. He suggested that this may mean imposing capital gains taxes on first homes and raising stamp duty.
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Brown supports tax on financial transactions

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What are we to make of Gordon Brown's conversion to the wonders of a tax on financial transactions? Test it against the Maxims of Taxation, as put forward by Adam Smith. Here they are - judge for yourself.
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A budget to prevent tax avoidance and evasion

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On the day of the 2010 Budget, we are pleased to introduce our new expert commentator, leading economist Charlotte-Anne Schreiber. She was delighted to be invited to the press box in the House of Commons to hear the budget speech. Although she found it confusing and contradictory, a promise right at the end of the 90-minute dissertation gave her hope that at long last a Chancellor had realised where taxation can be levied that would transform society and establish economic justice for all. Here is her first report for the Land Value Taxation Campaign.
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