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Employers’ Burden - update 2019

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employersburden 2019

Our tax system is so misguided that it doubles the cost of employment and government spending, as the bar chart shows. The topmost bar is for those with a nominal salary of £10,000 per year; the division is into percentages. For each line of gross salary the length of the line is the total cost to the employer, including employers’ National Insurance contributions. The blue portion of each line is the amount received by the employee, minus indirect taxes, such as VAT; it represents real wages. The effects are capricious. Those with salaries of £25,000 are affected hard, as again are those with slaries of £50,000 and more. Top managers and executives are also a heavy cost to their employers.

Direct taxes are calculated from tax tables. Indirect taxes are taken from an ONS paper “The effects of taxes and benefits on household incomes 2016/17 table 16”. Some judgement has been used to match the two sets of figures. 

Here are some suggestions as to the possible real effects of this situation

  1. There is a sharp distinction of the view of wages from the points of view of employers and employees.
  2. There is constant impulse to replace people by machines.
  3. Unemployment is a constant factor in the economy.
  4. The effect of taxation at the margin is to kill off economic activity which might otherwise have been viable, leading to increases in tax so as to mitigate those effects. This maintains a vicious cycle.
  5. In the cycle of production, employment based taxation rolls up until it is paid by the final consumer. The consumers’ gross pay has to be has to be sufficient to pay the taxes and leave enough to live on.
  6. Government expenditure is mostly wages, and is thus doubled under the same rules.
  7. In order to cover the cost, an employee has to be able to add value to an amount twice what is needed to live on.
  8. Those who cannot meet this criteria will likely find their jobs at risk, if, indeed they can find any employment at all.

Although the UK is by no means the worst example (Sweden is probably at the bottom of the league) the disadvantages suffered in comparison to countries that do not tax wages so highly must be huge. It is, in fact, a 100% tax on wages!

This information was prepared by Tommas Graves and originally appeared in the Autumn 2019 edition of “Land and Liberty”

 

LVT would drive business out of the country

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We have received the following comments which suggest that the Campaign is not succeeding in putting over its message as clearly as it needs to...
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Wonderful investment opportunities available now

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Great investment opportunities exist even in the present gloomy economic climate. Railway electrification leads to land value growth and a new programme was announced during the summer. We have been looking at the proposals and identified the likely property hotspots.
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Investing in land or property?

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Investor or businessman? This site has important information for you.
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What case for new high speed railways?

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Network Rail has now published its Strategic Business Case for New Lines. The product of a study by transport consultants Steer Davies Gleave, it concludes that a new core line from London to Birmingham, Manchester, Liverpool, Edinburgh and Glasgow would cost £34 billion to build and, over a 60 year period, generate £23 billion of additional revenue and a further £34 billion in additional benefits. So should it happen, and if so, how and when?
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45 percent of world's wealth destroyed

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Private equity company Blackstone Group LP CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis. "Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime." But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

Piffle! That is a couple of continents gone!

How is this supposed to have happened? The planet has not suffered an asteroid strike, or other global natural catastrophe. There has not been a world war. No tsunami occurred, devastating the more populous areas of Japan or the USA. What destruction has occurred? What Schwarzman means is that people will not pay as much as they would have done in 2007 for titles of ownership of shares and other assets - pieces of paper of no intrinsic worth apart from the fact that they are recognised as claims on real wealth, primarily the stream of revenue that can be identified as economic rent of land.

Pieces of paper are not wealth. Land is not wealth. The people who play this game are not wealth-creators but participants in a casino game parasitic on the economic organism. The sooner everyone understands this, the sooner they will be cured of the delusion that money can be made by moving it around.

Article in International Herald Tribune
 

A little arithmetic

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Employers burden

EMPLOYERS' BURDEN OF TAX

This diagram illustrates the shocking truth about how the burden of taxation really falls on employers, despite appearances to the contrary.

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