Tax break better for the grey vote

“I too am over 60, bapcav, and I also agree with you that, despite being old, I am in less need of a tax break than young people starting out in life.

I was lucky, and able to buy a house when I got married in 1971, and my wife and I have taken full advantage of the tax free savings accounts, now called ISAs, which, over the years have accumulated into a tidy sum. Sadly the interest paid on them at the moment is very little, but at least it is tax free and will remain so when interest rates pick up.

It will be more difficult for today's youngsters to accumulate wealth than it was for my generation, what with tuition fees, expensive houses and derisory interest payments on what little bit they can put by.

No, older people should not be complaining about their lot. If they didn't put something by for a rainy day it is their own fault. The opportunities were there. The younger generation will find it very difficult to do so and they are the ones in need of some help.”

“That's very altruistic of you bapcav and I see your point about the young. However, it would be difficult. How would it work? A higher allowance if you are aged below, say, 21 or 25 or 30. I can't really see this being feasible.

I think you are among a minority. Everyone complains about paying tax, but those whose energies are most directed towards what they see as a moral wrong are pensioners. Most of them do not think that they should pay tax on their pension for the same arguments the original letter write employed. I don't agree with them, but, instead, I think they should have a more generous tax break.”

“I am one of the "elderly" and see no reason why I shoud have more tax breaks than anyone else.

I have had all my working life to save for retirement, had tax relief on my pension contributions and tax relief on my mortgage interest. Until Brown wrecked the economy, I could say that I lived and worked through the "good years."

The ones who need help are the young, who face high housing costs and difficulties in finding work, even though they may have studied hard.”

“g”

“@likeitalot

Hi likeitalot. There is a very subtle difference between us. It is trivial and it's about reasoning, but essentially we are saying almost the same thing. Every source of income is taxed except those specifically exempted. So pensions will be taxed like anything else unless we can find a good reason to exempt them. That private pensions are accumulated in a tax free fund, and that tax relief is given on the contributions, are very good arguments for not exempting them. You get no tax relief on the contributions you make towards the state pension so it could be said there is a stronger argument for exempting that and your particular logic breaks down. But, so far, no government has found it necessary to exempt those, nor could afford to do so – probably!

Unfortunately, once you really get to know how taxes work, you find that there is very little logic or, at least, what logic there is works in mysterious ways. Thus, something that might seem utterly logical in one particular tax rule is found to be entirely contradicted with another.

But this is trivial in the context of the wider point about a tax break for the elderly.”

“"Pensions are taxed because they are income like any other and not for the reasons likealot stated. "

graydjames, I will defer to your obvious knowledge here but:- Am I wrong in saying pensions are taxed because the contribtuiton were tax deductable? No I am not.

But love the rest of your post and agree with it”

“Eastonian's comment implies that the idea of a wealth tax is utterly off the wall. Several countries have one, including a number in the EU. The plan was to have one in the 1970s shortly after capital transfer tax was introduced in 1974. CTT had to come first because the theory was a wealth tax would cause the very wealthy to redistribute their wealth. Hence CTT stopped them doing it or taxed them if they did.

This country's inherent acceptance of the purest of capitalist ideals, and the electorate's tendency to favour policies more right than left, on the whole, has ensured that the climate was never right for a wealth tax. I can't see this changing despite, only recently, Ed Balls, suggesting that he has his own wealth tax ideas waiting in the wings.

Just correcting the letter writer, his state pension isn't safe. That's taxable too. This is something so commonly misunderstood. All income is taxable, and why not? Pensions are taxed because they are income like any other and not for the reasons likealot stated. However, there is no strong case for exempting pensions, state or otherwise, for the reaons likealot stated. There is a difference. Remember also that private pensions allow a lump sum to be drawn tax free. It is very, very common, but sadly misguided, logic to think that a pension shouldn't be taxed.

People assume the state pension isn't taxable because it is received gross. Those with a second pension pay more tax on that to allow for the state pension. For those who only have a state pension, if it exceeds their personal allowance, they will pay some tax. Of course usually it doesn't exceed their personal allowance but soon it might, given changes in the last budget.

However, where the writer is 100% correct is that the elderly should have a higher personal allowance and, until Osborne's latest budget, they did; but it is now being phased out. I don't really know why this writer attacks Mr Clegg because his letter has nothing to do with wealth tax. He seeks something, a 100% tax break for modest incomes, that he is far more likley to get from a Labour or a Liberal chancellor and he should be attacking Osborne for removing the very relief that he seeks and covets.”

“"Okay, my state pension is safe, but my civil service pension and a modest annuity and a nominal pension for six years part-time work at Tesco are treated as taxable income"

John Burrows, a common mistake. You received tax relief on the contributions. As a means of saving a pension scheme is one of the best ways. Many can't do it. You pay tax for that reason. You did earn to pay the contributiuon but hardly earn to recive the dividends”

“Ideas like this only confine the LibDems to a lifetime as the 'Third Party'. It is only because of the Coalition that they have anywhere near the amount of power they have only previously dreamt about but when the life of this Coalition is over they'll be back as also-rans in the political world and no wonder.”