[Closed] Are any of the political parties planning to scrap the 60% tax rate at 100-120k?

OK, that's a fair point though I'd say it's a difference that makes no difference ultimately

Except that at a practical level it does make a difference, because the mechanism for removing the personal allowance is so clumsy (maybe it'll get better under RTI?) and because as it's not a "proper" rate of income tax, it introduces further anomalies like the treatment of childcare vouchers.

what should we do shoot the poor and tax the rich less?

Every society, even the US, does it this weird way so it might just be you that is out of kilter.

Why is it some folk. almost exclusively right wing, only see the "injustice" of a higher tax burden and yet they are oblivious to the injustice/unfairness of different wages?

Any insights Hora as to why one bothers you but the other does not?

someone on 15k in receipt of tax credits for children etc is a burden.

Any tax credits because of low pay represent a subsidy for the employer, and so it's actually to employer that is the burden. For example, [url= http://www.bbc.co.uk/news/uk-32272817 ]supermarkets receive an £11bn subsidy to their massive profits each year[/url].

hey are oblivious to the injustice/unfairness of different wages?

Are you suggesting that everyone should be paid the same?

I'm not saying we should smash the system or anything... We just should remember how it works. The reason the top 1% pay more tax now is because [b]we've[/b] made them richer.

Have WE?

Even if we have, we haven't been coerced into it, so why do I deserve any of their rewards? So the Wendy on at the moment, how many if the 60,000 or so if the folk in Old Trafford were forced into spending their money to watch their heroes (sic).?

Still love to understand what the moral case is for the equality of outcomes? Totally bizarre concept.

Perhaps I can claim some of the free time/leisure time of those who prefer not to supply their labour?

Are you trying to ignore addressing what i said?

DO you have children THM?When one had something did you

1. make them share as it was fair
2. teach them that equality of outcome was "bizarre"?

Serious Question BTW - we all know why equality of outcome matters and we generally teach it to our kids.

You'll never get too many people excited about the unfairness on 100k+ earners.

The overall income difference is the couple would be about 7k take home (or £580/month) so hardly the biggest injustice in the world.

The issue applies much further down the earning spectrum too.

1x60k = 17.9k Tax & NI, v's 2 x 30k = 13k Tax & NI. Thats about 5k more in tax that 1 well paid professional and non working spouse pay than two teachers with the same total income.

or

1x30k = 6.5k tax & NI v's 2 x 15k = 3.4k tax & ni. Yip one teacher and a stay at home parent are paying over 3k more tax each year than a couple with the same income...

The only "fair" approach would be to reduce one and increase the other, but that is never going to be popular with "hard working families"!

The only "fair" approach would be to reduce one and increase the other, but that is never going to be popular with "hard working families"!

All those couples have to option for one to work fewer hours while their partner gets a job. Problem solved.

Everyone I know impacted by the 100k PA withdrawal has just reduced their taxable income - generally by increasing pension contributions. Obviously you can only do this to a certain degree. The way it is implemented is stupid tho - forces you into self assesment even if you're on PAYE.

All those couples have to option for one to work fewer hours while their partner gets a job. Problem solved.

Well Mike, certainly not all of them will have the "option". But actually that is not "problem solved" - if everyone did that (lets ignore if that is possible) then the net tax revenue falls and we all have to pay more in some way.

If it wasn't clear, I was being slightly flippant in my answer.

teamhurtmore - Member

Have WE?

Even if we have, we haven't been coerced into it, so why do I deserve any of their rewards?

Have WE? Yes. Who else do you imagine did it?

The second question has two answers. The first, in terms of rewards, is really a simple one- if you gain from a large group of people, it's reasonable to ask you to recognise that and contribute your share to the nation that enabled you to grow rich.

To reverse the argument, nobody is coerced into making money- income inequality is the sole reason they pay more tax, it's 2 sides of the same coin. Saying this doesn't mean you demand equal pay for all; it just means you demand that people are honest about it, and accept the responsibilities that come with the benefits.

The second is more about frames of reference. It's not so much a question of "us" benefitting- it's more a question of recognising how both benefit. "We" personally benefit from healthcare, education, etc- "they" benefit from a healthy educated workforce. And so on.

The way we depict these things is absurd, currently. Hora gave perfect examples, working tax credits described as a benefit to the low paid individual and a cost to the rich. Low paid people that help make rich people richer, described as a burden because they don't pay that much tax. Rich people described as being "squeezed" because they're getting richer. Partly it's a silly us vs them but mostly it's just not accurate.

The moral question of whether it's OK for so few to benefit so much from the labour of so many is one question, and really not one getting into here. But what's not really debatable, is the need to be bloody honest about i, instead of bitching about it.

Though I agree that tax anomalies are annoying, just look at it as a motivator to get a promotion/earn more money to get out of the 60% zone. 😉

For me I've always thought that direct PAYE taxes (income and NI) should never be more than 50%, irrelevant of income bracket. Just feels wrong.

When I started work the only folk in the higher tax brackets were senior Managers, and on good money. Now your 'average-Joe' is paying top rate tax.

And, as a comparison, when I was very young my parents bought a house (3-bed semi, nice area in a decent small northern town) solely based on my Dad's income. And he wasn't earning enough to pay tax (deductions then for having two kids and mortgage interest).

it's more a question of recognising how both benefit.

Indeed, a snippet worth highlighting their NW

income [b]inequality[/b] is the [b]sole [/b]reason they pay more tax

No it's not, unless you use odd definitions of both words.

your 'average-Joe' is paying top rate tax.

The top rate starts at £42,385. That is not average its about double the average wage.

Everyone I know impacted by the 100k PA withdrawal has just reduced their taxable income - generally by increasing pension contributions. Obviously you can only do this to a certain degree. The way it is implemented is stupid tho - forces you into self assesment even if you're on PAYE.

I too, know a great many over the 100k but < 130k who refuse to pay the 60% and pay it into their pensions instead.

This 'anomaly' (of which there are many) does at least occur at a level where the earner has options - increase pensions or savings for example.

For other tax payers the only option is to keep working, and hope for a pay increase.

I do think that there needs to be a start from scratch approach to some of our taxation in the UK - we seem to have a lot of anomalies and a lot of sticking plasters to fix the old sticking plasters.... A friend who is a tax accountant moved from UK to NZ. He said in UK he had many, many books from HMRC on UK tax - a whole bookshelf worth. Apparently in NZ he was given four small files - one for personal tax, one corporate, one charitable/education and one overall dates and legal stuff. Simpler does seem easier to manage, and avoid some of the issues.

teamhurtmore - Member

No it's not, unless you use odd definitions of both words.

In what way? They pay more tax than most people because they earn more money than most people.

Fundamentally, complaining that you pay more tax than the average person, is complaining that you earn more than the average person. Then generally blaming the tax system or the government or the benefit-crazed.

A cynic might think that complex tax rules make it easier for the wealthy to dodge paying...

Complexity created by a succession of chancellors playing silly buggers with the tax system.

Natalie Bennet's argument this morning to explain a 60% tax rate was particularly contrived.

This 'anomaly' (of which there are many) does at least occur at a level where the earner has options - increase pensions or savings for example.

Savings won't help - it has to be pension (or child care, or cycle 2 work 😉 ) or something that reduces your taxable income, all which work equally well at the other thresholds.

As has flanagaj says, a 60% tax rate creates a hell of an avoidance incentive be that through government endorsed avoidance schemes like pension contributions, or other means.

I completely agree that simplification is needed, but the problem is that no government is going to propose a policy that gives back the PA to high earners. Even if accompanied by other increases that would completely even it out (say reducing the 150k threshold), our hysterical press would never get past the notion of giving a tax break to £100k+ earners.

[i]The top rate starts at £42,385. That is not average its about double the average wage. [/i]

1 in 6 apparently, so way over how it use to be.

http://www.theguardian.com/uk/2013/mar/20/budget-2013-40pc-higher-tax-bracket

[i]Twenty five years ago, when Conservative chancellor Nigel Lawson introduced the 40% band, only one person in 20 paid the higher rate. A quarter of a century on, Osborne is fuelling outrage among his own supporters with one in six taxpayers now paying tax at the 40% higher rate.

Unless Osborne reverses decisions he set out in the autumn statement, it is estimated that an extra 400,000 people will become higher rate taxpayers in the 2013/14 tax year, bringing the total to a record of 4.3 million people.
[/i]

Does that indicate that the rate has 'come down' to catch more people, or that more people earn higher wages though? (An 'expansion of the Middle classes') and thus come into the 'wealthy' bracket.

Does that indicate that the rate has 'come down' to catch more people, or that more people earn higher wages though? (An 'expansion of the Middle classes') and thus come into the 'wealthy' bracket.

"Forgetting" to adjust thresholds is a brilliant mechanism for stealth tax increases. Whilst the 40% threshold has received some adjustments, the £100k and £150k thresholds have not, so they'll affect far more people than when they were first introduced, and will continue to do so.

In a similar vein, the recent stamp duty changes were brilliant in offering everyone a better deal today, yet are expected to net huge increases in revenue as more and more houses slide into the 10 and 12% bands.

I hit the 40% bracket and while it's frustrating when I do overtime to be hit with it I'm lucky to be in that position. Yes I get less benefits, pay more tax and other 'penalties' in household than 2 people splitting our income 50/50 but I'm fortunate to have a good wage. I've worked hard and still do to get that wage though so think I'm reasonably fairly paid.

If I earned a 100k I'd feel the same way, frustrated but privileged.

Come and do a shift with me see those on minimum wages or just benefits trying to raise a family. They often get less in a week what we'd freely spend on a day out with my kids. If my 40% tax helps a little towards a family feeding and clothing their kids I'm happy with that.

You're not hard done to paying high end tax you're in a privileged situation.

Drac +1. If only more people had that view the country would be a nicer place.

Ok I'll bite.

Mrs FD in the not too distant future will earn £100k + .

There is many a time that we feel financially we are screwed because only 1 of us earns big money, where as if we both had average ish jobs we would have similar ish take home without Mrs FD having to work 80hrs per week.

It is frustrating that Mrs FD works so hard, and then gets all her money taken off her, it feels like a punishment for doing well, and quite frankly makes you think about telling kids not to bother as the amount of work you have to put out ways the reward.

I don't know anyone on £100k + who doesn't work excrptionally hard for it, and there isn't that much difference in net pay monthly to some one in £40-£50k bracket

I don't know anyone on £100k + who doesn't work excrptionally hard for it, and there isn't that much difference in net pay monthly to some one in £40-£50k bracket

No about £2.8k isn't much at all.

Drac, you're right, but the frustration part of it is amplified by knowing that the tax rate you're paying is a result of political posturing, rather than part of a carefully constructed, logical progressive tax regime. Plus I think there's a psychological leap when rates exceed 50%, knowing that any additional work that you do, you'll get to see less than half the proceeds.

Plus I think there's a psychological leap when rates exceed 50%, knowing that any additional work that you do, you'll get to see less than half the proceeds.

I agree.

Drac - the gap isnt that big.

The point I am making is that there are a lot of people who now earn £100-£200k who work very very hard for it. There are people who earn a figure higher than that, well lets say £500k + who do not work any harder for it.

My old boss (Finance Director of a FTSE 100 company) last time I looked earn approx £1.3m per year + bonuses/share schemes etc. Yep he worked hard for it, but no harder than a lot of people earning a lot less.

Top wages have rocketed in the last few years. £100k isnt that massive a wage. A £100k tax point is talked about as it sounds impressive to the masses and wins votes. The reality is £100k isnt excessive these days, and that bracket needs moving up.

Minimum wage is a pittance, and I know plenty of people who work unbelievably hard for it...I'm sure some of them think the people earning vast amounts more than them don't do vast amounts more work than them...
Everyone kind of resents the people who earn more than them, it's just that people who earn £100k plus don't have to worry about how they're going to pay their gas bill...
And yes, for most of us, £100k is a bloody massive wage

Minimum wage take home pay: £1,073
Median wage take home pay: £1,759
50k take home pay: £3,027
100k take home pay: £5,444

My heart pumps purple piss for them...

It is frustrating that Mrs FD works so hard, and then gets all her money taken off her,

My heart pumps purple piss for them...

£50k earned by a single earner takes home far less than £100k earned by a single earner.

The comparison is irrelevant

Tax policy has increasing treated high earners paid via PAYE as sitting ducks, thats a dangerous approach as a relatively few people provide a very significant portion of the tax revenue. Under out current system ts par more attractive to set up and run an business than have a well paid job.

Also Labour plan a significant raid on higher earners with re-introduction of the 50% tax rate (which makes total tax take 64.8% with 50% tax, 2% NI and 12.8% emploers NI) and capping pension contrinutions tax relief at 20%

@kimbers £100k a year isn't the top 1% of earners, quite far from it

The minimum wage is low pay, no doubt. People on it are supported in terms of pensions, NHS and welfare by higher earners. I think the minimum wage should be much higher and regionally calculated

Hard Work. You don't get paid just for effort, business pays for results/talent/potential. I tend to work 55 hours a week plus some stuff at weekends, I do not see myself getting rewarded for hours in the office or effort

every pension contribution helps her out more than the poorest in society

Minimum wage take home pay: £1,073
Median wage take home pay: £1,759
50k take home pay: £3,027
100k take home pay: £5,444

My heart pumps purple piss for them...

I'm in this category at the moment (and no I'm not after sympathy) but here's the thing. I'm actively looking to reduce my taxable income so that I drop below this figure. Frankly I'd be an idiot not to as a £100 pension contribution will only cost me £40! If the tax was graduated as it used to be I'd likely be less bothered but the total amount of tax I'd pay would me more.

But jam was just telling us all how personal pensions were an act of altruism on your part designed to help the state out, pay tax and keep people employed in the pension industry

Is it really the case that its just done out of self interest to reduce your tax burden 😯

I dont know what surprises me more this news or Jam being wrong

It's not either or, it can be both. There is a benefit to me, obviously, but also making that money available for investment is also a benefit to the economy.