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

Jambalaya - if you are earning £100k those talents surely are a given.

JY Altruism is what Americans do with their tax deductable donations to charity. In the UK the government just takes the money. Providing tax incentives for saving is smart policy. A GPs pension is worth well over £1m and that's paid for by the state, ie taxpayers. It makes sense for people to be given an incentive to save. Have a look at some of the calculations for the cost of state pensions over the next 50 years.

Some examples (using online calculator)

Gross net/month Annual Deductions Average Tax Rate
12,500 966 913 7%
25,000 2,880 4,913 20%
50,000 9,403 13,674 27%
100,000 5,444 34,674 35%
250,000 11,924 106,914 43%
500,000 22,965 224,414 45%

So as earnings go up the tax rates go up. Plus of course higher earners will be paying higher VAT and property taxes. A person on 250k earns 10x more than "national average" of 25k and pays 20x more taxes.

Jambalaya - if you are earning £100k those talents surely are a given.

So as earnings go up the tax rates go up.

I don't think anyone's disputing that. We have a progressive tax regime.

@ninfan why not post up total tax and NI paid by each of your 4 examples ? I'll do the calcs later but last week I posted an example than someone on £250k pa posts 47 times more tax/NI than someone on £17k - 14 times more gross pay, 47 times more in payments to the government

There is another way of looking at this that I suspect will be lost on those feeling sorry for themselves/others paid significant wages and paying significant tax. Your employer knows you are paying lots of tax, it's no secret and they are not stupid. Employees are incentivised by the take home not the top line and wages are therefore set to take this into account - i.e. if you want an employee to feel 10% more 'worthy' than the pay scale below you are going to need pay more than 10% extra if the pay increase takes you over a threshold. The higher tax is effectively a tax on the employer not the employee. If suddenly higher tax tax thresholds were abolished or increased do you really think wages would remain as they are?

In your example is the employee on £250K actually 'worth' 14 times more than the person on £17K or working 14 times harder? I doubt it - you just have to pay that much more to make the take home for the two role reflect the true worth.

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.

A couple on £50,000 each will each take home £36,326 a year (£3,027 per month). That's £72,652 combined (£6,054 per month).

A single earner on £100,000 will take home £65,326 (£5,444 per month).

(All according to http://www.moneysavingexpert.com/tax-calculator/)

So, the couple are £610 a month better off, which is about 11% and I'm pretty sure that two people on £50k will do more than 11% more work than one person on £100k.

it can be both

I get your broad point here but your original post made it clear you were doing it for yourself. that the money is then used "well" is incidental to the reasons that you do it.

Your original post made it clear that you were doing it out of self interest [ not a dig to be clear].

JY Altruism is what Americans do with their tax deductable donations to charity. In the UK the government just takes the money.

I guess that is how you retain your always correct 100% ? Just ignore the evidence that contradicts your view ,say something unrelated and then reassert your original point.

Have you considered politics as a career option?

Have a look at some of the calculations for the cost of state pensions over the next 50 years.

I get your broad point here but your original post made it clear you were doing it for yourself. that the money is then used "well" is incidental to the reasons that you do it.
Your original post made it clear that you were doing it out of self interest [ not a dig to be clear].

Oh my primary motive IS selfish, I want to increase my pension pot and the tax break makes it very advantageous. I also don't think that when I retire there will be a universal state pension. That being said even though my interest is selfish it doesn't mean that there isn't a wider benefit. If I were to do the same thing by buying more leave rather than a pension investment I doubt there would be quite the same reaction in spite of it being purely selfish with no wider benefit.

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

Top 2%, according to https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax

£150k puts you in the top 1%.

(Edit: based on income tax payers)

[b]The minimum wage is low pay, no doubt. People on it are supported in terms of pensions, NHS and welfare by higher earners.[/b]

Hang on, the state pension is linked to contrubutions through national insurance (and everybody who works for long enough gets one). I worked a minimum wage job for years and received no welfare (either from the government or the rich). Also, last time I checked, the NHS was there for all of us, not just the working poor...
Forgive me if I'm misquoting, but this makes me quite uncomfortable. If you are talented or lucky enough to be earning £100k plus a year then bloody good luck to you, you've clearly done well and no one should begrudge you your salary. Also, I get that tax is a pain in the backside, but it is fundamentally untrue that the tax paying rich support people on lower pay.

but it is fundamentally untrue that the tax paying rich support people on lower pay

You sure about that?

[img] [/img]

Employees are incentivised by the take home not the top line and wages are therefore set to take this into account - i.e. if you want an employee to feel 10% more 'worthy' than the pay scale below you are going to need pay more than 10% extra if the pay increase takes you over a threshold.

With that reasoning, I hope you don't own your own company or employ too many people. Quick question, where does the tax come from? (Edit:actually you have just answered that)

In your example is the employee on £250K actually 'worth' 14 times more than the person on £17K or working 14 times harder?

So who should decide what anyone is worth? Certainly NOT the government.
And what is working hard?
And what has that got to do with the determination of wages?

THM - remember this is STW forum chat, rational thinking and logic are not considered to be relevant. Subjective analysis is king!

but it is fundamentally untrue that the tax paying rich support people on lower pay.

I'd be really interested to know the actual figures on that.

What does it cost from birth to death to be an average UK citizen? By that I mean how much does it cost to educate you, pay for your NHS treatment plus an equal share of local and national expenses (roads, local government, emergency services, defence etc). Assuming you were averagely well, claimed no benefits throughout your life but contributed an even share towards national non person specific costs what does your existence cost the nation?

It would then be interesting to calculate how much you have to earn throughout your life to pay enough tax to cover your share, and therefore how many of us are net contributors and how many not.

What does it cost from birth to death to be an average UK citizen?

Anyone earning less than £47k isn't "paying their way", IIRC. However, those earning more wouldn't be able to do so without those earning less doing their jobs.

Mashiehood, I'm not arguing that the rich don't contribute singnifantly more to the pot, of course they do, I'm arguing with the belief among the rich that people on low pay are a great tax burden. During my time earning minimum wage I was no greater a burden on the taxpayer than someone earning £100k. During my working life I will contribute enough NI to cover my state pension, it is not a gift from the tax paying rich...

So who should decide what anyone is worth? Certainly the government.
And what is working hard?
And what has that got to do with the determination of wages?

Assuming the 'Certainly the government' is a typo and what you actually mean is NOT the government....

Who should decide - I guess in the society we live in that'll be market forces. But you knew that already. My argument is that the market forces link to salary has more to do with the take home than the headline figure.

Hard work and what's that got to do with it - tricky isn't it. But by christ you would have to hope that hard work was rewarded or at least in the mix alongside skills & experience. But looking at the hard work for minimum reward that some folk have to make it's clearly not always the case. I personally find that quite depressing.

It's a gift from future generations, the government will have spent your money well before you retire. It's a Ponzi scheme don't forget and one that will collapse. So be prepared!

Assuming the 'Certainly the government' is a typo and what you actually mean is NOT the government....

Indeed that was a false edit earlier. Now corrected

Who should decide - I guess in the society we live in that'll be market forces. But you knew that already.

Indeed ^2 but only where relevant

My argument is that the market forces link to salary has more to do with the take home than the headline figure.

As someone who employs people, let me just say that I doubt this is the case. Never had that conversation in my life. Most people are very, very hazy on their take home pay. They think and negotiate on their headline number.

mashiehood - Member

You sure about that?

Once again fixating on direct tax paid and ignoring all other contributions.

Some people need a reality check.

It's a few years old but, according to the IFS, earning £35,345 per year puts you into the top 10% of earners in the UK and earning £99,727 puts you into the top 1%.

([url= http://www.ifs.org.uk/publications/4108 ]IFS report[/url], [url= http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#High_income ]summary table on Wikipedia[/url])

I don't quite earn enough to pay 40% tax, but I'm probably still in the top 10% and I'm very comfortably off.

1. It's not a frickin savings scheme
2. Without the state you wouldn't have currency, infrastructure, markets, banking, law and order. If i wanted what you had I'd take my club and smash you over the head with it and take whatever it happened to be.
3. You live in a SOCIETY you are not gods blessed special little snowflake unique in talent and capability and if you fell down a hole tomorrow the world would keep spinning
4. Yes it's prbably quite annoying but in light of the above, you can either live with it or make representations to those with the capcability to change it or belt up.

negotiate on their headline number.

Agreed, but I know what my headline number 'feels' like in my take home. I guess there are some folk naive enough not to appreciate that negotiating a £10K pay rise won't mean £10K more in the bank but most aren't and even if it is at a subconscious level know what such a pay rise would 'feel' like despite not doing the calcs.

Once again fixating on direct tax paid and ignoring all other contributions.

Are you going to link to that massively problematic report that tries to argue that the "poor" (for want of a better word) pay more in tax as a percentage of their income than the rich whilst simultaneously acknowledging that the same group receive more in benefits than they pay in taxes?

Hard work and what's that got to do with it - tricky isn't it.

Yes it is. As an aside my older son worked in a pub last summer on min wage and as an intern in a law firm on a different one!!

Cue, "Dad, working in the pub is much harder work that working in the law firm. It's exhausting."

Response, "And the lesson is.......?"

gonefishin - Member

Are you going to link to that massively problematic report that tries to argue that the "poor" (for want of a better word) pay more in tax as a percentage of their income than the rich whilst simultaneously acknowledging that the same group receive more in benefits than they pay in taxes?

No, don't know what report you refer to and it doesn't sound like it addresses my point anyway. (though I don't see why you'd say "tries to argue", those 2 points obviously aren't exclusive?)

Apologies, there was a report that is widely circulated to show that those on low earnings pay a higher proportion of their income on tax, although closer analysis shows quite a few problems with it.

It's far from obvious to me why those two points aren't exclusive. If on a net basis you receive more money from the state than you pay in taxes (based on your earnings) then to me that says that you effectively don't pay any tax. Nothing necessarily wrong or bad about that but to argue differently seems wrong to me.

Drac - the gap isnt that big.

I based it on £42.5k Vs £100k and yes that was the difference.

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.

Yeah and there's those who earn £12.5k who work extremely hard whilst there's those who earn £100k who don't work any harder. It's a mute point.

So who should decide what anyone is worth? Certainly NOT the government.

Why not? and if not what then and why ?

Serious question would it really be worse than a market*? A market that decides that Joey Essex** or wayne Rooney is worth more in a day or week than a nurse earns in a year? In rooneys case I assume he earns more in month than a nurse will in a lifetime.

I doubt many of us think this is right even though we can explain why it happened.

I dont look at the market and go you know what all the decisions you have made on wages are correct. I doubt anyone does.

* I accept they would both be crap

** i only heard about him on here but I assume he earns well

Cue, "Dad, working in the pub is much harder work that working in the law firm. It's exhausting."

It's funny, some people who go to work every day and have to completely bust a gut, use the "I graft for my money" badge as some sort of argument that trumps the those who sit in an office all day "doing nothing".

My other half works "harder" than me and I earn more in a day than she does in a week. This upsets me at times, but then I realise its just because physical effort is one of the few tangible ways we can demonstrate what is required to do a job. But obviously, it's much more complicated than that. I'll never come home physically knackered after being rushed around on my feet all day, but then again she'll never go for days without sleep or with diarrhoea trying to work through something complex where a mistake will lead to job losses.

My advice to any youngster planning their future career would be to either find something they love, or find a skill that will pay well. they might get lucky and the thing they love will also pay well I suppose, but betting your future on that is risky IMO.

Worst case scenario, for me anyway, is doing something you hate for low pay.

It's obvious why Rooney earns way more than a nurse. He is allegedly one of the best footballers in the world and, hence, he brings in massive amounts of revenue and PR for his employers. If football fell out of fashion he wouldn't get those wages.

Compare that with there being nearly 400,000 nurses in the UK. The majority of which won't be world class and worse (for them) are working for effectively one employer who dominate the market and hence, their pay conditions.

It's obvious why Rooney earns way more than a nurse.

😀

However, those earning more wouldn't be able to do so without those earning less doing their jobs.

In your example is the employee on £250K actually 'worth' 14 times more than the person on £17K or working 14 times harder? I doubt it - you just have to pay that much more to make the take home for the two role reflect the true worth.

At the extreme all the "lower paid jobs" could be outsourced abroad.

Where the money they earned ends up in shop keepers pockets on another continent and the VAT in another government's coffers. The tax burden on the wealthy would be even higher if it wasn't for the VAT paid by the poor(er).

Jambalaya - Who would be your market then?

@mike, Whilst I agree that any venture needs team work and contributions from many people from and economics/taxation perspective this isn't true. At the extreme all the "lower paid jobs" could be outsourced abroad.

Eh? How would street cleaners and the like get outsourced abroad? Wouldn't UKIP's collective forehead vein explode if thousands/millions of people turn up at the ports each day?

@fin25 - we live in a society with a generous welfare state, that's part of the "contract". What I resent is this notion you get from some posters on here that somehow the better off are getting a free ride.

JY, you are certainly consistent with the deliberate misquotes. Some threads I have a 100% track record, others not so. I am struggling to recall one where facts I have posted have proven by you to be incorrect. We can all have different interpretations you don't seem to be able to grasp that.

However, those earning more wouldn't be able to do so without those earning less doing their jobs.

@mike, Whilst I agree that any venture needs team work and contributions from many people from and economics/taxation perspective this isn't true. At the extreme all the "lower paid jobs" could be outsourced abroad.

Really? The cleaners, the binmen, the nurses and doctors, the teachers, the road builders, the military.

I'm not sure what you do, but could your company exist if the country wasn't defended, your workforce wasn't educated and healthy, if the roads were just dirt tracks and there was rubbish strewn about the streets?

Jambalaya - Who would be your market then?

face - palm.

The example was an extreme one.

To say the very least!

there is little UK manufacturing

Not true, plenty of UK manufacturing at all levels. Thank goodness. The death of UK manufacturing is a myth.

@mike, I agree all those jobs have to exist but the lower paid jobs or those need not be in your business. My post was "at the extreme" and in responce that higher paid workers relied on the efforts of lower paid workers to justify their position.