meant to say. fag packet economics, so feel free to adjust! 🙂
Mike, you seem to by under an illusion that everyone in the higher tax bracket has a load of disposable income to throw around as they please
...
You need to get a little bit real, and read through this thread and through other sources and have a think about real-life disposable income for people with kids, debt, living in more expensive areas etc.
Really, I'd suggest that people on 120k do have more options for disposable income and would struggle plead poverty, in fact considering the average UK salary is 27k they probably have a **** load more dispoable income than a lot of people. They choose to spend it as they like on things that are not essential through choice not necessity. Perhaps you should speak to some of those people earning a shit load less than you at some point and see how they manage or not. If your biggest question is which wheelset do I replace next then I'd wager you have a resonable amount of disposable income compared to most.
here's the revenue breakdown for 2017.
Income and Capital Taxes -£242 billion
National Insurance -£126 billion
Indirect Taxes - £304 billion
Fees and Charges - £0 billion
Business and Other Revenue - £69 billion
Total Direct Revenue - £736 billion
Mike, I believe your general point is correct but you make assumptions and throw around assumed figures either as a troll,or a genuine poor argument.
In general last post is correct. But what if your £120k earner has enough genuine cost and debt to keep him or her awake at night about affording the bills, but our £27k earner has zero debt?
You cant make grand assumptions that all high rate tax payers have masses of disposable income to “lob £10k” at anything, although I agree it’s more likely at that end of the pay scale than the other.
You cant make grand assumptions that all high rate tax payers have masses of disposable income to “lob £10k” at anything, although I agree it’s more likely at that end of the pay scale than the other.
True but at that level of income you have a huge list op options available to you that are simply not available to somebody on lower incomes. Through pensions, asset management etc.
If you are the unfortunate person who earns in the top end of UK earnings and have spent it all then you are probably in the minority of the minority of the minority and had a lot of chances to sort your self out, again in ways that somebody on even average income would struggle to get to.
I'm sorry if I have little sympathy for the hypothetical example, I'd still suggest the state would be better off supporting the people on 15k more, supporting kids at school with more than a one of £50 handout or perhaps raising public sector pay in line with inflation every year so that people are not getting pay cuts.
I’d still suggest the state would be better off supporting the people on 15k more, supporting kids at school with more than a one of £50 handout or perhaps raising public sector pay in line with inflation every year so that people are not getting pay cuts.
Agreed. Except the point about pay, it’s not just public sector that have fallen into that category, take the words public sector out and you have your own election mandate 🙂
In general last post is correct. But what if your £120k earner has enough genuine cost and debt to keep him or her awake at night about affording the bills, but our £27k earner has zero debt?
That cost and debt ought to be attributed to a higher standard of living.
I.e a second house, more holidays, private education. etc
27K will may have zero debt but it's because his/her assets/choices will be limited.
Point of order...... in that the increase in the threshold for paying higher rate tax in Scotland is to be set by the Scottish Government who have today announced that any increase in that threshold is likely to be an inflationary one only, up to about £44k rather than the £50k that applies in the rest of the UK.
Just sayin’
Yeah I think the Scottish question has been mentioned a couple of times now. As I said, I never had it so would be hard pressed to miss it, in real terms I don't think I'm earning any less than I was before, it'll take a few years of below inflation rises to make any real difference.
Mike, you seem to by under an illusion that everyone in the higher tax bracket has a load of disposable income to throw around as they please
This is a joke right?
I mean the endless threads about what tat to fritter my money away on next that you post in combination with your posts here are simply awesome.
Just heard a line in a song "more money more stress". Seems to be true. Whilst simplified bollocks it does raise the question of where the sweet spot is. I could earn a bit more quite easily, say go from 38 to 50 but I would have much more stress and workload so I dont bother.
Final thought, are higher earners really upset that they pay more tax and poor people are net takers from the system, I just ask because I thought that was kind of the point of the system.
I mean the endless threads about what tat to fritter my money away on next that you post in combination with your posts here are simply awesome.
When was the last one, which ones did I follow through, which were trolling, how much money did I really spend? Until you can prove upon the latter, which you can’t btw, you’ve no right to nor evidence of my personal circumstances. Try someone else, there’s plenty potentially spending more than they need to on here.
...are higher earners really upset....
I don’t know for sure but I’d suggest the majority of the gripes here either are, or represent the views of lower earners.
When was the last one,
No idea I dont have much of an interest or much to contribute to threads about what colour of car to buy or whatever inane shite you seem to worry about
which ones did I follow through, which were trolling, how much money did I really spend?
Again I neither know or care, but by christ you certainly do drone on about money and how to spend it a lot.
I don’t know for sure but I’d suggest the majority of the gripes here either are, or represent the views of lower earners.
Which ones are those then. I admit I moaned about increased tax on wine whilst beer was frozen on the first page but that was tongue in cheek. Almost by definition theres going to be more lower earners though. Not everyone can be as great or hard working or just plain all round awesome as you can we.
AA, I think you’ll find your very much behind the curve in my posting history. Your last sentence is weak though, you and I both know I’ve never said that so there’s no point of the insinuation.
Im not getting into a slanging match with you this evening, I’ve enjoyed today’s debate albeit whether I’ve been wrong or right or have learned something from it, but I’ve no desire for internet insults these days.
I think you’ll find your very much behind the curve in my posting history.
Ooh I could stay up all night and catch up, wouldnt that be fun.
Not everyone can be as great or hard working or just plain all round awesome as you can we.
I'm sure if I looked I'd easily find the posts from last week about how you worked really hard to get all your money, showing a remarkable lack of empathy or awareness for how hard many lower earners work.
You crack me up, you know **** all about me yet you conclude from the internet many things that you love to assume, invent and persuade people of, your traditional MO from the Rugby thread. You are a snake and a manipulator AA.
Find my text and post away, I have no need to convince you or the rest of STW who I am outside of your intepretation here, I’ve enough friends and family thanks, and those I meet in the future by accident or design can make their own minds up beyond the image you want to create and have them believe through this particular medium.
Enjoy your trolling.
Not trolling I just genuinely think the shite you post is ****ing hilarious.
A while back @ransos denied that the higher paid ended up paying a higher percentage of tax. I put some numbers into the calculator on moneysaving expert.
Which tell us about income tax. Time for you to stop and have a think.
Time for you to stop and have a think.
Patronising git.
A couple of people have asked for your sources - can you provide them? As I've said up there, I believe that the tax system should be simplified and made more progressive, so to have some figures would help me.
There was a report (I think by the ONS) that appeared to show that the lower income bracket paid more tax as a percentage than higher earners. I say appeared as the same report also said that the same lower bracket received more in benefits than they paid in tax, an apparently contradictory statement there was also the issue than the percentage that was reported to be paid was higher than the likely maximum rate of VAT, income tax or NI so mathematically nonsensical too. I seem to recall it being explained by the amount of direct tax paid was based on spending (so that’s earnings plus benefits) whereas the % tax was calculated in earnings only hence the distorted number.
For example two people have £10k per year to spend where the sales tax is 20%. The first person earned it all the second was half earned and half in benefits. The tax paid by person one is 20% of earnings whereas the tax paid by person 2 is 40% of earnings. Therefore person 2pays a higher percentage of tax on earnings. Utterly misleading if you ask me.
the marginal rate of taxation is actually 62% due to national insurance, but if you add the loss of free childcare (half of it) for a couple of kids, you can actually be worse off on £117k than on £99k. doubt anyone is crying for you though 🙂
Patronising git.
Why, thank you.
the marginal rate of taxation is actually 62% due to national insurance,
how do you get that?
Gross Wage £99,000
Take-home pay £65,439
Effective tax rate: 33.9%
Gross Wage £117,000
Take-home pay £72,479
Effective tax rate: 38%
And why do you mention national insurance? it drops from 12% to 2% after 46k. The income tax rate goes up but that national insurance drop mitigates it a fair whack.
Potholes mother****ers, **** yeah bababoooommm.
An election winner potholes, told ya!
- Introduction of UK wide (well just south east England and some other preferred councils) crack teams of pothole terminators. Lead by the peoples champion pothole tzar, with a 24hr emergency line replacing 999.
- Disband all social security apart from state pensions, which obviously get an above inflation rise
- kick a lazy scrounger and their children in the face day
- Zero tolerance immigrant crack down
A party with this simple manifesto would sweep to power no probs. I reckon they could even get away with a pink snowflake as the party emblem. Ignoring the goes without saying brackets bit!
Here's the rest of the tax percentages figured out. seems pretty linear to me.
effective tax rates(tax+ni/takehome):
10k = 1.9%
20k = 15.0%
30k = 20.7%
40k = 23.5%
50k = 25.8%
60k = 28.6%
70k = 30.5%
80k = 32%
90k = 33%
100k = 34%
110k = 36.5%
120k = 38.6%
130k = 39.5%
140k = 39.7%
150k = 39.8%
how do you get that?
Your referring to a different thing. You’ve quoted the average tax rate not the marginal. The figures you’ve used are useful for answering the question “how much tax do I pay” but not for answering the question if “I earn an extra £100 how much tax will I pay on that £100?” For that you need to know the marginal rate which is not just a function of tax rate but also changes in personal allowances and loss of benefits.
Both are useful numbers as long as they are used appropriately.
Does NI not decrease in its rate dramatically as you get to high wages?
You need to remember that at £50 000 pa earnings you are in the richest few % of the country.
the highest marginal tak rates are actually on the poorest working people due to the rate tax credits are withdrawn at. for some folk this can be over 90% ie for every extra £ they earn they keep only 10p
Anyone earning £50 000 pa and whining about being poor needs a good slap and some time on national minimum wage just to see what the reality is for most folk.
"Anyone earning £50 000 pa and whining about being poor needs a good slap and some time on national minimum wage just to see what the reality is for most folk."
Well said teej.
And im sure we will hear all about regional variance and how people cannot live a minimum living standard in xyz area on 50k ...... Well if that's the case then you'll need to live else where within your means .
I moved out of the family home onto minimum wage i(bike shop)nto a shit flat in a shit(ISH) area , with a girlfriend who'd gone back to uni ... That wasn't fun in the slightest and will stay with me for life.
Aye, well said*
*and well done, editing out that last bit about joining the 'brothers' 🤣
Yup. Having little expendable income left because you’ve got a massive mortgage, kids in private school, lease cars and/or ski holidays to pay for is a little bit different to it being because this month you had to buy some new shoes, or pay the car mot or they ****ed up your benefits payments again...
It sometimes seems that there is an inverse relationship between income and empathy...
Yeah but you can just lob 10k tax free into your pension to make up for it.
Except that your allowable pension contributions also reduce as your income goes up, so probably you can't.
Edited, I appreciate we’ve moved on I’m ending up repeating myself!!
Anyone earning £50 000 pa and whining about being poor needs a good slap and some time on national minimum wage just to see what the reality is for most folk.
Has anyone here whined about being poor whilst being on £50k?
Yes and no.
Whined about being poor..... But it was 80k not 50k.
Anyone earning £50 000 pa and whining about being poor needs a good slap and some time on national minimum wage just to see what the reality is for most folk.
Kryton will be along soon to tell you how tough it is being a higher earner! He works hard for his money!!
to demonstrate the marginal rate of tax (not a complaint, just a demonstration, and based on 2018/19 figures) :
if you earn 100k, you have a taxible income is £88,150 (tax free allowance is £11,850)
on that, you pay £6,900 tax at 20% and £21,460 tax at 40%
you pay national insurance of £5624.12
so total deductions is £33,984.12 and total take home is £66,015.88
now, lets say you earned £10k more
you earn 100k, you have a taxible income is £103,150 (tax free allowance has reduced to is £6,850)
on that, you pay £6,900 tax at 20% and £27,460 tax at 40%
you pay national insurance of £5824.12
so total deductions is £40,184.12 and total take home is £69,815.88
out of your additional £10k earnings, you have been taxed\NI'd an additional £6,200, a marginal tax rate of exactly 62%
you also lose approx 5k/child worth of post-tax savings in the form of free childcare (for 3 year olds), and lose access to tax-free childcare to pay for the rest of it, so the total effective rate can easily top 100% if you're not careful
of course (as long as you're under the £40k and £1mm limits) you can push some of that into your pension, but you'll be taxed on all but £5k it when you withdraw it (the rest of your allowance is taken out by the state pension), and in fact if your pension is over the £50k limit (which I think is nigh-on impossible with current limits/annuity rates - approx £35k is the most anyone can get) then you'd be paying tax at 40% anyway
Good explanation 5lab.
Its always tricky trying to explain Tax to anyone never mind what level of social ladder they perceive to sit on.
Does NI not decrease in its rate dramatically as you get to high wages?
it drops to 2% around the same earnings as the 40% income tax kicks in meaning our effective direct tax bands are 32, 42 & 47%. If it stayed at the same rate the upper rates would be an eye watering 52, & 57%.
Personally I think we should do away with NI and be more honest about the actual rates of direct taxation.
Its always tricky trying to explain Tax to anyone never mind what level of social ladder they perceive to sit on.
OOOO!
Next up we need to include the whole taxation impact to give a clear picture of the overall tax burden.
I do agree with gonefishin that it needs a single rate to keep things simple and avoid the government doing the sneaky fiddles to convince you your tax has not risen.
Perhaps the team doing universal credit could take a look once they are finished.
To be clear I wasn’t advocating a single rate of income tax, different bands do make sense, just we should only one type of direct taxation rather than two.
I am in favour too of abolishing VAT and NI.
Have one single rate tax in a series of bands going up the scale of income..
Make it clear and simple.
We could do away with a whole segment of Accounting industry and Lawyers.
Got to be a good thing riiiight?
You need to remember that at £50 000 pa earnings you are in the richest few % of the country.
Thats the big joke really. The US arm of where I work starts their fresh out Engineers on that... lucky the cost of living is so low in the UK and the development opportunities are so diverse.... but it’s ok in March anyone with a “skill” will be on at least 30k.
when an MP is on around 75k and a cabinet minister 130k with no required qualifications and no real accountability you have to wonder where we are headed.
I am in favour too of abolishing VAT and NI.
Abolishing VAT probably isn’t a great idea as sales taxes can be used to nudge behaviour and manipulate consumption e.g. the high rates on cigarettes to discourage smoking. It’s far from perfect but it can help. Additionally VAT isn’t charged at 20% on everything (food, domestic fuel, rent) so it isn’t as regressive as some would make out. It could do with simplifying though.
To be clear I wasn’t advocating a single rate of income tax, different bands do make sense, just we should only one type of direct taxation rather than two.
Sorry that is what I meant just no extra taxes to confuse the masses, one tax, multiple bands
As above VAT is a good tool for some things but should probably be restructured.
Anyway none of this will happen as people will get defensive about tax and earnings, too many voters are in the mid to upper range and come brexit we are all going to have to get less and pay more.
(which I think is nigh-on impossible with current limits/annuity rates – approx £35k is the most anyone can get) then you’d be paying tax at 40% anyway
You can get more than that - but it is taxed at a horrendous rate. If you exceed the £1M lifetime allowance (this is the value of your DC pot, not the amount you paid in), taking a lump sum from any amount over the limit is taxed at 55%, and taking drawdown (income) is taxed at 25%, and then you pay income tax on top of that. So you may have avoided tax when you put the money in, but you certainly won't when you take it out. I appreciate that this is a problem that the vast majority of people will never have, but it does indicate that this narrative that the wealthy are more lightly taxed is not as straightforward as it might seem.
but it does indicate that this narrative that the wealthy are more lightly taxed is not as straightforward as it might seem.
But it does open it a variety of other investment opportunities, property, art, fine wines or whatever else is going, along with being able to afford a good accountant.
