I think many people prefer a progressive tax as it means other people pay more than they do on an absolute basis and as a percentage. Its simple human behaviour/politics. Where our system breaks down is that the richer you are, especially if you are in businesses rather than an employee, you can pay materially less tax than someone on an upper middle income. What is happening now is that it’s becoming very unattractive to be in a well paid PAYE job.

Junkyard, the very fact that you have had to use the term “marginal” in you justification destroys your argument. The very fact that a different rate is paid over a threshold (i.e. The marginal rate) shows that the tax is progressive. Maybe not very sharply but progressive none the less.

Imagine a 10k threshold to start paying a flat rate of 20%. Someone earning £9,900 pays 0 tax, someone earning £10,100 pays £20 tax <1% tax, someone earring 210k pays 40k tax ~ 19%.

The only way for a tax on earning not to be progressive is to have zero tax free allowance.

What you are arguing is the a tax free allowance + a flat rate isn’t progressive enough and I think most people would agree with that but their views on where they think the thresholds should be is just a political view, there is no technical right or wrong answer.

What is happening now is that it’s becoming very unattractive to be in a well paid PAYE job.

Although still much more attractive than being in a low paid PAYE job.

What is happening now is that it’s becoming very unattractive to be in a well paid PAYE job.

It’s statements like this that rub people up the wrong way.

It’s still very attractive to be in a well paid PAYE job compared to a less well paid PAYE job or even a less well paid non PAYE job. There is no point in the income scale where getting paid more means you take home less, there are just diminishing returns.

These diminishing returns are the fundamental result of a progressive tax system. Your argument that the returns diminish rather faster for someone on PAYE vs someone with more flexible tax affairs is probably valid, and there is a debate to be had about the merits of pushing people out of PAYE vs lowing taxes to minimise avoidance but doing so from the premise that being highly paid is “unattractive” is ridiculous.

@MSP and @jfletch – you are missing my point. What happens is that those jobs either move abroad or they get converted into a different form, eg a service company so that they attract lower levels of tax. Being highly paid is of course attractive but understand that those sort of people have geographic flexibility and influence to change their style of employment. There is a behavioral tipping point somewhere around 40% tax, why do you think the high paid French and German bankers work in London rather than in Paris or Frankfurt ? There is / was a tax advantage to be in London

Just to be clear you won’t get every high paid job moving/changing but you will get enough such that the overall tax take falls and you lose all the associated job creation and spending.

As I posted before and no one commented in the rest of Europe you have VAT on food of 5.5% to 8%, we’ll not see that here due to the uproar we’d undoubtedly see but my point is our tax system is very progressive already and supports the less well paid quite substantially.

The only way for a tax on earning not to be progressive is to have zero tax free allowance.

Indeed – unfortunately facts and an argument are often poor bedfellows!!! The maths is really very simple and has been explained before. And again, google Mirlees.

The VAT is a Tory thing is another funny one. VAT is used extensively across parties and across countries. Why because it has the least direct impact on investment etc. Still much better to wrap and confuse it as a regressive tax on income rather than a tax on consumption!!!

I think many people prefer a progressive tax as it means other people pay more than they do on an absolute basis and as a percentage

Plenty of rich folk on here saying they are happy to pay the tax.
Personally I think its a measure of your morality and the content of your character. As jesus noted the richer you are the harder it gets to be a good person [ get into heaven].

The very fact that a different rate is paid over a threshold (i.e. The marginal rate) shows that the tax is progressive.

Its not a different rate after the threshold its identical because it is a flat rate. As I said you can argue it anyway you wish but its still a flat rate with a threshold and if you pay tax you all pay the same rate be it you a cleaner or a Billionaire. With your examples you have to use total income to show a different % as everyone who pays tax pays the same rate.

The only way for a tax on earning not to be progressive is to have zero tax free allowance.

Well it could be regressive but I do get the argument/point I just think its disingenuous and IMHO its better to call a flat rate tax a flat rate tax [ with threshold].

IMHO no one who proposes this does so because they believe in progressive taxes they do so to shift the tax burden from the richer to the poorer. To do this whilst a arguing its progressive is sophist and I dont think you would convince many folk that its either a good idea or truly progressive [ though I can do the maths].

To do this whilst a arguing its progressive

You are clouding your argument by arguing that black is white. If there is a threshold its progressive (or regressive if you want to be a pedant), that is a fact that can’t be disputed.

Whether you think it’s a moral way to tax is another thing entirely and depends very much on a your political philosophy and ideals. Ia tax can be both progressive and “unfair”, “progressive” is not a synonym for “fair”.

You are clouding your argument by arguing that black is white

Are you new jfeltch?!?

that is a fact that can’t be disputed.

Unless…..!!!

Whether you think it’s a moral way to tax is another thing entirely and depends very much on a your political philosophy and ideals. Ia tax can be both progressive and “unfair”, “progressive” is not a synonym for “fair”.

Indeed, well put.

Some people think conflate the different definitions of the word ‘progressive’. Progressive thinking is modern, new, and aiming for somethign better. Progressive in taxation is a more strict mathematical sense, meaning that the rate gets higher as income increases.

So taxing everyone 100% over £35k wouldn’t be really fair, nor would it be a very good idea, but it would still be progressive.

others were forced to pay for me to benefit. Why is that fair?

It’s for the good of the nation. In the same way that someone’s taxes from Edinburgh might end up paying for Crossrail, or the M3 variable speed limit, or flood defences in Carlisle etc.

molgrips – Member
Some people think conflate the different definitions of the word ‘progressive’. Progressive thinking is modern, new, and aiming for somethign better. Progressive in taxation is a more strict mathematical sense, meaning that the rate gets higher as income increases.

So taxing everyone 100% over £35k wouldn’t be really fair, nor would it be a very good idea, but it would still be progressive.

Leaving the extreme example aside, imagine threshold of £12k, and flat tax rate above this is 40%

Joe earns £12k, what percentage if his income does he pay in tax?
Bill earns £20k, ” “?
Harry earns £50k, ” ” ?
Tarquin earns £100k, ” ” ?

Is this progressive or not?

Great mol, please can you pay for my PHD and I promise I will pay all the tax on my higher income so that everyone can benefit form greater spending. It’s lies an extreme version of trickle down!!!

please can you pay for my PHD

Sure – I’ll pay my share of it 🙂

That’s provided you generate some business with it that leads to growth, rather than just pocketing some extra cash for yourself.

I’ll also chip in for the M3 speed limits, even though I don’t drive on it at rush hour. Cos, you know.. I’m nice.

My uncle will send the invoicing details, I am putting it though my bank in Lagos Nicosia *! Cheers…. 😉

* don’t want any racist accusations!!!!

Do these 60% tax payers get to buy thier council house now. 😉

If there is a threshold its progressive (or regressive if you want to be a pedant), that is a fact that can’t be disputed.

Nor have I as I can do maths and I have accepted that point. Why not re read what i said and try and negate it?
To rephrase briefly
I have explained how the words have two meanings and it is in one sense but not the other. The fact still remains that the tax applied is a flat rate [with threshold] so at the point you pay tax their is no progression.

Deary me THM at least have the courage to engage directly rather than just gently ad hom from the sidelines 😆

Progressive in taxation is a more strict mathematical sense, meaning that the rate gets higher as income increases.

this is the crux marginal tax does not alter, its flat, but the % based on income does due to the threshold hence the “discussion”.
I do get your argument made I just think its a weak [ though mathematically indisputable] one.

If we do a £10 threshold its still technically progressive [ sense 1] yet every person who worked would basically pay the same tax – if we went to enough decimal places we could still show the “progressive nature” of the tax. I dont think that is really progressive [ though it would be technically] but you and THM can argue as you wish.
If this is calling black white then so be it.

Is this progressive or not?

Its a flat rate with a threshold and everyone pays the same marginal rate of tax and its progressive depending on average tax based on % of total income
Both are correct so to say only one is a partial answer.

Cos, you know.. I’m nice.

That you are fella

One of those there are plenty of things in society I pay for that I will never use but we do so , as you note, for the collective good of society.
Some of them I personally gain from some of them i dont but as long as the total utility* is maxmised

*John Stuart Mill sense

That you are fella

xxxxx

From one of the most authoritative reports on tax design in the UK

A tax is said to be progressive when the average tax rate rises as the tax base rises…….The simplest way to achieve progressivity in an income tax is to have a tax-free allowance before tax starts being payable. To see this, suppose the first £10,000 of income is free of tax and all further income is taxed at 20%. Someone earning £20,000 has a marginal tax rate of 20%. Their average tax rate is 10%.a Someone earning £100,000 would still face a marginal rate of 20%, but their average rate would be 18%. Thus a flat tax—an income tax charged at a single constant rate above a tax- free allowance—is progressive, as long as there is a tax-free allowance. This income tax can be made more progressive by (i) increasing the tax-free allowance, (ii) increasing the single rate of tax, or (iii) introducing one or more higher marginal tax rates on higher incomes. Progressivity does not, however, require that the marginal tax rate keeps on increasing as incomes rise.

Mirlees Report

It really is very simple.

Yep.

and still disingenuous for the reasons mentioned.
I think you can [ happy to be corrected on this one] make a regressive tax [ with threshold] appear progressive?

ie 10 K tax free
10-20k@15 10 k = 7.5%
20-30k@14.95- = 9.98
30-40k @14.9 = 10.99
I have assume the top rate ie 10k, 20k, 30k 40k
I am sure this can be done though my figures may need tweaking to achieve this contradiction of a regressive tax that is progressive. May need some fiddling with numbers but I assume , with enough tweaking it can be done indefinitely.
IMHO its not actually simple [ though the maths does not lie] hence we need to state what it is which is a flat rate tax with a threshold.

Either way most folk still think taxation should be truly progressive* rather than just technically progressive. Whilst I am in danger of inventing [ meaningless] terms here that is probably the easiest way to explain my position.

*marginal tax rate increase as income rises rather than average tax.