60% income tax rate

thelawnet

PasturesNew wrote: »

As even at today's rates people earning £100k take home £5,400/month ... do I really care if they pay a bit extra tax?

No.

Do they care that I and hundreds of thousands of others take home only £1000/month and never have spare money for "fun" things like hobbies/holidays or a social life? No. So I don't feel bad about that.

Well, the problem is they might not pay more tax. When the Tories cut the higher rate in the 80s, the tax take increased. High rates of tax can actually reduce the overall tax take.

So yes you should care.

Eyesparky

thelawnet wrote: »

Well, the problem is they might not pay more tax. When the Tories cut the higher rate in the 80s, the tax take increased. High rates of tax can actually reduce the overall tax take.

So yes you should care.

Too true, this country is definitely well beyond the optimal tax threshold ... a real case of less is more. The complexity of the tax system is also a real inhibitor to economic flexibility and growth.

Rochdale_Pioneers

thelawnet wrote: »

Well, the problem is they might not pay more tax. When the Tories cut the higher rate in the 80s, the tax take increased. High rates of tax can actually reduce the overall tax take.

So yes you should care.

The big cuts were in the disasterous 1988 budget - tax takes increased as the economy ran away with itself. Then they fell off a cliff as Lawson's "economic miracle" turned to bust.

Thrugelmir

thelawnet wrote: »

Well, the problem is they might not pay more tax. When the Tories cut the higher rate in the 80s, the tax take increased. High rates of tax can actually reduce the overall tax take.

So yes you should care.

Compared to the 80's the high earners now are far more likely to be mobile individuals who earn their income as a salary. They can vote with their feet. So not only does tax revenue drop but talented individuals leave the country too.

I'm for higher taxation but in the current climate we should be trying to make the UK the place to conduct business.

TomJ

Eyesparky wrote: »

Too true, this country is definitely well beyond the optimal tax threshold ... a real case of less is more. The complexity of the tax system is also a real inhibitor to economic flexibility and growth.

As far as I can work out, taking Employer's NICs into account and assuming an even income distribution across the year these are the levels of the percentages of an employer's outgoing going to HMRC on an employee's earnings between the figures given:

£0 - £4940: 0
£4940 - £5720: 11%
£5720 - £6475: 21.1%
£6475 - £43,875: 38.8%
£43,875 - £43,888: 56.6%
£43,888 - £100000: 47.7%
£100,000 - £112,950: 65.4%
£112,950 - £150,000: 47.7%
Over £150,000: 56.6%


Here are the figures with my working added, lest anyone is interested:
£0 - £4940 (=Lower earnings limit, £95*52): No tax
£4940 - £5720(=Secondary threshold, £110*52): 11%
£5720 - £6475(=Personal allowance): 21.1% (=(11+12.8)/(100+12.8)*100)
£6475 - £43,875 (end of lower rate of Income tax): 38.8% (=20+11+12.8)/(100+12.8)*100)
£43,875 - £43,888 (=Upper earnings limit, £844*52): 56.6% (=(40+11+12.8)/(100+12.8)*100)
£43,888 - £100000 (begining of withdrawal of personal allowance): 47.7% (=(40+1+12.8)/(100+12.8)*100)
£100,000 - £112,950 (all personal allowance withdrawn): 65.4 %(=(40+20+1+12.8)/(100+12.8)*100)
£112,950 - £150,000: 47.7% (=(40+1+12.8)/(100+12.8)*100)
Over £150,000: 56.6% (=(50+1+12.8)/(100+12.8)*100)

Not including Employer's NICs, an individual will be paying:

£0 - £4940: 0
£4940 - £6475: 11%
£6475 - £43,875: 31%
£43,875 - £43,888: 51%
£43,888 - £100000: 41%
£100,000 - £112,950: 61%
£112,950 - £150,000: 41%
Over £150,000: 51%

thelawnet

TomJ wrote: »

As far as I can work out, taking Employer's NICs into account and assuming an even income distribution across the year these are the levels of the percentages of an employer's outgoing going to HMRC on an employee's earnings between the figures given:

£0 - £4940: 0
£4940 - £5720: 11%
£5720 - £6475: 21.1%
£6475 - £43,875: 38.8%
£43,875 - £43,888: 56.6%
£43,888 - £100000: 47.7%
£100,000 - £112,950: 65.4%
£112,950 - £150,000: 47.7%
Over £150,000: 56.6%

You have this wrong between the LEL and the Primary Threshold no NI is payable, however you still earn an NI stamp. NI is only payable above the Primary Threshold.