Beating the VAT increase

zygurat789

Taxation levels are taken into account in arriving at salaries, so the better off are paid more to counteract this. What makes one person better off than another is the disposable income they have. So, even after paying 50% tax, the better off are still better off.

Stuball_2

zygurat789 wrote: »

Taxation levels are taken into account in arriving at salaries, so the better off are paid more to counteract this. What makes one person better off than another is the disposable income they have. So, even after paying 50% tax, the better off are still better off.

I would disagree, companies look at their employees gross salaries when calculating their budgets not what the employee takes home net.

People earning over £150,000 working for private sector companies who have had pay freezes the last couple of years have effectively taken a pay cut of 10% on their pay over £150,000.

Even people earning over £100,000 have lost their personal allowance so effectively have had a reduction in their take of home pay of upto £2580 a year.

I can't see companies who have initiated a policy of pay freezes then giving these people pay rises to counteract the effect of taxation.

zygurat789

But the gross allows for the taxation deduction because we all know it's going to happen. And yes higher earners are being taxed more heavily than they were but the additional tax is only a small percentage of their take home pay, the only figure which really natters, so employers won't have to counteract this.