The 50% Tax Rate

funguy

They should have a flat rate tax of between 15-20% for all earnings. Apparently this would bring in more money overall as people are encouraged to earn much more. Im sure i read somewhere that they did this in Hong Kong in the past and it increased the national wealth immensely!

chucknorris

There is actually a 60% tax band and it kicks in before the 50% tax band. For every £2 that you earn above £100k you lose £1 of your personal allowance so you have to pay an overall 20% extra tax over and above the 40% tax band (40%/2), up to a maximum of £100k plus twice your personal allowance (from £100k to approx £113k).


The way to avoid this (if part and enough of your £100k plus earnings comes from savings income) is to redirect some of this savings income to NSI certificates, pensions or an investment that is taxed by capital gains rather than income tax (shares for example).

tillycat123

I think it's better to look at peoples take home rather than the headline figure, people on £100k or slightly over are not super rich. Take us, OH pay packet £4500 this month take home, that's our total household income and 1 earner earns that, does that make us super rich?

I think 2 lower earners + their benefits may come pretty close to that figure.

So from leaving school with nothing and working damn hard for 20 odd years to finally get a decent job and working every hour god sends we have to hand 60% to the tax man now, is that fair?

chucknorris

tillycat123 wrote: »

I think it's better to look at peoples take home rather than the headline figure, people on £100k or slightly over are not super rich. Take us, OH pay packet £4500 this month take home, that's our total household income and 1 earner earns that, does that make us super rich?

I think 2 lower earners + their benefits may come pretty close to that figure.

So from leaving school with nothing and working damn hard for 20 odd years to finally get a decent job and working every hour god sends we have to hand 60% to the tax man now, is that fair?

The two lower earners are taxed separately rather than as one (not their joint income) so they would be nowhere near the 60% band.

tillycat123

chucknorris wrote: »

The two lower earners are taxed separately rather than as one (not their joint income) so they would be nowhere near the 60% band.

No but take home pay of 2 earner and all the tax credits they would get = ? My point being if only one person is the earner they are massively penalised and seen as super rich, when 2 lower earners are perhaps not that much differently well off with regards to take home pay and tax credits they also get.

Tax credits are worked out on joint income and I think tax banding should as well. Thats why loads of family's are about to lose child benefit.

kabayiri

Tillycat, how much value do you put into the asset you have of a stay-at-home partner.

This can result in things like reduced child care costs, which the 2 earner family has to cover. Maybe the 2 earner family has to hire extra cleaning / house support.

You're not accounting for the advantage you have.

neverdespairgirl

the_flying_pig wrote: »

I think the 50 top rate was a fairly good idea from a fairness/sending-out-the-right-signals point of view.

Why is it fair?

chucknorris

tillycat123 wrote: »

No but take home pay of 2 earner and all the tax credits they would get = ? My point being if only one person is the earner they are massively penalised and seen as super rich, when 2 lower earners are perhaps not that much differently well off with regards to take home pay and tax credits they also get.

Tax credits are worked out on joint income and I think tax banding should as well. Thats why loads of family's are about to lose child benefit.

But you were implying two people's joint income could fall into the 60% tax band and this is simply not the case. Or are you saying something else and it's merely coincidence that your post appears immediately after mine which raises the subject of the 60% tax band (which you also refer too).

Pennywise

kabayiri wrote: »

Tillycat, how much value do you put into the asset you have of a stay-at-home partner.

This can result in things like reduced child care costs, which the 2 earner family has to cover. Maybe the 2 earner family has to hire extra cleaning / house support.

You're not accounting for the advantage you have.

But, on the other side of the coin, in a lot of cases, the worker wouldn't be able to earn that much if their partner also worked - with relatively high wages usually comes the downsides, such as longer hours, working away from home more. This is often only possible because the other partner stays at home. If you have two workers, then both are going to have to do their fair share of house work, cleaning, cooking, etc., in the evenings and weekends, meaning that they are more likely to have more normal "9-5" jobs, earning closer to average wage. I don't really see an "advantage" of being on call, working unsocial hours, travelling away a lot, etc., which usually comes with higher earning jobs! The costs of cleaning etc is fairly trivial. As for childcare, that's only really a major cost until school age as after then, the costs of after school kiddie clubs or whatever for primary years is again fairly immaterial for an hour or two for just five days a week and there should be no costs at all for children at secondary school.

Not to mention that the children of stay at home parents seem more likely to do better at school, less likely to get into trouble, etc., so there are actually potential social benefits of having a stay at home parent, which is good for society. With joint taxation of "households", the parents could decide on what they wanted to do, given their relative ability to get good jobs, and not be penalised for wanting to look after their own kids!

There should definitely be an "opt in" system for a household to be taxed as a household instead of individually, so that tax allowances and rate bands can be shared. If it were optional, then you'd still have the default position of independent taxation. Benefits work on the basis of households rather than individuals, so it's logical that taxation should follow the same methodology.

movilogo

50% tax rate got moral support from people because due to way human jealousy works

Most of us don't like someone else earning more than us. So, riches should pay more taxes seems a good idea.

Now trouble is, being rich is a relative term. Someone earning £20k/year thinks one with £40k/year is rich where as the latter envies who earns £80k/year and so on.