The 50% Tax Rate

pqrdef

michaels wrote: »

Those compaining about paying a 52% (or even 62%) rate should realise that if you earn less than 35k with 3 kids you face an effective marginal tax rate of a minimum of 73% and probably more if you don't have any savings in which case you would also lose housing benefit, council tax benefits and other freebies such as free school meals. A quick google suggests that just adding in housing benefit and council tax benefit can take the rate to 95%.

There's a solution to this. I remember it being discussed in the 70s. Benefits are abolished and replaced by needs-related tax credits, irrespective of income. Your tax is a percentage of your total earnings, less your credits. If that comes out negative, the taxman pays you.

michaels

I actually think this might be worth exploring - give every adult citizen £4k pa and every child £2k pa and then abolish all other benefits, the tax free allowance and merge tax and NI at say 2 or 3 bands - maybe 20% up to median FT earnings, 40% up to 3x median and 60% thereafter.

Allow some of this tax to be deferred as a 'pension' but only up to the amount needed to be paid pa for 40 working years to give 70% of median salary. Excessive pension saving by the wealthy does not benefit the economy.

pqrdef wrote: »

There's a solution to this. I remember it being discussed in the 70s. Benefits are abolished and replaced by needs-related tax credits, irrespective of income. Your tax is a percentage of your total earnings, less your credits. If that comes out negative, the taxman pays you.

chucknorris

cepheus wrote: »

As usual asking whether the 50% tax is fair, is the wrong question. You should be asking is it fair that people could be earning enough to pay 50% in the first place.

How could anyone work so hard as to deserve that much? Surely it is physically and mentally impossible without a breakdown? .

Earnings do not just come from employment, for example only approx a third of my income is from employment. The rest is from business, investments and savings.

FATBALLZ

This debate about the 50% tax rate makes me laugh. If I earn more than £42k or so I would have to pay 51% of my income to the government. This is due to student 'loans' (for those unfamiliar with how they work, calling them a loan is just semantics, they are a tax in every other respect). Almost every youngster who in future gets a high paying job will be paying over 50% of their income if they are a higher rate payer, due to having had to go to university to get where they are.

How can (some of) the government say on one hand that a 50% rate is destructive to the economy, and on the other hand slap an effective 50+% rate on every youngster in the country? Maybe it's because if they're only earning £50k or so, they're too poor to up and leave, so it's ok to bleed them dry. Hmm.

JonnyBravo

FATBALLZ wrote: »

If I earn more than £42k or so I would have to pay 51% of my income to the government. This is due to student 'loans' (for those unfamiliar with how they work, calling them a loan is just semantics, they are a tax in every other respect). Almost every youngster who in future gets a high paying job will be paying over 50% of their income if they are a higher rate payer, due to having had to go to university to get where they are.

I think you'll find you'll be paying much more than that. Don't forget N.I. Then we could add on all the indirect taxes and pretty easily find 3/4 of all our money goes to the Govt.

MacMickster

FATBALLZ wrote: »

This debate about the 50% tax rate makes me laugh. If I earn more than £42k or so I would have to pay 51% of my income to the government. This is due to student 'loans' (for those unfamiliar with how they work, calling them a loan is just semantics, they are a tax in every other respect). Almost every youngster who in future gets a high paying job will be paying over 50% of their income if they are a higher rate payer, due to having had to go to university to get where they are.

You forgot to mention the effective 41% deduction rate that will apply to income over only £21,000 for graduates. I see this as far worse for the future of our children.

Don't worry though, that nice Mr Osborne regards the 50% tax rate for high earners as temporary and to be removed as soon as possible, so the current high earners will soon be paying pretty much the same rate as those earning less than the average annual wage.

bendix

Pete111 wrote: »

The 50% rate is almost entirely political. There are strong arguments that it gathers very little in revenue as it actively discourages weathly people working (and spending) here

Having to pay 52% (inc NI) was one of the factors in my DW quitting her very well paid job last year. She has now set up as Ltd company and, despite still earning a significant amount pays far less tax to UK PLC.

I can trump that.

Having some of my income taxed at 50%, losing my personal allowance and the ever-increasing stealth tax that is National Insurance finally persuaded me to give up working in the UK entirely.

Sod it. I aint paying that sort of money - what do I get from it? Nothing.

So as a result of Labour's political gesturing (because it was no more than a political tax) the revenue has lost around 60,000 a year in tax and National Insurance revenue from me, and that's just in direct taxes alone.

I now work in Hong Kong where the maximum tax you can pay is a flat 15%, and where there is no national insurance, VAT, CGT etc.

Go figure.

pqrdef

bendix wrote: »

ISod it. I aint paying that sort of money - what do I get from it? Nothing.

And that's the only consideration? 2500 years of moral philosophy wasted on you then.

Fine, if you don't mind being rich in a country full of poverty.

Personally, I pine for the days when the celebration of social inequality was considered to be in rather bad taste.

johnny_storm

bendix wrote: »

Sod it. I aint paying that sort of money - what do I get from it? Nothing.

I agree 100%. It amazes me how many people want others to work to pay their bills for them and think this is fair.

If only we had educated people with employable skills rather than dumbing down and socialist propaganda.

zagubov

bendix wrote: »

I can trump that.

Having some of my income taxed at 50%, losing my personal allowance and the ever-increasing stealth tax that is National Insurance finally persuaded me to give up working in the UK entirely.

Sod it. I aint paying that sort of money - what do I get from it? Nothing.

So as a result of Labour's political gesturing (because it was no more than a political tax) the revenue has lost around 60,000 a year in tax and National Insurance revenue from me, and that's just in direct taxes alone.

I now work in Hong Kong where the maximum tax you can pay is a flat 15%, and where there is no national insurance, VAT, CGT etc.

Go figure.

And who pays to train and educate all the experts and graduates that work there? Ah yes, other countries' taxpayers. These tax havens are such a bargain to set up aren't they!