Reduction in top, 50%, rate of tax?

le_loup

alancam wrote: »

Does anyone have the actual figure showing the revenues generated from the 50% tax rate?

From the Guardian:
Lord Oakeshott, the Lib Dem peer and close ally of Vince Cable, said: "This gives the lie to the special pleading form the super rich and the Tory right for a hand out to the top 1% of taxpayers. This official treasury estimate, including possible behavioural reactions, shows the 50p top tax rate raising £12.6bn over five years. Warren Buffet in America and business leaders in France and Germany are calling for shared sacrifice - why are Britain's super rich so super selfish?"

ben.bayliss

Any wrote: »

I am not in the 50%, even in the 40% tax rate.
But I do think the 50% tax band is robbery in the daylight.

All that moaning about helping out a society and not be selfish... Sorry, I think it is very easy to give out of someone elses pocket!!!

150k earners would pay more taxes already, sorry but even 20% of 150k is more then 20% of 10k...

John_Pierpoint wrote: »

It is not a strictly logical thing it is just the psychological feeling that the government gets more than half of every marginal effort you make. For what?

This is exactly what I meant. If I won't be the primary benefactor of my extra work, then I probably won't bother to do it.

John_Pierpoint

As someone who is retired and now somewhere nearer the bottom of the pile in income terms, I have the same difficulties:

I get a chance to do some (reasonably interesting) self employed work for say 120 quid, by the time I have paid travel costs, call that 100 quid. (Not to mention the hassle of keeping accounts and proper records).
I might well be paying tax at a marginal 30% [If reader you don't understand that, especially if you are a pensioner, bull up on the way our income tax system works]

Meanwhile, my dear wife has bunged, some moonlighting "useful little man" a friend has recommended, 75 quid to use our tools to do some job (say cutting the hedge) because she thinks I have put it off too long.

So as a family I have worked for a day and paid 5 quid for the privilege.

As a society it almost certainly makes sense for me to do what I'm skilled to do and someone on the dole to earn an honest few quid cutting the hedge.

That problem is called fiscal drag.

[Of course the characters in this little story bare no resemblance to anyone living or dead;):D]

Randvegeta

le_loup wrote: »

From the Guardian:
Lord Oakeshott, the Lib Dem peer and close ally of Vince Cable, said: "This gives the lie to the special pleading form the super rich and the Tory right for a hand out to the top 1% of taxpayers. This official treasury estimate, including possible behavioural reactions, shows the 50p top tax rate raising £12.6bn over five years. Warren Buffet in America and business leaders in France and Germany are calling for shared sacrifice - why are Britain's super rich so super selfish?"

Selfish? Why should the hard working lose 50% + so the lazy can benefit?

And yes, I do believe it is the lazy that are being bought, not necessarily the vulnerable. A recent study showed that 9/10 new jobs created last year went to foreign nationals. Why? Simply because Brits don't want to do that sort of job. But they damn well should. If anyone chooses not to take a job because they think it is BENEATH them, then why should someone who works hard prop them up?

As a person who works in I.T. I certainly can choose to live/work abroad. And so far, I have done so, simply because I get taxed less in other jurisdictions. 8 months into the year, I've spent a total of 2 months in the U.K. No UK tax for me thank you! Why? Because I can!

Pennywise

zygurat789 wrote: »

At the end of the day there are more people pying tax at 73%

They may have a marginal rate of 73% but probably a very small proportion will actually pay it. Most will continue to arrange their affairs so they can avoid it, such as:-

If working, earning at that level, not accepting promotions and not doing overtime to avoid suffering the higher tax and reduced benefits, or paying into pensions to get earnings down again.

Or if working part time, staying beneath the 3 day/16 or 18 hour threshold to avoid losing housing benefit, WTCs, etc, i.e. by only accepting part time jobs earning under the tax/nic threshold, or refusing longer hours/overtime to stay under the threshold.

Or the unemployed refusing to take relatively low paid jobs because they'll be worse off, or only marginally better off, than on benefits.

I'm constantly amazed at how well informed such people are about how to avoid the 73% marginal tax rate! It may well be that there are lots of people liable to 73% but only if they actually earn more money - most sensible people would just organise themselves to avoid it!

le_loup

Randvegeta wrote: »

Selfish? Why should the hard working lose 50% + so the lazy can benefit?

Whoops! Now someone has resurrected the dead.
More care needed.

zygurat789

Pennywise wrote: »

They may have a marginal rate of 73% but probably a very small proportion will actually pay it. Most will continue to arrange their affairs so they can avoid it, such as:-

If working, earning at that level, not accepting promotions and not doing overtime to avoid suffering the higher tax and reduced benefits, or paying into pensions to get earnings down again.

Or if working part time, staying beneath the 3 day/16 or 18 hour threshold to avoid losing housing benefit, WTCs, etc, i.e. by only accepting part time jobs earning under the tax/nic threshold, or refusing longer hours/overtime to stay under the threshold.

Or the unemployed refusing to take relatively low paid jobs because they'll be worse off, or only marginally better off, than on benefits.

I'm constantly amazed at how well informed such people are about how to avoid the 73% marginal tax rate! It may well be that there are lots of people liable to 73% but only if they actually earn more money - most sensible people would just organise themselves to avoid it!

Surely any fairly low paid person earning over £7475 pays tax at a marginal rate of 73%?

relaxtwotribes

zygurat789 wrote: »

Surely any fairly low paid person earning over £7475 pays tax at a marginal rate of 73%?

No. My marginal tax rate over £7475 is 0%, or 12% if including NICs.

Pennywise

zygurat789 wrote: »

Surely any fairly low paid person earning over £7475 pays tax at a marginal rate of 73%?

Only if their taxable earnings increase. That's my point. A lot of low earners know this and therefore don't make any attempt to earn any more, therefore don't pay the 73%, i.e. don't work longer hours, or don't go for promotion or a new job. They just sit there, earning the same, to avoid having to pay 73p tax on the extra £1 of income they could have earned. All you have to do is look on the benefits board and tax board here, and you see self employed spending their higher profits on new equipment or other business expenses to get their profits down to keep their benefits up and tax bill down. Same with part time workers - time and time again, they've rightly picked up that it's not worth them doing more hours, or getting a slightly better job.

This is exactly what happens at the £100k earnings trap and the £150k earnings trap. It's all the same. Soon, we'll have the ~£42k earnings trap re family allowance - already plenty of threads where people have rightly realised that they'll suffer a marginal tax rate of far in excess of 100% if an hour's overtime or minor promotion puts them slightly into the h/r tax bracket. So, any sane person takes preventative action - most will increase their pension contributions to avoid it.

This is the problem with penal rates of tax, whether you're earning £10k p.a. or £100k p.a. It's common sense that you'll take action to optimise your own position. If there was a steady marginal rate, people would be far more incentivised to work harder and improve their lot. The 73% is just as bad as the 50% and all the other tax traps. Look at stamp duty. 3% on a house for £251k or 1% on a house for £249k - no sane person would pay £251k, so govt lose out. We need to scrap the 50% AND scrap the £100k threshold, AND scrap the family allowance loss for h/r AND scrap the 73% for relatively low earners. Two (or more) wrongs don't make a right. The tax system needs major reform so that at whatever level of earnings, there is a legal cap of tax or benefit loss at a marginal rate of 50% so everyone will always keep at least 50p of every extra £1 they earn.

mjm3346

le_loup wrote: »

From the Guardian:
Lord Oakeshott, the Lib Dem peer and close ally of Vince Cable, said: "This gives the lie to the special pleading form the super rich and the Tory right for a "hand out" to the top 1% of taxpayers. This official treasury estimate, including possible behavioural reactions, shows the 50p top tax rate raising £12.6bn over five years. Warren Buffet in America and business leaders in France and Germany are calling for shared sacrifice - why are Britain's super rich so super selfish?"

Usual balanced reporting there then.
It is not a "hand out" to allow people to keep more of what they have earned.