MSE News: Budget 2012: Top rate tax to fall to 45%

CLAPTON

so deduction of 52% (50% tax and 2% NI) are enough to discourage people earning over 150,000 to work in the UK and so are vigourously opposed by certain ploiticians et al


but deductions of 51% (40% tax 2% NI and 9% student loan) for young successful graduate earning say 50,000 are considered absolutely right and proper and are no discouragement to working here by those same politicians


curious

euronorris

thelawnet wrote: »

The Netherlands offers a 30% tax exemption for foreign talent.
So the net top tax rate is only 36.4% for these people.

It's also only 30% on investments, and 25% for people who own more than 5% of a company.

The rules around that 30% tax exemption recently changed, and are now a lot stricter. It was only ever applicable for a maximum of 10 years, not indefinite (and never backdated). A lot of people who were receiving it, will stop receiving from this year on. The criteria has changed, and is quite extensive: http://www.euraxess.nl/newsletter/archive/october-2011/30-tax-ruling-to-change-for-better-and-worse

I've never been eligible, but I still chose to live here, rather than the UK. I have quite a few friends who are losing the 30%ruling, but they still plan to remain here. OH is lucky in that he gets it until 2018, but after that his net take home will drop dramatically.

But, like I said, the decision to live in a country is based on so much more than a tax rate!

euronorris

Oh, and the 52% tax rate is applicable for earnings over €56,491! So, regardless of the percentage, and the exemption, the majority of high earners here will still pay more in tax, than high earners in the UK do.

The argument of people leaving the country because of the high tax rate is weak, to say the least.

thelawnet

CLAPTON wrote: »

so deduction of 52% (50% tax and 2% NI) are enough to discourage people earning over 150,000 to work in the UK and so are vigourously opposed by certain ploiticians et al


but deductions of 51% (40% tax 2% NI and 9% student loan) for young successful graduate earning say 50,000 are considered absolutely right and proper and are no discouragement to working here by those same politicians

So don't take out the student loan. Nobody's forcing you to.

Borrow the money from your friendly local bank instead.

Randvegeta

First of all, just look at the number of brits living in tax havens like Monaco, Switzerland and Liechtenstein and commute to the UK by flight cuz its cheaper.

I certainly have an option to leave the UK and I will as soon as my GF graduates from UNI.

Also, high taxes result in high levels of tax avoidance and evasion.

Finally, what idiot thinks high taxes are good but student loans are bad?

- Student loans are optional! Don't take it if you don't want to!
- Student loans get paid back eventually! Meaning its NOT a tax.
- You only have to pay back your student loans if you earn over a certain amount.

The difference between taxing high earners and asking them to repay a student loan is that YOU NEVER pay off your taxes and it affects even those who never took out a student loan.

AND, if people think student loans are a deterrent for going to uni and getting a decent wage, just think what a 50p tax rate will do to people's incentive.

theGrinch

if people wont pay at 50p will they suddenly pay at 45p?

I was taught that a flat rate tax of between 20p and 23p was the greatest revenue winner

CLAPTON

thelawnet wrote: »

So don't take out the student loan. Nobody's forcing you to.

Borrow the money from your friendly local bank instead.

indeed so

however my point was about the whether or not high marginal rates of deductions are or are not incentives for growing businesses or tax avoidance or to work abroad.


the comparision between the 52% tax payer earnign over £150,000 and the 51% 'tax' payer earning only £50,000 is an interesting one

The argument for reduction the 52% deduction rate to 47% (and 42% eventually) is about tax efficiency and growing businesses and NOT about natural justice.

As far as I know there has been no research on the matter presumably because Dave and George's mates aren't affected

CLAPTON

theGrinch wrote: »

if people wont pay at 50p will they suddenly pay at 45p?

I was taught that a flat rate tax of between 20p and 23p was the greatest revenue winner

well they clearly won't pay at 45% as George has announced that he wants to move back to 40% so creating an incentive for the higher rate payers to delay as much as their income until that comes to pass. Then he will be able to 'prove' that higher rate bands don't work!

Pennywise

CLAPTON wrote: »

well they clearly won't pay at 45% as George has announced that he wants to move back to 40% so creating an incentive for the higher rate payers to delay as much as their income until that comes to pass. Then he will be able to 'prove' that higher rate bands don't work!

Far better for income to be taxed a year or two later at 40% rather than it being taxed abroad and UK Treasury getting nothing.

CLAPTON

Pennywise wrote: »

Far better for income to be taxed a year or two later at 40% rather than it being taxed abroad and UK Treasury getting nothing.

we have no real facts and figures do we?

Gordon announced the 50% rate in advance so most brought their income forward so there was a predictable and predicted fall in tax collected in the following year; now George has pre announced the changes, the opposite effect will take place so 'proving' beyond all doubt that 50% tax rate is ineffective.

now I don't really know what the truth is but we now have no real empirical evidence either way.

I can predict though that in a few years the 'fact' that higher rate of tax was 'proven' to be ineffective will lead George's mates to demand a reduction of the 40% tax rate.