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How times have changed.
StevieJ
Posts: 20,174 Forumite
In the 70's we had the rich marginally taxed at (up to) an incentive busting 98% of their income :eek: That was sorted and now we have the shocking tales of how that poor are now being hit with marginal rates at similar level 
http://www.mindfulmoney.co.uk/wp/shaun-richards/a-real-debate-is-still-required-on-higher-tax-rates-in-the-uk-as-they-are-to-be-found-in-unexpected-places/
If we look for the effect of this we come to a disturbing conclusion as we see that many people have what I call an effective tax rate or the Department of Work and Pensions calls a Marginal Deduction Rate which is levied at well over 50% on our poorest citizens. According to numbers estimated by the DWP these are the rates at play in 2011/12. Some 130,000 people pay over 90%, 330,000 pay over 80%, 1,710,000 pay over 70% and 1,935,000 pay over 60%
http://www.mindfulmoney.co.uk/wp/shaun-richards/a-real-debate-is-still-required-on-higher-tax-rates-in-the-uk-as-they-are-to-be-found-in-unexpected-places/
'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher
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Comments
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So what should be done? Let people earn and keep benefits?
You have to cut off at some point, and that will always lead to this "problem".0 -
The higher marginal rates are mainly due to benefits being much higher now than they were in the 70s.0
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The higher marginal rates are mainly due to benefits being much higher now than they were in the 70s.
What does that mean?'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Graham_Devon wrote: »So what should be done? Let people earn and keep benefits?
You have to cut off at some point, and that will always lead to this "problem".
As was the case with the well heeled in the 70's you need to incentivise people to want to earn more (one way or another).'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
The most effective way to reduce high marginal tax rates for the poor would be to scrap the £27bn pa spent on tax credits.
:money:"The state is the great fiction by which everybody seeks to live at the expense of everybody else." -- Frederic Bastiat, 1848.0 -
The most effective way to reduce high marginal tax rates for the poor would be to scrap the £27bn pa spent on tax credits.
:money:
That was included in my 'one way or the another' Then again tax credits were only brought in as a response to unemployed people being better off on benefits than working, do we wany to go there again?'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Interesting that socialists created both the stupid tax rates in the 70s and the ludicrous tax credit system, and they both failed horribly. The legacy of brown is that it doesn't pay to work.
The 90% marginal rate of taxation is not a taxation rate at all, but a combination of tax and subsidy removal. Hopefully this will be properly addressed by the universal credit, but I somehow doubt it.0 -
P.s. Steve, the "shocking" tales we are now hearing quoted in the article above are nothing new. This situation was created as soon as the last gov introduced the tax credit system. Whilst the current govt are at fault for not rectifying it, it isn't their baby.0
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chewmylegoff wrote: »P.s. Steve, the "shocking" tales we are now hearing quoted in the article above are nothing new. This situation was created as soon as the last gov introduced the tax credit system. Whilst the current govt are at fault for not rectifying it, it isn't their baby.
Yes but in response to a 100%+ deduction rate for some when switching from benefits to work. Having said that I am not sure how the 'middle class' earners on £40k got their noses in the trough.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
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