What should the maximum Income Tax rate be?

stevemcol

aldredd wrote: »

Whilst I'd love to be earning it, 150k isn't a 'super high earner' wage - we're not talking about millionaires here, but about people who have worked hard and got themselves into a strong position in a well-paid role.

150k will leave you with about 85k after tax, ni & 5% pension contribution.

Say you've got a pretty big home, paying 5k/m mortgage = 60k
That leaves you 2k/month for all your bills, cars, savings etc.

Don't get me wrong, it's a comfortable way to live, but these aren't filthy rich people we're talking about. And this is only on a 40% rate.
What incentive though does this person then have to push himself even further when he'll start getting over 50% of anything else he earns taken off.

I just believe that once you've earned your first 150K for the year, you're in a pretty good position to start putting a slightly higher proportion back into society. Look at what you've just described: 5k/month mortgage sounds like a very nice crib. After the mortgage is paid, the individual still has 2k, which is in excess of the national average income, to cover other expenses. I live very comfortably on a combined income of less than half of 150K. If I got a 10K rise next year, I'd gladly pay 50% on it.

Teajay

It is a complete nonsense to pretend that 'National Insurance' is not an income tax, and a regressive one at that, i.e. it hits middle incomes hardest.

When Bismarck's Germany first introduced the concept of the state paying workers a [minimal] pension, it was such an outrageous idea that it could only be conceived of as a form of state insurance. Over a hundred years later, we should be able to join states such as Australia and pay a basic state pension [and scrap all the state pension 'funnies' no one actually understands, such as the 'Additional Pension'] out of general taxation. My vote was for 50% including this, and scrap all allowances.

Derran

People seem to fail to realise that once you hit 100k a year, you start to lose your tax-free allowance as well. So not only do higher earners have to see a certain proportion of their higher level lose 50% to tax, they also lose their tax-free allowance. I have a client who earns 160kish, and he pays tax on 166k because he has a company car. Yep - he pays tax on 6k MORE than he actually earns. How is that right?

People saying that a 50p tax rate is acceptable are simply jealous of the people earning that amount, and have bought into the whole 'bash the super rich' bandwagon. These are normal people who have worked ridiculously hard to earn their salaries, only to see HUGE swathes of it taken away in tax. I earn nowhere near those levels, but I'd be fuming in that position.

Everyone is having a go at bankers and high-earners these days, and then settling down to watch Match of the Day, or listening to their favourite singer/band in the car, and completely failing to see that these people they idolise earn far more money (and dodge more tax) and escape the rich-bashing entirely.

poppy10_2

Derran wrote: »

People seem to fail to realise that once you hit 100k a year, you start to lose your tax-free allowance as well. So not only do higher earners have to see a certain proportion of their higher level lose 50% to tax, they also lose their tax-free allowance.

Aww diddums. 20% tax on the usual tax-free allowance of £7474 equates to an extra £1494 a year. Forgive me if I'm not shedding tears for your client on £160k/year.

Tax 'em till the pips squeak, I say. 60% tax for those earning over £250k.

Derran

poppy10 wrote: »

Aww diddums. 20% tax on the usual tax-free allowance of £7474 equates to an extra £1494 a year. Forgive me if I'm not shedding tears for your client on £160k/year.

Tax 'em till the pips squeak, I say. 60% tax for those earning over £250k.

Selective quoting does not make your point more valid. Nor does using patronising language.

But thank you for proving my point about jealously.

stevemcol

Derran wrote: »

Selective quoting does not make your point more valid. Nor does using patronising language.

But thank you for proving my point about jealously.

In my experience, it's not jealousy that prevails but an intolerance of greed.
People on high salaries are welcome to it from my pov but they shouldn't baulk at paying tax that they can afford.

koshain

I am paying 40% tax on fair portion of my salary, NI on top. In addition to this I have to pay council tax as well.
I moved to UK from US 5 years ago and since then my pay has doubled but my standard of living has gone down as compared to my life style in US on a lower salary.
I think the current tax system in UK is unfair to mid class. I am the sole bread winner in my family and one my income of £60k I am far worse off.
The tax should be based on combined earnings of a family rather than individual.
Tax money should be used to pay for council expenses rather then home owner coughing up that money.
The tax should percentage should be standard for all regardless of what they earn

Derran

But who is anyone to say what greed is?

Is having more than you need greedy? In which case, everyone on this forum is greedy - we don't NEED Internet access. We don't NEED a computer. We're greedy for having one. One person's (un-needed) laptop is another person's (un-needed) Bentley.

I'm pretty sure that having a Starbucks every day is considered 'greedy' by the homeless guy begging outside on the pavement.

Equally, I'm sure that 150k/year earners see Premier League footballers wages and think 'greedy'.

Yet most people look at the Alan Sugar/Richard Branson/Theo Paphitis types and congratulate them despite their wealth. Are they 'greedy' too, or just excellent at what they do and deserving of their wealth?

It boils down to 'I wish I had that'. Anyone who calls a higher earner greedy, but who fails to donate any of their own excess cash to charity (hey, you don't need it, it excess!) is a hypocrite.

Zyyb

I see jealousy as a major part of people calling for higher taxes, people forget that the top 1% account for 30% of total receipts. If anyone is interested I made a chart of the effective tax rate paid, this includes Personal Allowance and NI. It doesn't include Married couples, child benefits or Age allowance, just your average individual (though more could be added if I have the time to do the maths!)

http://img815.imageshack.us/img815/808/effectivetaxrates2012ch.jpg

What do you think of the curve? I think the curve is fine after 40k but should be inverted before that, it's quite steep from 10-20k which is a little less progressive then I'd like

I think it's a fairer way of looking at it, if £28k is the average UK wage, the average person pays 23% tax, for those earning £150k the effective rate is 40%. Earning 5.3 times as much, contributes 9.3 times in tax.

Although the top rate is technically 50%, the effective 50% rate doesn't kick in until £925k, quite a big spread. This doesn't account for other taxes paid, SDLT, VAT, Customs & Excise of course.

aldredd

Zyyb wrote: »

I see jealousy as a major part of people calling for higher taxes, people forget that the top 1% account for 30% of total receipts. If anyone is interested I made a chart of the effective tax rate paid, this includes Personal Allowance and NI. It doesn't include Married couples, child benefits or Age allowance, just your average individual (though more could be added if I have the time to do the maths!)

http://img815.imageshack.us/img815/808/effectivetaxrates2012ch.jpg

What do you think of the curve? I think the curve is fine after 40k but should be inverted before that, it's quite steep from 10-20k which is a little less progressive then I'd like

I think it's a fairer way of looking at it, if £28k is the average UK wage, the average person pays 23% tax, for those earning £150k the effective rate is 40%. Earning 5.3 times as much, contributes 9.3 times in tax.

Although the top rate is technically 50%, the effective 50% rate doesn't kick in until £925k, quite a big spread. This doesn't account for other taxes paid, SDLT, VAT, Customs & Excise of course.

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