What should the maximum Income Tax rate be?

StevieJ

CutTheJargon wrote: »

Does that mean that Marketing people should pay more tax? Or sales people?

Especially so! for those who make those unwelcome telephone calls, no I correct that, those who profit from those calls

StevieJ

50% should be the top rate, justification would be the Laffer curve, the oft quoted reason for cutting tax by the Libertarian/right wing mob. Seems like 50% is the optimised revenue raising rate according to that chart, and we do have a Trillion+ shortfall to pay off

bh01

This thread is a really good read.
In principle I'd like to see a high tax-free allowance and then something like 25 or 30% for most people and maybe 40-45% at the top end.
But NI should be wound into it all to make it simple, adding some %. In fact, doesn't 20%+NI make some moderate earners' effective marginal rate over 30%?

Anyway...
I wonder what the effect would be of going further:
Give everyone a basic citizen's payment (instead of state pension, jobseekers allowance, housing benefit, etc.), do away with means tested benefits, and tax a bit harder (30%?) with a very small (or zero) tax free allowance.
So everyone gains by working, no benefits trap, no financial incentive to have kids, etc.. I suspect the practicalities and risk of paying out to fictional people is just too great but the theory interests me.

HappyMJ

bh01 wrote: »

This thread is a really good read.
In principle I'd like to see a high tax-free allowance and then something like 25 or 30% for most people and maybe 40-45% at the top end.
But NI should be wound into it all to make it simple, adding some %. In fact, doesn't 20%+NI make some moderate earners' effective marginal rate over 30%?

Anyway...
I wonder what the effect would be of going further:
Give everyone a basic citizen's payment (instead of state pension, jobseekers allowance, housing benefit, etc.), do away with means tested benefits, and tax a bit harder (30%?) with a very small (or zero) tax free allowance.
So everyone gains by working, no benefits trap, no financial incentive to have kids, etc.. I suspect the practicalities and risk of paying out to fictional people is just too great but the theory interests me.

You don't have to physically pay out the money like they currently do with tax credits. You could build it into someones pay packet so if they earn minimum wage they pay no tax. There would have to be some form of conditionality to get a physical payment such as looking for work, looking after young children, being old enough to retire or being sick.

Derivative

I think that we should eliminate all personal allowances and make Income Tax, CGT, National Insurance and all the rest a flat rate for all.

It makes me cringe when I hear 'make the wealthy pay'.
Simply jealousy. Noone in this country is starving.

The 100% options are just hilarious. Utterly hilarious. I wonder if these people play the lottery? You'd win it and get zero.

MothballsWallet

MothballsWallet wrote: »

I still think there should be a super-high rate for celebrities and sports stars (eg footballers) who have endorsement deals - after all, what extra work do they do for that money? Just wear and talk up the product(s) in question. That's about it (from the outside).

So why shouldn't they pay a higher rate on that money because they've done very little extra to earn it?

The tax system should allow people to be rewarded for actual work that benefits them and others, not for promoting brand X over brand Y for whatever reason(s) (including the endorsement deal).

CutTheJargon wrote: »

Does that mean that Marketing people should pay more tax? Or sales people?

See bit highlighted in quote of my original post. Marketing and sales people do that.

N1AK

oldvicar wrote: »

I'm very tempted by the arguments advanced for a flat tax - such as everyone pays the 30 or 40 % on income above a tax-free allowance. Elegantly simple and cheap to administer and nicely progressive (or "fair" in today's parlance).

It's only elegant to people who ignore the huge downsides and it's far less progressive than our current system.

Factor in that the top 1% of earners pay 35% of income tax and you'll find that the flat rate would indeed be around 30-40% (say 35%) of everything earned over ~£12,500. If you used as a rough basis then you'd be increasing the tax on everyone earning between around £18,000-£100,000 in order to give a tax break to those on more...

N1AK

Derivative wrote: »

I think that we should eliminate all personal allowances and make Income Tax, CGT, National Insurance and all the rest a flat rate for all.

It makes me cringe when I hear 'make the wealthy pay'.
Simply jealousy. Noone in this country is starving.

I'd also like to see NI incorporated into Income tax and other simplifications of the tax system.

I have to wonder just how keen everyone who talks about a flat rate tax would be on the idea when they find out that you'd have to earning well over £100,000 a year to be better off and that people earning ~£20,000-£60,000 would be those hit hardest by it.

DavidLaGuardia

lkate wrote: »

I don't think anyone, regardless of their income should have 50% of their hard earned cash taken away from them.

"hard earned" is subjective. Baz Luhrmann in "Everyone's Free (To Wear Sunscreen) sings the line everything is half-luck.

I neither subscribe to the destructive socialist way of thinking nor the uber-captitalist idea that everything is purely a result on one's own efforts

Luck can be immediate or be as a consequence of the opportunies given through life including who your parents were, what education you had etc. Those on very high levels of income derive a greater share of the wealth creation system that exceeds their own efforts. 50% at a higher level simply means you share that luck and still keep half of it!

Equally the tax system needs to be sensible so we don't drive out talent (as pointed out by others posters).

My final point (perhaps the most important) to me is that income tax (I include NI) is extreme when compared to taxes on unearned income or capital gains. It is illogical that those earning through effort pay more than those whose earnings are from doing nothing.

BNT

DavidLaGuardia wrote: »

My final point (perhaps the most important) to me is that income tax (I include NI) is extreme when compared to taxes on unearned income or capital gains. It is illogical that those earning through effort pay more than those whose earnings are from doing nothing.

I think the logic is that the sources of unearned income are bought in the first place from earned income. People buy stocks and other investments with money that has already been taxed once.

As for hard work, etc. I think people tend to forget that we get paid for adding value, not for working hard.