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Do You Think Income Tax Banding is Fair?
Comments
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guruchelles wrote: »In tax year 2013-14 personal allowance (for most people) will be £9440.
The 20% tax rate will apply to earnings up to £32010.
The higher rate of 40% will apply to earnings from £32011, plus the PA, which is £41450.
And if you're lucky enough to earn over £150000 you'll pay 45% tax on those earnings.
Is this, in your opinion, fair? Should the jump be from 20% to 40%? Should the 40% threshold have come down? Should the personal allowance have gone up?
Interested to hear opinions.
I tend to agree that the holding down or containing/cutting of the 40% tax banding is a cynical move to increase the tax take and to pay for the increased basic threshold..
As is the increase in NI 1% as is the 1-3% increase in public sector pension contributions.
The increase in VAT was obviously more blatant.
You are probably right that the same amount of tax could have been collected by continuing to increase thresholds and at the same time simply increasing the rates of tax by 1 or 2%. That would be far to obvious though.
It is balancing the books and making up fro the lower volumes of tax being collected as wage levels are contained or reducing as people progressively switch from well paid full time work to lower paid part time work not to mention growing aggressive tax avoidance at personal and corporate levels.
Whilst you are right to make pension provision you are correct that you do need to live and enjoy your life, within your means, in the here and now. Pensions are jam tomorrow who knows what lies ahead or what future generations of government will resort to to balance the books then.
Taxation only ever rises for the average Jo(e) squeezed somewhere in the middle.
Happy days."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Maybe we could reduce business taxes as an offset against increasing the minimum wage.
Interesting concept.
1.) Doubt they could be trusted to make it happen.
2..) What if they don't pay sufficient tax?
3.) Tax lost would need to be regained elsewhere.
4.) Would add to the public sector costs and taxation."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »I tend to agree that the holding down or containing/cutting of the 40% tax banding is a cynical move to increase the tax take and to pay for the increased basic threshold..
Why cynical? Seems basic financial management. As there has to be a balance to every change. Given that taxation revenue needs to increase to reduce the budget deficit.0 -
grizzly1911 wrote: »Interesting concept.
1.) Doubt they could be trusted to make it happen.
2..) What if they don't pay sufficient tax?
3.) Tax lost would need to be regained elsewhere.
4.) Would add to the public sector costs and taxation.
The tax lost would be regained from removal of tax credits and tax on the increased pay.'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 -
income tax should be reveresed. the fist 5k should be taxed at 90% and so on, until those earning over say, 50k pay no tax. this will encourage people to earn more.
if a few scroungers and layabouts have to starve, that is just an added bonus.0 -
Malcnascar wrote: »[/I]
In my opinion we like to earn so that we can have choices that affect our lives. We earn through either employment or self employment. Tax is necessary so the state has "earnings" to meet the obligations that our society has devolved to the state.
Should we all pay tax on every penny we earn. In my opinion no, this would be unfair to the lower paid and act as a deterrent to work, so I am in favour of personal allowances. I would aim to get this in line with the minimum wage based on a 40 hour working week.
I would set the starting rate at 20% from the personal allowance up to the annual equivalent of the avarage national wage
I would have a rate of 30% in another band up to twice the average national wage
I would have a rate of 40% in another band up to twice the national wage
I would have a rate of 50% in excess of this. I.E at this level you are earning 5 time the average wage plus the minimum wage.
I would stop further National insurance liability wnen the 40% rate applies. I.e.incomes in excess of 3 times national average wage plus personal allowance.
I would restrict access to work related benefits to individuals earning in the personal allowance and 20% and 30% bands. Or for couples with children double this.
This should help the transition to higher tax less draconian thereby encouraging self betterment and tax would be progressive.
Just my opinion, but by linking to minimum wage and avarage wages the tax take would vary in line with the performance of the economy.
No wonder the government treats us a fools when well informed people on this forum talk about tax rates of 20%, 40 % etc
NI is not a hypothecated deduction
so our tax deduction rates will be after april
32%
42%
47%
stop this nonsense about 20% etc.0 -
Thrugelmir wrote: »Why cynical? Seems basic financial management. As there has to be a balance to every change. Given that taxation revenue needs to increase to reduce the budget deficit.
Cynical in that they should be transparent and just up the income tax rates.Instead of shaving a bit here, adding a bit here, tweaking NI and hoping that nobody really notices;)
Or throw it all up in the air and come up with a simplified progressive system that clearly shows what you are paying."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »Cynical in that they should be transparent and just up the income tax rates.Instead of shaving a bit here, adding a bit here, tweaking NI and hoping that nobody really notices;)
Raising personal allowances is a transparent policy.
Hopefully the first steps in simplification.
NI is an employment tax . So cannot be applied to investment income or pension income for example.
So I'm unsure as to the best way of intergrating the taxes. Which is the obvious long term aim.0 -
The income tax rates are 20%, 40% etc. NI might act like income tax, but it isn't income tax. Any more than tax credits/benefit withdrawals rates are income tax, even though they have the same effect.No wonder the government treats us a fools when well informed people on this forum talk about tax rates of 20%, 40 % etc
NI is not a hypothecated deduction
so our tax deduction rates will be after april
32%
42%
47%
stop this nonsense about 20% etc.
If you want to include stuff that acts like income tax but isn't income tax then you need to include those too. Making rates of over 90% for some people. Such as those on £5k as suggested by another poster
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The income tax rates are 20%, 40% etc. NI might act like income tax, but it isn't income tax. Any more than tax credits/benefit withdrawals rates are income tax, even though they have the same effect.
If you want to include stuff that acts like income tax but isn't income tax then you need to include those too. Making rates of over 90% for some people. Such as those on £5k as suggested by another poster
indeed so but is makes a debate about what is 'fair' and then talking about 20, 40, 45 nonsense
any sensible discussion should indeed include tax credits / benefits although of course it makes it all very complicated0
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