Do You Think Income Tax Banding is Fair?

N1AK

Fella wrote: »

Depends where you live surely. I'd say supporting a family of 4 on £42k in London or most of the SE is breadline stuff. The typical mortgage payments alone would be a huge chunk of your take-home pay. Assuming reasonable provision was being put by for the cost of those kids during their teens etc I think £42k would be a massive struggle.

You're right that location will noticeably alter your costs, though generally it will only be housing that changes vastly even if you live in or around London.

That said £42k (+ child benefit) will never be breadline stuff even for a family of 4. You wouldn't be able to live in a big house in a nice neighbourhood for sure and you'd probably have to think about what you spend your money on but that's not the same as being unable to feed your family.

But this is all a bit of an aside. The suggestion was never that £42k was rich but that it is in fact a good wage. It shouldn't be shocking that living in London with a family of 4 on a single 'good' wage doesn't mean having piles of cash left over each month.

I earn a little less than that in Northamptonshire and even after paying towards a student loan, pension and 10 yeard mortgage I've been investing over £1,000 a month. How could I possibly claim I'm not earning a good wage when so many people are earning half or less of what I do?

Fella

£42k is not a bad wage but should not be the higher income tax threshold IMO. The higher rate used to be for the people actually on high wages. Fiscal drag etc have gradually pulled more & more people into that band.

ukcarper

Fella wrote: »

£42k is not a bad wage but should not be the higher income tax threshold IMO. The higher rate used to be for the people actually on high wages. Fiscal drag etc have gradually pulled more & more people into that band.

What percentage of working people should be above threshold IYO.

N1AK

Fella wrote: »

£42k is not a bad wage but should not be the higher income tax threshold IMO. The higher rate used to be for the people actually on high wages. Fiscal drag etc have gradually pulled more & more people into that band.

The thing is that in isolation that comment is just as vacuous as someone saying "no one should ever pay any tax, they earnt the money so why should it be taken off them". It's an understandable sentiment but without any consideration of how the nations finances are going to be altered to make the change viable.

If they're going to cut tax then it makes more sense (imo) to cut it on people earning £20k and trying to look after a family of 4 than someone earning £40k and doing the same

Fella

I don't know how it equates to as % of people but a fag-packet finger in the air stab at what level it should be at would be more like £60k minimum IMO.

Fella

N1AK wrote: »

The thing is that in isolation that comment is just as vacuous as someone saying "no one should ever pay any tax, they earnt the money so why should it be taken off them". It's an understandable sentiment but without any consideration of how the nations finances are going to be altered to make the change viable.

Yeah I agree talking about one thing that should be changed in isolation is a bit meaningless. But since it's what this thread was about just dipping in.

N1AK wrote: »

If they're going to cut tax then it makes more sense (imo) to cut it on people earning £20k and trying to look after a family of 4 than someone earning £40k and doing the same

That bit I don't agree with since the person on 40k is already paying much more tax than the person on 20k. But thats where the arguement stops being economic & gets political I guess.

N1AK

Fella wrote: »

I don't know how it equates to as % of people but a fag-packet finger in the air stab at what level it should be at would be more like £60k minimum IMO.

A single £60k income would put a household in the top 5% of household incomes. So 95% of people should be paying low rate or no tax? How exactly do you envisage paying for that?

TrickyDicky101

michaels wrote: »

How is this for a suggestion - everyone should be paid their gross slary and then have to pay the tax (NI or whatever you want to call it) each month as we do with council tax - I suspect it might help to concentrate minds on what were priorities when it came to public spending...

I agree witht his - the current PAYE set up means many people (myself included) might overlook just how much of our earnings are taken to fund the State. It would be much more 'in yer face' if we had to physically pay from our own cleared funds each month.

Fella

N1AK wrote: »

A single £60k income would put a household in the top 5% of household incomes. So 95% of people should be paying low rate or no tax? How exactly do you envisage paying for that?

Basic rate tax isn't low rate. And someone on £60k would be paying a lot of it and a lot of NI too (especially once you factor in the NI their employer would be paying on their £60k wage).

Regarding how I'd pay for it, that's too much to go into, on this thread anyway. I think our finances should be run very differently to how they are.

grizzly1911

TrickyDicky101 wrote: »

I agree witht his - the current PAYE set up means many people (myself included) might overlook just how much of our earnings are taken to fund the State. It would be much more 'in yer face' if we had to physically pay from our own cleared funds each month.

Try looking at your P60 each year.