Secure Trust Bank?

ColdIron

I think someone needs to sit down and have a nice cup of tea

bowlhead99

derrick wrote: »

By definition the more you earn the more tax you pay, I do not see why when someone reaches £40000 they should have to pay twice the amount in tax on the extra, they would pay more by definition at 20%.
.

If food costs £10 a week and renting a basic place to live is £5k a year and other misc expenses for yourself and family are another £6k a year, maybe you can get by on £12k income for the 2017/18 year and still pay a little bit of tax. After all, you have £12k coming in and only £11500 of expenses, so you have £500 of "disposable income" on which you can pay 20% tax. This costs you £100 out of your £500 disposable income. But actually it's less than 1% tax on your total, but it still feels like a lot.

If you earn £46000 and still have the same expenses you have £34500 of disposable income, £33500 is charged at 20% and the next £1000 at 40%. That's a £7100 tax bill on the £46000 which is 15% ish, quite a lot more than the other guy paying under 1% on his gross. But on your disposable income of £34500, you're only paying about 20.5% tax, barely anything more than the other guy as a percentage.

And in practice, you live like a king because you can have pist twenty grand up the wall and still afford rent and food and toys for the kids, while if the other guy tried to take even one grand and pistit up the wall, he and his family would be living in the street because they can't afford rent.

Thus, a progressive rate of tax was born, with people paying a greater proportion of their income if they have a lot more income than mr average.

RichyRich

Bowl head, I am bookmarking your explanation of progressive taxation, as it explains it far more articulately than I ever can! Thank you.