Psychology of accepting higher rate tax

Albermarle

HCIMbtw said:

I 100% share this mental struggle.. per my recent post a new job will take me beyond being able to sacrifice down to the basic rate..

And with the child benefit it makes that effective £50-60k transition a hard psychological pill to swallow

I also share concerns for what albermarle highlights.. e.g. complete reform, and it potentially screwing with sacrifice and diligence in contributing heavily to my pension at younger age

I really want more money in an ISA, for the flexibility of being able to withdraw it (in advance of rule changes) and to use it in the event I want to retire early, which I do.. but the higher rate acts as such a barrier to me accepting it and giving me the ability to take home more

I'm still early days, mid 30s, pension pot is less than six digits.. so think I'm gonna just try max out pension these next 3 years or so... Maximum tax efficiency, Should put me in a good position to then step back and enjoy taking more salary. My mortgage will be up for renewal then as well, so can probably re-evaluate quite a lot.

A phrase often used in the Pension/Investments forum is 'Don't let the tax tail wag the investment dog'
In practice it means do not let some dislike of paying tax, interfere too much with your decision making about your finances. Of course you want to be as tax efficient as possible, but not to the point of it distorting other priorities too much.
Another phrase is ' there are only two things certain in life - death and taxes' 

pjcox2005

Grumpy_chap said:

pjcox2005 said:

I'm like paying tax. Higher tax is an indicator of greater wealth and salary, has an impact to society as a whole and basically states that I have security and options that 99% of the world's population don't have. It should be something to be proud of.

That's an interesting line of thought, but I'd particularly like to understand the part about "options that 99% don't have".

Periodically, in this forum and elsewhere, comments are made that if you earn £x you are in the top 1% of income for the world.  But, just having that income position in the global order does not necessarily create all the extra options that are inferred.  The higher income is linked to higher costs of living in the UK.  

What would the similar % of global income be for a full-time work on UK NMW?  Probably also a very high position in that global order, but not creating a life of luxury or massive choices.

Fair point there is a higher cost of living in UK which goes to that wage so may be its perceived wealth, but I'd suggest I can travel to most places (maybe not US with current exchange rate) and be able to afford to maintain a higher standard of living for a reasonable period of travel, i get private medical insurance through work which protects me more than most etc. which does come in part by being a higher rate tax payer (accepting some employers offer private medical for all).

Apologies though i'm derailing the thread i just find it interesting that often tax is considered a negative thing.