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  • FIRST POST
    Former MSE Lee
    Is it time to end the 50% tax rate? Poll discussion
    • #1
    • 5th Sep 11, 10:42 AM
    Is it time to end the 50% tax rate? Poll discussion 5th Sep 11 at 10:42 AM
    Is it time to end the 50% tax rate?

    Poll started 05 Sept 2011, click here to vote

    In April 2010, those earning over £150,000 got a new 'top rate' of income tax at 50% as well as losing other tax benefits. The Chancellor, George Osborne, has asked the Inland Revenue to investigate whether it's actually raising the UK any more money.

    Pro 50p rate say: Higher earners need feel the pain too, and can afford to pay more

    Anti 50p rate say: It disincentivises growth/success and encourages wealthy to take cash away from UK

    Which of these is closest to your view?


    A. Iím NOT a top rate payer. It should be more than 50%
    B. Iím NOT a top rate payer. 50% is fine and should stay
    C. Iím NOT a top rate payer. 50% is too high and should be cut
    D. I am a top rate payer. It should be more than 50%
    E. I am a top rate payer. 50% is fine and should stay
    F. I am a top rate payer. 50% is too high and should be cut


    Click reply to discuss
Page 1
  • snmrw
    • #2
    • 5th Sep 11, 12:26 PM
    • #2
    • 5th Sep 11, 12:26 PM
    It should be a case of graduated taxes - for example, rather than having 3 tax bands (no tax, basic tax and high tax), it should be a graduated. It is stupid that someone earning 50,000pa should be on the same tax and as footballers earning 50000 a week! I am not sure how it would work out, but I do think more stratification would may the system fairer.
    • wozearly
    • By wozearly 5th Sep 11, 5:58 PM
    • 202 Posts
    • 210 Thanks
    wozearly
    • #3
    • 5th Sep 11, 5:58 PM
    • #3
    • 5th Sep 11, 5:58 PM
    Interesting that the survey seems to suggest a broadly even split between non-higher rate payers saying that 50% is fine and 50% is too much.
  • carlw
    • #4
    • 5th Sep 11, 6:34 PM
    • #4
    • 5th Sep 11, 6:34 PM
    It should be a case of graduated taxes - for example, rather than having 3 tax bands (no tax, basic tax and high tax), it should be a graduated. It is stupid that someone earning 50,000pa should be on the same tax and as footballers earning 50000 a week! I am not sure how it would work out, but I do think more stratification would may the system fairer.
    Originally posted by snmrw
    there are 4 tax bands if you include zero tax free allowance!

    tax free allowance, first 7,475
    basic rate = 20% upto, from 7,475 to 35,000
    higher rate = 40% from 35,001 to 150,000
    crazy rate = 50% above 150,001

    im not in the 50% tax bracket but i do think that there is a big difference between somebody on 155,000 a year and the millionaire traders, hedgefund managers, sportsmen, business owners that have expensive tax lawyers that are paid to avoid tax. There must be a more efficient way of taxing the really rich and ensuring they pay their fair share, a mansion tax may work better, or a higher rate of capital gains tax. Why dont the government employ an expensive tax expert to shut down the loop holes, im sure it would be worth the expense.
  • g0recki
    • #5
    • 5th Sep 11, 8:56 PM
    • #5
    • 5th Sep 11, 8:56 PM
    How much revenue is the 50% band raising?
    If it's not raising much, scrap it.
    If it's raising a reasonable amount, keep it.

    If it is scrapped, it should be replaced by some form of wealth tax, such as the mansion tax proposed by Vince Cable.
    • Brydav
    • By Brydav 5th Sep 11, 9:14 PM
    • 37 Posts
    • 66 Thanks
    Brydav
    • #6
    • 5th Sep 11, 9:14 PM
    Inland Revenue not doing it's job?
    • #6
    • 5th Sep 11, 9:14 PM
    I'm fine with the higher earners paying a bit more, as long as it's working effectively. If it's not - scrap it.

    But...

    "George Osborne has asked the Inland Revenue to investigate whether it's actually raising the UK any more money."

    You mean it hasn't done this already?

    Surely Inland Revenue should already be constantly monitoring whether changes in the tax system have a positive or negative effect on the amount of revenue raised. No wonder the country is in the state it's in if they only look into it when asked to by a politician!
  • stevegoodman
    • #7
    • 5th Sep 11, 9:27 PM
    • #7
    • 5th Sep 11, 9:27 PM
    Sorry, I think we all get taxed too much anyway, so on principle I would vote to scrap it.

    And if they are thinking of scrapping the 50% rate maybe they should consider raising threshold for the 40% rate too, or allow married/people in civil partnerships to pool their tax allowances.

    Steve
    • vbrindle
    • By vbrindle 5th Sep 11, 9:40 PM
    • 119 Posts
    • 70 Thanks
    vbrindle
    • #8
    • 5th Sep 11, 9:40 PM
    Inflation
    • #8
    • 5th Sep 11, 9:40 PM
    I had to mention this. This little thing called inflation.

    Eventually we are all going to need pay rises as the cost of things are always going up. This is what inflation does. It makes things cost more and means everyone will need to be paid more.

    I suspect most are on the 20% tax rate but how long will it take before many tip over to the 40% rate?

    I have a long way to go before I earn 35K but is 35K that much today? When you think of house prices to the cost of food and petrol it's not much.

    Here's something to think about... I know it's more complex than this (I'm not including national insurance) but someone earning £26,250, after tax the monthly amount would be £1,750. For someone earning £35,000 it would be the same.

    Ok my figures won't exactly be accurate but if I was on £34k and my employer said they are giving me a 1K pay rise which would breach the threshold I would tell them to sod off. I'm sure many others would too.

    I guess the same would apply to those on £149k

    The truth is, tax isn't fair in this respect. A big jump like that is unfair.

    All of this is because it's too much like hard work for them to have more tax bands.

    I'm all for people paying more tax the more they earn but I don't think the current tax system is fair.
    • vbrindle
    • By vbrindle 5th Sep 11, 9:47 PM
    • 119 Posts
    • 70 Thanks
    vbrindle
    • #9
    • 5th Sep 11, 9:47 PM
    • #9
    • 5th Sep 11, 9:47 PM
    Sorry, I think we all get taxed too much anyway, so on principle I would vote to scrap it.

    And if they are thinking of scrapping the 50% rate maybe they should consider raising threshold for the 40% rate too, or allow married/people in civil partnerships to pool their tax allowances.

    Steve
    Originally posted by stevegoodman
    I agree with maybe raising the threshold for the 40% tax rate but for allowing couples to pool their tax allowances makes it unfair for single people.

    Going to child benefit that was mentioned by the conservative government (oh sometime within the last 12 months I think). It was announced that if they earned more than a certain amount they would lose this, yet if a couple both earned less than the threshold they would get it. This is unfair on the single parents out there I think.

    I fall into neither of these categories but I still see what is fair and what isn't.
  • deano98
    Here's something to think about... I know it's more complex than this (I'm not including national insurance) but someone earning £26,250, after tax the monthly amount would be £1,750. For someone earning £35,000 it would be the same.

    Ok my figures won't exactly be accurate but if I was on £34k and my employer said they are giving me a 1K pay rise which would breach the threshold I would tell them to sod off. I'm sure many others would too.
    Originally posted by vbrindle
    It doesn't work like that, you only pay 40% on anything you earn over £35K (up to £150K), once you go over £150K you pay 50% on anything over £150K
    • MSE Martin
    • By MSE Martin 5th Sep 11, 10:29 PM
    • 8,116 Posts
    • 42,310 Thanks
    MSE Martin
    Talking about raising or lowering the tax rates for the rich is like debating how much money the Italian government would make if they sold fishing licenses for people to fish in the Trevi Fountain in Rome.

    The rich, and large corporations spend more money dodging taxes and hiding it offshore than they actually pay, so the subject is a moot point.

    What we should be discussing is 'why do we allow the government to have so much power over our lives and waste so much of our money through excessive general taxation'?
    Originally posted by teddyco
    That is of course one of the reasons some suspect the 50% rate doesn't raise additional revenue, as it is an increased incentive to avoid it (see laffer curve) and it is argued disincentives people from enterprise (or at least within the UK).

    Take this to its logical conclusion - then to an extent by raising the 50% threshold, it only really impacts the higher earners who don't play the system.

    The real difficulty with the 50% rate, if (and that's a big if) it is shown not to raise additional revenue - and therefore not be income distributive, is it should be continued on principle just for the sake of ensuring higher earners pay more?
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

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  • g0recki
    I agree with steve goodman that we all pay too much income tax. But I don't think that necessarily means supporting scrapping the 50% rate, because only the highest earners pay it. If we all pay too much tax, then raising the personal allowance is the way to give everyone a tax cut, not just those making mega-bucks.

    Thinking about income tax, I just don't think it's fair at all. I think most of us think social mobility is a good principle - everyone should be able to succeed in life from whatever background. But the only way people from poor backgrounds can financially succeed in life is by earning income. So taking a percentage of people's hard-earned income away from them is anti-social mobility.

    What's confusing is that it's normally left-wing folk who get most worked up about poverty, disadvantage and so on. But then the left are the ones who are for increasing the tax on our incomes. I think this is one of the biggest failings of logic of the left.
    • beanybot
    • By beanybot 6th Sep 11, 8:55 AM
    • 15 Posts
    • 5 Thanks
    beanybot
    I think its mental people who earn 150k+ should give half their money to the government. Don't get me wrong, I only earn 16k but I have ambition and hopefully one day want to earn a lot of money but this tax system doesn't exactly encourage you to strive to better yourself or your income. Of course higher earners should pay more tax but not 50%, that's mental and just penalizes people for being successful.
    • JimmyTheWig
    • By JimmyTheWig 6th Sep 11, 9:10 AM
    • 11,885 Posts
    • 11,412 Thanks
    JimmyTheWig
    Anti 50p rate say: It disincentivises growth/success and encourages wealthy to take cash away from UK
    I have a real bee in my bonnet about this at the moment.

    Those on tax credits (i.e. most people with children) lose 73% of any extra income they earn through tax, NI and reduced tax credits.
    And if that increase pushes you into paying higher rate tax it's even worse as you're looking at losing child benefit next year.

    Many on benefits are worse off financially if they work.

    Yet we're all expected to work as hard as we can while those top earners are expected to take their cash away from the UK if they have to lose 50% of any extra they earn.
    It's all just a con to try to persuede us to let the richest people keep more of their money.
    • wozearly
    • By wozearly 7th Sep 11, 7:25 AM
    • 202 Posts
    • 210 Thanks
    wozearly
    It doesn't work like that, you only pay 40% on anything you earn over £35K (up to £150K), once you go over £150K you pay 50% on anything over £150K
    Originally posted by deano98
    Actually, that's not quite right. The thresholds stack on top of each other, so you don't start paying 40% tax until you've earned £7,475 of tax-free income plus £35,000 of 20% taxed income (ie, your annual income is over £42,475).

    The 50% band hits people with annual incomes of over £192,475.
    • wozearly
    • By wozearly 7th Sep 11, 7:29 AM
    • 202 Posts
    • 210 Thanks
    wozearly
    I have a real bee in my bonnet about this at the moment.

    Those on tax credits (i.e. most people with children) lose 73% of any extra income they earn through tax, NI and reduced tax credits.
    And if that increase pushes you into paying higher rate tax it's even worse as you're looking at losing child benefit next year.

    Many on benefits are worse off financially if they work.

    Yet we're all expected to work as hard as we can while those top earners are expected to take their cash away from the UK if they have to lose 50% of any extra they earn.
    It's all just a con to try to persuede us to let the richest people keep more of their money.
    Originally posted by JimmyTheWig
    The same problem applies wherever the marginal tax rate is high, and is a strong argument for looking at whether the systems are working as intended (ie, raising more revenue) or encouraging evasive behaviour and unintended consequences.

    Edit: Just to clarify, I agree completely with your point. The same logic for revisiting and reviewing whether the 50% tax rate is 'right' should be applied to whether working tax credits are working in the 'right' way.
  • libertino
    If the economists say it should be cut, I trust their expertise. However, whatever level it is set to is what the taxman should fully recoup from the taxpayers. The rich choose to spend much of their time living and working in the UK because they find it a great place to live. If they want it to stay that way and they want to continue benefitting from that, they must contribute. It's morally terrible that they would want to find workarounds to pay as little tax as legally possible, paying accounting experts to save paying more to the taxman. If they want to do their banking in tax havens, see if they find them havens to live in too.
    • pinkpanther22
    • By pinkpanther22 7th Sep 11, 8:31 AM
    • 12 Posts
    • 18 Thanks
    pinkpanther22
    The higher tax rates are a considerable dis-incentive. There is also a point where if you are self-employed via a limited company in order to keep your tax and NICS affairs in order you actually end up paying tax at closer to 62% by the time you have taken into account corporation tax as well as your own and your employee's income tax requirements. (I should add I'm not in this situation, but my partner is). Exactly what incentive is there to grow a business and employ people if that's going to happen?

    Why is anyone surprised that people try and dodge the system when it is patently unfair. Moreover, why should people who work hard have to fund the lifestyles of a social underclass (in the form of benefits) that the Labour government facilitated. The argument is not simply about paying the tax, it's also about where it's being wasted.
    • worldwheeler
    • By worldwheeler 7th Sep 11, 9:38 AM
    • 232 Posts
    • 122 Thanks
    worldwheeler
    I had to mention this. This little thing called inflation.

    Eventually we are all going to need pay rises as the cost of things are always going up. This is what inflation does. It makes things cost more and means everyone will need to be paid more.
    Originally posted by vbrindle
    I would say who is going to get this fictitious pay rise?? I don't think you understand inflation and what it does or who controls "the business cycle" Capital is king and labour is slavery. The capital interests will use their bought and paid for Muppet press prostitutes to push a guilt trip on to the people that its all their fault the country is in debt!! Austerity, yes you people who went out and duped bank managers into lending you £300,000, when you work in a shop earning £19k, it is your fault and therefore all shop, factory and manual labour have to be chastised and have no services for even greater tax payments. The greater tax is used to pay the poor stupid banker who was SO fooled by the brilliant shelf stacker into lending all that paper. It's a system of wealth transfer that is run and controlled by the few people that benefit from it to the detriment of the many. "Never in the field of finance has so much been stolen from so many by so few for their own benefit"


    Its all a dream. Persuade the public that one day they will be rich, a member of the elite, and they will demand protection for their masters even though these lords will tweak the controls of THEIR financial system and money supply which will ensure the people remain indentured slaves to the lords ever increasing benefit. "It's called the American dream because you can only believe it if you are asleep"
    • Saetana
    • By Saetana 7th Sep 11, 11:56 AM
    • 1,207 Posts
    • 2,326 Thanks
    Saetana
    The whole idea of PAYE (pay as you earn) is that a person pays an amount of tax on every pound they earn above their personal tax allowance. As top tax bracket payers are paying tax on a LOT more pounds than basic rate payers on average then I see no reason why they should get stung with a 50% tax level, add on national insurance and these people can be paying more than half their wages in tax beyond a certain point, which is totally ridiculous! I do think the Conservatives will get rid of the 50% tax bracket when they can but, the way things are going at the moment, this could be a long time, unless of course it proves that the 50% tax code is not working which would not surprise me one little bit.

    By the way, I am not nor ever have been a top rate taxpayer, my position is one of fairness, why should those who have either taken time and spent money to get an education or have worked themselves to the top of their career, or built up a business, have to pay a larger percentage per pound than those with less drive and who contribute less to the economy as a whole? Too many people on here lump all rich people together, more of them have made their money than have inherited it and it is these people we need to keep in this country.
    Last edited by Saetana; 07-09-2011 at 12:07 PM.
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