Is it time to end the 50% tax rate? Poll discussion

Former_MSE_Lee · 5 September 2011 at 11:42AM

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. I’m NOT a top rate payer. It should be more than 50%
B. I’m NOT a top rate payer. 50% is fine and should stay
C. I’m 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

snmrw · 5 September 2011 at 1:26PM

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 · 5 September 2011 at 6:58PM

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 · 5 September 2011 at 7:34PM

snmrw wrote: »

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.

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 September 2011 at 9:56PM

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 · 5 September 2011 at 10:14PM

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! :mad:

stevegoodman · 5 September 2011 at 10:27PM

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 · 5 September 2011 at 10:40PM

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 · 5 September 2011 at 10:47PM

stevegoodman wrote: »

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

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 · 5 September 2011 at 11:06PM

vbrindle wrote: »

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.

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 · 5 September 2011 at 11:29PM

teddyco wrote: »

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'?

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?

Is it time to end the 50% tax rate? Poll discussion

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