The Ayatollah Buggeri Posted December 4, 2010 Share Posted December 4, 2010 (edited) not really a significant amount of money to those of us earning more than 42k. As someone earning £43,873pa I estimate that this change, plus the increase in NI, plus being dragged into the higher rate NI bracket (which is the real kicker), plus the VAT increase on non-discretionary spending is going to decrease my disposable income by £100-150 a month, from a take-home pay of about £2,500 to £2,350. I'm also looking my rate of contributions for my workplace pension scheme increasing by 2% (of salary) a year from April, which will be around another £50. I don't have any workplace perks such as a car and neither do I have any children (hence I won't lose the child benefit I don't currently get). But even so, the loss of £200 a month or so in consumer spending power I would argue is significant. I will also end up around £300-400 a year worse off thanks to the increases in air passenger duty: my fiancee lives in the United States, and over the course of this year I will probably buy two or three transatlantic air tickets. The going rate for a return from Teesside to Anchorage has increased from around £500 to around £600-650 as a result of recent tax hikes. Some might argue that this is discretionary, but it's spending I feel I need to prioritise. The way I'm intending to deal with it is to reduce the amount of eating out I do from around once a week to once a month, more or less stop drinking in the new year and delay plans to replace my home computer by at least a year (though I'm thinking about buying a laptop on my next visit to a 'zero sales tax' state in the US and bringing it home). For the computer that's £200 or so in VAT straight away that the government won't be getting, a quite substantial amount paid in taxes by restaurants indirectly, and in alcohol duty and VAT. My overall tax spend will probably go up, but I'm definitely thinking about ways of reducing discretionary spending that attracts VAT and/or high rates of specific duty. I think the vast majority of people in this country wouldn't think £42000 was a relatively modest income It's 1.6x the national average salary, although the standard of living it buys you is probably a lot closer to that average once you factor in the fact that those actually earning the national average or below are having their income supplemented substantially by benefits and tax breaks of various kinds, whereas most of those earning above it are not. There are two points about taxing higher income. Firstly is that it may encourage the wealth creators to emigrate, which clearly doesn't apply at just over £40k and secondly that it will discourage people striving to improve their working skills so as to get better jobs, which clearly does apply. Precisely. My fiancee and I are currently mulling over whether we're going to settle in Britain or the US after we're married, a complex equation that includes our family situations, our job situations, immigration requirements and of course income and taxation. So far it's turning out to be a finely balanced equation, but the impending tax hikes on what I would describe as 'middle standard of living' Britain (i.e. not necessarily middle earned income) is starting to tip the balance quite decisively in terms of my going to the US. I am currently pursuing two possible job opportunities there, and if either comes off it's not going to be a very hard decision to leave. Agreed too on career development. I'm simply not bothering with an application for promotion at the moment, because almost all of the pay rise would be consumed in tax and the extra responsibilities would take time away from the extra-curricular consultancy work I undertake that A, nets me a lot more, and B, maintains a network of contacts and develops a reputation that will assist in landing a substantively better job elsewhere. Edited December 4, 2010 by The Ayatollah Buggeri Quote Link to comment Share on other sites More sharing options...
ken_ichikawa Posted December 4, 2010 Share Posted December 4, 2010 It will encourage people to pay more into pensions, which might be the real aim of this policy. A whole generation of well paid people paying massively into pensions will help the city over the years and will also allow for means testing of pensions in 20 years time. At which they get ganged by the 90% fees charged on pensions, which means their pensions are worthless. Add in inflation and their pensions will buy a loaf of bread every other week. Quote Link to comment Share on other sites More sharing options...
nohpc Posted December 4, 2010 Share Posted December 4, 2010 It will encourage people to pay more into pensions, which might be the real aim of this policy. A whole generation of well paid people paying massively into pensions will help the city over the years and will also allow for means testing of pensions in 20 years time. agree. This could force more money into pensions giving the government a nice big pot of money they can grab at any chosen time depending on what rules they want to impose. I'd love to put money into a private pension but I just don't trust any government not to rape it up the ass. People should be putting their money into ISAs now. As much as they can afford every year. When you are a higher rate tax payer after a few years you will be earning a lot on your stocks and shares ISAs which they can't touch with their 40% tax. Quote Link to comment Share on other sites More sharing options...
nohpc Posted December 4, 2010 Share Posted December 4, 2010 I can vouch for this, the endless discussions, the arguments and media and political talk is ENDLESS. It, together with the weather, darkness during winter and are the top three things I don't miss at all. Well it's nicer in the summer there actually. However, I think the uk is so immensly decked on so many levels that I do wonder if moving back there is a possibility. But my gf had a uk law specific job so non transferrable. oh well. Might as well just give up and form the rest of your life plan around this one thing even if it makes you miserable. Quote Link to comment Share on other sites More sharing options...
Snafu Posted December 4, 2010 Share Posted December 4, 2010 oh well. Might as well just give up and form the rest of your life plan around this one thing even if it makes you miserable. haha fair enough. Considering her pay, and that she would never ever get anything near that if she moved to Sweden, it could be a hard pill to swallow. Saying that, the living costs in Sweden are much much lower, depending on where you want to live. Saying that, where the living costs are lower, there aren't that many jobs. Well if you're an engineer there's actually plenty, but I'm not. Quote Link to comment Share on other sites More sharing options...
nohpc Posted December 4, 2010 Share Posted December 4, 2010 haha fair enough. Considering her pay, and that she would never ever get anything near that if she moved to Sweden, it could be a hard pill to swallow. Saying that, the living costs in Sweden are much much lower, depending on where you want to live. Saying that, where the living costs are lower, there aren't that many jobs. Well if you're an engineer there's actually plenty, but I'm not. There must be a haven somewhere on this planet for intelligent, young people who want to work, have a suitable home and contribute to society and possibly knock out some likewise offspring. Dunno where it is though. Your girlfriend could probably get a job in NZ or America. I have a friend who is a high flying lawyer who's firm had offices in NZ and New York. He's done NZ and is now off to New York. Quote Link to comment Share on other sites More sharing options...
Protect Rural England Posted December 4, 2010 Share Posted December 4, 2010 There must be a haven somewhere on this planet for intelligent, young people who want to work, have a suitable home and contribute to society and possibly knock out some likewise offspring. Dunno where it is though. Your girlfriend could probably get a job in NZ or America. I have a friend who is a high flying lawyer who's firm had offices in NZ and New York. He's done NZ and is now off to New York. Quote Link to comment Share on other sites More sharing options...
Protect Rural England Posted December 4, 2010 Share Posted December 4, 2010 Of course it is absurd anyone earning in excess of £42,000 should be paying 40% uncome tax. Legalised theft. on the other hand......... a few lefties, ie public servants such as teachers, policemen, NHS workers etc will now know what it is like to have to pay for their largesse. So in time it will filter down to the masses that paying unfair amounts of tax for relatively menial jobs that actually produce no revenue for this country is counter productive. There is only one way to stimulate the economy and that is to tax less NOT more. Charge less income tax to encourage savings, increase tax on nice to have not need to have purchases. So food and shelter (first primary residence = zero), nice to have not need to have increase accordingly. Cut back the public sector 75% outright. Then we might be on the road to recovery. In the meantime you luvvies enjoy the bastards stealing your money Quote Link to comment Share on other sites More sharing options...
South Lorne Posted December 4, 2010 Share Posted December 4, 2010 (edited) I think the vast majority of people in this country wouldn't think £42000 was a relatively modest income ....there is a family in the press today earning £30,0000pa tax free on benefits ...and they want a bigger house ...five bedrooms ..no less.....they cannot afford to work as they would lose many of their benefits...reconsider your position when you put this into context....and your vote..... Edited December 4, 2010 by South Lorne Quote Link to comment Share on other sites More sharing options...
Protect Rural England Posted December 4, 2010 Share Posted December 4, 2010 ....there is a family in the press today earning £30,0000pa tax free on benefits ...and they want a bigger house ...five bedrooms ..no less.....they cannot afford to work as they would loose many of their benefits...reconsider your position when you put this into context....and your vote..... £42,000 may as well be a million when you have no income. £42,000 when you are earning that amount is not very much £42,000 when you are earning considerably more is absolutely nothing. Terrible really but there it is. Quote Link to comment Share on other sites More sharing options...
South Lorne Posted December 4, 2010 Share Posted December 4, 2010 £42,000 may as well be a million when you have no income. £42,000 when you are earning that amount is not very much £42,000 when you are earning considerably more is absolutely nothing. Terrible really but there it is. ...some would be better off on the dole..... Quote Link to comment Share on other sites More sharing options...
Protect Rural England Posted December 4, 2010 Share Posted December 4, 2010 ...some would be better off on the dole..... And that is EXACTLY what is wrong with the UK. And, until the system changes, it will never change. Matters will continue to deteriorate until we become 3rd world. Simple. Stop thieving our money UK Govt. Quote Link to comment Share on other sites More sharing options...
xux42 Posted December 4, 2010 Share Posted December 4, 2010 (edited) In the meantime you luvvies enjoy the bastards stealing your money Not stealing my money unless you count lowering savings rates to negligible. Most benefits/ tax is income based, not wealth based thank goodness, so although I've earned very much less in the last 12 months we have had a decent tax credits top up and help with university costs despite having savings and investments that, whilst not enough to give up work, are well above average. Right now the best options for workers are either low pay, low stress, p*ss off at 5 jobs or contracting for good money keeping most of the fees in the business acct. so you can still claim Tax Credits. The worst option is earning just enough as a PAYE drone to be crapped on buy losing Tax Credits, straying into 40% & suffering stress inflicted by a stressed bully boss. I'm not sure that the "won't work lifetime benefits option" is all that its cracked up to be though. It seems to involve only mixing with other dole scroungers, being very chippy and petty and certainly doesn't accumulate any of the non-financial benefits of the workplace like learning to work with different types of people and building a network. Edited December 4, 2010 by xux42 Quote Link to comment Share on other sites More sharing options...
South Lorne Posted December 4, 2010 Share Posted December 4, 2010 And that is EXACTLY what is wrong with the UK. And, until the system changes, it will never change. Matters will continue to deteriorate until we become 3rd world. Simple. Stop thieving our money UK Govt. ...as you say we are spending our way to third world status courtesy of Nulabour....(Labour never change)....if IDS succeeds we may be able to turn the rot..... Quote Link to comment Share on other sites More sharing options...
nohpc Posted December 4, 2010 Share Posted December 4, 2010 Of course it is absurd anyone earning in excess of £42,000 should be paying 40% uncome tax. Legalised theft. on the other hand......... a few lefties, ie public servants such as teachers, policemen, NHS workers etc will now know what it is like to have to pay for their largesse. So in time it will filter down to the masses that paying unfair amounts of tax for relatively menial jobs that actually produce no revenue for this country is counter productive. There is only one way to stimulate the economy and that is to tax less NOT more. Charge less income tax to encourage savings, increase tax on nice to have not need to have purchases. So food and shelter (first primary residence = zero), nice to have not need to have increase accordingly. Cut back the public sector 75% outright[/u]. Then we might be on the road to recovery. In the meantime you luvvies enjoy the bastards stealing your money Do you not think that cutting back the public sector by 75% might harm the economy a little bit? I'm all for cut backs but that seems extreme! Quote Link to comment Share on other sites More sharing options...
The Ayatollah Buggeri Posted December 4, 2010 Share Posted December 4, 2010 Do you not think that cutting back the public sector by 75% might harm the economy a little bit? It depends on where the money to employ those public sector jobs is coming from and how much, if any, those public sector jobs are generating. Sack an equality and diversity officer whose salary is currently being paid from the PSBR and you benefit the economy twofold: by removing someone whose work activity is acting as a drag on private sector economic activity, and by not having to borrow money to pay them. But sack a tourism promotion officer in a popular holiday town whose salary is met in full by local council tax payers and OK, you've saved those taxpayers a bit, but you also endanger the generation of income. So it really depends on which public sector workers you get rid of. My fear is that the productive ones will be given the boot, and the equality and diversity officers will survive unscathed. Quote Link to comment Share on other sites More sharing options...
nohpc Posted December 4, 2010 Share Posted December 4, 2010 It depends on where the money to employ those public sector jobs is coming from and how much, if any, those public sector jobs are generating. Sack an equality and diversity officer whose salary is currently being paid from the PSBR and you benefit the economy twofold: by removing someone whose work activity is acting as a drag on private sector economic activity, and by not having to borrow money to pay them. But sack a tourism promotion officer in a popular holiday town whose salary is met in full by local council tax payers and OK, you've saved those taxpayers a bit, but you also endanger the generation of income. So it really depends on which public sector workers you get rid of. My fear is that the productive ones will be given the boot, and the equality and diversity officers will survive unscathed. So what you're saying is you don't believe in equality and diversity? Jobs for white men only? Quote Link to comment Share on other sites More sharing options...
libspero Posted December 4, 2010 Share Posted December 4, 2010 (edited) So what you're saying is you don't believe in equality and diversity? Jobs for white men only? You can believe in spaniel welfare without believing in having spaniel welfare officers in every town at the tax payers expense. It might be considered an unnecessary/wasteful allocation of productivity. Edited December 4, 2010 by libspero Quote Link to comment Share on other sites More sharing options...
libspero Posted December 4, 2010 Share Posted December 4, 2010 For example, my company package is so high, that it exceeds my personal allowance, meaning that even if I earn no money at all in my job, I will still have to pay tax. If my income were £36k, I'd be paying 20%. If my income were £37k, I'd be paying 40% and losing >£1k in child benefit as well. Putting this in the real world, anyone with a salary of mid £30K's, plus bonus, plus car, might end up paying 40% tax. I think we lead parallel lives. If I do ever tick over into the higher tax bracket (despite earning far less) I would probably do exactly as you say and put the difference into a pension (I have a SIPP instead of an opaque managed fund). Not having kids I'm not sure how the child benefit thing works exactly.. by offsetting earnings into a pension does that keep you below the limit? Quote Link to comment Share on other sites More sharing options...
nohpc Posted December 4, 2010 Share Posted December 4, 2010 You can believe in spaniel welfare without believing in having spaniel welfare officers in every town at the tax payers expense. It might be considered an unnecessary/wasteful allocation of productivity. I know. Equality and diversity jobsworths are a waste of money. I was just trying to be antagonistic. Quote Link to comment Share on other sites More sharing options...
Meat Puppet Posted December 4, 2010 Share Posted December 4, 2010 I know. Equality and diversity jobsworths are a waste of money. I was just trying to be antagonistic. And equality and diversity officers make up less than 0.1% of the public sector. There is a lot of unnecessary, in the normative sense, staffing due to the law as it currently stands. For instance the UK has the most lenient homelessness laws in the world. Landlord wants his property back and you have kids? Then you are 'homeless'. Councils then have to shell out for people to investigate the case and more people to acquire and manage properties to house them in. There are knock on effects in finance and audit departments. Much the same, although not as ridiculous, in adult social care and children's services. Quote Link to comment Share on other sites More sharing options...
Xurbia Posted December 4, 2010 Share Posted December 4, 2010 I don't think 42K is that much money these days considering the cost of living in Britain. Politicians don't deserve their money and should be taxed higher, along with the NHS managers. If the quality of life in Britain was fantastic then 40% tax might seem reasonable. Get yourself a business where you can trade cash. Quote Link to comment Share on other sites More sharing options...
Protect Rural England Posted December 5, 2010 Share Posted December 5, 2010 Do you not think that cutting back the public sector by 75% might harm the economy a little bit? I'm all for cut backs but that seems extreme! What people fail to grasp is that those who work in the public sector are non income producing for the UK. Of course people who work in the public sector work hard and do a good job. But the jobs themselves don't actually produce anything. They keep maintaIn the sick workers who can then hopefully get back to work to produce. They keep law and order, defend our Nation. They teach the future labour force. Of course some of these people are essential. But and this is the big BUT, how many actually produce foreign revenue who pay for themselves? Effectively none. We have too many people in the public sector screaming they pay their taxes yet their taxes are a rebate on the tax the producers have paid back to HM Govt to pay for yet more unessential workers. We are in a downward spiral until we shed huge numbers of the public sector. This is NOT a criticism of public sector workers. It is a statement of the obvious. Which is why socialists increase the public sector to buy votes. I am not suggesting capitalism isn't without flaw. Recent events in the banking sector have proved they are legion. There is a balance somewhere for sure. At the moment the pendulum has swung too far in favour of takers rather than givers. The outrageous increase in tax take will not solve the problems at all but it will highlight to everyone how unfair it is and prove that carrying 45% of the total labour force in the public sector is too great a burden on the Nation as a whole. Meanwhile, save what you can because in the years ahead we will all be taxed out of existance and there are no guarantees now for when you are old and sick. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted December 5, 2010 Share Posted December 5, 2010 agree. This could force more money into pensions giving the government a nice big pot of money they can grab at any chosen time depending on what rules they want to impose. I'd love to put money into a private pension but I just don't trust any government not to rape it up the ass. People should be putting their money into ISAs now. As much as they can afford every year. When you are a higher rate tax payer after a few years you will be earning a lot on your stocks and shares ISAs which they can't touch with their 40% tax. So you're suggesting a government may steal your pension but your ISA is safe? From theft AND legislative change? Ok... In general on this topic, not 3 years ago I was earning only 2 thirds of the 40% tax band but having a child meant a massive fall in household income. Through judicious amounts of luck and hard work I've put my self in a position where I'm now earning around the 40% tax band to make up for my wife's lost income although we still earn less overall than we did back then. I thought I was doing the right thing, self improvement rather than asking for handouts. Was it too much to expect to retain a universal benefit that my mother received for my siblings and I 30 years ago? Apparently it is. And now this tax change to chip away further. A poster mentions how they would divert income to a pensions to get round this and although conceding they don't have children imply it would be easy to live within your means ay this level. Not so easy when you see income drop from 60k to 30k and do your best to get it back to 45k+. Why did I bother? Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted December 5, 2010 Share Posted December 5, 2010 (edited) The present obsession with making sure that the "somebody" who pays isn't ourselves (and let's jerk fewer knees and utilise the time saved to reflect a little deeper than our benighted press have - isn't that exactly the point at hand, here?) always reminds me of this... http://doc.cat-v.org/economics/bar_stool_economics Bar Stool EconomicsSuppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this: * The first four men (the poorest) would pay nothing. * The fifth would pay $1. * The sixth would pay $3. * The seventh would pay $7. * The eighth would pay $12. * The ninth would pay $18. * The tenth man (the richest) would pay $59. So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers", he said, "I'm going to reduce the cost of your daily beer by $20". Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his "fair share?" They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so: * The fifth man, like the first four, now paid nothing (100% savings). * The sixth now paid $2 instead of $3 (33%savings). * The seventh now pay $5 instead of $7 (28%savings). * The eighth now paid $9 instead of $12 (25% savings). * The ninth now paid $14 instead of $18 (22% savings). * The tenth now paid $49 instead of $59 (16% savings). Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier. Edited December 5, 2010 by ParticleMan Quote Link to comment Share on other sites More sharing options...
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