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David Cameron Hints He Wants To Cut The Top Rate Of Income Tax To 40 Per Cent

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http://www.telegraph.co.uk/news/politics/10509537/David-Cameron-hints-he-wants-to-cut-the-top-rate-of-income-tax-to-40-per-cent.html

The Prime Minister also disclosed that he had a “little black book of policies” which he would like to introduce if he wins the next general election outright.

In an interview with The Spectator magazine, he suggested that he wanted to see the top rate of tax cut from 45 per cent to 40 per cent. Mr Cameron said that he was proud of having cut the top rate of tax from 50p to 45p last year.

He said: “I knew we would get attacked for it, but I thought the evidence was so strong that actually cutting the top rate of tax would probably result in more revenue.

“I thought, you can’t just not do something, because you’re going to be attacked, that’s just feeble politics.”

Nice a tax cut for the rich, how about something radical and cut the basic tax rate the lowest paid and then the rich can work at fleecing that disposable income from the poor to make themselves even richer? Too radical an idea?

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http://www.telegraph...0-per-cent.html

Nice a tax cut for the rich, how about something radical and cut the basic tax rate the lowest paid and then the rich can work at fleecing that disposable income from the poor to make themselves even richer? Too radical an idea?

How about telling the **** at No.11 to stop spending £120bn more every year than he collects in taxes?

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Nice a tax cut for the rich, how about something radical and cut the basic tax rate the lowest paid and then the rich can work at fleecing that disposable income from the poor to make themselves even richer? Too radical an idea?

Dropping the top rate of tax by 10% in two terms is some feat Davie, ya kunt.

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wasnt tory policy in the mid 1990s to get the basic rate down to 15% and the top rate down to 35%? (im sure with some labour type NIC increases along the way, afterall NIC and PAYE are completely different - one cuts off once you reach the big money!)

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http://www.telegraph.co.uk/news/politics/10509537/David-Cameron-hints-he-wants-to-cut-the-top-rate-of-income-tax-to-40-per-cent.html

Nice a tax cut for the rich, how about something radical and cut the basic tax rate the lowest paid and then the rich can work at fleecing that disposable income from the poor to make themselves even richer? Too radical an idea?

Income tax for the lowest paid is already quite low. The personal allowance is getting ever closer to 10k. Then people pay 20% up to 37k or so. I would argue that the threshold for the 40% band should be quite a bit higher. Many of those paying 20% tax get enough tax credits to cancel out the tax they pay.

Edited by BalancedBear

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I am going to stick up for the lid dems here. They raised the amount that people can earn before paying tax. AS a left winger I take it as total shame that this government did this and the labour f*chers didn't.

Labour just rammed up benefits to a stupid level where all sense and reason was lost. Where workers got less money than non workers.

and instead of a man and a women bringing up a family together. They just taxed the man to death and gave the money to the single mothers destroying the partnership and the status of the bread winner.

I know that last statement sound like I am a male chauvinist. It's just that men have got a very weak hand when the state will provide and take over his roll.

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I am going to stick up for the lid dems here. They raised the amount that people can earn before paying tax. AS a left winger I take it as total shame that this government did this and the labour f*chers didn't.

Labour just rammed up benefits to a stupid level where all sense and reason was lost. Where workers got less money than non workers.

and instead of a man and a women bringing up a family together. They just taxed the man to death and gave the money to the single mothers destroying the partnership and the status of the bread winner.

I know that last statement sound like I am a male chauvinist. It's just that men have got a very weak hand when the state will provide and take over his roll.

Since bliar and brown took over in '94, labour ceased to be the party of the working class and became the party of the shirking class. At least foot and Kinnock talked jobs, not benefits. Incessantly.

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Nice a tax cut for the rich, how about something radical and cut the basic tax rate the lowest paid and then the rich can work at fleecing that disposable income from the poor to make themselves even richer? Too radical an idea?

I think the rich can pretty much choose whether they pay it. The idea that rich people just pay tax is rather misguided, as was the 50p tax hike. It was never about raising money, it was a gesture.

There's a reason that we have VAT and PAYE, and that's because they are easy targets for the government. The earnings of the super-rich aren't, and a high top tax rate doesn't achieve much and can be counter-productive.

If the people in this bracket paid even 40% tax, we'd be doing well, but they don't.

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Income tax for the lowest paid is already quite low. The personal allowance is getting ever closer to 10k. Then people pay 20% up to 37k or so. I would argue that the threshold for the 40% band should be quite a bit higher. Many of those paying 20% tax get enough tax credits to cancel out the tax they pay.

No that's not right.

The rates are:

NI:

12% above £7748

2% above £41,444

IT:

20% above £9,440

40% above £41,450

So you've got:

12% on the first ~£1,700

32% on the next ~£32,000

42% above that

The jump between 32% and 42% is not too bad.

But you've got a whole swathe of crazy marginal tax rates to consider:

Anyone on tax credits: 73% (note that there are minimum thresholds to earn elements of these, so the 73% will apply for hours in excess of the minimum)

Between £50k and £60k with 1/2/3/4 kids: 52.6%/ 59.5%/66.5%/73.5%

£100k-£118,880: 62% (loss of personal allowance)

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Cameron showing a bit of leg to try and alter the spanking the polls suggest he's on for. Too late, Dave...

Trying to appear to that critical demographic - non-committed Labour voters earning > £150k/year.

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Trying to appear to that critical demographic - non-committed Labour voters earning > £150k/year.

So the man who brought how many (2,000,000 people more? 50%?) Ordinary people up to giving up nearly half their wages and is enslaving students to debt now wants to lower the rate at the very top end?

:lol:

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I think the rich can pretty much choose whether they pay it. The idea that rich people just pay tax is rather misguided, as was the 50p tax hike. It was never about raising money, it was a gesture.

There's a reason that we have VAT and PAYE, and that's because they are easy targets for the government. The earnings of the super-rich aren't, and a high top tax rate doesn't achieve much and can be counter-productive.

If the people in this bracket paid even 40% tax, we'd be doing well, but they don't.

The problem is that we don't even try to get them to pay, and I think a lot of this is propaganda; if there was a decent network of international agreements on tax havens and general secrecy, tax avoidance would be cut dramatically.

The current government has made tax avoidance for corporations significantly easier, to the extent of offsetting a lot of their spending cuts.

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No that's not right.

The rates are:

NI:

12% above £7748

2% above £41,444

IT:

20% above £9,440

40% above £41,450

So you've got:

12% on the first ~£1,700

32% on the next ~£32,000

42% above that

The jump between 32% and 42% is not too bad.

But you've got a whole swathe of crazy marginal tax rates to consider:

Anyone on tax credits: 73% (note that there are minimum thresholds to earn elements of these, so the 73% will apply for hours in excess of the minimum)

Between £50k and £60k with 1/2/3/4 kids: 52.6%/ 59.5%/66.5%/73.5%

£100k-£118,880: 62% (loss of personal allowance)

I'm glad someone else jhas also worked this out. The marginal figures are even higher when you factor in employer NI which is basically avoidable via salary sacrifice. My figure was 63% effective marginal tax rate (EMTR).

I did start a thread about EMTR but no-one was in the slightest bit interested. A shame really since it is one of the fundamental causes of our economic problems. There is a big disincentive to earn more, especially if it involves commuting or higher housing costs.

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It was when they cut the tax rate from 50% to 45% that the conservatives took a battering in the press and polls. If they did it again, it would as good as finish their chances of reelection. Cameron must know this, so it is quite surprising that he might do it again.

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the best thing would be to take people out of the 40% tax bracket after years of fiscal drag. a lot of people in the 40% bracket should not be there.

He is saying he would like to cut it AFTER the next ELECTION. He knows people will fall for it, after the next election it'll be I would like but we can't.

Edited by crash2006

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I'm glad someone else jhas also worked this out. The marginal figures are even higher when you factor in employer NI which is basically avoidable via salary sacrifice. My figure was 63% effective marginal tax rate (EMTR).

I did start a thread about EMTR but no-one was in the slightest bit interested. A shame really since it is one of the fundamental causes of our economic problems. There is a big disincentive to earn more, especially if it involves commuting or higher housing costs.

Yes, if you include employer's NI (which you should, because it's money that otherwise could go to the employee), the basic rate of tax is 40.2%, and higher 49.0%

There's no cap on employer's NI either.

The incentive to dodge tax is enormous, considering that dividends are paid out at only 20% tax, less than half what it costs to pay via PAYE.

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NI:

12% above £7748

2% above £41,444

I actually did not know that NI (which is basically income tax) gets a 10% cut at the higher rate tax border line (I am not paid that much). Interesting.

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I actually did not know that NI (which is basically income tax) gets a 10% cut at the higher rate tax border line (I am not paid that much). Interesting.

There is a huge case for simply merging NI and income tax.. and tax on dividends as well.

Biggest single problem I can see is employer's NI. If you scrapped it you'd have a difficult time getting employers to add it to pay instead, and it would mean a serious hike in basic rate tax.

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I actually did not know that NI (which is basically income tax) gets a 10% cut at the higher rate tax border line (I am not paid that much). Interesting.

The whole thing is a scam.

NI = National Insurance

Insurance premiums should be capped, so there is no reason for the 2% charge at all. It was 11% and 1% until recently.

The other scam is that employer's NI isn't capped at all, so you pay that even on salaries of millions, which is absurd if it is an insurance scheme, considering that you don't get any benefit out of it.

The real point, as I mentioned, is that the government can easily get its hands on salaries paid through PAYE, hence the high tax rates, and not so easily on dividends and other things, which are taxed at half the rate.

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The incentive to dodge tax is enormous, considering that dividends are paid out at only 20% tax, less than half what it costs to pay via PAYE.

You only pay corporation tax at 20% as long as the dividends plus your gross salary stay under the 40% bracket.

I have to admit to not knowing what happens if your salary already qualifies for 40% income tax ie. whether you pay 20% on the divi or 40% ( or even 45% ).

Personally I cannot take my maximum dividend from my own Ltd company as it would push me into the 40% bracket. <_<

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You only pay corporation tax at 20% as long as the dividends plus your gross salary stay under the 40% bracket.

I have to admit to not knowing what happens if your salary already qualifies for 40% income tax ie. whether you pay 20% on the divi or 40% ( or even 45% ).

Personally I cannot take my maximum dividend from my own Ltd company as it would push me into the 40% bracket. <_<

Well yes but you can pay your wife, defer the income into a future year, etc. It's optional. Also if you wind up your company you can get the cash out via 'entrepeneur's capital gains tax relief', and only pay 10% CGT - £10 million lifetime max.

You pay one quarter of the dividend received as a higher rate (40%) tax payer.

This works out the same as 20% vs. 40% tax, e.g.,

* company makes £1k profit

* company pays you £800 net of 20% corporation tax

* you pay £200 income tax, you receive £600 = 40% tax

Edited by bambam

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