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John The Pessimist

60% Tax Rate For Almost Top Earners

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Don't worry, the lack of sympathy is used by politicians to slowly ensnare lower earners. 40% tax was once only supposed to be paid by people who were "rich". Stamp duty started off being a tax on buying a mansion. This is the way it works - introduce a tax for rich who receive little sympathy and then slowly get others in the net. We should all be livid about this. The government taking 60% of anyone's earnings is immoral.

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http://www.theguardian.com/politics/2014/may/13/labour-tax-data-shows-growth-helps-top-1-percent

Over the past year, the share of national post-tax income of the top 1% of taxpayers – just 300,000 people – has risen from 8.2% in 2012-13 to 9.8 % in 2013-14. Over the same period, the bottom 90% – a total of 27 million taxpayers – have seen their share of post-tax income fall from 71.3% to 70.4%, according to estimates contained in the latest Income Tax Liabilities Statistics published by HMRC. They cover the year when GDP growth returned and the top rate of income tax on earnings above £150,000 was reduced from 50% to 45%

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Don't worry, the lack of sympathy is used by politicians to slowly ensnare lower earners. 40% tax was once only supposed to be paid by people who were "rich". Stamp duty started off being a tax on buying a mansion. This is the way it works - introduce a tax for rich who receive little sympathy and then slowly get others in the net. We should all be livid about this. The government taking 60% of anyone's earnings is immoral.

Immoral? Nonsense.

Govt. isn't 'taking' 60% of anyone's earnings. Only the privileged few who can easily afford it. Plenty of scope to increase it.

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The amazing thing is that you expect any symathy at all.

Someone on 25k is paying 32% as their marginal rate. Given that you earn over 5x as much and your marginal rate is *only* double (60%), well.....

Like I said the amazing thing is that you expect any sympathy at all.

Edited by alexw

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It's a bit of a funny system though isn't it? Those earning more than 120k pay a lower rate, as do those on less than a 100k. But those on 100-120k, we'll show those bastards! It's almost as if the labour gov wanted to look like they were soaking the rich without actually upsetting any of their super-rich buddies.

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The amazing thing is that you expect any symathy at all.

Someone on 25k is paying 32% as their marginal rate. Given that you earn over 5x as much and your marginal rate is *only* double (60%), well.....

Like I said the amazing thing is that you expect any sympathy at all.

Unfortunately it's not possible for someone earning over 5 x £25k to pay 160% income tax.

Though I'm sure Labour will give it a go, in the name of fairness of course.

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Marginal deduction rates are 100% for those earning between £0.25k and £3.4k.

Marginal deduction rates will be reduced to 65% (85% in some cases) for those earning between £0.25k and £3.4k.

I fail to see why the highest marginal deduction rates affect the poorest. We should have a progressive tax and benefit system. The more you earn, the higher your marginal deduction rate.

With an 100% income tax at levels above 1 million I bet we could improve the economy massively. If you could not increase your nominal income, you would reinvest additional money into productive business to bring down the cost of goods/services to improve your imputed income.

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Glad to see this getting a bit of coverage in the MSM as the removal of the personal allowance is a completely ridiculous tax policy.

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Most people don't understand the simple logic of percentages.

Those that earn more will pay more - if everyone pays the same % - that's the whole point of using a % in the first place.

I think the fact we use different % for different earners is mental.

Edited by ccc

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Most people don't understand the simple logic of percentages.

Those that earn more will pay more - if everyone pays the same % - that's the whole point of using a % in the first place.

I think the fact we use different % for different earners is mental.

I've heard this argument many times that we should have flat taxes - always from higher income folk. But then when I suggest we have a percentage based council tax E.g. council tax is 2% of your income....they go strangely quiet....

It's all nonsense anyway, year after year the highest earners are capturing a greater and greater share of the economic pie.

screen-shot-2013-04-17-at-08-07-35.png

Moreover the above graph only shows the known and *taxed* income. Given how mobile money has become in our globalized world this graph will certainly underestimate how much the top 1% take of the UK pie.

Edited by alexw

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Immoral? Nonsense.

Govt. isn't 'taking' 60% of anyone's earnings. Only the privileged few who can easily afford it. Plenty of scope to increase it.

What is a tax if it is not taking money off someone?

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Marginal deduction rates are 100% for those earning between £0.25k and £3.4k.

Marginal deduction rates will be reduced to 65% (85% in some cases) for those earning between £0.25k and £3.4k.

I fail to see why the highest marginal deduction rates affect the poorest. We should have a progressive tax and benefit system. The more you earn, the higher your marginal deduction rate.

With an 100% income tax at levels above 1 million I bet we could improve the economy massively. If you could not increase your nominal income, you would reinvest additional money into productive business to bring down the cost of goods/services to improve your imputed income.

Why would anyone invest money into a productive business if they can never earn anything more? They would either emigrate, or work less and enjoy more of the time they have on this planet.

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I've heard this argument many times that we should have flat taxes - always from higher income folk. But then when I suggest we have a percentage based council tax E.g. council tax is 2% of your income....they go strangely quiet....

It's all nonsense anyway, year after year the highest earners are capturing a greater and greater share of the economic pie.

screen-shot-2013-04-17-at-08-07-35.png

Moreover the above graph only shows the known and *taxed* income. Given how mobile money has become in our globalized world this graph will certainly underestimate how much the top 1% take of the UK pie.

Council tax / income tax - who cares - its just money off people for public services. I think everything should be a flat rate. Then the people who earn more pay more - and the people who earn less pay less. Its pretty basic logic. In fact just about as basic as you can get.

If everyone pays 10% - then someone earning 100k pays 10k for the same services that someone earning 10k pays 1k for.

How on earth can you say that is letting the higher earner off lightly etc ?

I just don't get it - and nobody has ever made an argument to change that fact.

There are of course issues with people hoarding assets - capital appreciation being more profitable than working etc..

However I am talking basic taxes on income here for basis services that everyone shares. Anything other than a flat rate is simple theft imo.

Not that I usually stick up for religion - but their tithing system has been around donkeys and you don't hear many if them saying its unfair . . . .

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The reason we don't have a simple tax system is so those in the know can abuse the loopholes.

I still find it hilarious when certain MP's are haranguing others when either they or their family use the same dodges. Cameron could address this by having all MP's tax affairs made public, won't happen as the general population would be annoyed.

MP's are the ones who set the rules, don't want people avoiding tax then make it simple and clear cut. Until you do don't criticize.

Edited by Ulfar

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I got caught by this this year after submitting a fairly late tax return. Reality was an instant demand for about £2k (unexpected) which they allowed me to pay off at about £200 a month (with interest) at the same time as they clobbered my code so I wouldn't be so badly off the following year. I'm about £450 a month worse off altogether this year, dropping to £200 a month next year - a fair amount to lose just after buying a house last August (10 year fixed rate BTW as I'm very pessimistic about rate rises).

It's a nonsense that people in the 'middle' (that's the perception - I know not reality but the fact is, things are fairly tight since buying last year after 6 years of renting) are caught by this when the really rich aren't.

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The reason we don't have a simple tax system is so those in the know can abuse the loopholes.

I still find it hilarious when certain MP's are haranguing others when either they or their family use the same dodges. Cameron could address this by having all MP's tax affairs made public, won't happen as the general population would be annoyed.

MP's are the ones who set the rules, don't want people avoiding tax then make it simple and clear cut. Until you do don't criticize.

Very possibly - but then again pretty much everything government do ends up ridiculously over complicated.

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Why would anyone invest money into a productive business if they can never earn anything more? They would either emigrate, or work less and enjoy more of the time they have on this planet.

Damn! The Left's cunning plan foiled again.

:(

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Immoral? Nonsense.

Govt. isn't 'taking' 60% of anyone's earnings. Only the privileged few who can easily afford it. Plenty of scope to increase it.

They can't afford it if they want to spend it on something other than tax. Having it taken away from them and given to someone else is theft! Socialism is theft!

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Not unlike someone with 2 children earning between £50,000 and £60,000.

EMTR, paging VMR.

Page received. thank you :)

The article of course, misses the effect of national insurance and benefit withdrawal which increases effective marginal tax rates (EMTR), let alone the consumption-based taxes that hit you when you spend what's left.

EMTR in that child benefit band is ~63%. I use a salary sacrifice pension scheme that will reduce it to around 15%. Personally, I think there is no point working at 60+% EMTR. Some staff here have already dropped to a 4-day week, no point working on a Friday 9-5pm if you don't even get the equivalent gross wages for 3 hours. Of course, if you have signed up to a big mortgage then you have no choice.

In the child benefit withdrawal band, that's around £25-30/hour gross. After 63% EMTR, you get to keep £9-11/hour. That is just better than minimum wage but not better than min wage + tax credits (2-child family) which interestingly has a negative EMTR. So the effective marginal earnings from working a professional job can be no better than an unqualified job (first ~25 hours).

I calculated that a £49,999 income is optimum and expenditure should be minimised instead. That isn't enough to get a 3-bed semi around here.

Earn less and you rent for life, earn more and the marginal income will hardly get you a better house. You only have a chance if you built up equity before the boom, inherit (unlikely for most), or avoid PAYE (difficult).

In VMR world, "A penny saved is a penny earnt" becomes "An EMTR penny saved is equivalent to 2.7 pennies earnt" :)

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Nicked from the Telegraph. Doesnt include employee/employer NI. The child benefit taper region looks wrong though. This is an extra 10%. It also doesn't include student loan repayments which add another 9% (?) which can push up EMTR to 80% in some bands.

tax-without-design_2910138c.jpg

Edited by VeryMeanReversion

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