45p Tax on high earners

[Greg Pope]

Andrew is right that reducing higher rate tax bands can actually increase tax revenues in certain economic circumstances (I seem to have a dim recollection of something called the Laffer Curve but I'm sure someone with a better grasp of economics will correct me!).

My priority for the budget would be to take lower income earners out of tax altogether which would help boost the economy, help the less well off and be a lot simpler than tax credits.

[lindsay ormerod]

Originally Posted by derekgas

Some footballers are on 3 or 4 times that amount Linds!

I know, it just pains me to think about it!

[accyman]

Originally Posted by cashman

cannot put a strong argument against that, though i would point out that it would reduce the immigrant intake.

sadly i dont think it will infact the extra tax wil probably pay the benefits of even more imigrants

[Neil]

Originally Posted by Greg Pope

My priority for the budget would be to take lower income earners out of tax altogether which would help boost the economy, help the less well off and be a lot simpler than tax credits.

I would have though by removing tax credits in such a way would actually save the Government and therefore us money.

[Neil]

Originally Posted by entwisi

you are effectively increasing the tax on being successful in your career. what a brilliant way of encouraging people.

I take it you wont be encouraged by the Government taking more money from you?


Basic rate: 20% £0-£37,400
Higher rate: 40% Over £37,400

Your tax already doubles then when you reach £37,400. An extra increase of 5% makes the gap even bigger. It does kind of make you not want to better yourself doesn't it?

I think the 40% band should be moved a lot higher than £37,400 if they are going to increase it to 45%.

[SPUGGIE J]

Would having multiple levels that are watertight be better based on wht you earn? As it stands someone who earns shedloads with a good accountant will pay very little tax. It is not as though it is propotional to your income is it.

[onlyme]

Its disgraceful. What about single parents?? You can have a two income household with both wage earners earning 25k, and paying the lower percentage tax. A single parent with just one wage to supportthefamily pays double tax with no tax credit support.

Why the hell do we encourage our kids to have a good education, work hard and furthertheir career when theyre to get penalised for it.

I work in sales and remember a good amount of time ago, deliberately stopping doing my job so I wouldnt getpushedinto the highertax bracket (with commission) and being worse off

Why should people work hard to better themselves and earnmore, only to be penalised.

Absolutely atrocious.

[West Ender]

Originally Posted by Neil

Your tax already doubles then when you reach £37,400.....
I think the 40% band should be moved a lot higher than £37,400

That's after deduction of your personal allowance of £6,475 (if you're under 65) so your gross earnings would be £43,875 before you're in the 40% band.

[katex]

Originally Posted by planetsusie

What is the criteria for high earners now? Has that line shifted?

Originally Posted by andrewb

I believe it's above £150,000

Originally Posted by West Ender

That's after deduction of your personal allowance of £6,475 (if you're under 65) so your gross earnings would be £43,875 before you're in the 40% band.

Understand all this, but what is Andrew talking about with a £150,000 tax band ? Is this where the new 45% is coming from or over the current (well, 2009/10) 'high earners' rate of over £37,400 ...

[Neil]

Originally Posted by West Ender

That's after deduction of your personal allowance of £6,475 (if you're under 65) so your gross earnings would be £43,875 before you're in the 40% band.

So you pay 20% on earning from £6,475 to £43,875 and then 40% on earnings over £43,875, is that correct?

[shillelagh]

HM Revenue & Customs: Rates and Allowances - Income Tax

There you go from the government itself ... the rates

Income Tax rates and taxable bands 2008-09 2009-10
Starting rate for savings: 10%* £0-£2,320 £0-£2,440
Basic rate: 20% £0-£34,800 £0-£37,400
Higher rate: 40% Over £34,800 Over £37,400

The link gives you all the details.

[Mancie]

Originally Posted by andrewb

It's nothing to do with actually raising more revenue to pay off debt, as it won't raise any additional. Increasing tax on the wealth creators means they're less likely to come and reside in this country, it means people have less aspiration to achieve top jobs, furthermore most economists believe it will bring in peanuts if anything, in fact a lot believe it will have the opposite effect and bring in LESS money for the government.

quoting andrewb... now were have I haeard that logic before?.. the same old kak Alan Walters the economic advisor to Thatcher was saying in the 80's.. if increase the tax on income of the rich they will all ****** off to the USA and leave us all alone.."the brain drain".... the fear the Tories try to put upon that if these people that have done very nicely out of the present difficulties will decide to jump ship if thier taxes are increased to help provide a more stable ecomomy....does anyone really care if the like of Andrew Lyyod Webber or Richard Bloody Branson ****** off?..the same old Tory attitude that we have to pamper the rich ... keep them happy and everything will be OK..

[entwisi]

Originally Posted by Neil

So you pay 20% on earning from £6,475 to £43,875 and then 40% on earnings over £43,875, is that correct?

Nope, its definately 40% on anything over the 37K.

Brain drain - possibly but in teh worlds climate as it is there isn't many places where you are unlikely to get hit. The potential for tweaks only comes in for those outside the PAYE system. Self employed, business owners etc. then its all about how many things can be set against tax, wages to spouses as directors etc. I personally don't have an issue with playing teh game. teh rules are there and put there by very clever people. If there is a loophole then fair do's, use it to your advantage.

[garinda]

Originally Posted by entwisi

If there is a loophole then fair do's, use it to your advantage.

You're quite right, there are many legal ways of avoiding the taxes that most other people have to pay, who don't have the resources to find those loopholes.

New whistleblower claims over £1bn Barclays tax deals | Business | guardian.co.uk

[andrewb]

Originally Posted by Greg Pope

My priority for the budget would be to take lower income earners out of tax altogether which would help boost the economy, help the less well off and be a lot simpler than tax credits.

Could not agree more!

Originally Posted by Mancie

quoting andrewb... now were have I haeard that logic before?.. the same old kak Alan Walters the economic advisor to Thatcher was saying in the 80's.. if increase the tax on income of the rich they will all ****** off to the USA and leave us all alone.."the brain drain".... the fear the Tories try to put upon that if these people that have done very nicely out of the present difficulties will decide to jump ship if thier taxes are increased to help provide a more stable ecomomy....does anyone really care if the like of Andrew Lyyod Webber or Richard Bloody Branson ****** off?..the same old Tory attitude that we have to pamper the rich ... keep them happy and everything will be OK..

It's economics not 'Alan Walter'. If you want to take your line, and punish the rich for creating wealth, do so. Your policy is to make the poor poorer just as long as we punish the rich.