40p Tax band - history
Discussion
IIRC the Russians of all people recently went to a flat 15% tax on everyone and every business, doing away with a byzantine tax system. The result is that their tax take is up massively - its easier to collect, easier to administer, and leaves less wriggle room for avoidance schemes.
Surely there is merit in at least simplifying our tax system to a point where 'perceived' unfairness (eg Jimmy Carr / Starbucks etc etc) is made more difficult?
The really scary thing about this whole debate is that people who earn enough to pay higher rate tax don't always seem to be intelligent enough to understand the tax system....
Surely there is merit in at least simplifying our tax system to a point where 'perceived' unfairness (eg Jimmy Carr / Starbucks etc etc) is made more difficult?
The really scary thing about this whole debate is that people who earn enough to pay higher rate tax don't always seem to be intelligent enough to understand the tax system....
Ahonen said:
cerbfan said:
But just going into the 40% tax bracket is not a massive loss is it? Just means that the few hundred quid that is above the threshold of 40% instead of the previous rate. I'd swear that a lot of people think that once you go above the threshold you pay 40% on your whole salary the way its bleated on about.
Yes, this bemuses me, too. The quote at the bottom of that Independent article referenced on page 1 beggars belief:
Indy article said:
Rachel Reeves MP, the shadow Chief Secretary to the Treasury, said: “Millions of struggling families on middle and modest incomes are paying the price for this government’s economic failure.”
She added: “How can this government claim we are all in this together when working families, striving to do their best, are being singled out?”
I appreciate it's just a lefty going for a soundbite but Rachel, we're talking about £117 a year. Or one dinner for two in a pub with two bottles of house red. It's a tiny figure. If your finances are that tight that you are budgeting down to the last £2.25 a week of your £43k gross earnings you really should take a careful look at your expenditure. Maybe I'm tight, but I earn only a little more than than and I can honestly say that I wouldn't really notice losing £117 a month, so £117 a year is nothing.She added: “How can this government claim we are all in this together when working families, striving to do their best, are being singled out?”
Out of interest what would the threshold be if it had increased in line with inflation every year since 1997?
simoid said:
How is progressive taxation unfair?
You cannot possibly suggest taxing someone 10% for someone on £100 per week, and 10% for someone else on £100,000, is fair.
Perhaps we should introduce the same principle to restaurants? Poor people could eat for free or very little and rich people could pay very high prices for their meal, because they could easily afford to do so and the net revenue should be the same. Of course, the system might run into difficulties if the rich decide not to use said restaurants...You cannot possibly suggest taxing someone 10% for someone on £100 per week, and 10% for someone else on £100,000, is fair.
RYH64E said:
simoid said:
How is progressive taxation unfair?
You cannot possibly suggest taxing someone 10% for someone on £100 per week, and 10% for someone else on £100,000, is fair.
Perhaps we should introduce the same principle to restaurants? Poor people could eat for free or very little and rich people could pay very high prices for their meal, because they could easily afford to do so and the net revenue should be the same. Of course, the system might run into difficulties if the rich decide not to use said restaurants...You cannot possibly suggest taxing someone 10% for someone on £100 per week, and 10% for someone else on £100,000, is fair.
That is not fair.
Just in case you were struggling with the definition of fair.
"Definition of fair
adjective
1 treating people equally without favouritism or discrimination:"
BMWBen said:
Why shouldn't they? Like I said before, what has more value to you: the first 40k of your salary or the second?
I agree with you on the risks and the vested interest, but I fail to see how you can't see the moral case.
I can see a moral case more clearly for everyone being hit the same than for differential percentages. Nothing more likely to foster a 'them and us' attitude.I agree with you on the risks and the vested interest, but I fail to see how you can't see the moral case.
(I might add that I'm a basic rate tax payer, so I'm not saying this from self interest).
simoid said:
http://en.wikipedia.org/wiki/Progressive_tax#For_i...
Read, digest, understand that having a flat tax rate is unfair, because £1 to a pauper is more valuable than £1 to a millionaire.
Diminishing marginal utility.
Thats just why i like this forum, an alternative view point to my own, with backup information.Read, digest, understand that having a flat tax rate is unfair, because £1 to a pauper is more valuable than £1 to a millionaire.
Diminishing marginal utility.
This is a very good point but I dont believe its 'fair' (if that matters) to have differing tax bands.
I believe instead of taking more money from the high earners, more needs to be done for the poorer in society, especially those who work, more tax relief (a lot of good work has already been done with this)
Perhaps instead of taking the money at source, VAT could be looked at as a better revenue generator, VAT is of course easier for the rich to avoid than the poor.
I believe that some balance needs to be brought to the system, to make everyone better off but to still generate the same revenue, the 'rich' have certain advantages over the poor and far more ways to save money.
Hold on, a Flat Rate means a pauper still pays less.
Pauper annual income - £8,000
Flat rate tax at 10% = £800.00
Better off person income - £80,000
Flat rate tax at 10% = £8,000.00
£800 is not £8,000.00
Don't assume however, that introducing a "Flat Rate" of tax is necessarilly going to make taxation simpler. Lots of other simplifications need to be introduced besides simplifying the various tax rates.
Pauper annual income - £8,000
Flat rate tax at 10% = £800.00
Better off person income - £80,000
Flat rate tax at 10% = £8,000.00
£800 is not £8,000.00
Don't assume however, that introducing a "Flat Rate" of tax is necessarilly going to make taxation simpler. Lots of other simplifications need to be introduced besides simplifying the various tax rates.
Edited by Eric Mc on Friday 7th December 09:58
jesusbuiltmycar said:
Out of interest what would the threshold be if it had increased in line with inflation every year since 1997?
It is hard to find historic thresholds as far back as 1997 but I found a parliamentary research paper from 1996 that said the higher rate threshold for 1997-98 would be £26,100 and the personal allowance would be £4,045 so (assuming an individual had the full personal allowance) 40% tax would be payable on earnings over £30,145.Using the Bank of England inflation calculator (which only goes to 2011) if this had risen with inflation it would be £45,016 by 2011.
In 2011 the personal allowance and higher rate threshold were £7,475 and £35,000 respectively and £42,475 together.
ralphrj said:
jesusbuiltmycar said:
Out of interest what would the threshold be if it had increased in line with inflation every year since 1997?
It is hard to find historic thresholds as far back as 1997 but I found a parliamentary research paper from 1996 that said the higher rate threshold for 1997-98 would be £26,100 and the personal allowance would be £4,045 so (assuming an individual had the full personal allowance) 40% tax would be payable on earnings over £30,145.Using the Bank of England inflation calculator (which only goes to 2011) if this had risen with inflation it would be £45,016 by 2011.
In 2011 the personal allowance and higher rate threshold were £7,475 and £35,000 respectively and £42,475 together.
1973-74 — 30% 40-75% — 5,000
1974-75 — 33% 38-63,73,83% — 4,500
1975-76 — 35% 40-75,83% — 4,500
1976-77 — 35% 40-75,83% — 5,000
1977-78 — 34% 40-75,83% — 6,000
1978-79 25%c 33% 40-75,83% — 8,000
1979-80 25%c 30% 40-60% — 10,000
1980-81 — 30% 40-60% — 11,250
1981-82 — 30% 40-60% — 11,250
1982-83 — 30% 40-60% — 12,800
1983-84 — 30% 40-60% — 14,600
1984-85 — 30% 40-60% — 15,400
1985-86 — 30% 40-60% — 16,200
1986-87 — 29% 40-60% — 17,200
1987-88 — 27% 40-60% — 17,900
1988-89 — 25% 40% — 19,300
1989-90 — 25% 40% — 20,700
1990-91 — 25% 40% — 20,700
1991-92 — 25% 40% — 23,700
1992-93 20% 25% 40% 2,000 23,700
1993-94 20% 25% 40% 2,500 23,700
1994-95 20% 25% 40% 3,000 23,700
1995-96 20% 25% 40% 3,200 24,300
1996-97 20% 24% 40% 3,900 25,500
1997-98 20% 23% 40% 4,100 26,100
1998-99 20% 23% 40% 4,300 27,100
1999-00 10% 23% 40% 1,500 28,000
2000-01 10% 22% 40% 1,520 28,400
2001-02 10% 22% 40% 1,880 29,400
2002-03 10% 22% 40% 1,920 29,900
2003-04 10% 22% 40% 1,960 30,500
2004-05 10% 22% 40% 2,020 31,400
2005-06 10% 22% 40% 2,090 32,400
2006-07 10% 22% 40% 2,150 33,300
2007-08 10% 22% 40% 2,230 34,600
2008-09 — 20% 40% — 34,800
2009-10 — 20% 40% — 37,400
2010-11 — 20% 40%, 50%d — 37,400
2011-12 — 20% 40%, 50%d — 35,000
2012-13 — 20% 40%, 50%d — 34,370
Diminishing marginal utility means that for each extra unit of something you have, you enjoy it less.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Eric Mc said:
Hold on, a Flat Rate means a pauper still pays less.
Pauper annual income - £8,000
Flat rate tax at 10% = £800.00
Better off person income - £80,000
Flat rate tax at 10% = £8,000.00
£800 is not £8,000.00
Don't assume however, that introducing a "Flat Rate" of tax is necessarilly going to make taxation simpler. Lots of other simplifications need to be introduced besides simplifying the various tax rates.
Yeah, but, no, but, yeah, but, no, but 10% is the same as 10% and tehy earns morun me, innit, 'snot fayre!!! Blud.Pauper annual income - £8,000
Flat rate tax at 10% = £800.00
Better off person income - £80,000
Flat rate tax at 10% = £8,000.00
£800 is not £8,000.00
Don't assume however, that introducing a "Flat Rate" of tax is necessarilly going to make taxation simpler. Lots of other simplifications need to be introduced besides simplifying the various tax rates.
Edited by Eric Mc on Friday 7th December 09:58
simoid said:
Diminishing marginal utility means that for each extra unit of something you have, you enjoy it less.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Ok sounds good, so to make it fair lets take £1,000 from the person that earns £10,000 and £9,991,000 from the person earning £10,000,000 then it will be all equal....EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Its not a tax on happiness... its a payment to the government for services rendered or is it?
Odie said:
simoid said:
Diminishing marginal utility means that for each extra unit of something you have, you enjoy it less.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Ok sounds good, so to make it fair lets take £1,000 from the person that earns £10,000 and £9,991,000 from the person earning £10,000,000 then it will be all equal....EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Odie said:
Its not a tax on happiness... its a payment to the government for services rendered or is it?
It's a tax on society's income to provide the things that society needs.The burden is shared throughout society, hopefully so that those with broadest financial shoulders pay a bit more, relatively, without punishing them for working hard/smart/lucky.
simoid said:
Odie said:
simoid said:
Diminishing marginal utility means that for each extra unit of something you have, you enjoy it less.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Ok sounds good, so to make it fair lets take £1,000 from the person that earns £10,000 and £9,991,000 from the person earning £10,000,000 then it will be all equal....EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Odie said:
Its not a tax on happiness... its a payment to the government for services rendered or is it?
It's a tax on society's income to provide the things that society needs.The burden is shared throughout society, hopefully so that those with broadest financial shoulders pay a bit more, relatively, without punishing them for working hard/smart/lucky.
simoid said:
Odie said:
simoid said:
Diminishing marginal utility means that for each extra unit of something you have, you enjoy it less.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Ok sounds good, so to make it fair lets take £1,000 from the person that earns £10,000 and £9,991,000 from the person earning £10,000,000 then it will be all equal....EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Odie said:
Its not a tax on happiness... its a payment to the government for services rendered or is it?
It's a tax on society's income to provide the things that society needs.The burden is shared throughout society, hopefully so that those with broadest financial shoulders pay a bit more, relatively, without punishing them for working hard/smart/lucky.
mondeoman said:
simoid said:
Odie said:
simoid said:
Diminishing marginal utility means that for each extra unit of something you have, you enjoy it less.
EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Ok sounds good, so to make it fair lets take £1,000 from the person that earns £10,000 and £9,991,000 from the person earning £10,000,000 then it will be all equal....EG cakes, pints of beer, money.
If you tax someone 10% of their £10,000 you tax say 10% of their "happiness".
However, taxing someone 10% of their £10,000,000 is taxing less than 10% of their "happiness".
Ergo - taxing the poorer person the same as the richer person makes them relatively less happy.
That's the unfairness
To make it fair, you tax the person earning £10,000,000 a higher percentage.
Odie said:
Its not a tax on happiness... its a payment to the government for services rendered or is it?
It's a tax on society's income to provide the things that society needs.The burden is shared throughout society, hopefully so that those with broadest financial shoulders pay a bit more, relatively, without punishing them for working hard/smart/lucky.
simoid said:
But despite the fact that the percentages are the same, 50% of the income of someone on £10,000 p.a. is a greater financial burden than 50% of the income of someone on £10,000,000 p.a.
I understand what your saying but my point is why does the government need more because a person earns more? I understand why a person who earns less should give less, but why should a person who earns more, give more? If that makes sense.
simoid said:
But despite the fact that the percentages are the same, 50% of the income of someone on £10,000 p.a. is a greater financial burden than 50% of the income of someone on £10,000,000 p.a.
Absolutely true, as long as both people work in a similar job, live in similar houses, and the state provides equivalent healthcare and education. What's that? They don't? Gosh.Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff