Autumn Statement 2016
Discussion
Ozzie Osmond said:
Welshbeef said:
The only way to make it fair is for everyone to pay the same % of income tax after a tax free element.
Your idea of "fair" appears somewhat out of line with about 100 years of global taxation policy.tighnamara said:
OK, look at it another way.
You had / have ways to reduce your tax bill for the year through working as a contractor. What gives you then the right to pay little or no tax but Joe down the road earning £35,000 pays the going tax rate through no fault of his own other than being PAYE.
I may be wrong here but I doubt that there is any country that doesn't have increased tax rates on level of earnings.
Will agree that the current tax system needs to be overhauled though but personally I like to pay my taxes within reason. This may seem silly to you but I would struggle to pay only 5% tax on a high income, that's just me though.
Well someone earning £15k a year excl NI pays 4.9% income tax. The. Take off how much they elect to pay into pensionYou had / have ways to reduce your tax bill for the year through working as a contractor. What gives you then the right to pay little or no tax but Joe down the road earning £35,000 pays the going tax rate through no fault of his own other than being PAYE.
I may be wrong here but I doubt that there is any country that doesn't have increased tax rates on level of earnings.
Will agree that the current tax system needs to be overhauled though but personally I like to pay my taxes within reason. This may seem silly to you but I would struggle to pay only 5% tax on a high income, that's just me though.
Let's take someone on average income £26k a year excl NI pay 11.3% tax - let's say they pay in a sensible amount to pension 15% of their salary so their effective income tax rate is 8.3%.
My point is hardly anyone except contractors ie anyone on PAYE generally do not say they pay x% tax instead low high or upper rate tax band is stated.
So can you give an indicative effective income tax rate rather than just saying I paid all my tax which if you paid into a pension scheme paid into an ISA claimed gift aid for charity donations didn't pay capital gains tax when you sold your principle primary residence yet cleared £300k clean profit avoidingVAT by choosing lower or zero rated goods to save money etc.
Ozzie Osmond said:
Welshbeef said:
The only way to make it fair is for everyone to pay the same % of income tax after a tax free element.
Your idea of "fair" appears somewhat out of line with about 100 years of global taxation policy.Why is is fair a single working parent family with 2 kids who earns £60,001 get no child benefit yet a two parent working family both earning £50,000 a year would get full child benefit?
Why is it fair that those earning £122-150k have a lower marginal tax rate than those earning £100-122k
Ditto those earning £200k+ have a lower rate than the £150-200k.
It's not progressive at all.
Welshbeef said:
So what makes the change over from 20% to 40% the specific value £ relevant likewise all the other issues I raised.
Why is is fair a single working parent family with 2 kids who earns £60,001 get no child benefit yet a two parent working family both earning £50,000 a year would get full child benefit?
Why is it fair that those earning £122-150k have a lower marginal tax rate than those earning £100-122k
Ditto those earning £200k+ have a lower rate than the £150-200k.
It's not progressive at all.
They don't?!Why is is fair a single working parent family with 2 kids who earns £60,001 get no child benefit yet a two parent working family both earning £50,000 a year would get full child benefit?
Why is it fair that those earning £122-150k have a lower marginal tax rate than those earning £100-122k
Ditto those earning £200k+ have a lower rate than the £150-200k.
It's not progressive at all.
sidicks said:
Welshbeef said:
So what makes the change over from 20% to 40% the specific value £ relevant likewise all the other issues I raised.
Why is is fair a single working parent family with 2 kids who earns £60,001 get no child benefit yet a two parent working family both earning £50,000 a year would get full child benefit?
[b]Why is it fair that those earning £122-150k have a lower marginal tax rate than those earning £100-122k
Ditto those earning £200k+ have a lower rate than the £150-200k. [/b]
It's not progressive at all.
They don't?!Why is is fair a single working parent family with 2 kids who earns £60,001 get no child benefit yet a two parent working family both earning £50,000 a year would get full child benefit?
[b]Why is it fair that those earning £122-150k have a lower marginal tax rate than those earning £100-122k
Ditto those earning £200k+ have a lower rate than the £150-200k. [/b]
It's not progressive at all.
£100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
tighnamara said:
What gives you then the right to pay little or no tax but Joe down the road earning £35,000 pays the going tax rate through no fault of his own other than being PAYE.
Average Joe has a choice, he chose to be under PAYE.The rules are the same for everyone, seems silly to bemoan someone who made a different choice.
Having said that, paying a net 5-10% is taking the mickey a bit. I've always paid ~20% over the last few years and it's going to be a lot more this year with the new dividends rules.
sidicks said:
Welshbeef said:
Which bit?
£100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
What happened between £150k and £200k?£100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
Shaoxter said:
Average Joe has a choice, he chose to be under PAYE.
The rules are the same for everyone, seems silly to bemoan someone who made a different choice.
Having said that, paying a net 5-10% is taking the mickey a bit. I've always paid ~20% over the last few years and it's going to be a lot more this year with the new dividends rules.
Agreed, but my issue was with paying 5% tax and thinking it is fine. Just my view. The rules are the same for everyone, seems silly to bemoan someone who made a different choice.
Having said that, paying a net 5-10% is taking the mickey a bit. I've always paid ~20% over the last few years and it's going to be a lot more this year with the new dividends rules.
Welshbeef said:
Which bit?
£100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
Can you break those numbers down a bit? £100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
I can't get to those figures, instead for someone earning a gross salary of £122k, I get an overall tax take of 39.5%, assuming NI is payable at the higher rate up to £43k, and assuming the personal tax allowance has been taken away? I'm not sure where I am going wrong.
Super Slo Mo said:
Welshbeef said:
Which bit?
£100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
Can you break those numbers down a bit? £100-122k
Normal income tax 40%
Employees NI 2%
Then the removal of tax free threshold 20%
Total 62%
If you earn £125k for every £ you earn over up to £150k
Normal income tax 40%
employees NI 2%
Total 42%
I can't get to those figures, instead for someone earning a gross salary of £122k, I get an overall tax take of 39.5%, assuming NI is payable at the higher rate up to £43k, and assuming the personal tax allowance has been taken away? I'm not sure where I am going wrong.
Firstly you have the usual higher rate income tax 40%
National insurance once you have hit the max contribution then continues as 2% of your salary
Lastly between £100-122k the tax free allowance goes from £11,000 to £0. So someone on £122k has no tax free income.
As such to remove the threshold it is tapered £1 in £2. Now that means 20% tax threshold starts at £0.01 therefore it's an extra 20% income tax in the £100-122k range.
So all up 40%+2%+20% = 62%
Welshbeef said:
I'm talking about every £1 you earn between £100-122k
Firstly you have the usual higher rate income tax 40%
National insurance once you have hit the max contribution then continues as 2% of your salary
Lastly between £100-122k the tax free allowance goes from £11,000 to £0. So someone on £122k has no tax free income.
As such to remove the threshold it is tapered £1 in £2. Now that means 20% tax threshold starts at £0.01 therefore it's an extra 20% income tax in the £100-122k range.
So all up 40%+2%+20% = 62%
Ok I see, interesting way of looking at it. Firstly you have the usual higher rate income tax 40%
National insurance once you have hit the max contribution then continues as 2% of your salary
Lastly between £100-122k the tax free allowance goes from £11,000 to £0. So someone on £122k has no tax free income.
As such to remove the threshold it is tapered £1 in £2. Now that means 20% tax threshold starts at £0.01 therefore it's an extra 20% income tax in the £100-122k range.
So all up 40%+2%+20% = 62%
The removal of the 20% allowance is tapered though, so it's only an extra 20% at £122k, it's less at any point between this and £100k, not the full 20% on the £11k in the 100-122k range. Isn't it?
Super Slo Mo said:
Welshbeef said:
I'm talking about every £1 you earn between £100-122k
Firstly you have the usual higher rate income tax 40%
National insurance once you have hit the max contribution then continues as 2% of your salary
Lastly between £100-122k the tax free allowance goes from £11,000 to £0. So someone on £122k has no tax free income.
As such to remove the threshold it is tapered £1 in £2. Now that means 20% tax threshold starts at £0.01 therefore it's an extra 20% income tax in the £100-122k range.
So all up 40%+2%+20% = 62%
Ok I see, interesting way of looking at it. Firstly you have the usual higher rate income tax 40%
National insurance once you have hit the max contribution then continues as 2% of your salary
Lastly between £100-122k the tax free allowance goes from £11,000 to £0. So someone on £122k has no tax free income.
As such to remove the threshold it is tapered £1 in £2. Now that means 20% tax threshold starts at £0.01 therefore it's an extra 20% income tax in the £100-122k range.
So all up 40%+2%+20% = 62%
The removal of the 20% allowance is tapered though, so it's only an extra 20% at £122k, it's less at any point between this and £100k, not the full 20% on the £11k in the 100-122k range. Isn't it?
I can assure you when you pay it or have pay rises etc the net impact is small. Let's say you get a £6k payrise entirely in that zone from £100k you'd think 6% payrise well PCM net it's £190 then strip off say 15% pension contribution it's a mere £161.50 PCM.
Hence in this zone people tend to pay in even more into pensions as the tax relief is even more.
The £150-200k territory is even worse deep into the 70%'s thereafter it drops back to 45%.
So when the left push for an extra 5% income tax for over £150k your pushing many into an effective rate in the 80%''s.
Problem is to correct these insane marginal rates means pushing the starting point up higher to not capture so many people or scrap it but that then gives an effective tax cut to the big earners. But as currently it costs the state so little it's worth scrapping BuT leave I long enough you've a problem as it will be generating so much tax revenue to scrap it they need to cut spending or raise another tax.
Let's say you earned £100k and lived in say Reading but then were offered a job in central London paying £122k. On the face of it you think great a 22% pay rise...well it's only £8,360 actually and then take off the £5k season ticket then take off the £1.5k annual parking at the station that £22k payrise is net giving you £1,860 for a much bigger job. Clearly bonuses and LTIPs would be greater ie 100% OTE but that's not guaranteed so a huge amount more effort and horrible commute for £155pcm.
You see the issue.
sidicks said:
But his idea of 'fair' does have a certain logic to it, unlike many aspects of global taxation policy....
What is that logic?Flat tax is one of those things which sounds warm and cuddly but doesnt fly. It fails, amongst other things, to take of the huge impact on lower paid people who at the margin suddenly jump from 0% tax to the full flat rate.
Ozzie Osmond said:
What is that logic?
Flat tax is one of those things which sounds warm and cuddly but doesnt fly. It fails, amongst other things, to take of the huge impact on lower paid people who at the margin suddenly jump from 0% tax to the full flat rate.
It was flat tax with a large threshold. So you wouldn't get a large jump in tax.Flat tax is one of those things which sounds warm and cuddly but doesnt fly. It fails, amongst other things, to take of the huge impact on lower paid people who at the margin suddenly jump from 0% tax to the full flat rate.
sidicks said:
Ozzie Osmond said:
What is that logic?
Flat tax is one of those things which sounds warm and cuddly but doesnt fly. It fails, amongst other things, to take of the huge impact on lower paid people who at the margin suddenly jump from 0% tax to the full flat rate.
It was flat tax with a large threshold. So you wouldn't get a large jump in tax.Flat tax is one of those things which sounds warm and cuddly but doesnt fly. It fails, amongst other things, to take of the huge impact on lower paid people who at the margin suddenly jump from 0% tax to the full flat rate.
Say £20 0% thereafter x% job done
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