The top 10% of taxpayers contribute 60% of income tax...

[MsPinkMarshmallow]

I'm fed up of hearing that "high earners" will be targeted by the next budget.

The top 10% of taxpayers pay 60% of income tax.

Don't piss them off. They'll just leave the UK or work less so they're taxed less.

Some more stats: in 2024-25, the top 1% of income tax payers earned 13.3 per cent of total income and paid 28.2 per cent of income tax

35% of adults in the UK pay no tax at all

More from the Taxpayers Alliance here:

https://www.taxpayersalliance.com/briefing_share_of_income_tax_paid_by_percentile

<stands back and awaits kicking>

Those hero have more pay more

you may be surprised to know that when tax changes are considered the impact across all groups - including the likelihood they will all leave - is considered and the change is implemented if the net effect is beneficial

you may also be surprised to discover that no one pays no tax at all / things like VAT affect everyone , although they tend to affect the poor hardest

You’re right but people don’t want to hear it. One of the latest leaks is Reeves planning to charge them as they leave.

No need to pity the top 10%. Just imagine their income if they are managing to pay that proportion.

I think it’s unlikely that those tax payers will go away, but there are a lot of “cliff edges” in the tax system that disincentivise work.

It is curious though that certain taxes are evidenced to incentivise changes in behaviour (eg alcohol tax, sugar tax, boiler tax) but then somehow income tax is magically meant to have the opposite effect. Revenue must be raised somehow, but I wish that there were more creative and convincing ways to instead grow the economy and lift everyone up.

Everyone pays tax . Everyone has to pay VAT and most people pay some council tax. Anyone who drives pays tax on fuel and vehicle tax. Even energy bills include tax

Stupid options so I can’t vote.
The richest pay more because they can easily afford to do so and still have a very nice standard of living which is far beyond anything poorer people have.
This is how society works.
Equity is not the same as equality.
We all pay what we can and we all pay for others who use services we don’t personally need or use to varying degrees.

Yes I saw that. The cheek of it!

If they add capital gains on the sale of a main home that'll stagnate the housing market and disincentivise downsizers as well. Even if it's over £1m that will include a lot of pretty average London homes.

The marginal tax rate over £100k is 60%, how is it fair that the government takes 60% of earnings over the threshold?

Why would anyone work for 40 pence out of every pound they earned?

Firstly. the article is only about income tax, not all the other taxes.

Secondly, tax is about a balance between making a contribution to society at the same time as being incentivised to work hard and create wealth.

You can’t tax low income earners a high percentage as they will be left with no (or negative) discretionary income after taxes. OTOH, of course you could potentially tax someone who earns £10 million per annum at 60%, because they would still be left with £4 million.

So, higher earners can and should pay a higher percentage. But, you need to leave them what they (on average) consider enough to be fair and you can’t drive them to other jurisdictions.

It’s a fine balance which the chancellor has to consider. Simplistic arguments on either side don’t serve anyone well.

I don't consider giving 60p out of every £1 to the government fair. Not at all.

I guess it depends what you mean by "high earners".

If you mean billionaires then yes they do have the option to leave the country and pay less tax. That sort of wealth brings you enormous flexibility.

If you mean people with assets for example £2-£5 million then probably they don't have the wealth to make leaving the country a simple proposition.

So you get into this "dead zone" which other people might term "the middle class" where people are wealthy enough to have money to tax, but not wealthy enough to take significant avoidance action.

These are the "wealthy" people you can target to get more money. They have enough disposable income/savings to be taxed, but not so much they can afford to spend millions getting away from taxation.

And from then on you can move to a simple conclusion. Poor people generally can't pay much more tax because they are poor, rich people won't pay much more tax because if they want to they can avoid it, so it is the people in the middle that really are the only ones that can be tapped up for more tax and actually make a difference to the countries finances.

I think there is definitely a problem with incentives by our erratic tax system and higher rates on some earners - which hinder growth because they encourage people to work less.

What’s the top 10% now? Over £70k maybe?

Ok so they pay 40% tax, 2% NI, maybe 9% student loan. So already potentially a 51% rate on any extra pound they earn.

Have a couple of kids and if they hit £80k they lose child benefit - meaning potentially and 80%+ rate on their income over the removal threshold.

Hit £100k and they have a 60% rate up to £125k - plus NI at 2%.

They also might lose their childcare support, if they have young children. This can be worth several if not tens of thousands. They might actually lose money by earning a penny over £100k.

All of this incentivises behaviour - and there’s lots of evidence to suggest people are cutting down hours, using pensions etc to reduce their incomes and work less because it simply isn’t worth earning the extra.

I have two in nursery next year, and due to the loss of childcare I take home no extra pay between £100-150k. Not a penny. What’s the point? So instead people put masses in their pension and work part time to avoid it - of zero short or long term gain to the country’s coffers. So why create such a massive incentive to do it?

I’ll be giving £1 out of every £1 between £100-150k next year to the government.

Some seem to think this is fair.

35% of adults don't pay any tax at all.

The richest can't always shoulder the burden, I'm sick of seeing that trotted out on here and elsewhere. Very often they don't even use state schools or the NHS but still contribute (quite rightly).

The 60% only applies to earnings between £100k and £125k. It goes down again after that to 45k.

The 60% band is very bad tax design as it is very distortionary. It would be much better to smooth out tax rates so they only ever go up (by less!), not up (by a lot!) then down again. But it is very misleading to imply all income over 100k is taxed at 60%.

It's not fair at all.

In line with most other countries, apparently.

What do you think their income is if they’re in top 10%?

As per the latest figures available, for the 2022-23 income tax period, the 90th percentile is £66,669.00. So anyone earning £66,670.00 is in the top 10%. Hardly Croesus.

I know that. As explained here:

www.raisin.com/en-gb/taxes/100k-tax-trap/

It's interesting that every time the question of taxing the richest comes up, the debate immediately shifts to income tax.

Whereas the focus should be on unearned wealth, specifically land and property.

It's almost as if the discussion we need to have is being deliberately derailed. It's certainly not a discussion that the super rich would like us to have.

There is an incentive, because if you continue with your career for those two years it will likely lead to a higher paying career path than if you don't.

Generally peoples salaries increase over time. That is why it is important to think carefully when you don't get a salary increase, because if you miss an increase for say one year, it is not just for that year you are losing the salary, but effectively for the rest of your working life.

Do you not understand how taxation works OP?

That statistic simply illustrates how enormously wealthy the top 10% are.

If you have huge amounts of income then it's most definitely fair.

That’s not particularly unusual. Australia, Canada, Netherlands, Norway, France, Spain, Germany, Japan all have some form of this. The US taxes all citizens worldwide and if you give up citizenship you are taxed for that, so that’s a version of it as well. You can disagree with it but it’s not some weird left field out of nowhere idea.

But the mean income in the top 10% will be much higher. And it is the very richest who will be paying the most, obviously.