To think that taxing high earners even more would actually be a bit unfair?

[bubbleymummy]

I hear this suggested a lot on mumsnet and I really disagree with it. High earners are paying a huge contribution in tax already - thousands and sometimes 10s of thousands more than a lot of people who are clamouring for them to be taxed even more! Why should they be punished for having a highly paid job? How would you like handing nearly half your income over to the government? I think we should be thankful that we do have high earners who are already making a significant contribution. We would be a lot worse off if we drove them away with higher taxes!

I can't afford to pay any more tax!! Please, no....

I have a massive student debt (some student loans, some credit cards) as I funded myself through uni, I earn well but I work around 60 hours a week and spend £300 a month commuting, a big chunk of my income is taxed at 40%, then NI at 11% then student loan at 9%. I am forced to rent because I can't save an enormous deposit until i've paid all the debt... yet so many assume that because i'm a 'higher rate tax payer' I'm in a position to further subsidise the country. I don't use any more public services than anyone else and object to being forced to pay any more. The whole thing infuriates me and makes me want to move.

siasl - I agree with your point about money needing to be targeted to the genuinely needy.

Your second point isn't quite correct though - things are being done about the pension deficit. People with public sector pensions are going to have start paying in significantly more - eg I am likely to have to start paying around another £100 per month into mine, simply to maintain the same terms and conditions which I bought into in the first place. I am not, however, going to start a thread bleating about how unfair this is, that after working hard for many years, the goalposts suddenly move so dramatically - because we are all having to bear the consequences of the economic mess. The point of this thread, though, is that HR tax payers already contribute loads, and often aren't particularly well off, and have very little left over each month, and therefore it's not economically viable apart from anything else, to try to squeeze them even more

knittedbreast please read the thread before you start with the 'it is that simple'. I am a hrt payer but my house is likely in negative equity as I bought it in 2007 at the height of market. It is not 'huge' it is a 3 bed semi in south east. Neg equity not really a prob because we don't want to move but it does cause a problem with the loan to value and ability to remortgage so we are shackled to an svr mortgage and totally at the mercy of any base rate rises.

Monetary problems are not just reserved for lower rate tax payers!!

"when are people going to stop the excuse that the rich have bigger mortgages so they are also hard up. Dump the big house with a huge mortgage, if you are struggeling buy a smaller house. I hear people say "of but its not that easy what about schools" what do you think poor peole do?"

The thing is that housing is the elephant in the room, because it's created a disparity between generations that can never be bridged. Now you could say "well people cant complain that they missed the property boat" but actually, they can. Many people weren't even old enough to get a mortgage during the property boom.

Take 2 people - A&B who live in identical semis. It's quite possible that person A, who is a higher rate tax payer and bought the house for £200k last month has a lower income after housing than person B who lives in an identical house but is a basic rate tax payer, gets tax credits paid for by Person A but bought the house for £30k in 1990.

I am a 50% taxpayer. Do I begrudge it? No absolutely not, I strongly believe in fairness in society and think that 50% is only fair.

What I find ludicrous and misguided is the suggestion that the rich (and I guess I fall into this category) should pay more than a 50% tax. What happens at that level is that people get demotivated and actually choose to work less. Therefore, we earn leass money and contribute less in taxes. This is a significant issue for the rest of the UK because 1) the top 1% of earners are the biggest contributers to the governments income revenues (who do you think would fund tax credits if less taxes were paid?) and 2) there is less generated in the economy ( its no big surprise but people who earn more spend more). This is well proven economic theory and I promise you that no matter your income, if you were paying more in tax than taking home, there would come a point at which you decide whether or not you can afford not to work. In my circumstances, if tax rates were more than 50% I would go down to a 4 day week, because I don't need the money and it wouldn't be worth the hassle.

Excellent post Bagged - your illustration at the end makes the point brilliantly.

And also totally agree with novice. I don't begrudge paying 40% tax (though I do begrudge the fact that I don't think the money is wisely spent). If I had to pay much more, I would probably work fewer hours. Everyone has a 'cut off' point, where they will decide that actually, its not worth the hassle and pressure of earning a higher income, just to see more of it being taken straight off you. That cut off point is perilously close for many people.

Actually Takvar - I do not have a disability - did not grow up in care - grew up in an abusive home after my mother died when I was 11 months old - no silver spoon here, my father is very very wealthy but none of it has come or will come to me.

Why is that you have to have grown up in care or have a disability?

I was hugely disadvantaged in terms of the way my class mates grew up and the love and support they had - made me even more determined to get out of that shit and not to have to rely on the abusive parents I ended up with.

Madame - totally agree that there is more than one way to be deprived. Its a very narrow view to suggest that unless you have a registered disability and have been brought up in care, then you cant possibly have a view on the economy.

Fair play then, MmeC - its just that so many people on here say 'its not luck, its hard work' and ignore the real luck in being born when and where they were, IYSWIM.

I'm not talking in terms of inheritance, or even paid for education, simply the ability to make the most of what was available to them.

FWIW my mother probably does also count as one of those people who really did make something out of a pretty poor seeming chance in life - in her case because she's extremely clever, and in particular very mathematically able (won a grammar school place despite minimal primary education, chaotic family background and what would now I'm sure be diagnosed as moderately severe dyslexia). I guess I've been affected by her approach - that those of us who have been able to do well in life have a responsibility to those who haven't.

Takver - in fairness, I don't agree that anyone is ignoring the 'luck' of when and where you are born. TBH any of us born in the western world are comparatively lucky.

As for your point that "those of us who have been able to do well in life have a responsibility to those who haven't" - again, I can see where you are coming from, but I think what a lot of people are saying is: they don't mind at all paying taxes and having responsibility towards those who have fallen on hard times. What people do object to is feeling responsible for people who won't take any responsibility for themselves. Why should responsibility be a one-way street?

Apologoes if it's already been said, but it's a fact that poor people pay a higher proportion of their earnings in tax when you take into account total tax bill and not just income tax.eg council tax ,VAT, tax on petrol etc.

I'm sorry do not higher rate tax payers pay those taxes as well?

I do think it is unfair to keep taxing those who earn higher salaries. We get taxed enough as it is.

You cant win really. My dh worked really hard building up his company, we paid high taxes and corporation tax. Then when we were fortunate enough to sell the company we had a whopping personal tax bill to pay as well.

When you dont have much money you cant afford to buy the nice things and live comfortably, but when you do have money (no matter how much) they try and find every way to get it from you.

Yes, we have a big house but we have the big bills that go with it. Yes we have nice cars but we have the bills to go with it... Fuel costs more, road tax costs more, car insurance costs more. But they are the choices we have made so we cant complain about it.

If we were still living our lives scraping through each month, wondering if we had enough money for the bills and food etc then I certainly wouldn't be begrudging those more fortunate than us.

Basically, you get penalised if you are at the lower end of the money scale because you can't afford many things, you spend your time worrying about affording to live but you also get penalised if you are at the higher end of the money scale because everyone thinks that you should be taxed more just because you are seen to be able to afford it.

It's a no win situation.

Yes but low earners have to spend nearly all their income and hence incur vat on nearly all their takehome pay Higher earners save more and threfore a lower percentage of their income goes on indirect taxes

this explains it

Katiestar, I disagree. The majority of staple foods are VAT exempt (there are some anomalies) but what happens is that convenience foods, snacks, soft drinks and sweets/chocolates which are considered luxury items are subject to VAT. If a "poorer" person has a diet that largely consists of these luxury items then yes, they will spend more of their take home on pay on VAT, but this is a lifestyle choice as far as HMRC are considered.

Umm Katie I dont have any money left to save, my disposable income is zero, so not sure your logic works really?

Dear god, you know what I'm not doing this again, this assumption that all HRT have oodles of spare cash sloshing about!

It's not clearcut that VAT is a regressive tax. Many basic items, such as food and children's clothing, are not subject to VAT. Household energy bills are taxed at a lower 5% rate.

It depends a bit on whether you look at incomes or expenditure.

www.bbc.co.uk/news/business-12111507

VAT is a complete mess in the UK. The HMRC book detailing what VAT rate applies to various product/services is about 1000 pages long!

What novice says is correct in respect of indirect taxes

Actually they are zero rated - not exempt if being pedantic!

The VAT rise will hit those on lower incomes hardest as a proportion of their income.

Oops, sorry that last post was aimed at thinkingaboutschools.

The problem for me with the UK and tax is that it's just bad value for money.

Ideologically I suppose I prefer the idea of low tax so that individuals can decide what they send their money on, rather than the state redistributing as they see fit.

Practically though I don't care whether I'm taxed at 20% or 50% as long as when I'm taxed at 50% I get high quality services (education, health, defence etc) than mean I don't need to spend so much individually.

The problem is that the UK doesn't deliver. As a foreigner who has lived here for 13 years, state services just don't measure up to what I knew at home.

My fault for marrying a Pom I suppose!