AIBU to ask a question about Tax paying and what is fair?

[Taxquestions]

Regular but name changed for this thread - Pom Bears, Water Gun, Penguin Date etc.

Although this is not a thread about a thread, I read a thread today which really raised my eyebrows about some people's beliefs on what tax payers should really be paying in tax. I am interested in all views.

One of the contributors seemed to believe that tax payers should be taxed so highly that their eventual income stream would be nearer an average salary i.e if you earn't 100K you should be paying 75% back in tax.

I read things like "well they don't actually pay the higher rate".....errm looking at my P60 I can assure you they (I) do "well they have accountants to lower the rate for them" how exactly would this be? HMRC are scrupulous, there are FSA rules and regulations and there isn't any way to "fudge" the system - if you are not in this system please tell me where on earth you get the opinion that everything is fraudulent.

I wonder what the general opinion is to someone like me...I earn over 100K a year, work bloody hard for it, have very little tax free allowance (in fact I think it is more like 0), don't take up a NHS space as have private medical insurance, don't take up a school space as my children are in private for non snobby reasons despite the opinion that some hold. I employ over 100 people, am a fair manager/employer who pays above the national/international average and I contribute a substantial sum of my very hard earned income every year in both Tax and NI contributions. I don't have a final salary pension scheme and will be in the same position as everyone else who has either worked without a final salary pension or those who have never worked come retirement (subject to any savings).

So mumsnet do you think I should be penalised more for loving my job, being good at it and wanting to work hence being afforded the salary I am "lucky" to earn? Should I go out to work just to put more into the tax pot?

So as not to drip feed whilst I put "lucky" - it has been far from it, I am working class through and through left school early with no qualifications and worked my way up the ladder. This makes no difference to me but just to clarify for those that might also assume I was born with a silver spoon in my mouth :)

Both DH and I are HRT. DH somewhere towards what you earn. We use state schools and the nhs, does this mean we should pay more tax then someone who goes private? Id like to think that if everyone used these services then the standard would remain high. Not directed at you OP as you've not suggested this but interested to hear views.

I personally think the HRT band should start higher as in the south east that's not actually easy to live on that salary. Otherwise the system is broadly fair and not that easy to circumvent. It's the big corporation's tax that is unfair but to a large extent the government's hands are tied by the international situation.

Lots of people work very very hard in responsible jobs for less than a 5th of what you earn.I don't think coming out with 60% of your salary is too bad at all.Remember as well 1 you pay the same rate of tax as evertone else on your lower tier of earnings and 2) lower earners pay NI on all their earnings

My argument is that at 40-45% tax I can afford to pay a gardener, a cleaner which is my neck of the woods is 15-20 per hour and if I was paying more tax I couldn't pay these salaries to people who really need it and the more responsible my job the more I need this help

Priceless!! so basically you are arguing that you should pay less tax so you can employ a staff!!!!!!

It is irrelevant that you use private healthcare/School, those are luxuries you are choosing to have that most people can't. You still have to pay in for the benefit of the whole of society.
Tax evaders are usually millionaires who use off shore. They are the people screwing us because their tax contribution is much larger. I do think wealthier people should be paying much more tax and although you have quite a lot you aren't super rich so I think your tax contribution is appropriate. People on more than you need to be paying more.

She's not saying she should pay less tax, she's quite clearly saying she's happy to pay exactly what someone with her income should be paying.

She's saying she shouldn't have to pay more than what the hmrc currently expects of her

I think the higher rate tax starts too low as it is. As I am PAYE there is no clever accounting. I pay £3K in tax per month that is before anything like council tax etc. I had to pay a huge amount for nursery/pre school and don't even get child benefit. If the tax went up I would stop working. Not sure how as I still have some debts to pay off. I know I should get a grip but it is really rubbish opening my payslip each month to see how much goes in tax.

The same thing applies.She thinks she shouldn't have to pay more tax because she wants to employ a staff!

It is not about working hard. A lot of people work very hard, long hours in jobs that require a lot of education/training for a low wage. Nurses for example.
People do not want to do well just for the money. Just after the war we had a very high rate of tax but people still wanted to work and progress.

Or how about she shouldn't have to because she's currently paying everything that is expected of her.

And employing others makes sense because they pay tax, what exactly is wrong with employing staff on a fair wage?

I think the OP is not being clear and confusing people.

This is my understanding.

• She is a PAYE employee - so even if she has 100 people on a reporting line to her - SHE IS NOT THEIR EMPLOYER. HER employer is. And they would be employed regardless of whether she was there or not.

• Unless she is paying her gardener and her cleaner on a payroll and their NI and tax contributions and they have full employment rights (which I doubt) SHE IS NOT THEIR EMPLOYER. They are contractors who are paid for a service. No different to hiring a window cleaner or a childminder.

(If I am wrong please correct me OP)

Pixiepotter - And employing people is a bad thing? Who do think employs people like gardeners, cleaners, nannies?

And are you 'employees' payed over 40k or do they use state top ups to support their wages?

I think there should be a flat rate of PAYE. I also think that people who reckon that hrt work equally as hard as lower paid workers don't know what the hell they are talking about. Low paid workers genealogist go to work and go home again. They work a eight hour day and generally refuse to any more. HRT tax pastures normally work at least a12-15 how day and when the shot his the fan... The buck apps there.

What I think would solve the problems. . Actually dh's plan. is that the government becomes a 20% shareholder in Every companyin the country. Corporation's could then not avoid paying tax.

I was nodding along to OP's opening post until I got to this bit: I earn over 100K a year, work bloody hard for it...

At that point I stopped reading. I hate this assertion that high earners work 'bloody hard' and the implicit suggestion therein that low earners don't. IME this is what people who use the 'I work bloody hard' argument usually believe.

FWIW, I think that higher earners should pay more tax than lower earners.

However, I think there is a definite tipping point, which should always be lower than 50%. Particularly, when there is NI and loss of personal allowance to consider.

Any individual who earns a quid, should be able to keep at least half of it. Any more than that, and people start to find ways to a. avoid it or b not bother earning it.

History has taught us that when the tax burden becoems too high, tax take goes down.

Some people of course don't care about the actual tax take. They simply want punitive measures to alleviate suppoised unfairness...I give you Gordon Brown's last hurah tax hike to punish 'bankers'.

lol. That's what happens when you change trains during a morning commute. .

Oh and hard work is neither here nor there!

The fact is you earned it. Not anyone else. It is yours! Of course you have a duty to give some of it over to pay for public services, but it shouldn't be taken from you in an effort to equalise you with the lower paid.

hrt may not work harder but they are generally hold positions of more responsibility. If I went to work on the tills today and made a mistake, it would small not a real issue... ultimately nobody would care. If I went into work today and made a mistake on the transaction mappings into the global financial system a major of Corporation.. That error could be really bad and in the long run cause a company to close down. It could mean redundancies across the board. ... It could have a real impact on lives.

That is why people earn more ... not because of how much they work but because of the skills/knowledge required and the responsibility that goes with it.

Why would people take in that responsibility for no reward. We cannot all work in supermarkets with no actual responsibility. Some people actually have to do real jobs that have real impacts to make this world work.

I do think that teachers, nurses and carers are under paid for the jobs they have because those are very real responsibilities. They should be hrt's.

I live in London area. £100k is still a lot of money. Then factor in potential of two incomes that's a significant family income.

I do think there should be a tax above 40%. 40% get an awful lot of people fairly. There are an awful lot of people perfectly able to pay more from £100k plus salaries. I think 75% is stupid but I do feel an extra level could be brought in that is fair to those earning £100k plus.

I think it's complete bullshit that this apparently stifles creativity. What is meant is just simply "it's mine and I'm not letting go of it". That is a rubbish arguement.

I do think there are an awful lot of loopholes and ways of accounting for things that are legal that should be closed. However it appears that's not worth it. Again that just means that rich are affected. Better not do that then.

"- She is a PAYE employee - so even if she has 100 people on a reporting line to her - SHE IS NOT THEIR EMPLOYER. HER employer is. And they would be employed regardless of whether she was there or not."

If you are a business owner, and that business is a company, any salary that you draw from the business as a director is subject to PAYE. So you can be both the owner of the business and a PAYE employee of it.

Thank you Clodia, was just about to post that.

People set up as companies, as per the bbc, still pay corporation tax on company profits, income tax on dividends and probably PAYE and NI on some part of their income from the company.

Tax is still paid, it is just reduced somewhat by these measures.

TBH if your income is high but your outgoings low, you can salary sacrifice a large amount into pension tax free anyway and save PAYE.

FWIW, I think that higher earners should pay more tax than lower earners.

However, I think there is a definite tipping point, which should always be lower than 50%. Particularly, when there is NI and loss of personal allowance to consider.

^^ this

I appreciate it is a high class problem but it there is a nasty bit from 100k where they withdraw the personal allowance giving you an effective tax rate of 60% which is rather galling.

My dh earns enough so that we lose all of his personal allowance. Of the £20k over £100k you actually pay £12k in tax - you get less than half and you want even more!!!

Dh works his arse off and many of his friends say that they wouldn't want to put in the hours in even if it meant earning more.

Some people work hard and earn shit money that is awful and needs to be addressed but soms people don't have the intellect to do the difficult jobs and done can't be bothered.

Should the doctor's secretary earn the same as the doctor - I don't think so!!

But you don't pay 40% tax on ALL your earnings do you? Just a proportion

Pixiepotter - And employing people is a bad thing? Who do think employs people like gardeners, cleaners, nannies?

not a bad thing, but irrelevant to taxation levels imo.
you are being a bit disingenuous employing people for the greater good, when in fact it is to make your own life easier.So what you are basically saying is that if you pay more tax it will make your life less easy and you think that is a justification!!