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 :)

Vivienne - Where did I say it was a hard life and I needed sympathy?

I said I work bloody hard and I do - that's a fact.

tonde the efficiency issue is not just about high rate payers. It applies to all tax.

I agree that minimum wages shpuld rise. It is ludicrous that we have to top up families with two working parents, just so some very large companies can keep wages low.

But I disagree that it is efficient to take money from high earners to give to low earners. By the time you've factored in the costs of taking and distributing, it's barely worth anything to those that need it.

Of course we have to take some tax for good public services that we all need and use. And higher earners should pay more. But demand too much, you'll actually take less.

Apologies Truffle! I mean't the poster before you

Interesting that you think it's fair to effectively pay income tax twice

In that sense we all pay income tax multiple times. When I buy food some of the money goes to pay the supermarket staff who all pay income tax. When I take my car to the garage a significant chunk of the labour charge goes to pay the mechanic who pays income tax. When I pay the window cleaner most of the money goes to pay him and he pays income tax. And it is likely that somewhere up the line your own salary is being paid by someone who is buying services from your company (or your company's customers) from their taxed income.

Either we have income tax or we don't. If we have income tax it is inevitable that a proportion of the money you spend from your taxed income goes to people who are themselves paying income tax. Perfectly fair in my view.

of course the money appears to be taxed multiple times, because every individual has, and certain other entities have, a tax liability - it's not the money being taxed but people and corporations

otherwise only a handful of people would pay any tax at all

Multiple taxation is inevitable.

But money will pass further and spread wider, the less tax we pay.

I think you pay a reasonable amount of tax OP. I think I do. I just don't happen to think that YOU & I ARE SO SPESHUL that if we stopped paying tax or left our jobs the economy would collapse and other people would go jobless. I think this applies also to other high rate tax payers as well.

You work in compliance - if you don't do it, someone else will because it's a regulatory function. That you are good at bringing in those clients to your business is neither here nor there. You are not generating any income or additional profit for the economy overall. And if you dropped down dead tomorrow someone else would do your job and pay your taxes and those 100 people would get other jobs. Same with me. I can cite all the things I have done on my CV to create millions of pounds of income for my company (and, in my case, for the general economy, working in a creative/entrepreneurial sector as I do) but, face it, someone else would do it if I weren't here.

Higher rate tax payers do create jobs, why on earth would people think they don't?

Because nobody on this thread has presented any evidence to support that point. They keep asserting this but you know...citation needed.

SOME higher rate taxpayers do of course (JK Rowling springs to mind). But generally not regulatory specialists on £100k p/a.

OP - you asked what is fair?

It would be fair that everyone working hard in this country (that is nearly everyone) took home a wage that allowed them to house, feed and take care of themselves properly. But that isn't happening. Far too many people are far earning less than this. The tax system needs to make sure this happens.

Stop worrying about getting more for yourself all the time. It just makes you look greedy and selfish.

Interesting that you think it's fair to effectively pay income tax twice.

I think it's interesting that someone can get a job as a £100k Sarbanes Oxley specialist with such little grasp of basic economics.

I'm beginning to smell bullshit again so I am bowing out.

Yes, OP does seem very dim.

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

Can't believe that somebody actually wrote this. This is one of the most bizarre and detached statements I've ever come across.

The idea that only higher rate tax payers work hard and have responsibility is unhinged. Oddly, the same poster makes concessions for teachers, nurses and carers...

How about paramedics, African Export? They're not higher rate tax payers. They save lives every day. Do you? How about emergency service dispatchers? This role requires an incredible ability to handle stress, work accurately, and multitask without making fatal errors. They get paid less than 20K pa. Perhaps you would like to take a flight with no air cabin crew on board. After all, since they earn less than 40K they must have no responsibilities! Perhaps you'd like all Cancer Research to stop - many research scientists in this field must be useless, with no skills or responsibilities, since their salaries don't tip the magic 40K. Where's your PhD in biological science, African Export. Where's your experience in macromolecular crystallography? Or could you produce postdoctoral research in protein crystollography too? After all, it must be dead easy, what with a salary of less than 40K. And all those useless, lazy bomb disposal experts, firefighters, fishermen, gas safe technicians, prison officers...

Hard work and responsibility does not correlate with high pay. Perhaps it should, but it doesn't. The notion that high rate tax payers work harder and contribute more than lower earners is self-serving tosh.

I desperately want to tax OP on bizarre misuse of the apostrophe, because that really isn't fair on the rest of us.

I don't think you should pay more tax OP. I do think there's a teeny bit of "the country should be grateful to me" about your OP which is getting up people's nose.

My thoughts on tax, FWIW:

1. Many self employed people/incorporated sole traders get away with paying much lower rates of tax than employees due to exploiting various rules/exceptions and being paid cash. They need to be taxed more effectively.

1. Inheritance tax should rise.

1. The PPR exemption on CGT should be largely removed. In other words people who make a hefty profit when they sell their house should be taxed on it. (This would have to be phased in gradually).

1. The extra tax raised by 1 2 and 3 would enable the general rates of income tax to be lowered.

The basis for views 2 to 4 is that is that inheritance and property price rises are "windfalls"; they are not earned. It is better to raise tax on unearned income, and reduce tax on earned income, as this shoudl (in theory) encourage people to work. It is also better because it is progressive - low rates of IHT and the PPR exemption simply make rich people richer, as it tends to be the rich who benefit most from inheritances and property price rises.

Trebizon - see Wayne Rooney for further details

Tonde - nope don't think I am special in any way and I can't find any reference to that in my threads, please point me to where I said that.

I do not work in compliance. My role means I have to comply to legislation across a 4variety of subjects and countries.

Happy - I fully agree with you that everyone working hard should be able to house, clothe and look after themselves and their families properly. In this country that should not be an issue and it's disgusting that in a lot of cases it is.

I am not worrying about getting more for myself I don't think? I can't see where I said that? I am asking what if people think the current system is fair?

Another poster bought up a very good point about taxing people more and they will just not want the roles. I am at a level now in some ways - I see a role advertised and think is it really worth the extra stress and responsibility when half of the money will go back to the Government...albeit they did lower the 50% tax back to 45% last year but still it just doesn't seem worth it.

4

Tonde - I am not a SOX specialist. I have to comply to SOX regulation as part of my role.

Where on earth are you getting your assumptions from?

“I do not work in compliance. My role means I have to comply to legislation across a 4variety of subjects and countries…

Tonde - I am not a SOX specialist. I have to comply to SOX regulation as part of my role.??Where on earth are you getting your assumptions from?”

My job is all about SOX complicancy, ISO compliancy (second post)

Many apologies for the completely RANDOM assumption. I really don’t know where it came from.

AfricanExport:
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.

Hmm, not sure about that to be honest. There are plenty of roles with high consequences if done wrong, and with a high skill set required that don't pay very well. As an engineer I have a masters degree, post graduate qualifications etc, and could kill someone if I don't do my job right, yet earn below HRT. The big earners tend to be those who are pushing money around, or dealing with people's health or the law (as people are willing to pay a lot when their health is on the line, or are in court).

Tonde - my job involves a lot of compliance across a lot of subjects and every day I have to be compliant to some sort of regulatory code whether that's SOX, ISO, H&S, Technical British Standards, I could go on. So yes my job is all about compliancy in some form but I never said I was a Sarbanes Oxley Specialist, neither did I say I was providing a Compliance Service to third parties.

For some reason you seem hell bent on attacking me in some way which isn't really useful to the discussion and is derailing from what started as a good debate.

Minipie - agree with your point 1) completely. I am not sure I agree with 2) and 3) and would be interested to hear other views on this...

"Another poster bought up a very good point about taxing people more and they will just not want the roles. I am at a level now in some ways - I see a role advertised and think is it really worth the extra stress and responsibility when half of the money will go back to the Government...al"

This is true. But it's also ok that it's this way.

Higher rate tax payers do create jobs, why on earth would people think they don't?

If what you earned was redistributed a bit to lower earners, then those lower earners may be able to afford things they can't at the moment like doing the loft extension they were wanting, hiring a cleaner for an hour or two a week etc. The money swilling around the economy would be the same whether in your hands or someone else's. Certain industries that rely on higher earners might suffer but you could expect a corresponding increase in other industries.

We are a capitalist society though, and that's not going to change anytime soon. So I agree with your general principle. But some of your justifications are a bit off.

Just got my bonus , last year involved late night working and weekends so I do deserve it. My salary puts me on 40% tax rate anyway and the bonus means that I will now have to repay child benefit for 13/14 tax year. It does make me feel was there a point in the bonus. I definitely think the 40% tax band should kick in at 50K pa for those in South East. If i lived in my home town £50K a year would be a good salary, in SE, the house prices/rent and commute eat away very quickly at the salary.

Put some of your bonus into your pension, lasvegas, sufficient to take you below £50k

"Another poster bought up a very good point about taxing people more and they will just not want the roles. I am at a level now in some ways - I see a role advertised and think is it really worth the extra stress and responsibility when half of the money will go back to the Government...al"

"This is true. But it's also ok that it's this way."

I'm slightly dubious as to whether people genuinely turn down higher paid roles because of taxation if they are higher rate tax payers anyway....but even if some do, then that's ok. If a requirement for additional responsibility and additional skills in a job in your own field puts you off, then you are probably not the best person for the job! Sounds like you would have difficulty managing and coping in that new role, and it is for the best that it goes to somebody who doesn't find it quite so daunting.

Better for positions of responsibility to be sought by the best qualified candidates, rather than the greediest.

"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."

My job involves assisting with the prosecution of criminals. Serious criminals - we are talking murder, rape, armed robbery, drug dealing...you get the picture. I have personal responsibility for ensuring they are kept in prison for the correct amount of time pending trial. I make the calculations, I communicate with the courts, the defence solicitors and the prison service. Lawyers and barristers on 2-3 times my salary contact me to check information on custody time limits because I have "the skills/knowledge required and the responsibility that goes with it". If I get it wrong then an alleged murderer, rapist, drug dealer is released on an automatic right to bail, back into the community. I speak to the victims and witnesses of crimes on a daily basis - real people, who have had their lives blown apart through no fault of their own. I'm part of the mechanism trying to secure justice for them.

We have lost 20% of our workforce over the last four years due to Treasury cuts. I am now doing the job of 2.5 people. I work 10-11 hours every day to keep on top of it. We have had a pay freeze for the last 3 years. In my current job I cannot earn more than £26k p.a. I get no paid overtime, no bonuses. I accrue flexitime, which is capped, so in reality I am working part of my week for free, every single week. And I am by no means unique.

So don't you dare bleat about "real jobs that have real impacts" as if only people on higher rate tax know the meaning of hard work and responsibility, AfricanExport.