to think that the threshold for higher of income tax is far too low

[ReallyTired]

www.dailymail.co.uk/news/article-2721477/Surge-police-teachers-dragged-40p-tax-band-More-1-6million-employed-pay-higher-rate-decade-ago.html

Higher rates are starting to hit people in ordinary jobs. In 2003 there were no nurses paying the higher rate of tax and now there are 72,000 nurses in the higher tax band. Middle to high earners are the work horses of the UK economy and high taxes act as a disincentive to working harder or taking on more responsiblity. We need these people generate income to pay for benefits.

I feel that cutting of child benefit also harms the ecomony.

seven i'm with you. I'll pay tax happily, we use schools, doctors etc.

BUT, why are we as a household £5k a year (net) worse off as a single income household than the equivalent household with two earners with equal incomes?

Now that pisses me off. We are penalised for being a household with one person who has a well-paid job and the other that can't work. Fairness isn't something i'd wish for but a small about of equitable-ness would be nice...

But they do have to tax individuals separately. So each person will get a tax free allowance. I don't think I'd like to move towards a taxation per household income system.

Men used to own women's income in the UK and men not women did a tax return. It took many decades of fighting for women to get the right to separate taxation. The child benefit change is a start towards making women property of men again and a very retrograde step.
however yes it is unfair eg that if I die my children are homeless as I am not married and almost half our assets go to the state. (inheritance tax). If I were married that would not happen as assets pass to a spouse free of inheritance tax.

GreenGrow - "Alan Sugar will be in the upper rate 45% (47% including NI) not the 40% (42% including NI) but I get your general point."

Ah, apologies!!

D

Chunderella it's specifically because of the military/former military side of DH's status, and as I said, there's a trade-off wrt the council tax. We checked it out thoroughly when I was pg with DD1 and had expert advice. It's fine.

In everything else my benefit entitlements are the same as any EU citizen's - I could have claimed tax credits when I was eligible - I just chose not to because too many of my friends were being overpaid, underpaid and generally messed about. When it comes to things like JSA - should that ever happen - I will have the same entitlement as anyone else as I have been here 17 years.

I'm one of those people who wouldn't mind paying more tax - I don't earn megabucks (top of NHS band 5 for anyone who's interested) and DH earns about the same as I do. That puts us in the top 25% of household income at least, we're pretty privileged.However, I don't want to see a system change that penalises the lowest paid, which is why I am so opposed to flat tax.

Sorry had to post my figures and dash earlier as the baby woke up.

anyway, i didn't mean to overgeneralise about lower earners receiving benefits, just wanted to acknowledge that that was a separate factor that affects some but not all low earners. I also couldn't include the effect of cb loss between 50 and 60k as not everyone has children or their partner might mean they lose it even on a low rate.

The figures i posted earlier show that there is roughly a curve in the total tax paid, with glitches around the thresholds but would end up inching ever closer to 45% for millionaires. I agree with the Op that the thresholds are often psychological barriers, but as i illustrated earlier they do have a very real effect on the marginal rate earned above them, thereby disincentivising some people to do overtime etc. They could however, simplify the system by having a range of tax rates to mimic the curve already in existence but ironing out the glitches around current threshold points. So, for example, on 10k you would pay 2%, on £15k you would pay 12%, 30% of 60k etc. It wouldn't have to deviate from the current rates, it would just remove the issue that makes it not worth hrt payers earning more. My earlier theoretical example of £50k going part time- instead of it costing 42% in tax and Ni, it would be 28%. Total tax cost overall, but changes the opportunity cost of extra hours etc by removing the arbitrary allowances and thresholds and being upfront about what you are paying. I don't think it would be any harder to administer a sliding scale than the mish mash of allowances, thresholds and rates and national insurance which is income tax, lets be honest which are complicates enough already!

And also, it would be a lot more palatable to say- I am a 28% taxpayer than the current mythical "40p taxpayer" because unless you earn £150k, you don't actually pay that much, and then you would be categorised as a 45% taxpayer- again untrue! No good can come out of over exaggerating the amount of tax you pay other than to make you feel bitter about it!

We need a higher minimum wage and no tax until 20k. Then a flat rate.

I agree with the flat tax idea! Literally everyone should pay it! I also think that people should work for their benefit money unless they have a disability. I think NI and income tax are used for the same things so either we have NI which is used for NHS & Social Care or just have income tax.

Flat tax? So poorer people pay proportionally more of their income than the wealthy?

Bollocks to that crap idea. It's not fair at all.

Flat rate tax is always hardest on those on low incomes. Pay 30% of NMW = poverty. Pay 30% on £100k = riches. That's wrong.

Flat rate tax can be just as generous to low earners as any other system. There is no correlation between the number of tax-bands you have and how redistributive or "fair" the income tax system is.

To give a ridiculous example, you could set the personal allowance equal to median income, so half the population paid no tax, and set the tax rate on taxable income at 100%. So virtually communism, delivered by a flat tax.

All "flat tax" means is that it there are only two bands of tax, the personal allowance on which you pay 0%, and the rest on which you will pay between 40% and 50%. (The idea that it can be as low as 30% is bollocks. I've done the calculations. The difference between my calculations and the right-wing think-tanks who claim it will be lower is that I've properly factored in the abolition of NI as a separate income tax, including the abolition of employer NI.)

YABU to be resentful of paying tax. It pays for our bloody public services. They should be a lot higher for everyone and definitely for those earning about £40,000.

Isitmylibrarybook the marginal rate of tax between 100-120k is 62% if we are honest and include ni as tax- 40% tax plus 40%tax on 10k allowance divided by £20k + 2% ni

Yanbu. I am surprised that this is not an election manifesto for someone....

I feel very squeezed indeed....

YABU to be resentful of paying tax. It pays for our bloody public services. They should be a lot higher for everyone and definitely for those earning about £40,000.

RTFT. OP said the Higher Rate kicks in too soon - and she's right. 5k above the average is not "higher", it's ridiculous.

The money raised would go a damn sight further if it was managed properly - CB capped at 2, no non-critical cosmetic surgery on the NHS, no IVF on the NHS.
Keep the NHS for curing diseases and ailments, if people want the fluffy stuff, they should save up & pay.
Less managers & more nurses - it all adds up to more bang for your buck.
Stop subsidising whole buses that are barely used.
Fix the pothole when it's small, rather than digging the road up 2 years later.
Bill clubs & pubs for the police sat in a van outside.

The list is endless.

If they raised taxes right now, the services wouldn't get any better - they'd just cost us more.

I have nothing worthy of note to add to this argument, but just wanted to say that I was bloody furious to lose CB. My DH earns over the threshold, so we get nothing. The whole lot was removed. I work P/T (self employed) and volunteer for CAB.

The CB was MINE. Not DH, but MINE. He has no obligation to tell me what he earns - so even if I was unaware of his salary, he'd complete his tax return privately, and then I'd lose my CB. Doesn't that breach his right to privacy? Now, as it happens, i know what my DH earns. But there are some families out there who this is a real issue for.

It's just the bloody unfairness of it all. Yes, I know that we are lucky to have the household income we do....but you could have a theoretical family next door earning more than my DH but keeping full CB. Someone upthread mentioned capping CB at 2.....when all this came about my reaction was "why not pay CB to everyone for the first child and then no more". That way, no one loses out, every claimant can access that money and also retain a simple "credit" for the years of child rearing.

As it is, it's made me lose money that was spent on my child. It wasn't frittered away, it went on her. As it should have been. I'm also in the situation that I've been told my NI/Pension credit is covered as we chose not to receive the payment at all, but will it really be? Can I trust the government to give me the credit that paying CB would have done? I doubt it.

BUT, why are we as a household £5k a year (net) worse off as a single income household than the equivalent household with two earners with equal incomes?

Mercedes

Presumably you don't have a big childcare bill though. On 3 days a week ours has been / will be as follows:-

2 years @ £6k per year
1 year @ 4k per year - dd turned 3 - (in reality less as I went on maternity leave pulled iced her nursery hours)
2 months at £10k per year!!!!!! - two kids in nursery
2 years at £7k per year - dd started school
1 year @ £5k per year - ds turn 3
4 years @ £2k per year - ds start school
3 years @ £1.5k per year - dd hits secondary so needs less care
3 years @ £0.5k per year - ds @ secondary, dd aged 14'so no care needed.

Totals just over £50k - for 2 kids with a decent age gap.

We get childcare vouchers so pre tax so I guess goes down to £35k or so after tax.

Scary sums though.

A sahm has the option of getting a job. I feel sorry for the single mother who earns above 50k and loses her child benefit.

It may not suit the family for a sahm to get a job at that time.Jobs,families,kids and people differ as do circumstances and the ability to cope with stress levels.

When you have kids you know they will need to be cared for and you have two options- childcare or a sahp. Both involve financial sacrifice.Both can be planned for.

Considering there are more part time workers and families with a sahp than families with 2x wp and that some families spread their kids out,save,used grandparents,use friends,juggle part time hours with a partner,do shift work that reduces childcare etc those figures by no means apply to everybody.It's disingenuous to say all families with 2x wp have crippling childcare bills (and are thus more worthy)and those with a sahp could just get a job.

Disingenuous.

Why aren't more people electing to put the additional (over the threshold) money into their pension rather than losing CB? Especially if they are only a few thousand over. Seems like a no- brainer to me, but maybe Im missing something. It is just a question of adding as an AVC into your pension.

It means you put tax-free money in for your later years and keep CB for now.

Oh and IVF and infertility isn't "the fluffy stuff".

Considering how obesity causes all manner of cancers and can often be self inflicted I don't see how those unlucky enough to be suffering with non self inflicted diseases such as endo,PCOS, fibroids and other conditions should be excluded from treatment that not only treats such conditions(pg can improve both PCOS and endo) it saves the NHS millions in dealing with the mental misery that childless couples can be left with for life.