So people earning over £80k are wealthy, unless they are JC??

[usernamealreadytaken]

In an interview with Julie Etchingham, JC apparently said he's not wealthy, despite earning over £130k p/a, because of WHERE HE PUTS HIS MONEY (but he's not going in to that!). AIBU to think this is the most ridiculous statement he has managed to put out in recent weeks?

Given that Labour want the wealthiest in our society (earning over £80k) to pay more taxes, what Good Reason could he possibly have to not include himself in that bracket? Discuss :-)

[elkegel]

People seem to have a basic misunderstanding of income tax bands.

Personal Allowance: Up to £11,500 - 0%
Basic rate: £11,501 to £45,000 - 20%
Higher rate: £45,001 to £150,000 - 40%
Additional rate: over £150,000 - 45%

This does not mean that if you earn £151,000 you get taxed on your entire income at 45%.

[JanetBrown2015]

I think we all know that. The problem comes in London if you pay at least £24k for child care, £40k mortgage and 9% student loan tax all your income taxed at the "lower" rates goes on housing and childcare which means all your "spare" income for food, clothes etc is being taxed at these rates. Also 40% is realy 42% when you add in national insurance. 20% band NI is 12%
So the rates for practical purposes for tax NI for employees are
32%,
42%,
47%
(and then when you get higher earnings and lose the personal allowance due to the effect of that in that little bracket your income tax currently is over 60% in a sense which is stopping those lucky people who earn at those levels wanting to get pay rises as their tax rate goes up).

[usernamealreadytaken]

Fanjo NI is not massaging the figures, it actually exists

[RufusTheRenegadeReindeer]

elkegel

I dont think many people on this thread think that but i agree that lots of people in real life get a bit confused as our tax system is quite confusing

[Badbadbunny]

People seem to have a basic misunderstanding of income tax bands.

It's not just income tax bands that matter. "take home" depends on other things, such as NIC, student loans, pension/superannuation deductions, effect of withdrawal of personal allowance, interaction with other tax reliefs, such as personal savings allowance.

Then you have the interaction with state benefits, such as child benefit and tax credits at lower income levels.

If you factor in ALL the tax/benefit thresholds, cliff edges, etc., you end up with a lot of anomalies of punitive marginal "tax" rates. That, combined with other "working costs" such as travel, childcare, etc. that can vary according to hours worked, type & location of job.

It's a FACT that doctors and dentists are reducing their working hours and retiring early for tax motivated reasons as they're already being hit by the £100k personal allowance reduction and the lowering of the pension lifetime limit. Working 4 days per week instead of 5 can actually mean they end up with more money in their pocket when everything is factored in (i.e. the higher taxes, the pension tax penalties, lower travel costs, lower childcare, etc). Bringing in a higher rate of tax at £80k will make that situation worse. No wonder we have a shortage of doctors and dentists with ill conceived envy taxes!!

[Sionella]

Yep, I really don't understand why people think it's not demotivating when they expect others to be happy to pay more into the bottomless cesspit that is labour's plans.

Pay a fixed amount more that would def go to the NHS or to train more carers to support those who look after disabled family members or to education? Sign me up. Give what will effectively be a blank cheque to JC as he increases it every year so that he can piss it up the wall on a time machine to drag us back to the 1970's? No thanks!

[usernamealreadytaken]

The Guardian is not the Daily Mail

"The word “radical” implies some fresh and bold thinking, not replating a double helping of the dish that two-thirds of the electorate declared unappetising just two years ago."

"There are many reasons why the party is heading for another defeat and very likely an awful one. Being too radical is not really one of those reasons. The truly scary thing about Labour is that it is not thinking radically at all."

[NoLotteryWinYet]

it could be a bit demotivating - everyone will optimize as they can - i wonder if we'll have a small flurry of people earning between £100k-£123k asking for a cut in hours given their marginal tax rate?

[Badbadbunny]

i wonder if we'll have a small flurry of people earning between £100k-£123k asking for a cut in hours given their marginal tax rate?

It's already happening and not a "small flurry" - it's a tidal wave! Particularly doctors and dentists - the more experience ones we desperately need who are reducing their hours in droves to avoid the 60-70% marginal "tax" rate on their earnings between those two figures.

But, what's worse, they've been pushed past their trigger point, and aren't just scaling back to earn under £100k. They've started to ask questions and research options and are discovering they can set up personal service companies where they can pay themselves in dividends and avoid national insurance, where they can avoid h/r tax by investing their pay in property via their ltd co., where they can put their spouses on the payroll. The tax loss from the libdem's policy of envy and punishment is enormous, not to mention the loss of working hours of desperately needed doctors and dentists! And that's just one profession!!!

[usernamealreadytaken]

And good old John McDonnell keeping it real - I get the whole equality thing, but REALLY???

Shadow chancellor admits he claims £200 a year winter fuel allowance despite income of nearly £100,000 a year - and says it's only FAIR that millionaires get it

[LapdanceShoeshine]

He won't claim it. It comes with your pension automatically, & I don't think it's possible to stop it - I've heard of people trying, & complaining when they can't, so just donating it to a relevant charity.

[JanetBrown2015]

national insurance is not massaging figures. Your average worker pays 20% income tax and 12% national insurance. That is 32%. It would be silly to say they only pay 20% whilst it is true the tax element is 20% NI is removed from your salary. So about a third over the personal allowance is taken.

Some with students loans will be paying a 9% graduate tax too so that increases your 32% to 41% even for basic rate tax payers. I think that an awful lot of your pay to be taken from you for these lower earners on average pay. If you pay for childcare as many full time working women and men do it gets even worse lthough I accept that is not in any sense a tax like deduction and for the 9% graduate tax that is only those with student loans and in theory being a graduate increases your pay over your life (if women keep working rather than giving up work for babies) so you probably do okay out of it over time .

[MsMartini]

But those figures only apply to earnings over the relevant threshold - for student loans 21k from memory. So low earners will not pay anything of that element.

[usernamealreadytaken]

Lapdance you are correct, it is paid automatically with state pension. Those who don't need it can write and request it not to be paid. Surely somebody with an income of over £100k who is trying to raise taxes on the wealthy to support the most vulnerable in our society should really give their head a wobble if they think they NEED £200 from the treasury to pay for their winter fuel. If it was reported in the media that TM was taking the payment, there would be uproar about her stealing this money from those who need it most

[LapdanceShoeshine]

username, see if you can find out how someone goes about declining it...

[JanetBrown2015]

MsM, that is true and only half of people have a student loan, but the average wage iso ver £21k so most graduates certainly in the SE at least will be paying the 12% NI, 20% income tax and 9% graduate tax.

In fact the Tories are increasing the tax free band for income tax to £12,500 (NI starts however at about £7400 of earnings) So if you have a family of say 7 children ( not that rare in parts of London by the way and I have 5) and you all work in the family busines, plus a spouse and probably granny and grandpa also living with you and chipping in that is 13 lots of £12,500 tax free before the partnership pays any tax (ignoring NI) if they all work in the business - that is £137,500 of income before any income tax is paid on the partnership profits.

[MsMartini]

JM, yes, I see that - but if you are on average wage (24k?), you are only paying the student loan repayment on 3k of that - so £270 a year and just over 1% of total salary?

[LadyinCement]

I don't know why this isn't clamped down on. Every small business person there is has their spouse apparently doing 50% of the work - or probably just enough work to shove enough income onto them to avoid paying HRT. Someone I know says they work full time in their dh's graphic design business... proofreading his correspondence.

[JanetBrown2015]

In what way? If all of them work in the business like many a local shop why is it any different than if they all work for £12k each x 9 in a local call centre and use their personal tax allowance?

[Badbadbunny]

And that is shameful.

Why? Why is it any different to all household members going out to work for other people? I just don't get this argument at all.

[usernamealreadytaken]

Fanjo He hasnt said he will take it though 

John McDonnell has admitted he claims the winter fuel allowance - despite having an income of nearly £100,000 a year. 
The shadow chancellor confirmed that he receives the money and spends it on his energy bills.

You'd think he'd decline it, wouldn't you?