To not want my children to pay for tax cuts for the middle-class?

[antelopevalley]

A new policy proposal to increase the ceiling for higher rate tax for individuals has been proposed so that it will only apply once you earn £80k plus. But there seems zero idea of how this will be funded.
Realistically the only way it will be funded is by increased government debt. Debt that my children and others will be working to pay off in the future.
Why should my children and others have to work in the future for tax cuts for the middle class?

Government borrowing should be for investment in the future. Building sources of cheap future energy for the future for example. It should not be used for short term political gains.

[rainbowmilk]

I’m a higher rate taxpayer who’d benefit from this proposal, and I agree with you OP. I am not one of the people that needs help. I may complain about my lot but I’m doing OK.

I do find it hypocritical to be going on about what your kids will have to pay for, though, given that every childless person who complains about paying tax for other people’s kids is told that they should be glad to do so as part of the social contract and the need for babies. Your kids will just have to hear the same!

[antelopevalley]

@PerfectlyPreservedQuagaarWarrior

Actually, it isn't an argument that they'll behave differently this time, because the evidence that tax cuts to people in this specific income bracket only results in saving or investing isn't there.

What you're talking about is the demonstrated previous behaviour of people who in many cases will have a lot more, and then assuming it applies to what will in many cases be middle income households (our household income is low 60s, though between two earners so no higher rate here, and we came out between the 50th and 60th centiles on that ONS where do you fit thingy, so there would be scope for someone in the 50-80k bracket if a sole income household to be lower). You aren't wrong about what happens with people who have a lot of money and assets, but you're filling in the gaps assuming a single parent privately renting on 60k in London is going to behave in the same way.

Except lots of people will be earning that and not be in that situation.

[sst1234]

Like others said OP, instead of assuming your children will never earn that amount, perhaps focus on instilling in them the value of skills, education, entrepreneurship so they can take advantage of this.

High tax advocates are usually just wanting anybody but them to pay more tax.

[sst1234]

@TigerRag

But we all can't be doctors, etc. We need cleaners, shop staff, etc.

No We don’t. People are employed into those jobs where humans are cheaper to pay for than automation. Isn’t it strange how as soon as labour cost gets high, businesses start to invest in automation.

Cue posters falling over with examples to refute this point by bringing up jobs that they think could never be automated.

[XingMing]

in our case, IHT won't be relevant. DMIL's care home fees at £975 per week will soak up any surplus. Self funded. It's easy to burn through the value of a normal house when you are fairly healthy with dementia.

[Booklover3]

@Capri3

No, not at all. I live in a London commuter-belt town. Loads of top percent earners keep nannies, gardeners, cleaners, hairdressers, manicurists, beauticians, car valeters, private dentists/doctors and tree surgeons in work. Local takeaways and restaurants are always busy. Lots of extensions and house renovations employing architects, brick layers, tilers, electricians, kitchen fitters, plumbers, floor fitters, carpet fitters. Several private schools, academic tutoring services, tennis coaches, dance schools, swimming instructors etc….

Where do you think that the money comes from to employ all of these people?

And where would you prefer to be in that triangle? The one at the top with all the money to employee these people… or at the bottom with the nanny or the cleaner?

[Alexandra2001]

@sst1234

No We don’t. People are employed into those jobs where humans are cheaper to pay for than automation. Isn’t it strange how as soon as labour cost gets high, businesses start to invest in automation.

Cue posters falling over with examples to refute this point by bringing up jobs that they think could never be automated.

Of course posters will because you re incorrect, though judging by Truss's performance and the fact we've had 4 in the last 6 years, maybe our next PM should be a robot?

There are a whole host of jobs that cannot & will never (as in foreseeable future) be done by a machine/automation & those that can, attract a huge amount of complaints, esp when they involve human interaction.

[XingMing]

The price of her nice retirement bungalow, bought 25 years ago, in a sought after post code, fetched a decent price, settled an equity release mortgage, and is paying care home fees -- at £975 weekly, I am just waiting for the care home to ask for more to pay for heating bills,

[PerfectlyPreservedQuagaarWarrior]

@antelopevalley

Except lots of people will be earning that and not be in that situation.

Yes, that's true. Lots won't, but you clearly get that some will. There is significant diversity in the 50 to 80k cohort, which aids my point.

So where is your proof that people who are on 50k and may very well be below the ONS median depending on their household size are going to behave in the same way as the super rich if given a tax cut? Bear in mind there are more people earning 50k than 80k too, and higher rate taxpayers are disproportionately found in or near areas with the best job markets, which of course are more expensive. All you've done so far is use what we know about tax cut consequences in people with much more income and assets to claim that people not in this group will do the same thing.

[Janesdufflecoat]

I hate the current Govt with a passion but the tax bands have been set at the same level for too long!

I worked for HMRC 20 years ago & the bands are pretty much the same!

One example would be redundancy pay £30,000 tax free that's probably been the same for 30 years! At the time it was a lot of money but now not so much!

I'm more cross about paying a 'heating mortgage' for the next 20 years while the big companies make billions in profits than I am about the tax bands! That really is taking the piss!

[TheBoots]

@Doingprettywellthanks

Since 2000 there have been 204 voluntary payments to HMRC

put your money where your mouth is @TheBoots !!

Thanks @doingprettywellthanks, I do, in fact put my money where my mouth is and give as much as I can to people who aren't as lucky as I am. And what, pray, do you do to make life better for your fellow humans?

[Labraradabrador]

@antelopevalley

@Winceybincey Except I have not. I am just not naive. Higher taxes will happen in the future to pay for all of this.

OR we could be more proactive about managing our expenditure? Just like any families budgets, debt is a consequence of income not aligning with expenditures.

Privatisation of healthcare is inevitable at this point, for example. We can manage it proactively to make it work for the common good and ensure everyone has the basics (using private fees to supplement free services), or we can let it crumble and people vote with their feet and those with resources exit the system and create their own private bubble. You could tax everything over 50k at 100% and it still wouldn’t be enough to fix the nhs.

I also object to the idea that your children are owed my income. I’m all for safety nets that ensure basic health, education and well being for all, but I object to the idea that it rests on less than 50% of the population (net contributors) to fund the entirety of society’s well being.

[Labraradabrador]

Also I think you undervalue the effect of taxes as a disincentive to work more and generate more income.

I do wonder the net effect of raising the threshold- I suspect there would be less of a decline in tax revenue than you might think as many people would work more.

I am one of the many self employed who actively manage workload around tax thresholds. I max out pension but then don’t take on any more than £50k as it just isn’t worth my time. I’m only working 1-2 days a week,but would easily double that if I felt it would be worth it. If the tax rates lower I would instantly increase work, meaning more taxes paid by me in total.

[AprilRae91]

Stamp duty takes the piss now and needs updating. We’re paying 7k stamp for out ordinary 3 bed terraced in the NW.

[Badbadbunny]

@Labraradabrador

Also I think you undervalue the effect of taxes as a disincentive to work more and generate more income.

I do wonder the net effect of raising the threshold- I suspect there would be less of a decline in tax revenue than you might think as many people would work more.

I am one of the many self employed who actively manage workload around tax thresholds. I max out pension but then don’t take on any more than £50k as it just isn’t worth my time. I’m only working 1-2 days a week,but would easily double that if I felt it would be worth it. If the tax rates lower I would instantly increase work, meaning more taxes paid by me in total.

I fully agree and see it constantly in my business (accountancy). I have self employed and small business clients at lots of different tax thresholds who are deliberately holding back their potential and deliberately working less than they could, to avoid breaching tax thresholds.

Right from the lowest level, i.e. part time ebayers, mobile hairdressers, office cleaners, market traders who are just working "enough" hours to qualify for UC or tax credits, free prescriptions, rent allowances, council tax discounts, etc - they won't work more because the benefit of a few extra working hours doesn't make up for the loss of benefits.

At the other end of the scale, I have a dentist who has a hard time keeping his income under £100k as he doesn't want to lose free childcare and doesn't want to pay a marginal tax rate of 63.25% on his extra earnings over £100k, so he's actually cutting down his working hours and doing less work to keep his income under the £100k.

Numerous different types of small businesses who keep their profits under £50k so they don't lose their child benefits at the same time as going over the higher rate threshold - they could work harder and grow their business more, but make a conscious effort not to.

But the worse tax cliff edge is the £85k VAT threshold where you can often be worse off by thousands of pounds by letting your sales/turnover (not profit) go over the £85k by a small amount, i.e. they could be £10k worse off if their sales grow from £85k to £86k if they are in retail, hospitality, a small garage or in fact any small business dealing directly with the general public. It's completely immoral and stupid to have that kind of "brake" on a small business that could otherwise grow! I've just had such a case, a small guest house who have had to reduce the number of letting bedrooms as they were too close for comfort to the £85k, so couldn't take the risk and the only safe way is to reduce their capacity, i.e. hold back a business that otherwise could have grown! It's madness.

The marginal tax rate graph (i.e. how much extra tax you pay on an extra pound of income) is like a mountain range with peaks and troughs, whereas common sense says it should either be a straight line or a gentle upward sloping curve. Our current crazy system has marginal tax rates at certain income levels of 60-70-80% which is a massive disincentive to push yourself and earn a bit more. Worse still, in several circumstances, it can be over 100%, in fact in some cases, can be hundreds or thousands of percent (such as the VAT threshold breach).

We desperately need a radical reform of the tax/benefits system to end this stupidly damaging system which has been created by a couple of decades of politicians tinkering with the tax system and being incapable of understanding the effects of their constant meddling.

Working harder/working more should always be worthwhile, wherever you are on the income scale. Quite simply any point on that scale where you end up "taking home" less than half of the extra you earn (i.e. marginal rate of over 50%) needs to be corrected and it's a massive disincentive to work harder/more if you know you're going to end up with less than half of your extra earnings in your pocket.

[MooseBreath]

I think the higher tax bracket should be based on household income. 2 people bringing in £49k each are doing a hell of a lot better than a sole provider at £98k.

[sst1234]

@Badbadbunny

I fully agree and see it constantly in my business (accountancy). I have self employed and small business clients at lots of different tax thresholds who are deliberately holding back their potential and deliberately working less than they could, to avoid breaching tax thresholds.

Right from the lowest level, i.e. part time ebayers, mobile hairdressers, office cleaners, market traders who are just working "enough" hours to qualify for UC or tax credits, free prescriptions, rent allowances, council tax discounts, etc - they won't work more because the benefit of a few extra working hours doesn't make up for the loss of benefits.

At the other end of the scale, I have a dentist who has a hard time keeping his income under £100k as he doesn't want to lose free childcare and doesn't want to pay a marginal tax rate of 63.25% on his extra earnings over £100k, so he's actually cutting down his working hours and doing less work to keep his income under the £100k.

Numerous different types of small businesses who keep their profits under £50k so they don't lose their child benefits at the same time as going over the higher rate threshold - they could work harder and grow their business more, but make a conscious effort not to.

But the worse tax cliff edge is the £85k VAT threshold where you can often be worse off by thousands of pounds by letting your sales/turnover (not profit) go over the £85k by a small amount, i.e. they could be £10k worse off if their sales grow from £85k to £86k if they are in retail, hospitality, a small garage or in fact any small business dealing directly with the general public. It's completely immoral and stupid to have that kind of "brake" on a small business that could otherwise grow! I've just had such a case, a small guest house who have had to reduce the number of letting bedrooms as they were too close for comfort to the £85k, so couldn't take the risk and the only safe way is to reduce their capacity, i.e. hold back a business that otherwise could have grown! It's madness.

The marginal tax rate graph (i.e. how much extra tax you pay on an extra pound of income) is like a mountain range with peaks and troughs, whereas common sense says it should either be a straight line or a gentle upward sloping curve. Our current crazy system has marginal tax rates at certain income levels of 60-70-80% which is a massive disincentive to push yourself and earn a bit more. Worse still, in several circumstances, it can be over 100%, in fact in some cases, can be hundreds or thousands of percent (such as the VAT threshold breach).

We desperately need a radical reform of the tax/benefits system to end this stupidly damaging system which has been created by a couple of decades of politicians tinkering with the tax system and being incapable of understanding the effects of their constant meddling.

Working harder/working more should always be worthwhile, wherever you are on the income scale. Quite simply any point on that scale where you end up "taking home" less than half of the extra you earn (i.e. marginal rate of over 50%) needs to be corrected and it's a massive disincentive to work harder/more if you know you're going to end up with less than half of your extra earnings in your pocket.

Proof, even if anecdotal, from a professional that high tax keeps productivity low and our economy suppressed.

[PerfectlyPreservedQuagaarWarrior]

It's true, there are various bottlenecks in the UK tax system and sometimes people respond accordingly. This isn't limited to higher earners by any means, low earners who need to take into account the impact on top up benefits are one of the cohorts affected.

[Pottedpalm]

@MintJulia

OP, think about which people it will impact most - those earning between £45k and £100k.

Who are all those people who are retiring in the middle of a skills shortage? Who are the 'Great Resignees'?

They are experienced teachers, nurses, doctors, dentists etc in their 50s and early sixties. The ones we need to hang on to and encourage to go on working.

We have a chronic shortage of teachers, doctors, dentists. Creating a tax regime that encourages them to carry on working an extra 5 or 10 years sounds like a good idea to me. Better value too, because the NHS trained them and we should encourage them to work as long as possible.

Sorry if that offends you, but working class people need doctors and teachers just as much as anyone else.

Well said

[Everanewbie]

@Doingprettywellthanks

Since 2000 there have been 204 voluntary payments to HMRC

put your money where your mouth is @TheBoots !!

Perhaps nuance is a better word than balance. There only seems to be extreme arguing with extreme.

[antelopevalley]

@Pottedpalm An extra £4k is not going to make a difference to that. Nurses, GPs, and teachers leave because of the working conditions. But there is no political will to sort that out.

[FarFromHome2]

@5128gap

Excellent. Let's all just tell our children that then! And in the future there will be millions of £80k+ jobs suddenly created out of thin air for everyone who was sufficiently incenticised to want one.
And we won't need any teachers, or carers, or nurses, or social workers, police officers or cleaners or shop workers....Oh yeah, we might actually...but I know! They can earn £80k too! (as long as they worked hard at school, obvs.)
Everyone can be senior, no need for lower paid workers at all, ever again.
It'll be BRILLIANT!

Your view is analogous to telling an athlete that there is no point training, as not everyone can win, and someone always must come last.

It’s not a sensible argument. If your children work hard at school, learn discipline, and the benefits of delayed gratification then they will have a much improved chance of getting a better career and of earning a higher wage.

I’m never going to win the Olympic 5,000m final, but if I train properly I can break the 20m barrier.

Similarly the people I employ are never going to be as wealthy as Elon Musk, but through the efforts that they have put in through school and university, and those that they put in now, they are able to earn a decent six-figure salary.

[FarFromHome2]

@Jiminycricket10

This ^ totally agree @5128gap

My mum did drill it into us to work hard at school, get a degree, value education.

I’m still waiting for the plethora of Yorkshire based companies offering even 40k+ never mind 80k+ that are apparently waiting to reward my hard work as promised...

Yorkshire has barristers, headmasters, accountants, surgeons, dentists, architects, senior police officers and so-on earning that sort of money. Is there any reason that these jobs aren’t achievable for you?

[FarFromHome2]

@Booklover3

And where would you prefer to be in that triangle? The one at the top with all the money to employee these people… or at the bottom with the nanny or the cleaner?

Our nanny gets £18 per hour, our cleaner gets £17. I don’t think that that can be considered “ at the bottom.”

[Hoppinggreen]

@FarFromHome2

Yorkshire has barristers, headmasters, accountants, surgeons, dentists, architects, senior police officers and so-on earning that sort of money. Is there any reason that these jobs aren’t achievable for you?

Leeds is a Financial centre and now had Channel 4, there are also lots of top law firms and other National and Multinationals there. Sheffield has similar.
There are well paying jobs in Yorkshire (if you are qualified of course)