Why wasn't 40pc rate reduced or income tax thresholds raised?

[Indigoo03]

Any opinions?

This seems unbelievable. I earned more than that as a receptionist in the late 90s

Many people don't work.
Pensions are low
These people are included

Not needing the extra money and valuing your time more, particularly if you would have to work more and incur additional costs of working such as a childcare. That's a reason. You don't have to agree with it or understand it, but it is.

And yes, of course it's like that for everyone when crossing a tax bracket. That's the point. It's not limited to the 50k group.

I have not once that anyone should keep any money here!

Can you read properly please.

Those who pay more will save more, unless the chancellor is looking to cut taxes overall, but level a proportionate increase on higher rate taxpayers (which he wasn’t).

You were probably working full time though @boobot1? Lots of the adult population aren't doing that.

Fair enough, we all make choices, and I do get it.

But don’t moan about it, is what I would say and then expect a higher proportion of the benefits of tax cuts, on taxes you make the decision not to pay.

The taxpayer, and higher rate ones especially owe you nothing simply because you made this decision.

Can you read properly please

I was talking about lowering tax rates at the lower end or even raising the tax threshold.

You then talked about that as redistribution. It's not. It's people keeping more of their money, to spend locally and promote growth.

It's the same argument for tax cuts at the higher end. Except not locally.

They have reduced basic rate to 19%.

They have lowered them.

I didn't pay any tax when I was SAHM or when I worked 16 hours a week in a hobby job when DC started school. I wasn't poor though, quite the opposite, but I'd be in that 43%.

Those at the lower end not only get to keep all that they earn, they also get extra on top.

Only about 40% of households make a net contribution (I.e. greater than they receive in benefits.)

People keeping more of their money in this fashion (raising the threshold) places a disproportionately higher burden on the higher rate tax payers to find the coffers.

It’s basic maths and is a further redistribution by any other name.

The 40% threshold wasn’t raised because far more people pay some tax at that rate, so the income loss there would be far greater.

This 👆🏻

Which is why when there are tax cuts, the overall large net contributors see the benefits.

Any other way would be a stealth increase on the wealthy.

Yep. Also this.

This is fine provided you extend the 'don't moan' principle to both the government and to people who are against raising the thresholds, when they experience the consequences of disincentivising people to earn more.

For ordinary people, that might look like less access to particular skills. Maybe your GP can't get a locum because of people feeling it's not worth their while doing the extra shift once you factor in the extra tax. Maybe you can't get a skilled tradesman, maybe it's a pain in the arse at work because you've recruited for ages and nobody wants the internal promotion... all kinds of permutations. And for the government, that means not bleating about low British productivity.

Although in general I think it's better to consider this topic dispassionately rather than framing it in terms of moaning and entitlements. People have a range of responses to economic incentives and most of us have a point at which we don't think it's worth working harder or more, sometimes at which we can't afford to if we have costs like childcare. This is a fact and an inevitability, and the sensible thing would be to think about how we can most beneficially respond to it.

It's not exactly a lot.

They could have been more bold. Lower more and increased the thresholds.

Scrapping additional rate cost £2bn and benefits 629,000 people

Taking another 0.5% off the basic rate would have cost £2.5bn and would have benefitted 34million people

Both measures would have given a similar amount of money back into the economy to be spent.

But they chose the option that only benefits a few. On purpose

Although they are a bit trite, the little stories equating taxation to a group of people paying for a meal or drinks in line with how we pay for public services do show how unreasonable the “why should he get a cut” argument can be.

The tax burden in the UK is focused on quite a few households, who pay a far greater fraction if their income than the others. The call to tax them ever-more makes no sense, they already pay far, far more than their fair share.

To be clear, again, I am not pro these cuts.

My comment was about the situation where others are talking about some being disincentivised when moving to another tax bracket for various reasons, and so I am saying, that is a choice they make.

You can’t make those kinds of decisions and claims in apparently good faith, then expect others to subsidise you.

We are both in the 40pc bracket - we will benefit from the reduced basic rate and NI and are happy with that as we feel lucky as it is.

I've never voted Tory so I'm not just blindly defending them, but I sort of get it. People in our bracket earn well but are generally salaried. We won't run off to Monte Carlo to save tax, at the same time we are not on the breadline.

It is quite frustrating how poor people’s understanding of what taxation is and who actually contributes more of it is @Quincythequince.

I mean, I’m not entirely convinced by the dropping the top rate of tax thing. It was obviously going to play horribly with the public. But people who pay top rate tax do contribute a lot to the pot through taxation. Really loads. They still do, even if they’re taxed at 40% rather than 45% for the bit over £150k.

People earning between £25,000 to £30,000 certainly pay tax. This is in the median income area
Some may get benefits but not many

Cutting that tax rate more and increasing the threshold would have had an impact on spending, growth and being able to get by.

The British are funny over tax. Whoever there's discussion about childcare/education/health care various counties that do it better are cited, but they invariably pay much more tax than we do. No part promoting tax rises to pay for better services has ever won an election here.

I've recently spent time in Finland and in Iceland. The people there are proud of their roads/schools/hospitals. They know they pay high taxes to pay for it, but they don't seem to begrudge it the way we do (or at least not the ones I spoke to).

OMG the typos, but hopefully you get the gist!

No, it’s not.

But if they lower it too much, then revenues drop way too much, because every tax payer pays basic rate so they all benefit.

Unless you think the rich should just put their hands in their pockets and pay more and tax cuts should only be for those who barely pay any?

Again, these current suggested rates for next year are still generous then they were under Brown and Blair.

Our household is relatively high earning.

We both work in the NHS.

our specialities are in demand and we are constantly asked to work extra. We have the capacity to do so, but why would we work extra when tax thresholds mean that our hourly rate would be effectively slashed?

I would rather have the time to myself.

the number of medics who retire early as a result of the lifetime allowance is a very worrying situation. Scrap the allowance and the vast majority of them would work longer, not only doing the much needed clinical work, but also paying tax!

i started work 30 years ago, We saw a financial advisor and made plans for retirement because We wanted to take responsibility. Our plans were then screwed over when the government made successive decrease to the lifetime allowance.

i have never personally understood why the government disincentivised people from making adequate provision for their retirement.