to think a flat tax of 25% for all on everything would be much fairer?

[peapodlovescuddles]

51% is ridiculous. People shouldn't be penalised for working hard their entire life (and I know this will be controversial) and being much better than average at what they doI know the economy is in trouble but surely alienating the richest portion of society is a stupid idea?
£150,000 isn't a ridiculous salary, there are plenty of middle class professionals who aren't living a lavish lifestyle earning that much.

Oh and ShonaSpurtle has made a great comment about National Insurance payments, which everyone has ignored.

Message withdrawn

YANBVU, and an idiot - I work part-time (2 days a week and I work bloody hard I might add!) and only earn about £6k a year, big chunk of that goes to childcare, and if I lost 25% of it (on top of the 13% bloody NI) it wouldn't be worth me working at all.

and actually you know never mind carers getting 6k figure salary I would have been quite happy if my frequent 37hrs a week (I was only supposed to work 3 nights but often ended up working 4 - sometimes even 5!) had tipped me over to 5 figures after tax let alone 6!

your good education gives you access to other things than a job that pays you a lot of money:

-status in your community
-work which is varied, gives you autonomy to act, interests you

Maybe if the salaries weren't so enormous some of these high fliers would stop trying, but I suspect a few weeks in a call centre would change their mind.

Peachy is quite right - as an Cambridge graduate I feel very lucky that I had that much taxpayer's money spent on me, but I certainly don't think I "deserve" lots of money and even more don't think that, because I am in a well-paid job, that I shouldn't pay tax and shouldn't pay at a higher rate than people who have been a lot less fortunate than me.

If any of you are in any doubt that there are some very bright and hardworking people out there who aren't being paid shed-loads of money, try some voluntary service. It's a real eye opener and any Thatcherite tendencies are killed off PDQ. And you feel like you've won the lottery when you go back home (if I were religious I'd be thanking a god!)

Good for you bloss.

And yes, as triximalixie points out we have been ignoring the National Insurance issue.

To repeat, because there is a maximum as well as a minimum earnings level for National Insurance, once you go above that maximum your rate for employees NI drops from 11% to 1%.

So effectively, as soon as you earn more than £770 per week (in 08-09) - or just over £40,000 per year, your marginal tax rate immediately drops by 10%.

Therefore, in 08-09 on earnings from £6k (roughly - above the personal allowance level) to £34,800k you paid 31% tax (20% income tax + 11% NICs)

From £34,800 - £41,000 you paid 51% (40% income tax + 11% NICs)

From £41,000 upwards you paid 41% (40% income tax plus 1% NICs).

I think this is right, but I would happily stand corrected if anyone is better at this stuff than me (not hard - wrong sort of economist, don't do numbers ).

Shone no it doesn't, it gives me access to buggerall becuase of how life has affected us, bar a very large loan to pay off should In ever solve the logistics issue that would be combining caring with work. As a recent graduate I have about £16k around my neck.

In fact you could argue (I'm not, just throwing it in ) that those who graduated at taxpayers expense rather than their own loan based funding should be paying even more LOL

BTW the various thresholds etc are here

Peachy, sorry I was specifically responding to the idea that by dint of their hard work and educational achievements high earners should not be overburdened by tax.

I was pointing out that they were in receipt of other rewards not necessarily available to people in lower income work (Generalisation here of course, when I worked in retail I was arguably happier in my work than I ever have been since. Couldn't afford to stay there though.)

Takver that's interesting. You've just demonstrated that lots of 'middle income' earners are already paying marginal tax rates of 51%, so the super rich are simply getting up to that level...

It woudl be great if tax and NI could be brought together so that we can have transparent and sensible tax bands - I think Gordy was trying to push it in that direction but it would take forever at 1% at a time! REally needs the bottom thresholds for NI lifting considerably too.

Shona yeah sorry I relaised that faterwards

Takver, I think you should repeat your post in bold as a lot of people probably aren't aware of the difference in NI at higher incomes!

I think its unreasonable to ask everyone to pay the same rate of tax. VAT is a very regressive tax and unfairly hits the poor as a percentage of their income. I think a society can be judged on how well or how badly it treats its poor or otherwise disadvantaged and if someone is in the happy position to be asked to pay 50% then they are lucky people. I think the person who earns the most in the country (full time) should not earn more than 10 times that of the lowest full time earner. The people who are getting hit hardest are mostly financial "experts" and not doctors or more highly acedemically qualified people and therefore, I would say, much easier to replace should they decide to go.

It is absolutely true that most people aren't aware at all of the upper limit to NICs.

It made sense in the context of the original design post war of the Welfare State as an insurance based system, but in practice NICs have simply become an additional tax, with current income used to fund current spending.

Nowt wrong with that, but in that context it makes little if any sense for there to be an upper earnings limit.

I think the only reason it has survived is because the people who benefit from it are good at lobbying and have a strong political voice. I'm amazed though that it hasn't gone (and indeed the 1% rate is I guess a first - if very tentative - step in that direction) because governments always like tax rises that people don't really understand.

Hence of course VAT levels as they are - stupidly regressive tax - but much less obvious as it isn't there in black & white in your pay packet.

BTW Elliot as our system currently stands I think it would be a bad thing to lift the lower earnings limits for NI, because until you hit those limits you don't get a lot of the contributions based benefits.

Takver I think there are two reasons its hard to get rid of the NI anomaly : one, because it would make headline taxation rates much higher and that woudl be politically difficult and two, because it is applicable on all weekly earnings and so lots of people pay it who would otherwise be below income tax thresholds - in other words it raises too much revenue. But it is a big reason why we have such high marginal tax takes on the low paid in this country.

That's very true, and I can totally see why they don't want to abolish NICs and just collapse it all into income tax, sensible though it would be. But they could lose the upper earnings limit (or nibble away at it) without apparantly raising the headline tax rate.

Peapod needs help, and fast!

POP! Out you come!

Now that I've freed you from your bubble you can start engaging with the real world.

I am setting up a new business venture teaching budgetting to anyone earning over £150k who is struggling how to manage.

Based on various MN threads over the last 24 hours I am expecting ot do extremely well.

Though am slightly confused about how apparently intelligent *financiers

FWIW most countries who have upper marginal tax rates below 50% have shocking social inequalities and middle class and conservative professional though I am, I'm proud that I live in a country where we at least pay lipservice to universal free education and healthcare.

PS the additional tax burden has not been required due to the sudden growth in parasitic benefit seekers but the
Government bail out of the financial institutions.

Kew: "universal free education and healthcare" Socialist claptrap.

Each to their own, I say, and if you're incapable of trampling on the vulnerable working hard to get a good salary, tough!

'PS the additional tax burden has not been required due to the sudden growth in parasitic benefit seekers but the
Government bail out of the financial institutions. '

valid point

Is OP related to Margaret Thatcher? She had a similar idea. It was called the Poll Tax. It finished her political career.

oh god I have become a socialist . And I fought so hard (courtesy of said free healthcare and education) to escape my working class roots and now they are found, lurking in the darkest corner of a Mumsnet thread.

Lol Kew

Buy your kids some boden and take them to waitrose, it'll pass