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.

The bizarre thing, looking at table 2.8 from your reference is that they are showing a total income tax take for 2007-2008 of £147323m, which sounds about right when compared to the estimate in Social Trends of £155,000m for 08-09. But the breakdown of who it comes from is very different in the table you've referenced.

But then if you look at their table 2.5 from this list here it is the same table shown in Social Trends. Can you make any sense of it?

I think the numbers are more or less consistent Takver, they are just presented differently. They are a year different as well but on the whole they are consistent.

So I tested your numbers by working out what the top 1% of earners paid in tax. The top 1% of earners is 310,000 taxpayers and they paid tax of £33,975 which is 22% of the total income tax take. This is broadly consistent with my numbers.

And when I look at your figures, they are saying that:

• those people earning over £50,000 pa will pay 50.5 percent of all income tax paid

• those people earning less than £50,000 pa will pay 49.5 % of all income tax paid.

And this is not irreconcilable with the HMRC numbers, it just means that those people earning over £50k are in the top 10% roughly of the population.

It surprised me to that that was how the two sets of figures marry up so I googled to check it here. So I am surprised to learn that to get into the TOP 10% of earners in this country, you just have to earn £49k.

Yes, of course, I'm being dense. The funny thing is that DH was looking at the table, and asked me what % of people fell into the over £50k group but I hadn't got as far as answering him, and hadn't spotted that that was the answer to the problem.

Perhaps the answer then is that we need to squeeze those earning between £50 - £200 K, in that they pay lots of tax, but probably don't earn enough to relocate easily to a tax haven

Quattro - it's funny because that phrase "tax the rich until the pips squeak" came to me today as well.

I agree, that is not the way to go - there is a balance to be found.

But I do not believe that these people are irreplaceable. I think one leaves and someone else gets the opportunity to take his/her place, and probably does just as good a job.

I am not convinced by this "reserve of talent" that we should be so frightened of losing. Nor that so many of these high earners are so selfish as to move country because they've been asked to put a bit more in the pot.

I would rather keep the people who are invested in society as a whole and lose the ones who only care about their own pockets, frankly.

"£150,000 isn't a ridiculous salary, there are plenty of middle class professionals who aren't living a lavish lifestyle earning that much."

No. There aren't.

90% of the country earn less than £40,000. 99% of the country earn less than £150,000. Your statement is factually incorrect. The top 1% of earners by definition are not earning a middle salary level, and are living a lavish lifestyle.

Plenty of people work extremely hard and are excellent at what they do, without being rich, because some industries pay disproportionately highly. And if our current economic mess has not convinced you that most of those earning over £150,000 are very fallible indeed, I'm not sure what will.

"So I don't think progressive taxation goes far enough, frankly"

Dollius, okay....... currently 51% taxation isn't a major disincentive to dh and we are happy enough to cough up (and wear the hairshirt necessary for our good fortune)...but if the highest tax band went up to say 60%+ or more, dh whose pay pretty much corresponds with how much work he puts in would simply scale down his work commitments...( I can't imagine this would have a major impact on society who could probably do without the inheritance tax planning and investment advice, lol)

Actually the more I reflect the more I am liking this idea! Yes - bring on the 60% plus tax banding. The dc might see their father a bit more often

However, on the other hand...if it became a major disincentive to entrepeneurs and business people who employ others and thus (in what is indisputably a market economy in a capitalist world) generate wealth for all (albeit not equitably shared) it could be something of an own goal, no?

I pay tax/NI at roughly 50% here in Belgium. I certainly don't earn anything near 150k, and never expect to. Everyone pays more tax here. Difference is public services are fantastic. And there isn't a huge amount of Govt dept. You get what you pay for and all that.....I now it's not perfect here, but...

Couldn't be bothered to read yet another long one on this. For those struggling because their income over £150,000 is taxed at 51%

Tough!

The idea that you work 10 times as hard as someone earning a tenth as much is rubbish.

Feel free to find some country that thinks you are worth the money and don't bother to write.

Apologises to those I have offended now to save time later

hmc

I really question how much of a hair shirt you are really having to wear just because you pay 50% of earnings above £150,000.

There are so many families getting by on one-tenth of that in this country - many because they have no option but to care for disabled or elderly family members (thus saving us all a lot more tax, probably) and therefore through no fault of their own.

Do you really owe those people nothing?

Do you really think it is you wearing the hair shirt?

And, sorry, I don't think we will have some massive talent drain. There will always be more creative and ambitious people just waiting to take the place of those that leave.

And who are happy to put their fair share back into the society that enables them to use their talents to generate their wealth.

While the original post is obviously very stupid, I would just like to highlight one particular slightly counter intuitive way in which this mindset, or some associated assumptions, are stupid.

3 x £150k - £600k

ie by a traditional, pre-stupid-house-boom model, a £150k earner might expect to live in a £600k house.

In certain areas of the SE - the most expensive parts, where high earners expect to live - £600k would get you a v. nice family house, not a premier footballer's mansion.

for instance

So, if you are a. a greedy arrogant fuck who believes you deserve the best of everything and b. also believe as such g.a.f.s tend to do that high house prices are intrinsically good and must not be allowed to fall (because you own a big expensive house and all your friends do), then you probably believe c. that given that mere 4-bed proprties cost £600k, £150k pa is not really a lot of money.

Pathetic.

dur - clearly 4 x £150k is £600k - typo

I think part of the benefit of doing well at schol/ A levels etc and going to a top UNiversity is the opportunity to do an interesting degree and get an interesting job which you love because you have the choice! It doesn't mean you are better than people who don't have degrees or have degrees from other places(and I do have a Cambridge 2:1 so speaking from experience).

If your choice is to work in the city and earn pots of money, fine but you still have to realise that the infrastructure for this country (roads, public transport, NHS, education for you if not your children, caring for those who cannot work often through no fault of their own etc) should all be paid for and you have a greater capacity and to do so than someone on the minimum wage.

Actually going back to the op, I think there is an interesting discussion to be had about taxation.

I was wondering - if everyone had a £15,000 personal allowance (except for those earning over 100k obviously - how much would income tax have to go up by?

It seems to me that the current loss of benefit/tax figures penalise people who try to work but can't earn much more than minimum wage but that we would need slightly less tax revenue if those people currently in the benefit trap were to work IYSWIM. Any thoughts?

I think you are absolutely right, betterthan.

If everyone had a proper personal allowance (say £15k to £20k), then we could also do away with tax credits which cost the earth to manage.

I mean, what is the point in taxing someone who earns £6,500, just to give them money back in the form of tax credits (which the most vulnerable, neediest people find near-impossible to claim anyway).

Therefore, we would save loads of money that way and tax probably wouldn't have to go up at all.

That's my very scientific analysis.

but if we do away with the tax credit system, what's going to happen to all the people who currently work administering it? They're all out of a job straightaway.

I think a bigger personal allowance would be a good start, but not sure it would do away with the issue of tax credits - mainy because tax credits allow targeting to particular groups, like families. You need a tax system that allows reliefs to be targeted to children.

eeeekkkkssss its all money and numbers [grins]

wish inearnt £150,000 think i deserve to earn it in my job but hey ho dont thing i will get that pay rise just yet

isnt it interesting that the more we have/get the more we want

Yes, but that's always a problem when you shrink bureaucracy. I would say use the savings to invest in proper training to get more police officers/community liaison people/nurses/teachers etc at the front lines where we need them

The tax credit system only came in a few years ago - these people were doing something else before then.

And yes, there ought to be reliefs for low-income families etc, but not what are effectively benefits which have to be claimed and which discourage saving (if you have savings of a certain level for many things you are disqualified from claiming - eg, pension credit).

The claims system is very difficult for vulnerable/elderly/disabled people and what happens is they don't claim and they get nothing.

The tax credit system has also caused a lot of harship to vulnerable people, such as single mums, who have been overpaid because of a mistake made by the Revenue, and then had money clawed back. It's a shambles.

Reliefs should be automatic, not in the form of "tax credits".

Some of the poor redundant tax credit people could be moved to different bits of the inland revenue to try and deal with tax evasion (rather than avoidance) and actually check some of the figures people put in their tax returns.

Just a (slightly tongue in cheek) thought...

As Dollius said though, if everyone had a personal allowance of £15 or £20k, that would be pretty much enough to live on without tax credits - particularly if childcare vouchers/ child benefit etc was perhaps extended in amount to certain groups.

i am just sitting here after reading all this and wondering how i could ever earn that amount of money could the people that do earn it tell me what they do and how i could do it in my line of work coz i could just see myself driving around in a brand new convertable car living in a nice 'done up' house instead of my building site of a house now oh and i would love to go on lots of holidays.

so please help me earn this much what do i need to do????

"But you haven't addressed the point about rich people leaving. They do do that, you know and the more money they have, the easier it is for them to leave. Look at Lewis Hamilton .... now tax resident in Switzerland ..."

Rich people say this sort of thing every time someone threatens their wealth. Sadly, they never keep their word. I was overjoyed when Labour got in because not only did I think we would get a fairer government than the Tories but Paul Daniels had promised to leave the country if they did. Sadly, the little weasel reneged.

Lewis Hamilton has gone? Good luck to him. If I have to see him less as a result, then we all win. I am sure that even Lewis Hamilton will accept that his wallet is not propping up the country unaided. We will muddle through without him and his ilk.

The bottom line is that:

(1) the majority are the financial backbone of this country and they are staying - not the tiny minority of high earners

(2) it is ultimately money that gets taxed, not individuals - any fool can make money in a bubble, and a genius can lose money in a crash. As long as it ends up in someone's pocket (and most of it does) it gets taxed and we all reap the benefits

(3) we all forget the concept of "sticky money" (a feature of the multiplier effect). Money spent locally stays local and keeps going around and keeps getting taxed. High earners, regardless of where they live, tend to have a large proportion of spare income which they invest. This tends to take it out of this "loop". In other words, low and medium earners are more taxable than high earners.

"Do you really owe those people nothing?"

Dollius, keep up, I actually said:

"We are happy enough to cough up"..get this, we are wealthy and possess a social consience

The hairshirt comment was a cheeky jibe at the venal envious types (which before people get arsey [sigh] is not a charge directed at everyone on this thread)

But I maintain that further inroads in progressive taxation, beyond say 60%, would be counter productive. As I stated, it wouldn't bother us personally though (dh would work less) - my objection to plus 60% taxation would not be personally motivated, more a concern for the economy as a whole

I think you chose to wilfully misunderstood my post

'misunderstand'