What do you think of the 5% tax hike for those earning more than £150k - good or bad?

[soapbox]

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The most interesting thing in the PBR is the debt-cap. I reckon anyway. If you take this measure in tandem with the foreign profits piece, the net of those two changes is that the tax burden is shifting from UK outbound MNCs (who now won't be taxed on dividend income from overseas subs) to UK inbounds (who now will have their interest deductions capped).

Vairy interesting

QC said:

"My post said this:
"The top 1% of earners contribute 22% of total income tax (these are people who earn over £100k)"

You muddled it up and said that the 90% of all people earn LESS than 50k a year and contribute 78% of the tax burden."

Mea culpa. I made an error. Argument dashed. We'll all live.

"You then muddled up your measures of central tendency."
I did not. Show me where

"Sheesh, you must teach at a new university."

I am happy with vigorous debate. This last comment however is just downright personal and insulting.

I didn't see the thin cap restriction. What ratio are they being allowed?

I think it is a good idea

I so want to cheer like Wilf, but sadly like Swedes I think it is merely a stunt.

Glad though that the government is at least making this small gesture. It may be meaningless in terms of revenue, but it is symbolically important I think.

The cut in vat really seems pouring water through a sieve though - don't understand how this is supposed to do any good.

Ahem. I don't think anyone said people who earn over £150K are greedy. Just that if they're not willing to pay more tax on the income over that sum, they are greedy.

Call a spade a spade people. It is greedy to whinge about income tax when your income is in the top 1% of income in this country. It is not greedy to earn it and accept that you should pay a higher tax rate than people who are earning a third of what you are.

Even if your mortgage is for £400,000, at a 7% rate of interest (way higher than current rates), that would be a repayment of £2860. That still leaves you with at least £4000 (at a conservative estimate) to meet all your other bills. Even in London, the tubes and theatre tickets don't cost that much. And they still have Lidl's there, so I'm reliably informed.

The whole shebang is a desperate roll of the dice to try to turn a possible depression into a shorter recession anyway, isn't it? I don't think it's going to work.

I'm not sure that in such mad circumstances Darling really needed to properly cost the repayment of the temporary tax cuts. But I am pleased that they're thinking along these lines.

"Show you where you muddled up your measures of central tendency". Here's where you muddle up your measures of central tendency:

" ...the bulk of income tax in this country is paid by those earning UNDER 50k. Middle income and low earners." If you measure middle income by the mean or by the median your statistics get you to £19k. I personally distrust your figures because the one that is quoted more frequently is £25k but I have not looked this point up. Whatever the number is, middle income is nowhere near £50k.

"The last comment was downright personal and insulting." Well there is no denying that I did intend to be very rude. Was irritated by both you and duckhead who (a) kept ascribing other people's views to me and (b) had such effing entrenched beliefs, and kept spouting them regardless of all evidence to the contrary. But I am sorry now.

OK I have dutifully waded through the entire thread and my comments are as follows:

1. Any person who earns £150k or more, and hasn't managed to structure their life to be able to absorb a relatively small (to them) drop in income, is an idiot IMHO. Even we, as a family with a mortgage on less than the average wage, could just about manage with a 1 or 2% income drop (God forbid!). So if someone earning more than £130k more than me can't manage the same, well their brain obviously doesn't match their salary.

2. This was a very disappointing damp squib of a pre-budget report. I'm under no illusions that this is anything by GB's baby. I used to have some respect for him, even though I'm not a Labour supporter. He has just lost the last of my trust and I am seriously worried for the future.

I seriously doubt that any retailers will be dropping their prices on the back of this and tbh, if I couldn't afford a £50 present for my DS yesterday I won't be able to afford a £48.90 Xmas present for him next week. I don't know how stupid they think we all are.

Someone below mentioned the 5% VAT rate on energy costs. Now if they had cut or abolished that, that may have made some actual difference to our household budget. It would also have showed some real sense of the worries facing families across the UK at this time. If they really think our worries are limited to whether we can afford the latest plasma TV then they are seriously, seriously out of touch with reality.

£4000 a month doesn't go far with say 3 kids in private school, a skiing holiday for 5, a week in the caribbean and 3 weeks in a nice villa somewhere (pref catered) though does it??

Not to mention the wife's clothes habit

LOL.

Exactly Countess.

I can see why you think I muddled it up. But as you said in another post, I deliberately interpreted middle income differently because I so desperately wanted to be right. As I explained at [boring] length (why I interpreted it that way, not why I wanted to be right)

Apology accepted. [And I don't, by the way]

Ladymuck - it's on page 72 of the PBR Report - it's not going to be a statutory safe harbour - they are looking at restricting tax deductions for interest by reference to the group?s consolidated net
external finance costs.

So it's going to be p/l charge based, rather than debt-equity based. The cap is around total external debt cost rather than say interest cover on a standalone EBIT/EBITDA basis.

Was quite widely trailed actually. Shocker for inbounds ...

" But it's a bore that you can only invest 100% of your gross income in your SIPP. And I fear we will be very soon at the £1.6M limit - daren't look to be honest, just in case we have nowhere to divert earnings."

Are you serious, swedes? Can't work out if you're joking! Surely you might as well pay more tax if you're struggling to find things to do with your money.

Oh, Wilf, will you marry me? I'm loving your posts on here.

's I noted earlied I'm far more worried by the £10bn to be found in "value for money savings in public spending". How does that hole get plugged?'

Thats the worrying thing. Less services for the disabled, the elderly, the vunerable. Its not going to be the rich waiting 2 years for OT for their child who had a stroke (on the news this morning), or their child refused a feeding tube cos the PCT wont fund any more (my situation).

Its always services for the very poor and vunerable that are cut. The only thing the rich will notice is their cleaner looks a bit more tired and worried or the waiter in a London resteuarant wobbles the plates cos he's now working extra shifts.

But on the whole, people spending less on tat they don't need and driving less cos they can't afford it (and why the fuck are train fares going up 7% again!) will benefit the environment.

Too be fair they could but probably won't cut two of the receptionist jobs in our local A&E, 4 were on duty on Sunday and 4 of them sat there starring into space, chatting and generally doing nothing, not even trying to look busy.
That wastefulness needs to be cut in every government department and more medical staff in their place so we don't have to sit for 4 hours looking at them.

I'm not in favour of the extra %5 at £150k and above because it will do more damage to the economy than good. However, I find it much less shocking than the fact that the 40% starts at a mere £40k.

good post needmorecoffee

Hearing Darling on Radio 4 this morning it was very plain that this PB is something that even he's not sure will pay off.
The reduction in VAT he hopes will stimulate spending...but on the other hand he urges us to be prudent .
TBH i think the country has now tightened its belt and this will do nada to stimulate the economy. Are you running out and buying a car/camera/pair of curtains on the back of it?
He then confirmed that tax income is down priamarily due to a reduction in corporation tax and stamp duty. Oh and that borrowing was up ( no shit Sherlock ). The shortfall has to be found so he thought the fairest way was to hike the top rate of tax. He had no answer whatsoever to the fact that it simply is no where near enough.
Fingers crossed that his brilliant plan works.

On Radio 4 today John Humprheys was talking about those earning forty thousand paying an extra THOUSAND in tax.

Great. Why should we both work?

Have not read the whole thread - sorry - have stuff to do!

I think it would be wrong.

1. Will make feck all difference, just
   headline grabbing.

2. Will have a bad knock-on effect in industry which could easily end up pushing UP wages and bonuses etc. (If your pay increase/bonus is suddenly worth less, thre will be pressure to compensate accordingly). So we want higher earners to be paid more then?!

3. Hmm. We've fucked up, I know, we'll go round and take money from other people's back accounts so it looks like we're doing something. That'll be fair.

There is no point using the thread to have a whinge about those richer than us. They exist, they run industries, they have lobbying power and they are a bracket of people that no political party should piss off without thinking VERY carefully first.

abraid - pay off your debts asap and then don't.
If everyone refuses to play the game, have two people out at work, the cost of living will come down because it'll damn well have to.

And as for the VAT cut. There is no reason why the retailers would need to pass that on. So we'll wait and see on that one. I for one am not expecting a sudden price drop bonanza.

We could raise money my sponsoring Darling to shave off or dye those bloody eyebrows before a cut off his head in sheer annoyance.