Income tax - is this a good idea or am I massively missing something

[Phonicshaskilledmeoff]

So much bad feeling regarding who pays the most tax etc. when in actuality salaries aren’t always linked to who works the hardest, and I find the question of ‘who’s worth more’ even more uncomfortable.

What if they removed the concept of income tax away from the individual entirely. Instead, the employer would pay all the tax. Still based on the individuals salary, but would not appear in their pay packet. (No extra cost to the employer).

your net pay would stay the same but become your gross pay. Any position £££ advertised would reflect the amount actually received by the employee.

I think it could boost employment, with companies encouraged to hire more role staff into lower paying junior roles, in addition to taking away the animosity around who’s paying what tax.

Thoughts?

Salaries would be reduced so it seems pretty pointless

Who benefits? The employer would have some extra admin to do as well - quite a lot.

So employers advertise the net rate rather than the gross rate, but ultimately pay the same?

dont see how it would boost employment. Would make it more difficult to attract senior talent as marginal tax rate so high

also complexities around credits and benefits- for many people their take home will largely depend on tax thresholds, benefits, and how much their partner earns. One spouse earning well will eliminate their spouse’s cedits, so taxable situation for someone on 59k with children who is a single parent is quite different from same salary but a higher earning partner.

If you want people to feel better about paying tax, this won’t work and it’s a little infantilising.

Tax needs serious reform, not just income tax but all taxes. Make working more pay, make people want to climb the career ladder and be ambitious.

Cut tax for businesses and incentivise them to base themselves here and hire British workers.

Less stick, more carrot. A concept Labour just doesn’t agree with.

Salaries are never linked to “who works the hardest” they are linked to who takes the most responsibility. That’s why it’s the guy at the top that takes the hit when someone lower down makes a catastrophic mistake.

What about carers who are responsible for the wellbeing and indeed lives of millions of people each day? Seems like a big responsibility.

@Phonicshaskilledmeoff also, why do you think it would encourage them to employ more employees, with fewer at the top and more at the lower end of the ladder?

Increasing headcount increases cost. It's one of the reasons people don't like hiring 2 part-timers instead of 1 full timer.

Is this one of those posts where you don't really understand anything but just chucked out a random idea?

I really dislike those to be honest. You do need to learn something... I don't claim to be an expert in business - but this idea is particularly bizarre.

Because tax would still be tiered as it is now- you’d get more bang for your buck

Would they have extra admin- they already calculate the tax as it stands.

I think it would switch the mindset of I’m a big earner, I’ve paid most into the system.

How? If taxes are tiered as they are now and the only change is that it paid by the employer (who deducts it from gross salary), how does that actually change anything?

I actually work in such a system - my employer deducts my taxes (which is tiered but no deductions for family size, etc.) but that's because I work for an international organization (think UN) and I don't pay taxes directly to any country (the organization gathers taxes from everyone, at the same rate no matter where we are stationed, and gives money the relevant governments (I'm not sure how it is decided how much to give each government).

Im just a normal person throwing out an idea that I think is a decent one. I have an economics degree and am a qualified accountant, but don’t profess to be a tax or payroll expert. I just don’t think it works as it is currently.
A different idea, but certainly not bizarre- companies already pay elements of NI.
Those at the top end pay considerably more tax per hour. Therefore if a company were responsible for that tax, they may consider it more appropriate to have more junior employees. But that wasn’t the main driver.
I don’t think the ‘I’ve paid the most tax’ sentiment is working and is particularly divisive.

What would this system do about self employed people? Rental income? Etc.

Isn’t that basically what we have now with PAYE? You just want salaries to be quoted post-tax.

If someone has two income streams, do they get added together when calculating what rate the employers should pay?

If so then that really is what we have now, for almost all employees.

This would be a no from me!

I agree, but you could say the same about call centre workers and other low level jobs.
If a carer mucks up, ultimately it’s the boss who takes responsibility.

You know already that when employers look at staff salary costs we don't look at the sum of net salary - we look at gross salary (including the pension and NI contributions we make) nothing changes - the team still cost us the same - I'm confused as to how you think our analysis would change.

That’s really interesting. I think it would change mindsets around who’s paying the most into the system.
I’m paying the most, becomes I cost the most. I suppose.

Dont get me wrong, I believe in a capitalist system and am a higher paid worker. I just don’t think the mindset at the minute is particularly helpful and is fairly divisive

Duplicate what?

What I’m saying is that carers have immense responsibilities, but are not remunerated accordingly. Same with many other roles like nursery staff. If they screw up, people can be harmed or worse. And they will be fired for screwing up.

Low pay does not mean low responsibility.

Why shouldn't people who contribute the most be aware of this? How about we shift the mindset to 'I'm a low earner and should be contributing more to make a fair contribution to the country'?

It’s not based on responsibility, it’s usually linked to

1. your ability to generate revenue or save money for the organisation you work with; and
2. how easily you could be replaced (I.e. could anyone from the street do your job with minimal training or would someone need to do years of training first)

those two questions basically determine pay in most instances…

“I’ve paid the most tax” sentiment IS relevant though, as we live in a country that still screams at high earners that they should be paying MORE despite already paying an unbelievably high tax rate and much more than others & often having trained for many more years etc

Because I don’t think that’s true. I don’t think a low earner necessarily contributes less to society. I don’t think my position in banking contributes twice as much to society as nurse. I certainly pay twice as much tax though.

Not sure what benefit this would have- it's basically just changing how jobs are advertised as employers already have to withhold and account for income tax.

It also wouldn't work with the fact that that lots of people have multiple sources of income and so will be paying income tax at different rates. Why would I employ A (who also has another job and is taxed at the higher rate) when I could employ B (no second job, basic rate)?

One would hope you're making a relative contribution to society in other ways otherwise that's pretty shameful. We're not talking about contribution to society though. We talking about a financial contribution to avoid bankruptcy for the country.