What’s the point in earning above higher tax threshold?

[Pippippipi]

Really what’s the point? Anything above 43k till 50k ie uk high tax threshold has such high deductions it’s terrifying. 42% tax, 8% NI, non negotiable 11% superannuation pensions payment leaving me with 39% to take home. Even worse if you’ve student loan payments.

People in very normal jobs with responsibilities are being dragged into these thresholds, it doesn’t feel fair in anyway.

Clearly the point is that you get more money in your pocket (albeit not as much as you would like) and more money into your pension.

A guaranteed defined benefit pension that many of us on dc pensions would envy, (as we watch to see what Putin and Trump will do next to trash the value) and which will potentially be supported by taxes we pay on our pensions if our income (including state pension) exceeds basic personal allowance.

It's a disincentive tbh - DH is self-employed and it's easier to just work to earn enough to hit the £43,663 plus pension contribution and then stop for the year and actually enjoy some free time.

Which is a lovely option to have as he clearly has enough income / savings to be able to do that.

It would be an odd economic logic that said "higher earners must pay less tax because they have plenty of money so won't work unless they get perks"

It could be looked at like this: in spreading the tax load it is necessary to to keep the first £XXXX of earnings Tax-Lite because that is the money people depend on to live. Then even it out for higher earners and view it as tax spread across all their earnings". I.e look at the whole tax bill as a % your whole income, not just what you pay on the amount over the threshold.

If I were him I would also be telling her not to disturb him at work telling tales on his partner!

The government could just not take the piss with taxes until they’ve learned to cut their cloth accordingly though. A 50% marginal tax rate for those on £44k is absolutely taking the piss. A 65% marginal tax rate for those on £101k is also taking the piss.

People need money to live on at all income brackets these days. If you live in Edinburgh where prices are high, buying a £500k home with a mortgage of £450k would see you paying £2,500 a month. The government taking50% of their salary because they’re ‘rich’ is just not treating them fairly.

The higher tax only applies to any income in that bracket- not the whole income.

Indeed, that’s what’s meant by ‘marginal’.

Shall you up your hours, only to hand over half to the government? So many people say ‘nah, not worth the hassle’ and the government and the economy both lose out.

Thats why higher tax rates are damaging, and that’s why higher tax rates are returning an increasingly minimal return for the government.

He works away so we kind of have to weigh up money vs absence. But we would probably draw that line differently if the tax thresholds were higher.

They're too low in Scotland imo, particularly with fiscal drag.

There is increasingly a sweet spot at which the amount of effort and hours required to earn a high salary has to be weighed up against sticking at a lower level as the high tax makes the difference in take-home pay negligible and not worth the sacrifice

That is exactly what the famed Laffer Curve is all about. The IFS did an interesting paper on the extent that Scot’s were likely to change their behaviour to avoid the new £75k-£125k band here. To summarise, raising higher rate taxes results in very little extra tax take, while pissing those taxpayers off immensely.

ifs.org.uk/articles/increases-scotlands-top-rate-income-tax-may-have-reduced-revenues-although-significant