10p tax band

Kappa · 19 May 2008 at 00:20

furnace said:
Just because employers shell out more to overcome the tax, it's not "cancelled out" and magically made OK again. If you run your own company there is no employer to pay you more.

I didnt suggest that the employer would totally CANCEL out the tax rate increase, but it doesnt go unrecognised. Stock options, company cars etc.

Bear · 19 May 2008 at 07:35

furnace said:
I didn't (and wouldn't) suggest a flat tax rate, either, but that doesn't mean I think it's OK to "steal from the rich".

Why not have a flat tax, what would you fundamentally have against it ??

What if you could set a tax free allowance of say £10k and then have a flat tax rate of say 25% (dont know an exact value to make sure the tax take isnt significantly less) and close all tax evasion loop holes. So people on minimum wage would virtually be taken out of the tax system alltogether and everyone would pay the same percentage no matter how much they earnt.

Anewbe4u · 19 May 2008 at 09:23

atpbx said:
In fact, looking at what ive written, you'd have to go someway to accusing me of not understanding how the 40% band works.
Its says 40% of everything extra i earn once i get over the 40% threshold.
I've used just a random amount of cash in the example, say i got promoted and earnt over 36k, why should everything over that sudden be eligible for 40% tax?
etc etc etc

Perhaps learning how to read would be a good thing to do first before calling me stupid.

So you'd rather earn less than pay more tax out of principle? 40% tax or not, I'd much rather earn £50k then £30k.

Visage · 19 May 2008 at 09:39

Bear said:
Why not have a flat tax, what would you fundamentally have against it ??

What if you could set a tax free allowance of say £10k and then have a flat tax rate of say 25% (dont know an exact value to make sure the tax take isnt significantly less) and close all tax evasion loop holes. So people on minimum wage would virtually be taken out of the tax system alltogether and everyone would pay the same percentage no matter how much they earnt.

The mainproblem like that is that essentially you reduce the entire personal tax system to essentially 2 numbers - the threshold and the rate. That means that the government has no means to use the tax system as either a carror or a stick, or as an instrument of policy.

What if, for example, they want to encourage mothers to go back to work once their kids are at school? Under the current system they can offer tax allowances, tax credits and personalised tax codes to encourage this change. Under a flat tax system they wouldnt be able to do it. The same arguments apply for pretty much every other group that the government may wish to consider for special treatment.

Visage · 19 May 2008 at 09:41

Regarding the higher tax rates; Its also a matter of political expediency - If a government can increase a higher tax rate so that someone on 100k pays 10k a year more tax (figures are for example only), and uses that income to reduce the lowest tax rates such that 10 people on 20k a year get a 1k tax cut then they've just earnt themselves a net increase of 9 voters....

Bear · 19 May 2008 at 10:45

Visage said:
The mainproblem like that is that essentially you reduce the entire personal tax system to essentially 2 numbers - the threshold and the rate. That means that the government has no means to use the tax system as either a carror or a stick, or as an instrument of policy.

What if, for example, they want to encourage mothers to go back to work once their kids are at school? Under the current system they can offer tax allowances, tax credits and personalised tax codes to encourage this change. Under a flat tax system they wouldnt be able to do it. The same arguments apply for pretty much every other group that the government may wish to consider for special treatment.

All tax credits are is an inefficient way of giving money they have earnt back to them. With a large personal tax free allowance there is no need for convoluted ways of giving their tax money back.

Visage · 19 May 2008 at 11:05

Bear said:
All tax credits are is an inefficient way of giving money they have earnt back to them. With a large personal tax free allowance there is no need for convoluted ways of giving their tax money back.

The problem is that its an all or nothing thing. You cant ease the tax burden on a single group without doing it for everyone, and vice versa.

Bear · 19 May 2008 at 13:02

Visage said:
The problem is that its an all or nothing thing. You cant ease the tax burden on a single group without doing it for everyone, and vice versa.

Exactly and that is the point, as it is fair to everyone, no one group is targetted more than another. The only real losers in this would be the uneccessary amount of civil servants needed to administer the convoluted system.

Ex-RoNiN · 19 May 2008 at 13:09

Munky1080 said:
I assume you mean 40% - and it's that's the case...it's absolutely DISGRACEFUL! No one should ever have to pay 40% income tax!

In Germany, if you rent, live alone with no kids to support, and are under 30, your income tax can be 51-54%.

Morba · 19 May 2008 at 13:11

robmiller said:
Yup, that's the only issue I have. I've no problem with adding another band above the 40% one, but we'd have to see a decent return in public services for it and I just can't imagine that happening.

There is another band above 40%.

Visage · 19 May 2008 at 13:11

Bear said:
Exactly and that is the point, as it is fair to everyone, no one group is targetted more than another. The only real losers in this would be the uneccessary amount of civil servants needed to administer the convoluted system.

No, it wouldnt be fair, as not everyones circumstances are the same.

'From each according to his means to each according to his needs'

Muffin` · 19 May 2008 at 13:15

Ex-RoNiN said:
your income tax can be 51-54%.

What other criteria are there?

Ex-RoNiN · 19 May 2008 at 13:24

Muffin` said:
What other criteria are there?

In 2007/2008 an income of less than €7,664 is tax-free for a single person (€15,329 for a married couple). Incomes up to €52,152 for a single person (€104,304 for a couple) are then taxed with a rate progressively increasing from 15% to 42%. Incomes over €52,152(€104,304) are taxed at 45%. In addition to this there is the "solidarity surcharge" of 5.5% of the tax, to cover the costs of integrating the states of the former East Germany.

Numerous other items, including gasoline, alcoholic beverages, tobacco products, tea and coffee, carry sales taxes in addition to the Mehrwertsteuer. There is also a church tax (Kirchensteuer), of 8% to 9% of the Einkommensteuer/Lohnsteuer. But you are not required to pay the tax unless you wish to be officially affiliated with one of Germany's established churches; usually Catholic or Protestant (Evangelisch).

All in all there are approximately 30 different types of taxes, including taxes on inheritances, real estate and motor vehicles. There is even a tax on the gross amounts received by the state-run lotteries, though the distributions to the lucky lottery winners are tax-free.

Source: http://www.howtogermany.com/pages/germantaxes.html

So income tax is limited to 45%+5.5%, then you have 8% Church Tax, and you pay tax on your assets also (houses, etc.) if they have been paid for fully.

Btw, Church Tax is a remnant from the 3rd Reich and the agreement they had made with the Catholic Church....this agreement saw the Catholic Church agree to not challenge or interfere with German rule...one of their darkest moments since the 4th crusade and the hugenot persecutions.

Bear · 19 May 2008 at 13:26

Visage said:
No, it wouldnt be fair, as not everyones circumstances are the same.

'From each according to his means to each according to his needs'

Then it would be dependant of what you define as fair then. Everyone being under the same rules is fair to me, obviously it isnt to you. I would have thought taking the poorest out of the tax system all together is a great means of tackling "each according to their means"

Tomsk · 19 May 2008 at 13:33

Rilot said:
The tax in the UK isn't bad at all but it's the terrible services we get in return that's the issue. People want to feel that they get good value from our tax. At the moment we see the money wasted.

I have the same opinion - We're not getting value for our taxes

Morba said:
There is another band above 40%.

Is there? Just two bands now 22% and 40%

If it wasn't for the the last Conservative (Thatcher & Major) government, we could still have 83% tax!
http://www.hmrc.gov.uk/stats/tax_structure/incometaxrates_1974to1990.pdf

Energize · 19 May 2008 at 15:17

Tomsk said:
Is there? Just two bands now 22% and 40%

20% you mean.

Morba · 19 May 2008 at 15:51

Tomsk said:
Is there? Just two bands now 22% and 40%

No 50% band over £100k now?

Energize · 19 May 2008 at 15:55

Morba said:
No 50% band over £100k now?

When was the last time you checked the tax bands? :confused:

It's been 40% for years now, and the 22% rate has dropped to the 20% along with the personal allowance going up to £6k this budget.

The Dread Pirate · 19 May 2008 at 15:57

I'm not sure whats more depressing This thread about tax or the convesation about death i was having with my brother

Mad old tory · 19 May 2008 at 16:00

Morba said:
No 50% band over £100k now?

That was a proposed lib dem policy a couple of years back.