TAX ?!?!
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I used to think that if you earn £150k you would come away with £75k at 50% tax rate.
But it is apparently calculated in sections. So up to £35000 they take 20%. Between 35k and 150k the take 40% and only the money you earn over 150k do they take 50% of.
So realy if you earn £120k the first 35000 they take 20% of, the 120k minus the first 35k is 85k and then they will take 40% of that 85k.
I used to say the same thing, what is the point of earning 40k if after 35k the tax goes up to 40% i would better off on 35k. But they just tax the 5k after 35k at 40% not the whole amount.
But it is apparently calculated in sections. So up to £35000 they take 20%. Between 35k and 150k the take 40% and only the money you earn over 150k do they take 50% of.
So realy if you earn £120k the first 35000 they take 20% of, the 120k minus the first 35k is 85k and then they will take 40% of that 85k.
I used to say the same thing, what is the point of earning 40k if after 35k the tax goes up to 40% i would better off on 35k. But they just tax the 5k after 35k at 40% not the whole amount.
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The marginal rate is 60%. That is what I said. That is not wrong.
You have said I'm wrong by telling me the effective overall tax rate. Please prove my marginal tax rate as being wrong as you have said.
I wait with anticipation to your brilliant mathematics.
And also to point out, I have made no comments with regards to fairness or to overall tax rates. Nor have I said that overall you get higher deductions. I have only commented about marginal rates. So please disprove my point about that since you believe I'm wrong.
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Wouldn't that mean between 100k and 116k you would be better off on 100k because you would lose your allowance. Only once you get past £116k do you start to earn more.
No - you'll always get more money by earning more money. It's just the percentage of the money you earn that ends up in your pocket between those two bands is barely worth it.
And that's why we talk about marginal rates.
Although interestingly in certain circumstances there have been situations which give rise to a marginal rate of more than 100%, which means they would cost you money.
For example proposed pension changes a few years ago would have done this in certain specific circumstances (which the coalition then revised the changes anyway). Also, I believe if you have enough children it's possible to get above that with the child benefits, but I can't remember the exact details.
Pretty much, yes. I remember at college our politics teacher used to tell us the same thing you used to think; that there was no point in earning just a little over £35k as you'd get clobbered on all income at 40%.
I believe in the 1970s it was, at one point, possible to have a marginal tax rate of above 80% if you earned income in a certain way, such was the structure of the tax system back then. (somebody correct me if this isn't right) It was simplified substantially in the late 80s from a heavily tiered system to one much simpler tiering system similar to the current format we have today.
The whole accursed system is designed to keep accountants driving Saabs - sorry, what's the standard issue car for accountants now that Saab are dead and buried?
As I said before, I didn't say you were wrong regarding the rate for that specific income bracket.
I was simply pointing out that people talk about that rate like it's what people on high incomes are paying - when in reality it only applies for a small portion of income.
How much tax do you think you pay on any additional income over £150,000 - let's say on a £50,000 increase on a base salary of £150,000 PA.
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Show me where my marginal rate is wrong.
Edit: Oh and lovely, your image proves my 60% marginal rate as well. Which is apparently a "rubbish figure".
It's like talking to a brick wall...
I didn't say you were wrong regarding the 60% for that specific income bracket, I simply pointed out that total deductions are nowhere near 60%.
If you actually read the rest of the sentence you can see the "rubbish figure" was regarding the total deductions - I'll give you a hint, it's on the same line.
Actually, the sentence quoted does pretty much say that the marginal rate is nowhere near 60%.
If you only read the bit in bold then yes, if you read the rest of the line then no.
I gave the full calculations much earlier on the 60% (for that specific bracket & how it's calculated outside of that bracket) and have linked images which show it's correct.
I fail to see why I need to explain myself when I obviously know what the marginal rate is, as I've said before - I was simply pointing out that that small rate for a very small income slice isn't representative of the wider tax picture for higher income earners & shouldn't even be mentioned (as it gives the impression that they are done by harder than they are).
As mentioned earlier, it's a meaningless sub-set of tax which is used to push a agenda of "look how much we are being taxed" - when the reality of total deductions is lower.
As above, can't be bothered repeating myself.
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You said my marginal rate figure of 60% is rubbish. I have shown where you said this. You were wrong to say that as the marginal rate IS 60%.
You may have since learned what a marginal rate is, which is fine. But don't go around telling people they're wrong when in fact they do this thing for a job and they are absolutely correct.
Chill your beans, he was referring to the total deductions being less than 60%. His wording was perhaps poor, but that's what it seems he meant.
I know what he was saying, I know what I was saying. His wording was poor. But the fact he decided to just say "no", and that my figure was "rubbish" has irked me, especially when the only issue is that he decided to misrepresent what I've said.
What I said isn't rubbish, it is entirely valid, now that has been pointed out (passionately) we can all move on
A fair point, I admit my wording my was poor & perhaps I should have been a little more tactful.I know what he was saying, I know what I was saying. His wording was poor. But the fact he decided to just say "no", and that my figure was "rubbish" has irked me, especially when the only issue is that he decided to misrepresent what I've said.
What I said isn't rubbish, it is entirely valid, now that has been pointed out (passionately) we can all move on
I work in statistics (statistical/propensity score modelling) - so the way they can often be used to misrepresent certain facts (not saying it was your intention, but the marginal rate is often used that way) is a bit of a personal "irk generator" of my own.
This is far to civil for GD.