Chancellor may tax older taxpayers more than younger.

Amp34 said:
Not that different, it’s a slightly higher rate of tax free limit and a slightly higher rate of tax for those above that limit. Generally a rate when specified is just plucked out of thin air on this forum, not literally the specific rate that person thinks is the best example.

The reality of the situation would be the only people paying more in tax would be those top 10-20% of earners. Yes, I’m sure some of those will complain, but it’ll be fairly easy to point out their complaints are unfounded as the tax is “only” on income for luxury items AND it’s a flat rate of tax over a living wage, not some arbitrary rate at an arbitrary amount like it is now.

With the current tax situation we have a ridiculous situation where people on minimum wage are being taxed on their earnings, while they cannot even afford to put a roof over their heads in some cases. We shouldn’t be taxing people on money that is needed to literally survive, but I don’t think it’s unreasonable to tax people on money that they don’t need, but make their lives more comfortable.
Click to expand...

I agree apart from the the part about the complaints. The people who are complaining about income tax being a punishment for being paid a lot are hardly likely to stop doing so if they're being taxed more. I don't see any reason why changing the number of income tax bands to 2 from the current 4 would change anything about that. I think your proposal would increase the complaining rather than decreasing it because it would mean that the working poor weren't paying income tax at all. Pointing out that you think their complaints are unfounded won't matter to them.

I also see the reasoning with the opposite approach, i.e. increasing the number of tax bands to 8 or more rather than decreasing the number of tax bands to 2. I think that the increased complexity of that approach would probably increase costs and increase tax evasion, but maybe not by a significant amount.
 
Moses said:
Links to sources? Just had a quick look on the FT and Times sites and nothing prominent there.
Click to expand...

The talk in the pension industry is that the tax change will most likely be to pension tax relief, reducing the benefit for older workers. Currently tax relief for pension contributions is (broadly) paid at your marginal rate once deducted. A proposal was put forward last year which would be a sliding scale of tax relief based on a starting amount less your age.

For example, tax relief would be 60% for 20 year olds, and drop by 1% for every year older, meaning that 60 year olds would 40 years older and therefore only receive 20% tax relief.

In terms of immediate income to the exchequer, this system would most likely be fantastic. Older workers generally earn more, are more likely to have higher disposable income due to other financial liabilities lessening and are more likely to be compelled to save for their retirement. At the other end, younger workers are generally paid less, and prioritise other financial commitments over retirement saving, such as saving for a house deposit, paying a mortgage etc.

In terms of encouraging targeted saving towards retirement, this system would most likely be disastrous.

It would be a very brave Conservative chancellor who, after the last election, went back for a another dig at the 50+ demographic. Or one whose party was increasingly worried about more younger people beginning to vote, and not showing any inclination to tick the blue box...
 
i can kind of see how they're intending this, get young folks onto the housing ladder and paying into pensions quicker with less tax, then claim it back once they're settled in further up the ladder and can afford it.

tbf i can see how this is probably going to seem annoying to folks who're going to get hit bad by it, and somehow i doubt they'll be retroactively applying rebates.

has anyone mentioned corbyn's "bribing" the young yet?
 
I suspect this is a reaction to the current rising trend (amongst the young most notably) that people who are 40/50+ have "had it good" by riding the property bubble compared to the young that are now unable to buy even a shed at the bottom of the garden because deposits are £20k+.

There's lots of research papers being posted about (a lot on reddit, for example), that the baby boomer generation have had it really easy for the last 40 years. It's quite compelling stuff, but I'm not sure I buy it either way. One metric I do remember is that wage growth over the last 40 years has been 28%, but property is 923% (lols..)

I can't remember who it was, a LibDem candidate I think it was that proposed this tax idea at the GE (not the snap one.)
 
Amp34 said:
Not that different, it’s a slightly higher rate of tax free limit and a slightly higher rate of tax for those above that limit. Generally a rate when specified is just plucked out of thin air on this forum, not literally the specific rate that person thinks is the best example.

The reality of the situation would be the only people paying more in tax would be those top 10-20% of earners. Yes, I’m sure some of those will complain, but it’ll be fairly easy to point out their complaints are unfounded as the tax is “only” on income for luxury items AND it’s a flat rate of tax over a living wage, not some arbitrary rate at an arbitrary amount like it is now.

With the current tax situation we have a ridiculous situation where people on minimum wage are being taxed on their earnings, while they cannot even afford to put a roof over their heads in some cases. We shouldn’t be taxing people on money that is needed to literally survive, but I don’t think it’s unreasonable to tax people on money that they don’t need, but make their lives more comfortable.

Edit: From a rough calculation the above example would yield half the population (those on less than 27k) would pay no income tax, those on 35k or less would pay less income tax than currently and those on 35k would pay more if the rate was around 50%.
Click to expand...

As Anglion says, people getting paid a lot are complaining about paying more tax than people who are not so fortunate to earn that much. Increasing the personal allowance and increasing the tax rate to maintain neutral revenue will merely mean those earning more will pay an even high proportion of the tax bill. That wont stop complaints.


Increasing the personal allowance and removing the inefficiency by taxing low income earners just to refineries of their tax in benefits are both great ideas, but the tax rate Will have to be higher to cover this.
And wife alli don't see how changing 4 tax brackets to 2 makes any If it any easier or "fairer" for any definition of fair.
 
I calculated it as the above, around 50% of all income over 27k should do it.

People on above £54k (top 10%) pay 3/5ths of the income tax in the UK. That means there’s not a huge amount of tax that’s actually needed to be collected from those in the lower spectrum.

One of the biggest complaints is the arbitrary nature of the 40% tax bracket. There’s no defined reason for it, it just goes up to that past the limit making people both pay a greater amount of tax and a greater percentage of tax. Going to just a greater amount would alleviate a fair number of the complaints IMO. There will always be people complaining, you can’t solve everything, but simplifying the system and making things more transparent and “fair” would certainly help.

If the government believe that people can afford to pay extra tax then why did they choose £45k as the break? It’s not a living salary is it, that’s much lower. It’s this that miffs a fair number of people.

As someone who would be negatively affected by that change i think it would be fairer anyway.
 
Amp34 said:
I calculated it as the above, around 50% of all income over 27k should do it.

People on above £54k (top 10%) pay 3/5ths of the income tax in the UK. That means there’s not a huge amount of tax that’s actually needed to be collected from those in the lower spectrum.

One of the biggest complaints is the arbitrary nature of the 40% tax bracket. There’s no defined reason for it, it just goes up to that past the limit making people both pay a greater amount of tax and a greater percentage of tax. Going to just a greater amount would alleviate a fair number of the complaints IMO. There will always be people complaining, you can’t solve everything, but simplifying the system and making things more transparent and “fair” would certainly help.

If the government believe that people can afford to pay extra tax then why did they choose £45k as the break? It’s not a living salary is it, that’s much lower. It’s this that miffs a fair number of people.

As someone who would be negatively affected by that change i think it would be fairer anyway.
Click to expand...

I think it's unrealistic to think that "a fair number of the complaints" from people who are currently paying 40% income tax on some of their income would be alleviated by having the same people paying 50% income tax on a larger part of their income. I think it's more likely that having them pay a higher rate of tax on more of their income would result in more complaints from them, not less.
 
Since the Tories can't offer the millennials free everything, oh and Unicorns for everybody like Corbyn did, this is an idea to grab those young voters - not that it will work or get passed by Parliament anyway so there's nothing to worry about for the older generation.
 
50% of young people pay a higher rate of tax at the moment (student loan). So it's not without precident. And, of course, young people pay the social tax of higher property rent and mortgages, which supports older people's wealth.

I can't see such a tax happening, but I can see some fairness arguments
Tunney said:
Agreed. The full minimum wage starting at 25 is a nonsense. Age shouldn’t come into it.
Click to expand...
It helps make hiring younger people more attractive to employers. These are people fresh on the jobs market, whose experience can't compete with older workers.
 
cheesyboy said:
Semantics
Click to expand...

cheesyboy said:
And, of course, young people pay the social tax of higher property rent and mortgages, which supports older people's wealth.
Click to expand...

Of course, there is no social tax. You might say semantics but it is important to be accurate. You might say that there are a higher percentage of younger people who rent or have mortgages on historically high property values. Throwaway sound bites are a politicians' friend, and often distort the truth, and there are certain demographics of the country who will genuinely go on to believe that there's a social tax.
 
chief barker said:
Since the Tories can't offer the millennials free everything, oh and Unicorns for everybody like Corbyn did, this is an idea to grab those young voters - not that it will work or get passed by Parliament anyway so there's nothing to worry about for the older generation.
Click to expand...

I agree there is no magic money tree........................ except when it is for keeping the party in power then they find a bit extra down the sofa.
 
The_Abyss said:
Of course, there is no social tax. You might say semantics but it is important to be accurate. You might say that there are a higher percentage of younger people who rent or have mortgages on historically high property values. Throwaway sound bites are a politicians' friend, and often distort the truth, and there are certain demographics of the country who will genuinely go on to believe that there's a social tax.
Click to expand...
What's the practical difference of an actual social tax, and a structural situation where young people pay more than older people, in such a way that their act of paying actually transfers wealth to those older people?

And if a proposed tax on the old might help address this wealth transfer, why should it be considered 'unfair'?
 
cheesyboy said:
It helps make hiring younger people more attractive to employers. These are people fresh on the jobs market, whose experience can't compete with older workers.
Click to expand...

We're talking about minimum wage jobs here. You shouldn't need seven years experience in flipping burgers or stacking shelves to do the job satisfactorily. There's already a separate minimum wage for those in training.

It's also open to abuse. I wonder how many people have mysteriously been made redundant as they've approached their 25th birthday?
 
Moses said:
TBH, anecdotally, younger workers (as in people we had on apprenticeships at 16/17, and young people around 18) were always significantly worse in terms of reliability/ability/a sense of personal responsibility/etc.
Click to expand...

Someone on an apprenticeship will earning a training minimum wage, which is fair enough. A 24-year old is likely to outperform a 60-year old in most minimum wage jobs though.
 
Discrimination still alive and kicking in 2017:rolleyes:
You shouldn't and can't say all young people are lazy, late etc as that's just plain wrong.
 
Hikari Kisugi said:
There appear to be rumblings that Hammond next month might introduce further complications to the taxation system. Aiming to tax older taxpayers at a rate higher than those who are younger.
Hard to be certain of thoughts until we hear the final announcement.

Personally in my occupation, we do not get any type of service benefit, if I have worked one, ten or thirty years I get paid the same amount for each service I provide.
The thought that someone twenty years younger paying less tax for doing the same job as me seems utterly odd to me.

What are people’s views?
Click to expand...
Sounds like a terrible idea. Can't imagine this being true at all.
 
Loving the simplistic view of the current state of taxation on this thread.

The Telegraph did an interesting piece recently about how the marginal rate of tax can be 10,000% when looking at the withdrawal of child benefit, withdrawing the personal allowance over 100k and the reduction in pension allowance over 150k. Plus the impact of National Insurance bands added to Income Tax making for an already highly taxed workforce.

If Corbyn did get in an whacked up the taxes for people on higher incomes, it'll be easier to convince my wife that a move to the states would be good for us, so that will be less tax for UKplc.

I think the best way to make the system fairer is to reduce the tax on earned income and instead tax assets such as land and property which cannot be hidden.
 
You must log in or register to reply here.
Back
Top Bottom