Tax.... what is everyone’s problem with it?

[dowie]

£125k is the point where you receive no non-taxable income, not £100k.

I didn't claim otherwise, seemingly you were unaware of this until I posted though. It is 100k where the 60% marginal rate starts and the marginal rate is what I specifically referred to.

Also, whilst there is a steep increase in the amount of tax paid between £100k and £125k you would still be around £10,000 better off on £125k vs £100k. At no point do you pay 60% tax on your earnings. Also, please keep in mind than less than 2% of the population make £100k or more, anyone that's lucky enough to be affected by this is very much in the minority.

Are you not following what a marginal rate is? Of course you pay 60% on your earnings that fall into that marginal rate... to use the same example as earlier if a GP earning 100k a year decides to put on a twice monthly Saturday clinic and gets an extra 10k in return then he'll, currently, pay 6k tax on that additional 10k. He only takes home 4k from the 10k he earned... and that's before any NI + any potential future tax increases form Labour....

There could come a point where he just decides that actually, he's already giving away more than he earns from running the Saturday clinics, Comrade Corbyn is going to hit him with another "only X % hike" and he'll just not bother with them in future.

You have that sweet spot hitting some of the most productive workers we have and quite frequently hitting them exactly where their overtime or bonuses fall. I don't think it is either fair or particularly helpful to structure things that way.

 

[Raikiri]

Are you not following what a marginal rate is? Of course you pay 60% on your earnings that fall into that marginal rate... to use the same example as earlier if a GP earning 100k a year decides to put on a twice monthly Saturday clinic and gets an extra 10k in return then he'll, currently, pay 6k tax on that additional 10k. He only takes home 4k from the 10k he earned... and that's before any NI + any potential future tax increases form Labour....

Only if those earnings happen to fall in the 100-125k range. If they earn less or more than that specific amount it's not really relevant.

There could come a point where he just decides that actually, he's already giving away more than he earns from running the Saturday clinics, Comrade Corbyn is going to hit him with another "only X % hike" and he'll just not bother with them in future.

But, as an educated person I am sure they would understand that it's literally impossible to give away "more than they earn" with the current taxes. Even if paying a higher a tax rate on those additional earnings they would still end up with a net positive. Also, I know a few doctors and thankfully they don't base all of their actions on how much money they might make. An alien concept I'm sure.

You have that sweet spot hitting some of the most productive workers we have and quite frequently hitting them exactly where their overtime or bonuses fall. I don't think it is either fair or particularly helpful to structure things that way.

Again, if you earn more money, even if you pay more taxes you end up with more money. There is no current taxation that results in you being worse off for earning more money.

Edit: Also GJ on ignoring the rest of my post

 

[dowie]

Only if those earnings happen to fall in the 100-125k range. If they earn less or more than that specific amount it's not really relevant.

I'm literally talking about that marginal rate that is applicable in that range - you're basically telling me that I'm talking about that marginal rate... well yes! Glad we've finally got that established.

But, as an educated person I am sure they would understand that it's literally impossible to give away "more than they earn" with the current taxes. Even if paying a higher a tax rate on those additional earnings they would still end up with a net positive. Also, I know a few doctors and thankfully they don't base all of their actions on how much money they might make. An alien concept I'm sure.

It isn't an alien concept at all - people respond to incentives. In the example given they literally would be giving away more than they earn for doing the extra work and with any further tax rises they'd be giving away even more.

Again, if you earn more money, even if you pay more taxes you end up with more money. There is no current taxation that results in you being worse off for earning more money.

And that completely misses the point.

 

[martin363]

This g

Just in case anybody was still confused

This gets much more interesting if you then continue beyond 100k, say to 120k, where for the money earnt between 100,001 and 110,000, you lose your 0% tax on the first 12.5k earnt, a significant increase in tax paid from 1 pound beyond 100k. (great graphic by the way).

 

[rubberduck]

I live in the south east where the cost of living is massively higher than in the north.

This is false.

 

[Seearbe]

Just in case anybody was still confused

Redraw for £110k and add in nic. Oh, and all the other benefits that drop out along the way like child tax credits and stuff. You'll soon see that the tax costs are much higher.

 

[VincentHanna]

Lots of people here who earn 100k+ who feel hard done by apparently

Should you really be having to take a reduction in child tax credits in to account? What about those people who don't have kids?

 

[Pudney]

I did list some things that can and have happened when the focus becomes solely how best to satisfy shareholders. Which doesn't have to be dividends can be in terms of short-term share price increases.

Like cost cutting and producing an inferior product which is more profitable in the short term.
Like excessive desire to reduce wage costs, driving down conditions and pay.
Like not being able to invest properly in the future.

Perhaps you're right that it isn't the shareholders directly pulling the strings and directly making those decisions. But the general consensus of opinion is that a desire to please shareholders has had negative consequences in the behaviour of many businesses.

I don't think that's controversial?

If you want to speak as an authority and say, "This doesn't happen it's all fantasy and don't believe what you read," then I'll bow out and stop reading articles in places like Forbes

I think it happens but I disagree the cause is down to shareholders and would also disagree the solution lies with shareholders. In my view the problem comes from directors, either due to self-interest where they receive performance related pay or self-interest from share based awards. Directors should also be more accountable to other stakeholders.

 

[Seearbe]

Lots of people here who earn 100k+ who feel hard done by apparently

Should you really be having to take a reduction in child tax credits in to account? What about those people who don't have kids?

Not hard done by. Just frustrated that others feel that life suddenly become infinitely easier once you earn at that level.

 

[VincentHanna]

Many things do...

It depends what you do for work, obviously...

 

[Seearbe]

Many things do...

It depends what you do for work, obviously...

And where. Earning £100k in London is very different to earning £100k in Sheffield.

 

[FishFluff]

Not hard done by. Just frustrated that others feel that life suddenly become infinitely easier once you earn at that level.

Are you trying to say it doesn't? Because life gets way easier even before 100k. (Source: Used to be dirt poor)

 

[VincentHanna]

True.

Though even 100k per annum is good for London.

For Sheffield it's amazing.

 

[Hades]

This is false.

You think the cost of living is the same in the north and south?

 

[dowie]

True.

Though even 100k per annum is good for London.

For Sheffield it's amazing.

So what?

Doesn’t mean it is a good thing to tax the **** out of people at that rate or particularly fair.

I mean you could reply with the same soundbite for any rate of tax, it still misses the point.

 

[Deleted member 66701]

You have that sweet spot hitting some of the most productive workers we have and quite frequently hitting them exactly where their overtime or bonuses fall. I don't think it is either fair or particularly helpful to structure things that way.

That's kinda the point though. If those people don't do the extra work, then that creates new employment oppurtunities for others.

 

[Seearbe]

Are you trying to say it doesn't? Because life gets way easier even before 100k. (Source: Used to be dirt poor)

It gets easier the more you earn but it's not like all financial problems are solved once you're a "top 5% earner". As my earnings have increased, I've had a family which means I need a bigger house and my wife hasn't been able to earn as much, so whilst I am incrementally better off financially, it's not like I can afford amazing holidays or drive a ferrari or anything. Don't get me wrong, it's all first world problems. But I could also say that I had more disposable income at other stages in my life when I didn't have a load of financial responsibility.

And believe me, I very much came from the wrong side of the tracks and have worked up to where I am now without being given anything. I'm lucky, I know, but I have also experienced the other side of wealth.

If the next government were to increase income taxes at the levels Labour are touting, it would have a serious impact on my financial situation. Increasing taxes at the £80k threshold is not the answer because that really is the "squeezed middle" point.

And to put some of this into perspective:

Jeremy Corbyn has an estimated net worth of up to £3 million. As he claims the position as MP, and Labour leader £74,962 and £62,440 goes into his account yearly. Together this makes over £137,000. Over 30 years, he has claimed over £3 million from the state alone. This is £1.5 million more than a normal MP. Once he retires, he’s set to earn £1.6 million pension.​

Is he the many or the few?

 

[Mucky_Pup]

I don't have a problem paying tax, sure I would like a bit more value for mine and others money and less wastage, but it's never going to happen anytime soon. What I do have a problem with is; people saying that middle earners like me and others like myself are not paying their "fair share", well I'm sorry, but I'm currently paying multiples of what other people pay, up to about 10 times the multiple for someone in full time employment at minimum wage, if that isn't a "fair share" for a a single solitary working class person to be paying in, I'll never know what is, and any value, however large, will obviously never appease them.

 

[dowie]

That's kinda the point though. If those people don't do the extra work, then that creates new employment oppurtunities for others.

I doubt that that was the point at all more like an occasional side effect and it certainly isn't necessarily the case nor necessarily particularly desirable in instances where it is the case (i.e. some cases where someone has to do the additional overtime/work).

Firstly in the cases of bonuses - they're there partly as an incentive and partly to aid retention, an extra reward for high performing staff members. Essentially you nullify the effect of this incentive - which can have a knock on effect in terms of productivity or indeed retention.

In cases where it is for overtime it could just mean you have delays/longer times to complete a project etc... or int he GP case with the clinic just being scrapped longer appointment waiting times or patients foregoing seeing a GP or increasing the strain on the local A&E.

In cases where you can argue that creating a disincentive for extra work does lead to more people sharing the same amount of work then you end up with less tax revenue overall - that same amount of work now has additional personal allowances and lower rates applied.

I don't think that disincentivising work is a good thing in general.

 

[FishFluff]

It gets easier the more you earn but it's not like all financial problems are solved once you're a "top 5% earner". As my earnings have increased, I've had a family which means I need a bigger house and my wife hasn't been able to earn as much, so whilst I am incrementally better off financially, it's not like I can afford amazing holidays or drive a ferrari or anything. Don't get me wrong, it's all first world problems. But I could also say that I had more disposable income at other stages in my life when I didn't have a load of financial responsibility.

I guess my perspective is slightly different as my wife also earns a decently and we don't have (or want) children.

And to put some of this into perspective:

Jeremy Corbyn has an estimated net worth of up to £3 million. As he claims the position as MP, and Labour leader £74,962 and £62,440 goes into his account yearly. Together this makes over £137,000. Over 30 years, he has claimed over £3 million from the state alone. This is £1.5 million more than a normal MP. Once he retires, he’s set to earn £1.6 million pension.​

Is he the many or the few?

This is a bit disingenuous though. Most people who bought a flat in Greater London under right to buy in the 80s probably have a 'net worth' of well over £1m at this point and considering Corbyn has lived in North London for god knows how many years a meaningless net worth figure being so high is unsurprising. As for Corbyn 'claiming' over £3m from the state, he's earned that by working as an MP. Or are we now saying that I 'claim' my salary each month for my hard done by employer?