What level of taxation is "fair"?

[Firestar_3x]

Before going off on a tax rant crusade, please provide information on the other tax bands and information regarding the year on year tax and personal allowance changes.

Then please provide me with a chart showing which group (as a whole) contributed the most in tax to the government.

 

[Theophany]

Usually I revulse at the BBC's economic editorials, but I found this quite interesting, if not an intentional attempt at divisiveness: http://www.bbc.co.uk/news/business-21934564.

From TFA:

The Office for National Statistics reckons that the average Londoner contributes 70% more to Britain's national income than people in the rest of the country - a difference of £16,000 each a year.

It's tricky to measure, but they also seem to pay more in taxes than they get back in government spending.

An interesting statistic for the ONS to give.

 

[jaybee]

Before going off on a tax rant crusade, please provide information on the other tax bands and information regarding the year on year tax and personal allowance changes.

Then please provide me with a chart showing which group (as a whole) contributed the most in tax to the government.

What's your point Firestar?

 

[Dave]

Bringing this thread backup. I just checked the allowances for higher rate tax payers over the last few years and now for the tax year we are about to enter:

Higher rate 40% income tax payer bands:

2009-2010 = £37,400+
2010-2011 = £37,400 - £150,000
2011-2012 = £35,001 - £150,000 (6.9% year on year reduction)
2012-2013 = £34,371 - £150,000 (1.8% year on year reduction)
2013-2014 = £32,011 - £150,000 (7.4% year on year reduction)

You've not taken into account that the personal allowance has risen over the years you've quoted, so the year-on-year reduction isn't quite a fair comparison as the increase in personal allowance will offset some of the tax paid by the reduction of the higher band. The numbers you've quoted is the income tax bands after the personal allowance comes off, and not the overall basic salary. It's £9,440 next year, which means that you have to earn £41,451 to be a higher-rate tax payer. By comparison, for 2012-2013 it was £8,105; this makes a basic wage of £42,476 to be a higher-rate tax payer.

Although the basic salary for to be in the higher-rate tax band has decreased as you stated in your figures, it's only by 2.4% in this case in real terms by taking total salary and tax into account, and not the 7.4% that you have given.

I agree with the London comment however - I'm moving to London at the end of the year and will be a higher-rate taxpayer (just!) and I'm not going to have much left over after rent, bills and food. Good job my wife is working too so we can save up a little!

 

[jaybee]

You've not taken into account that the personal allowance has risen over the years you've quoted, so the year-on-year reduction isn't quite a fair comparison as the increase in personal allowance will offset some of the tax paid by the reduction of the higher band. The numbers you've quoted is the income tax bands after the personal allowance comes off, and not the overall basic salary. It's £9,440 next year, which means that you have to earn £41,451 to be a higher-rate tax payer. By comparison, for 2012-2013 it was £8,105; this makes a basic wage of £42,476 to be a higher-rate tax payer.

Although the basic salary for to be in the higher-rate tax band has decreased as you stated in your figures, it's only by 2.4% in this case in real terms by taking total salary and tax into account, and not the 7.4% that you have given.

In that case scrap everything I have just said and I'm a complete moron.
I will go and read up on personal allowance stuff as I don't know how this works clearly. Doh!

 

[Dave]

In that case scrap everything I have just said and I'm a complete moron.
I will go and read up on personal allowance stuff as I don't know how this works clearly. Doh!

Your figures just need a little adjusting for the actual salary to hit being a higher rate tax payer; Wiki has a list of the personal allowances over the years.

The point you made still stands though - £41,450 (rather than £32k!) is a good salary back at home in Derbyshire, but in London it won't go too far.

 

[Firestar_3x]

What's your point Firestar?

That 32k becomes over 40k with your personal allowance, if you / they can't afford the live in the city then perhaps you / they shouldn't, i can't afford to live in Monaco so don't.

People don't say it for fun. In this country it really does pay to be at rich or at the extreme end of earning well, or Poor (leeching benefits as a lifestyle choice). Average Joe's and people that work and get by, are the ones "paying" the most. We are paying in every ounce we put into earn more and to further our careers. We spend years working hard to gain that extra salary pay, only to be congratulated with higher tax rates when we get there.

The top 14% of earners pay 60% of the income tax bill, what do the middle earners contribute?

Should we pay more tax, the more we earn? Possibly yes, but not with such a generic and outdated higher rate allowance. It should be heavily tiered and broken down more, so that people earning £150,000 should obviously pay a higher rate than someone who earns £32,000. Massive difference. Or, frankly why can we not all pay the same rate of tax? The very nature of a percentage rate will bring more tax in for higher earners so why do we need to penalize further than that?

Personally i think we rely on the rich too much to shoulder the tax bills.

 

[Theophany]

That 32k becomes over 40k with your personal allowance, if you / they can't afford the live in the city then perhaps you / they shouldn't, i can't afford to live in Monaco so don't.

Not really the same. I can't afford to live in Monaco, but then I don't have any skills that would make me employable there anyway and so have no interest in living there. How is this comparable to people who have opportunities in London yet cannot afford to live there or cover the often expensive commuting costs?

The top 14% of earners pay 60% of the income tax bill, what do the middle earners contribute?

To be in the top 14% of earners you need to be on or over somewhere between £33,000 and £50,000. Hardly a champagne and caviar amount, especially given that this is before tax.

Personally i think we rely on the rich too much to shoulder the tax bills.

This ultimately hinges on your definition of 'rich.'