Wealth tax and the rich

[Mike4]

Everybody's situation is different, and of equal validity. Personally I don't think it right that your preferred charities should benefit at the expense of the common good (i.e. paying IHT should come first, before any charitable gifts). But it is your choice to bequeath to charity instead of looking after any of your family.

I suspect the 2 aren't mutually exclusive. In fact the family may benefit more from not recieving or expecting a large inheritance.

Paul

It's an interesting point.

A theme in business I notice from time to time happening is a small firm or business started and built up by a father has a son begin working in it when he reaches working age. As the years pass the customers of that firm begin to avoid dealing with the son whenever possible, preferring to deal with the father because the son doesn't really care, expects to inherit the business and has an 'entitled' attitude.

Father is blind to this and when he eventually retires or dies the son takes over and drives the business into the ground.

[Sorcery]

This might be informative : https://www.telegraph.co.uk/money/tax/t ... y-britain/
29% net take home pay once earning over £100,000

[scrumpyjack]

This might be informative : https://www.telegraph.co.uk/money/tax/t ... y-britain/
29% net take home pay once earning over £100,000

Then of that 29p, 20% goes in VAT

[the0ni0nking]

Unless for each £1 increase in salary your take home pay goes down by >£1 then none of this makes any sense.

Basically, in my mind what he's saying is I'm fine at the level I'm at and don't want the additional pressure of X, Y or Z that would come as a consequence of taking the next step up the ladder.

It's hardly news.

I'm of a similar view, my gross income is c£110k when you include rental income but with pension contributions I get that down to c£80k. I could get it down to £50k and move myself out of higher rate tax and am considering doing that (thread posted elsewhere about it).

I've done my time - when I worked in Switzerland pre-pandemic I think it worked out I was on about £150k, but also my living expenses were b*gger all as everything was paid by work. It was a purple period for me - but not one which was long term sustainable and not something I'd probably do again but at the time it was great.

And watching FC Zurich with their ultras (facial tattoos etc) was something I'll never forget nor was the delights of a trip to Zurich Hooters or playing Bingo in German near the Church Clock of St Peter etc etc. Memories.

[Mike4]

As someone who never did pay higher rate income tax I take it that you'll all find it reasonable of me to define "the rich" as anyone who does pay it?

I pay it and I'm a plumber.

It doesn't seem right that a humble tradesman should be paying higher rate income tax.

[Adamski]

As someone who never did pay higher rate income tax I take it that you'll all find it reasonable of me to define "the rich" as anyone who does pay it?

I pay it and I'm a plumber. It doesn't seem right that a humble tradesman should be paying higher rate income tax.

But if they raise the threshold, they've got to increase it elsewhere, but how and to whom?

Marginal top rate of tax 47%, 45% plus 2% NI. For those over £100k the marginal rate for some is 60% because start losing personal allowance.

I'd be amazed if tax rates start falling, look at the flak Liz Truss got.

[Gerry557]

That article is quite shocking really but supports what I being told in discussions. In fact it might be worse if you have more than one degree. The person I was speaking to has x2 student loans paying off I think one was a masters.

I was comparing them with another family at the lower pay bands, £23k-£25k area. The highly paid person didnt have the lifestyle comparison that you would expect. I acknowledge that things will change with time.

So working from a younger age, no student loans and getting on the housing market earlier can pay off up to a point. The higher earner, paying off student loans but in rented accommodation struggling to build up a deposit.

I still expect the latter to end up retiring earlier with a better property but £100k+ earnings doesn't seem to be all that, especially in the earlier years.

How do you fix it? I cant see tax cuts for the rich being a vote winner even if it might be better for all.

[Gerry557]

As someone who never did pay higher rate income tax I take it that you'll all find it reasonable of me to define "the rich" as anyone who does pay it?

I pay it and I'm a plumber.

It doesn't seem right that a humble tradesman should be paying higher rate income tax.

I just checked with the tax man, apparently most of yours is a callout tax.

[DrFfybes]

This might be informative : https://www.telegraph.co.uk/money/tax/t ... y-britain/
29% net take home pay once earning over £100,000

Without signing in I can't see the detail, but it is blatantly obvious there are misrepresentations, assumptions and generalisations in the headline graphic. In fact I'd go so far as to say it is blatant lies.

For a start, income tax is not 60% on "Every pound earnt [sic] over £100k". There is a window between £100k and £125k where the marginal rate is higher due to tapering of the personal allowance, but that is not what the graphic implies.

Similarly a student loan at 9%. Firstly it assumes you had one, secondly it assumes you're still paying it off. Average student loan is apparently £24k, which means Mr Dury should have paid it off a while ago as his income grew to the £100k mark.

So, once he reaches £125k, he'll miraculously be taking home 24p more, nearly double that as suggested by the article.

Then of that 29p, 20% goes in VAT

Except on domestic Fuel where it might be lower, duty on vehicle fuel and alcohol and cigarettes, and most importantly Bourbon biccies, which are VAT free

Paul

[Lootman]

That makes you a socialist in the Darling sense since he first used the phrase "my bias is towards the broadest shoulders baring the largest burdens".

Another problem with this sentiment so beloved of swivel-eyed lefties is it is so open-ended.

No matter how much tax a government loads onto "Those with the broadest shoulders", no leftie is EVER going to say "That's enough now" . More will always be called for as there will always be someone with "the broadest shoulders" and therefore deserves to be taxed more heavily.

Yes. even a single flat rate tax is a case of the richer paying more, since the rich have, earn and spend more. But for some people the tax take is never enough. Often they do not even know what the money should be used for. They just want to take it because you have it. Such people effectively hate success and prosperity. Envy.

I think that it is equally important that taxes are broad-based, so that everyone pays something, enabling tax rates to be as low as possible.

[stevensfo]

This might be informative : https://www.telegraph.co.uk/money/tax/t ... y-britain/
29% net take home pay once earning over £100,000

Without signing in I can't see the detail, but it is blatantly obvious there are misrepresentations, assumptions and generalisations in the headline graphic. In fact I'd go so far as to say it is blatant lies.

For a start, income tax is not 60% on "Every pound earnt [sic] over £100k". There is a window between £100k and £125k where the marginal rate is higher due to tapering of the personal allowance, but that is not what the graphic implies.

Similarly a student loan at 9%. Firstly it assumes you had one, secondly it assumes you're still paying it off. Average student loan is apparently £24k, which means Mr Dury should have paid it off a while ago as his income grew to the £100k mark.

So, once he reaches £125k, he'll miraculously be taking home 24p more, nearly double that as suggested by the article.

Then of that 29p, 20% goes in VAT

Except on domestic Fuel where it might be lower, duty on vehicle fuel and alcohol and cigarettes, and most importantly Bourbon biccies, which are VAT free

Paul

Except on domestic Fuel where it might be lower, duty on vehicle fuel and alcohol and cigarettes

But isn't duty tax levied on these BEFORE VAT? So you are taxed on an amount on which you have already paid tax?

Actually, more than twice. You're paying out of your income that has been taxed.

Steve

PS I hate the word 'duty'. It is a tax, pure and simple.

[MuddyBoots]

Actually, more than twice. You're paying out of your income that has been taxed.

Steve

PS I hate the word 'duty'. It is a tax, pure and simple.

And then the companies who you buy from have to pay corporation tax (or income tax / NI if unincorporated traders) which comes out of the price you pay even though it's not marked as 'tax' on the invoice.

[Sorcery]

This might be informative : https://www.telegraph.co.uk/money/tax/t ... y-britain/
29% net take home pay once earning over £100,000

Without signing in I can't see the detail, but it is blatantly obvious there are misrepresentations, assumptions and generalisations in the headline graphic. In fact I'd go so far as to say it is blatant lies.

For a start, income tax is not 60% on "Every pound earnt [sic] over £100k". There is a window between £100k and £125k where the marginal rate is higher due to tapering of the personal allowance, but that is not what the graphic implies.

Similarly a student loan at 9%. Firstly it assumes you had one, secondly it assumes you're still paying it off. Average student loan is apparently £24k, which means Mr Dury should have paid it off a while ago as his income grew to the £100k mark.

So, once he reaches £125k, he'll miraculously be taking home 24p more, nearly double that as suggested by the article.

Then of that 29p, 20% goes in VAT

Except on domestic Fuel where it might be lower, duty on vehicle fuel and alcohol and cigarettes, and most importantly Bourbon biccies, which are VAT free

Paul

I would say the article is true in the right set of circumstances. There is a tax band of hell for people going over £100k which is worse if you are still paying a student loan, require childcare, lose your allowances and which doesn't go away until you get to approx £150k. I am not sure of why would anybody invent such a crap system. An idiot? A manic socialist? An anarchist intent on destroying money?

Really, I would love to know, who the heck invented this?

[scrumpyjack]

I would say the article is true in the right set of circumstances. There is a tax band of hell for people going over £100k which is worse if you are still paying a student loan, require childcare, lose your allowances and which doesn't go away until you get to approx £150k. I am not sure of why would anybody invent such a crap system. An idiot? A manic socialist? An anarchist intent on destroying money?

Really, I would love to know, who the heck invented this?

Of course it grew like topsy, bit by bit, starting with Alastair Darling in 2009, after the global financial crisis, introducing the clawback of the personal allowance and the effective 60% tax rate. No chancellor subsequently had the guts to sort the mess out and inflation in the last 15 years means it now affects many more taxpayers

[DrFfybes]

I would say the article is true in the right set of circumstances. There is a tax band of hell for people going over £100k which is worse if you are still paying a student loan, require childcare, lose your allowances and which doesn't go away until you get to approx £150k. I am not sure of why would anybody invent such a crap system. An idiot? A manic socialist? An anarchist intent on destroying money?

Really, I would love to know, who the heck invented this?

Works at the other end too - tapering of the starting savings allowance means a pensioner with a few savings and total income under £20k can end up paying a marginal rate of 40%.

It is a mad system.

[scrumpyjack]

Fairness and trying to take into account individuals personal circumstances are concepts that in reality are subjective and impossible for taxation. The two overriding principles are, for the lefties no level of progressive taxation is ever high enough, and more generally taxes are designed to pluck the
maximum from the taxpayer goose with the minimum of hissing.

Occasionally a Conservative government is brave enough to reset things to more sensible levels and the economy then thrives for a while. That got us out of the last ‘dark age’ where the Arthur Scargills were ruining the country, but I can’t see it happening again any time soon. We need a much larger economic calamity to trigger change. I fear we are just slowly descending into the swamp!

[Spet0789]

I would say the article is true in the right set of circumstances. There is a tax band of hell for people going over £100k which is worse if you are still paying a student loan, require childcare, lose your allowances and which doesn't go away until you get to approx £150k. I am not sure of why would anybody invent such a crap system. An idiot? A manic socialist? An anarchist intent on destroying money?

Really, I would love to know, who the heck invented this?

Of course it grew like topsy, bit by bit, starting with Alastair Darling in 2009, after the global financial crisis, introducing the clawback of the personal allowance and the effective 60% tax rate. No chancellor subsequently had the guts to sort the mess out and inflation in the last 15 years means it now affects many more taxpayers

The problem is that a relatively small cohort gets absolutely screwed. Let’s call them low high-earners. I appreciate that £100k is a lot of money for lots of people but it’s an income level that is an aspirational band that most people can aim for… senior teachers, senior nurses, doctors, successful tradespeople, small business owners, lawyers, accountants, middle managers and so on.

The effect of these insane marginal tax rates is to ‘trap’ this cohort in an income band where they don’t want to work harder or take a more senior role as the extra work / responsibility just isn’t worth it unless you are highly confident you can push through to £200k plus which obviously isn’t the case for most.

This creates a chilling effect on ambition all the way down the income scale and contributes to the sense that “the rich” have a better deal. Hopefully Rachel Reeves will sort out these silly marginal rates.

[DrFfybes]

The effect of these insane marginal tax rates is to ‘trap’ this cohort in an income band where they don’t want to work harder or take a more senior role as the extra work / responsibility just isn’t worth it unless you are highly confident you can push through to £200k plus which obviously isn’t the case for most.

Possibly...

If I was on £49k, the incentive to earn more only to see an extra 10% of it go in tax (Nett, as NI reduces for employees, although most people don't think about that, they just see the doubling of income tax) is not great, similarly if I was on £99k.
However if I was on £115k the incentive to push through to get to £125k (not sure where your £200k comes from?) where I see more of my money back is stronger.

£100k puts you in the top 4%, and £125k in the top 3%, so the incentive for Chancellors to sort the mess out is pretty slim in terms of voters.