How the top tax rate became a middle-class problem
https://www.thetimes.com/business-money/money/article/how-the-top-tax-rate-became-a-middle-class-problem-jsjv09sn0
Posted by insomnimax_99
How the top tax rate became a middle-class problem
https://www.thetimes.com/business-money/money/article/how-the-top-tax-rate-became-a-middle-class-problem-jsjv09sn0
Posted by insomnimax_99
20 Comments
Additional rate isn’t an issue, higher rate and the 60% trap are.
Taxing wealth over income would lead to a far more equal and meritocratic society.
If taxes aren’t redistributive then wealth will pool at the top and the bottom get poorer and poorer.
Slash income taxes and replace it with a land value tax. Declare what your property is worth annually, and pay a small % each year.
“But what if people understate what their property value is?”
Enshrine into law that property values are public and easily searchable online. If somebody offers your stated value or above you must sell, or update your value to reflect this fair market price, thus paying more LVT.
It makes sure that the most desired land is kept at competitive prices, and would have minimal impact on households except for an annual online form to fill in.
Easy nil-rate band for any property below £X or primary residence, whatever you need to do to make the poorest exempt.
Some but not a lot of my income falls into the 40 bracket, I promise you I am not in the kind of wealth bracket that should be taxed like that, I don’t have any spare thousands that I won’t miss for tax, I struggle when doing food shopping each week
I know dozens of people who are sacrificing production for a sweeter tax position.
Yeah earning just over the 40% bracket won’t be a luxurious life style but it’s more than enough to get by on. Everyone knows once you get solidly into the 40% bracket you’re not going to feel much of a benefit until you’re in low/ mid £100k.
HMRC hasn’t realised yet that holding back the tax bracket and the 60% trap are just causing people to work less and wages to stagnate. They’re not getting more tax, it’s just the economy suffering.
The problem is, HMRC/ the government needs to hold their hands up and say they’re over spending and need to cut lots of services/ projects or (the route they’re actually taking) don’t admit they’re inefficient and try and squeeze more tax out of people.
Just tax land. Easiest solution that solves so many issues.
The implication is that the additional rate threshold should be increased, but there’s no alternative suggested. National debt is 96% of GDP already.
how long have the thresholds been frozen now? and at least until 2028? combine that with inflation since they were last adjusted and you can calculate just how many more are paying higher tax even though earning (relatively) no more than before
Before I read it; is it because the tax brackets haven’t kept up with inflation and now not-very-rich people are paying it? It is, isn’t it?
Am I stupid for thinking there should be a 55% bracket Iver 250k and a 60% over 2 million?
Why wasn’t the income threshold for the 47p rate indexed to inflation when it was first introduced?
I am deliberately not taking on more hours because I am in the 45pc bracket. It’s not so much that it isn’t worth it, it’s just that at that point the tax take makes it more worthwhile for me to invest my time back into my own personal projects that may have potential in the future. I’d rather drop the work that’s only paying 45p in the pound and instead pick up the work that pays nothing *today* but may well pay more in the long term.
Brackets shouldn’t exist. It should be linear or logarithmic (or some other function) all the way to 99%. It should be applied to salaries, capital gains, and any other form of income equally.
But no way we get this because Reform, Conservatives, and Labour are all controlled by the rich.
It’s an awful country for tax. And pretty much everything else…
People are just outright getting taken for a ride. Look abroad and you see just how much better everything is.
[Come to Scotland](https://taxpolicy.org.uk/2024/03/10/infographic_marginal_rates_2024/) Where there’s a 50% tax & NI trap at 43K!
With the median (half either side) income [sitting at about 38.6K in 2024 (739.70 * 52.14) ](https://www.gov.scot/publications/annual-survey-of-hours-and-earnings-2024/pages/employee-earnings/) it’s not going to be long before most hit the 42% threshold of 43k (4% growth over three years)
It’s even worse in Scotland where the SNP implements a regressive taxation system that taxes you at a marginal rate of 50% from £43k. Absolute insanity.
The best option is to use a MAID programme on the disabled and those that are unemployed for 6months save a lot of money for tax cuts
I’ve never really understood why NI exists and we don’t just wrap it all up into one tax. I feel like the original reasons for it being separated are not necessarily there anymore.
why is it a “middle-class” problem if it only affects 3% of the population?
I’m fortunate enough to have paid £53k in tax as a PAYE employee last year. I don’t particularly have an issue with the amount of tax paid, but I do have an issue with how it’s spent. I have an even greater issue with the fact that I pay the same as 14 average wage workers yet don’t get any free childcare allowance. Why do we penalise those that contribute the most? I’ll never understand it
Me and my wife both earn £59k, by design. (£50k for me, plus £9k salary from my wife’s business, she pays herself £59k from her business). If one of us hits £60k, we lose child tax credits at £200 a month, meaning a pay rise currently for either one of us isn’t worth it.
I’ve been approached by my employer multiple times regarding exploring promotions. This would take me to £55k, then £60k after 3 years. Currently not worth it for us, by the time we’ve lost child tax credits and had 40% of that pay rise taxed off of us, I might be up £100 a month take home pay. £100 a month for extra responsibility, people management, potential loss of flexibility/compresses hours/wfh etc. Further promotions after this into the next pay bracket at £70k+ are incredibly hard, might take me 10/15 years. Not worth it.
One of us would need to hit £70k plus for it to be worth it for us, which isn’t currently viable for her business, and simply won’t happen for me. 2 young kids mean she’s happy where she is, any more work for her would impact time spent with our children which we value more than an extra £200/£300 a month.
We have a fair amount of friends and family that aren’t applying themselves to their career due to tax and childcare implications. No doubt this will be the same across the country for a lot of families.
Well done HMRC. Way to kill growth.