The Laffer curve, that is.
Chancellor George Osborne has asked the Inland Revenue to check whether the 50p top rate of income tax is actually making money for the government.
Some economists have claimed that tax avoidance and evasion mean the rate is raising less income than expected.
Er… Yes. Who in their right mind is going to willingly hand over 50% of their marginal earnings to the state? Why should they? When my business was doing well, I stopped earning when I hit the 40% band for exactly the same reason. I object to every penny that goes to these charlatans to piss up the wall. I see no reason to give them any more than is absolutely necessary.
Those who hit the 50% bracket will have the wherewithal to avoid paying it and I congratulate them on doing so.
So, finally, a chancellor has recognised that, actually, we don’t want to hand over even more of our hard earned to them to play with – and, frankly, 50% is obscene.
It’s worse than you think.
Ther is now a “gap”, where between, approximately £110k and £160k a year, there’s no point in getting a pay-rise, because the higher tax AND the removal of legitimate allowances, means you are worse off …
Oops, is I think the expesssion?
So when will we see the 100 tax code to make it worthwhile for people who do want to work,work.
I rather like this idea ,yes,yes, a lot of people will still try to go on the benefits route but I suspect a lot will start taking the lower paid jobs.
That’s encouraging, but I’d urge caution until we find out what he plans to do about it!
Right from the very beginning people said that this wouldn’t be a net revenue raiser.
And it’s far beyond 50%, assuming you factor in Employer’s NIC and Employee’s NIC (total 15.8%) and the effect of withdrawing the personal allowance (see Greg Tingey above). This gets the effective overall rate closer to 60%.
Stupid, but at least it only affects a few thousand people.
But, to be fair, that’s still not quite as bad as the overall average marginal tax rate of about 80% on wages up to median wage level, once you take tax, NIC and benefit withdrawal into account.
Really stupid, and this affects about a third of the population. If we reduced benefit withdrawal rates, then applying the Laffer Curve logic, the overall cost of benefits would go down. What’s not to like?
I think one needs to think in terms of total tax take, i.e. all money taken by the state for which one does not receive a direct service, which includes VAT, Council Tax, etc. The worst thing about VAT and Council Tax is that you pay them out of money that the government has already taken a cut.
I think that it is fundamentally wrong for a person to work more for the state than for themselves and so, while I’d prefer much lower taxes, I think that a total tax take of 50% or more should simply not be allowed. I’ve also always thought that there should be a point where it is considered that any individual has done their bit. Just because someone earns 100 million, does that meake it fair that they pay more than 50 million into state coffers? I personally don’t think so. If income taxes were capped at, say, 10 million, see how many of the mega rich people would settle in the UK, spending their hard or not so hard earned millions and happily write a cheque for 10 million each year to the receiver.