45p Tax on high earners

andrewb · 24-03-2009, 09:21

What do people think about this? It's going up from 40% to 45% on high earners, and both main parties have pretty much signalled they'll go along with it.

My concern is that it's a completely political move by both sides. Labour have done it to make the Conservatives look like the party of the rich, and the Conservatives have done it to make themselves not look like the party of the rich.

It's nothing to do with actually raising more revenue to pay off debt, as it won't raise any additional. Increasing tax on the wealth creators means they're less likely to come and reside in this country, it means people have less aspiration to achieve top jobs, furthermore most economists believe it will bring in peanuts if anything, in fact a lot believe it will have the opposite effect and bring in LESS money for the government.

In the 1987 recession when income tax was taken from 45% to 40% the government actually saw more money coming in.

It's popular with the public according to a poll, but again this just adds to my cynicism, they're doing it because they'll get votes, not because its actually going to help. They take the easy option rather than explaining to the public that it really won't make a difference.

planetsusie · 24-03-2009, 09:45

What is the criteria for high earners now? Has that line shifted?

jaysay · 24-03-2009, 09:46

Quote:

Originally Posted by planetsusie

What is the criteria for high earners now? Has that line shifted?

Anybody who earns more than Gordon Brown

andrewb · 24-03-2009, 09:47

Quote:

Originally Posted by planetsusie

What is the criteria for high earners now? Has that line shifted?

I believe it's above £150,000

planetsusie · 24-03-2009, 09:48

Okey dokey
Thanks...
hahaha jaysay... hahaha

BERNADETTE · 24-03-2009, 10:29

I don't understand how by raising the tax there won't be any extra. Can you please explain why?

churchman phil · 24-03-2009, 10:51

Because it will of course go to pay MP's expenses Bernadette

jaysay · 24-03-2009, 10:57

Quote:

Originally Posted by churchman phil

Because it will of course go to pay MP's expenses Bernadette

Oh come on Churchman they have to live

cashman · 24-03-2009, 11:29

Quote:

Originally Posted by andrewb

What do people think about this? It's going up from 40% to 45% on high earners, and both main parties have pretty much signalled they'll go along with it.

My concern is that it's a completely political move by both sides. Labour have done it to make the Conservatives look like the party of the rich, and the Conservatives have done it to make themselves not look like the party of the rich.

It's nothing to do with actually raising more revenue to pay off debt, as it won't raise any additional. Increasing tax on the wealth creators means they're less likely to come and reside in this country, it means people have less aspiration to achieve top jobs, furthermore most economists believe it will bring in peanuts if anything, in fact a lot believe it will have the opposite effect and bring in LESS money for the government.

In the 1987 recession when income tax was taken from 45% to 40% the government actually saw more money coming in.

It's popular with the public according to a poll, but again this just adds to my cynicism, they're doing it because they'll get votes, not because its actually going to help. They take the easy option rather than explaining to the public that it really won't make a difference.

cannot put a strong argument against that, though i would point out that it would reduce the immigrant intake.

entwisi · 24-03-2009, 11:46

40% tax band starts a lot lower than 150K IIRC its ~38-40K

so unless they split it so that you have a band of 40 from 38 - 150 and 45 above that you are effectively increasing the tax on being successful in your career. what a brilliant way of encouraging people.

ETA: http://www.hmrc.gov.uk/rates/it.htm

West Ender · 24-03-2009, 17:46

Forget the 45% on "high earners" (is £40K so very high these days?). The whole system is unfair as it is.

Raise the personal allowance to at least £10,000 so that very low earners don't pay any tax; leave the 40% tax for those with taxable income over £40,000 but introduce a 50% band at above £100,000.

katex · 24-03-2009, 18:10

Am a bit thick on economics West Ender, understand tax within my earnings bands throughout the years, but do these high earners, who can afford good accountants, still find a way of 'hiding' their earnings to avoid paying tax ?

lindsay ormerod · 24-03-2009, 18:38

I wouldn't have thought £40k was a high earner, (would be very nice though !) especially when you look at the amount top footballers earn, some of them will be on £40k a week!

derekgas · 24-03-2009, 18:45

Some footballers are on 3 or 4 times that amount Linds!

West Ender · 24-03-2009, 18:49

Quote:

Originally Posted by katex

Am a bit thick on economics West Ender, understand tax within my earnings bands throughout the years, but do these high earners, who can afford good accountants, still find a way of 'hiding' their earnings to avoid paying tax ?

Good accountants will always find loopholes and dodges to benefit their clients. There's only so far they can go, though, and good accountants don't usually go in for anything that isn't legitimate.