What should the highest marginal tax rate be for any personal income

[TeePee]

I and the rest of the population absolutely have a right to demand a share goes back to society.
The only reason that person can get paid so much money is that society exists. Society exists because of the work of thousands of previous generations that are long since gone working to better society. We all have a right to take advantage of the opportunities that society provides us, however to suggest that no one should have to give anything back both through the work they do and through paying income tax is extreme.

Even a "self made" super rich person is not at all self made. They could only get that way because we have infrastructure and systems and so on.

In fact that view is so extreme and blinkered I wouldn't be surprised to find out you like to bomb communist conventions in your spare time!

Why are you so focused on taking from the successful, to the point of ignoring my call for a minimum guaranteed income, a concept as left wing as the come? Why is taking from the successful more important to you than supporting the unsuccessful?

[TooNice]

Stop a large number of the people that would be hit by this 100% tax from taking their brains and their ability to pay tax to another country that values their brains and ability to pay tax.

Flipping this idea around, couldn't a lower tax (above 0), make the UK more attractive to foreign high earners?

[peterb]

Flipping this idea around, couldn't a lower tax (above 0), make the UK more attractive to foreign high earners?

Yes, it would, just as lowering corporation tax would make Britain more attractive to companies who might relocate here, generating jobs.

Amazon are located in Luxemburg (for example) because the Finance Minister st the time set up a tax regime that effectively made Luxemburg a Tax Haven. The Finance Minister at the time was a Jean Claude Junkers.

Similarly, Companies like Apple UK have distribution centres and corporate headquarters in Ireland because of incentives and favourable tax regimes.

[Corky34]

While it may not be 'punishment' it is certainly a disincentive.

I'd say that's more down to the asinine way our tax system works, I may not be working on current knowledge but i remember being told if you earned a £1 more and that pushed you into a higher tax band that higher rate would apply retrospectively, that's just dumb IMO, and don't even get me started on the amount of "stealth" taxes like VAT, NI, Council TAX, etc, etc.

[peterb]

I'd say that's more down to the asinine way our tax system works, I may not be working on current knowledge but i remember being told if you earned a £1 more and that pushed you into a higher tax band that higher rate would apply retrospectively, that's just dumb IMO, and don't even get me started on the amount of "stealth" taxes like VAT, NI, Council TAX, etc, etc.

While I agree that the tax system is convoluted, income tax is based on a tax year, so if you are pushed into the higher tax bracket for any one tax year, it applies to that income for that year. So if a pound pushes you into the bracket, you pay the higher tax rate on that pound (unless you are very high earner)

VAT is a purchase tax, and retailers embed that in the price you see. Business to business sellers tend not to.

This is different from (for the example) where prices are generally displayed without sales tax,nwhich is added at the till. This is because purchase (sales) tax rates vary from State to State.

Council tax is the replacement for rates and is transparent - you are notified every year and is payment for council provided services, so not really a stealth tax as such.

Stealth taxation (IMHO) is the failure to raise tax thresholds in line with pay increases, so more people get pulled into higher taxation brackets, even though their pay may not have risen other than in line with inflation - so called fiscal drag.

[directhex]

I'd say that's more down to the asinine way our tax system works, I may not be working on current knowledge but i remember being told if you earned a £1 more and that pushed you into a higher tax band that higher rate would apply retrospectively

That's not how income tax works.

If you earn £32,001 then you pay 40% tax on £1, 20% tax on £21,000, and no tax on £11,000. Any issues caused by a change of income in the year causing an over/under payment via PAYE will come out at the end of the tax year.

[Corky34]

That's not how income tax works.

Well i was told it some 25 years ago.

@peterb Yes i understand most of the obvious taxes, like you say though our tax system is very convoluted, if i ruled the UK I'd scrape all taxes other than income tax, feel free to tear that idea apart as i haven't put much thought into it.

[peterb]

Wel.. NI isn't just an employee tax, it's a tax on the employer as well, so you'd have to absorb that somewhere. High rates of income tax would be a disincentive to work etc etc.

Bottom line is that Government costs, and the only way it can raise money is by taxation (and borrowing, which is just deferred taxation)

Governments don't create wealth (although than can create the conditions that wealth can be created) and it's a juggling act as to how the Exchequor raises the money for Government to function.

I say Government doesn't create wealth - but of course if every business was nationalised, then in theory all profits would go to Government, but that would rule out any external investment. Nationalised industries such as telephones, railways, and so on suffered from chronic under-investment as the Governments of the day sought 'more worthy' causes to spend money on, to enhance their election prospects. So IMNSHO that doesn't work well.

[badass]

Flipping this idea around, couldn't a lower tax (above 0), make the UK more attractive to foreign high earners?

That works pretty well for some Swiss cantons. However dropping taxes too far will not be enough to offset the reduction in tax take from those who aren't just in the country for tax reasons. There is a balance to be struck to ensure that taxes are progressive, avoid punishing people for putting the effort in to earn more money and avoid brain drain. I think that balance is around 40-50% highest marginal rate.

[badass]

Why are you so focused on taking from the successful, to the point of ignoring my call for a minimum guaranteed income, a concept as left wing as the come? Why is taking from the successful more important to you than supporting the unsuccessful?

You make the mistake of assuming that because I believe in progressive taxation, I am some kind of leftie. Of course I'm politically to the left of you. So is 99% or more of the population.

However I actually do support a minimum guaranteed income then taxing every single pound earned (minus costs of employment) at 40% which ensures that those that get the most out of society put the most back in whilst still receiving a fail percentage of their income.

[badass]

I say Government doesn't create wealth - but of course if every business was nationalised, then in theory all profits would go to Government, but that would rule out any external investment. Nationalised industries such as telephones, railways, and so on suffered from chronic under-investment as the Governments of the day sought 'more worthy' causes to spend money on, to enhance their election prospects. So IMNSHO that doesn't work well.

For a perfect example of that, look at the NHS. Being staffed at the front line by talented and hard working staff does not a good organisation make. Anyone that replies with "I've had good experiences with the NHS" might want to ask the staff that provide those services how they feel and perhaps look at the bigger picture. What the rest of the country's experience is. Particularly for care that at the point in time is non urgent.

[Corky34]

Wel.. NI isn't just an employee tax, it's a tax on the employer as well, so you'd have to absorb that somewhere.

Employers earn income, everyone gets an income so it would just be a matter of taxing that income at differing levels.

High rates of income tax would be a disincentive to work etc etc.

True but evidence tends to show the effect is very small until you get into really high rates.

[badass]

True but evidence tends to show the effect is very small until you get into really high rates.

That's not evidence - it's conjecture. E.g. the Scandinavian example used conveniently omits their excellent education which probably has a strong positive effect on the Labour supply.
The rest is just supposition and thus no more valid than any opinion posted on this very thread.

However this isn't about overall income tax rates, rather marginal rates, and marginal rates get incredibly high in the UK if you're in certain thresholds.

I will use an example where in these two individual case (and something completely ignored by the author) the person is self employed. He simply has many more holidays as his income approached £100k and ensured that it never went over £100k. The work they did (network engineer and IT infrastructure engineer) is both very beneficial to the tax man and to society as it is improving infrastructure, thus improving productivity. Two stories story do not make a useful statistic, however I know of no one - myself included who when self employed would not simply cut back the amount of work they do to avoid being penalised by the 62% Marginal rate for people between £100k and £122k
If that rate did not exist, at least in these cases, the government would actually receive more tax (42% of any amount is more than 62% of nothing) and society would benefit in these cases from the socially useful work they do.

[Corky34]

That's not evidence - it's conjecture.

What you couldn't be bothered to look at what that article referenced, that's hardly my fault is it, either way it's not really a reason to get your knickers in a twist is it.

Besides i only provided a link to that article in reply to what peterb said about high rates of income tax disincentivising work.

[TooNice]

However dropping taxes too far will not be enough to offset the reduction in tax take from those who aren't just in the country for tax reasons.

Yeah, I figured that would be the case too. Though I wonder the sweet spot wouldn't be a bit further below 40-50%. Personally I was thinking in the 20-35% range - to be sold a 40-50% range, there is many things that I'd want to see improved..

[Lucio]

I'd back a flat, rather than graduated, income tax methods but only if it were coupled with a significant reduction or elimination of VAT and a greater taxation on the trappings on significant wealth such as land and high value property taxes.

If we want society to be fairer, we need to make it harder to be significantly wealthy, and easier to be moderately wealthy.