£100k + earners in for a shafting next year?

[GSte]

You just think the country should be run in a way that means you can dither around in a menial job without any responsibility and get the same benefits as everyone else.

I didn't read that in anything j1979 said!?! Just that people who are working full-time should be able to afford to keep a roof over their head, food in their mouths and have access to free healthcare, etc, and if that means that people who earn far, far more than any human needs pay a little more tax then so be it.

You make a vast oversight when you talk of people "dithering around in menial jobs".... not everyone has the aptitude/psychological makeup/personality traits required to do anything other than a menial job. In my opinon that doesn't mean they should be destined to a bleak existence though, surely we are at a level of civilisation where "law of the jungle" attitudes are a thing of the past?

[TooNice]

@j1979: Odds are, those who earn more will end up paying more council tax (though depending on the purpose of council tax, one could say that it doesn't scale properly).

But let's take your numbers for simplicity. How is paying more, while in likelihood using less of the benefits 'fair'? If you think that it is ethically appropriate for the more wealthy to help out the less privileged, sure, I can go along with that. However, as long as they have earned their money legitimately, I don't see how it can be objectively argued as 'fair'. Now I am fine with the concept of wellfare, national health service and so on. But while I can agree that their lives are going to be badly affected (certainly compared to the extent of those with far more limited means), they are still getting shafted for the greater good. Some people get shafted by life (born unprivileged in all sense possible), and others may be privileged to have a pretty good life. But that hardly mean they can't get shafted by taxes. Now I know which side I'd rather be, but unfair is unfair, it doesn't matter we are not talking about what's more unfair, only what is/whether it is unfair full stop.

Oh, and Bill Gates has already donated hundreds of millions to charity, and pledged to give back most of his billions to society when he moves on. Whether he has indulged himself any more than Sir Tim Berners-Lee is probably anyone's guess, but I can't see how it can't be argued that he shouldn't have earned far, far more than the average shelf stacker.

[Saracen]

^ That's hardly a real choice though. I don't think anyone would appreciate if I take half their wage (assuming it's significant enough) and tell them that they can freely eat in my shop (Heinz beans and toast - a feast for those who would go hungry otherwise!).. or eat wherever they feel like it and forfeit that half of their wage.

Unless you have very unusual tax circumstances, nobody forfeits half their wage in income tax.

Even if you earn £500,000 a year, at standard PAs and at current rates (2009/10 tax year) the effective overall rate is still under 40%, and that is including National Insurance. At £100,000, the effective income tax rate is 29.93%.

I've tracked these percentages over the years, and way up into stratospheric levels that even the biggest banker bonuses don't come anywhere close to receiving, Income Tax as a percentage of gross stays under 40%. I stopped at a £100,000,000 a year income, and of course, long before you get anywhere near that, you've got expensive tax lawyers making sure you pay far less than flat rates at standard PAs.

So I'll stress that point again ..... nobody, but nobody, pays half their wage in income tax, and not even in income tax and NI combined.

The people that do pay half their wage in overall tax, though, are the low earners. As I mentioned earlier, and as (I think) j1979 referred to, things like Council Tax bite hard on low earners, and when you combine that with VAT, the overall percentage of gross shoots up for low earners, because they're paying a high percentage of their income in Council tax, and because fundamentals, like petrol, that are very heavily taxed, are a far greater proportion of disposable post-NI and IT income ..... or a greater proportion of total income, for that matter.

And high earners already get a fairly substantial tax break in the form of the way NI works. Between the primary threshold (about £5k) and the upper earnings limit (abut £44k), employees pay 11%. Above that, the primary Class 1 rate is a flat 1% on the earnings above that point.

As a result, NI as a percentage of gross earnings peaks at around the £40k point (and is 9.43% of gross at £40k), but by the time you get to £100k in gross earnings, the NI amounts to just 4.76%, which is roughly the same as someone earning £10,000 pays (4.71%) and a lower proportion than someone earning £15,000 pays (6.81%).

High earners do not have a rational case for moaning about marginal rates going up above £150k, and even less so about PAs being clawed back. They already have a very good deal.

[TooNice]

^ I am not saying they are (or didn't mean to imply), the entire example is just for illustrate that people won't be too happy if they do perceive the service they receive as being significantly poorer than the share of the money they put into. Taking that example again, if I was actually offering them 3* Michelin food and all star service, perhaps some of the people who love food may feel slightly less bad over it.

[...]Put it this way .... everyone pays for state provision of services like roads, healthcare, education and so on, and everyone can call on them.[...]

However, everyone pay different sums to receive the same service with no option to opt out. I won't argue that most people would still rather be in the position where they have to worry about paying more extra tax, than just struggling and not have other options. The wealthy will still be wealthy after the extra tax, but just because there are people worse off, it shouldn't surprise people that some of the people affected will complain. This happens all the time whenever a perceived injustice occurs. Saying that there are worse injustice is never going to be a consolation.

This topic reminds me of that episode of Wife Swap I saw recently (one with the freeganism). The wife from the wealthy family at one point cracked and shed some tears when she talked about how they pay a lot of tax, yet had to pay £4k for braces for one of the kids, while the freegan family freely admitted they paid no tax whatsoever (they live in mobile trailer, no job, basically not a penny to the system), yet managed to get the same treatment free (on the taxpayers). The thought "You just spent £10k for a drum set on your son's b-day, and you are crying over £4k braces?" did cross my mind. Yet at the same time, I can see why it's not fair, why one could be upset over it. At least for the principle.

[j1979]

@j1979: Odds are, those who earn more will end up paying more council tax (though depending on the purpose of council tax, one could say that it doesn't scale properly).

But let's take your numbers for simplicity. How is paying more, while in likelihood using less of the benefits 'fair'? If you think that it is ethically appropriate for the more wealthy to help out the less privileged, sure, I can go along with that. However, as long as they have earned their money legitimately, I don't see how it can be objectively argued as 'fair'. Now I am fine with the concept of wellfare, national health service and so on. But while I can agree that their lives are going to be badly affected (certainly compared to the extent of those with far more limited means), they are still getting shafted for the greater good. Some people get shafted by life (born unprivileged in all sense possible), and others may be privileged to have a pretty good life. But that hardly mean they can't get shafted by taxes. Now I know which side I'd rather be, but unfair is unfair, it doesn't matter we are not talking about what's more unfair, only what is/whether it is unfair full stop.

Oh, and Bill Gates has already donated hundreds of millions to charity, and pledged to give back most of his billions to society when he moves on. Whether he has indulged himself any more than Sir Tim Berners-Lee is probably anyone's guess, but I can't see how it can't be argued that he earns far, far more than the average shelf stacker.

again i see your point. i fail to agree.

going back to previous discussion in this thread, the argument that the neurosurgeon is super well paid for a reason is to an extent is fair enough. They do add something to society (although i still think the gap is too high). But then there is on the other hand. people in the "city" who earn high wages and bonuses. Im sure these people help to make London a cash cow, but they offer little to better society, after all the don't produce anything. They gain from fluctuations in markets and are in essence gamblers. what good do they do?

[Zak33]

It's amusing to watch all the jealousy towards high earners. "They are so greedy, it's obscene", etc. So if were offered two jobs, one at £25k, one at £250k, all the 'obscene' camp would be taking the 25k and feeling all good about themselves, I assume?

Post of Win...

[Saracen]

In terms of whether people's pay reflects their value to society, I'm not convinced it necessarily does, and absolutely convinced it's far from a consistent principle. It does, however, pretty much reflect supply and demand.

Is a neurosurgeon more worthy than a cancer surgeon? Not if you have cancer he isn't. How many people suffer from cancer and need surgery compared to needing a neurosurgeon? I don't know, but I'd guess that it's MUCH higher.

It's harder comparing the "worth" of a good nurse to that of a good surgeon. We need both, and the latter in far greater numbers. And I know some surgeons that would be lousy nurses. In fact, I'd guess most would.

Similarly, we need binmen, train drivers and people to stack shelves in Tesco .... unless all those highly paid neurosurgeons want to stack shelves in their spare time. And personally, I certainly don't want to live this life with binmen. We got a taste of what that's like in the 70s (and some places more recently) and I didn't enjoy it a whole bunch.

Really, what people get paid merely reflects supply and demand. A surgeon requires a given personality type, considerable education and a highly trained and practised skill set. It takes time to acquire, which implies dedication and determination, and like with a fighter pilot, is an expensive process. Hence, supply is limited and price goes up. Similarly, a fairly small number of people can be football superstars or world class singers. Those that can get rewarded, not according to social "worth" but to supply and demand ..... and of course, to the amount of money floating around in that industry.

And none of that has much bearing on how you determine tax policy.

It seems to me that this whole argument centres around what we each consider "fair". Is it fair that those that have the ability and put in the effort to earn more should pay more, because it means they're being penalised for ability and effort, which others won't or can't put in? Or is it fair that people pay according to their ability to pay?

In truth it's probably somewhere in-between, and that's where social judgement comes into setting tax policy, because that's what this is all about .... the policy values. Any tax system is going to be redistributive. It has to be. If we all got out exactly the value of what we put in in tax, there'd be no point. We could all just buy what services we want directly.

But then you get into more abstract levels of debate. If there were no tax system, who would train all those private neurosurgeons? Or for that matter, nurses? Who would educate them? The private health system? Don't make me laugh.

So, even those that opt out of the NHS benefit from it, albeit not to the same extent. Even those that get around by private helicopter benefit from roads and trains, because without roads and trains, food couldn't get to their favourite supermarket. Or, for that matter, their private physical trainer couldn't get to their home for the training.

When people opt for private health or education, they're not opting out of the NHS, they're paying for a service level upgrade. Ditto private education. It's a bit like booking a flight .... first class only exists because of the masses flying economy .... and in that example, probably vice versa too. Actually, thinking about it, flights are practical without first class, but the economics are different. And for that matter, flights are practical with first class only .... it's called "private jets". But if you only earn £100k a year, you can't afford that - a pretty simple trip to the US will cost you a couple of years salary for the charter.


So if setting tax rates is all about social policy, then you have to consider what is or isn't fair in that context.

Governments should IMHO decide what services they need to provide, then consider how to raise the money to pay for it. What they actually seem to do is raise as much cash as they can, then think up ways to spend it .... and in far too many cases, ways to waste it. So we need to decide how much of an NHS we need to pay for, for instance. What services it provides, and to what standard. Does it provide a medical treatment just because it's available? Plastic surgery? Fertility treatment? Altzheimers drugs? Addiction therapy? Acupuncture? Aromatherapy?

Then we need to work out how to pay for it.

As far as I'm concerned, it is absolutely fair for those that can afford to pay more to do so. We can't entirely judge "fair" by percentages, but we can't judge it by absolute amounts either. Unless we want a society where it's "devil take the hindmost", the inference is that we protect the vulnerable, and those unable to protect themselves. For me, that means we provide a safety net, for example, for those that can't work or can't get work. It doesn't imply we protect those that could work and just won't. The trick with that isn't in deciding what our objectives are, but on coming up with a system that achieves it, that can be monitored and policed effectively. I suspect just about every politician in the country would agree with the above stated objective, but deciding it is one thing and achieving it entirely another.

Given that type of objective, then I think "fair" is a system where, the more you earn, the more you benefit personally but the more you contribute as well, simply because you can afford to.

So, rather than tax on Income, perhaps we ought to tax on disposable income, after certain things are deducted. For instance, we could come up with an allowance that provided enough to pay council tax, food, clothing, basic shelter and a contribution towards living costs like transport. The problem is .... what should that allowance be? And as it happens, we already have exactly such an allowance, called Personal Allowance. It's the bit we all get tax free.

The real question is whether it is set at anything like an adequate level? I'd say it isn't. I'd prefer to wee a much higher basic level of PA, even if the basic and/or higher rate of IT had to go up to pay for it. In other words, reduce the load on the very poorly paid, and take the lowest of them out of the IT system altogether.

We all need a minimum level of income simply to be able to live in a modern world., To put roof over head, pay for clothes food and warmth. The state ought to be looking to protect people up to that level. After that, you have the "discretionary" part of income. Some choose to spend it on fancy cars, holidays, bigger houses, booze and tobacco, high tech toys, expensive kitchens and so on. Well, the more you earn, the more you can and should do that. But, the more you have the ability to spend on that type of discretionary item, the more you can afford to contribute to society.

Removing PAs above £100k is a policy decision that says that you have such a substantial level of discretionary income hat you no longer need the basic protection of PAs. It says that with that level of income, you are sufficiently far up the pay scale that you already have a significantly more comfortable lifestyle than the vast majority, and that the basic protection of PAs is no longer needed or, and this is the social judgement ..... justifiable.

For that reason, in my view, it's absolutely fair, and long overdue.

[oolon]

I'm sorry, but £100k a year *is* obscene. Tax the buggers to hell, that's what I say

Whats with the assumption that someone earning £100k did not have to work really hard for it? I have earnt 100k in a year, when my redundancy was taken into account, and all I had to do was work pretty much 24/7 for 9 months for my employer who had been taken over, just work and sleep no social life at all (I was doing a data centre migration). I also had to work up the point the company didn't want me to get the redundancy however they did not have to give me any kind of notice when that would be so finding another job was impossible. I could see the job market getting bad at the time, and by the time I was finished it sucked, and I was very tired and not really able to take on a full time job. The year after these extreme earning I took home 10k, and I did not claim job seekers allowance, even though I ended up doing on and off jobs for 2 years..... and still am.

[GSte]

It's amusing to watch all the jealousy towards high earners. "They are so greedy, it's obscene", etc. So if were offered two jobs, one at £25k, one at £250k, all the 'obscene' camp would be taking the 25k and feeling all good about themselves, I assume?

No, we'd take the £250k one and then not moan about paying higher levels of tax on it!?!

[Moby-Dick]

right, I've just had to delete a couple of posts due to them descending into name calling. please don't make me have to do it again...

[TheAnimus]

In the absence of my blow for blow abusive post (i still think I should get some kind of recognition for wasting mods time in the annual awards.....)

Sorry mate its hard luck! and if that person still wants to winge about it i suggest they stop take a look in the mirror!! Then try hard to see the total hypocrisy in their argument.

My council tax bill is almost 10% of my total gross wage. So tax and disposable income are all relative. So please stop moaning about TAX.

http://www.google.co.uk/url?q=http:/...v_NOUbTHUNo-oA

Now, lets have a quick think here. Is someone who is constantly saying everyone should moan about the tax they are paying, hold the government to account on its spending a hypocrite when they follow through with their actions.

No.

Is someone who is saying that people shouldn't complain about their tax, who then moves on to complain about their tax a hypocrite? Yes.

So hopefully thats not abusive name calling, just clarification of terminology.

I would go a step further and say that as j1979 actually only seams to mind if its other people complaining about tax, that its perfectally OK for him to complain about his tax (which must put you as a 1% top earning world wide) that you are showing hypocriticism symptoms.

Now if you can't see a parallel as been one of the richest percentiles in the world, telling someone else that they *earn* too much money..... Then well, that's probably a clue as to only earning what you are!

[Saracen]

Is someone who is saying that people shouldn't complain about their tax, who then moves on to complain about their tax a hypocrite?

Well, he didn't actually complain about it.

He made a statement of fact ..... council tax as a percentage of total gross wage.

He made a statement .... tax and disposable income are all relative.

He didn't actually complain about it ..... though that is a complaint I have made about the regressive nature of council tax on many occasions. I see nothing hypocritical, at least in the statements you quoted. Whether it could be found from other quotes, I don't know, not having been back through them all.

[TheAnimus]

I had spent the time to grab a better one I thought, but I think it was moved by moby's purge because of my characteristic abuse.

Probably should be doing some more work on my obscene job, rather than wasting more lunch hour on forums

Thou I would still say anyone who states a fact, whilst asking someone to stop been emotive is attempting to suggest their plight is worse. Whilst self-deprecating, I would class that as a winge, if not a full blown moan on the internationally accepted scale of self moaning, I would say its at least half a Mills.

[Saracen]

I still think the real issue is how we determine on what basis you charge tax, to be "fair". It's really the core issue, is it not?

Also, you've got friends that moved to Geneva, and said someone that it was their firm that moved them. Well if that's so, then they presumably didn't move because of personal tax issues. It may have been business tax, or changes (or proposed changes) to banking regulation, or part of a corporate restructure, or a result of a buyout/merger, or any one of a number of reasons or even a mix of these, but it wasn't about personal tax. I presume???

And if not, them moving doesn't throw any light on the tax impact of this change.

[TheAnimus]

I still think the real issue is how we determine on what basis you charge tax, to be "fair". It's really the core issue, is it not?

Also, you've got friends that moved to Geneva, and said someone that it was their firm that moved them. Well if that's so, then they presumably didn't move because of personal tax issues. It may have been business tax, or changes (or proposed changes) to banking regulation, or part of a corporate restructure, or a result of a buyout/merger, or any one of a number of reasons or even a mix of these, but it wasn't about personal tax. I presume???

And if not, them moving doesn't throw any light on the tax impact of this change.

No it was all about money. The company can trade from pretty much anywhere. Most of the clients that visit will be getting the learjet there anyway.

So they where given the choice, based on the performance of the company with regards to taxation via the company equity tracking scheme (because of certain regulation, its not the company itself, but a company which tracks the company)....... Once again tax regulation can be side-stepped.

And on their personal wealth, quite a few of them are not the high earners, they would be scraping 200k, rather than the 1-10M brigade.

They chose to go, the company gave them a choice because there is such a shortage of skilled people in that area, they can't afford to push someone away.

It is worth noting the London office is still there, its just mostly back office staff now.

The thing about tax been fair, is you should really listen to the person been taxed, and in no way gag them.

Some people would describe me as greedy, some would rant endlessly that I'm considering buying a flat or two down in Cornwall for a BTL....

The thing is, left to my own devices I think that I can do a better job with putting my money places than the government can. This last tax year i've given more than the average net salary to a charity I believe in. I also have certain constraints based on how the money can be allocated without my approval, I also slashed their IT expenditure by about 95% with a little help from a mate of mine (ok more than a *little*).

Now, the people who are saying "oh its so much money", for a start off, to me its not. I used to play footsie (ie sit oppersite and fight over legspace) with someone who in one week would earn about 5-10 times my annual. He is on the times rich list, where as I live in Finchley.

My point is that you have to have perspective, you have to look up and down. I've a roughly 0.00000000030769230769230769230769230769231% chance that anyone reading this ISN'T the poorest or the richest man on earth.

How would you feel, earning 10k if you let the whole world vote on how much you should be taxed, and they understandably slapped you with a 95%.

Ok, so that is a complete extreme, but its a very valid point, when you take into account the scale of the world, we really only do the bare minimum to help our fellow man. We have tough immigration rules, only give the doll to british people even thou plenty of them will have never worked a day in their life, and plenty of them never will, only for the damn welsh to still be un-greatful. Yet give not even the interest payments on debts to the '3rd world'.

I just can't see how people think its fair for them to decide HOW MUCH someone OTHER THAN THEM should give. It is not their money, they haven't earnt it, and people might end up pissing off to Geneva.

[Syllopsium]

Tax isn't meant to be 'fair'. If many of us were in government, we'd do exactly the same thing. Government is about fulfilling basic responsibilities, and managing the economy is one of those.

If it was my choice, I'd certainly move more low earners out of the tax system and load it onto people with higher income (including myself). I would, in fact, call that a vote winner - I'd be more prepared to vote for a party that directly helped those on the breadline than one who proposed the raising of taxes and then applied it poorly to whichever public service was in vogue that year.

If, however, the economics didn't work out that way, then maintaining the economy is more important than giving the very poorly paid a few more quid (yes, there are other factors. Let's try not to overcomplicate).

There are plenty of training courses out there - either for the poorly educated, for certain minorities and so on. People who are slightly better educated, not in a minority or have a bit more income don't qualify. There's nothing wrong with this, but it's not about being nice - the expectation is that the cost of running these courses offsets the investment in social security and other public services.

Government is a system of control to keep things running in an acceptable state for everyone. The general intentions aren't necessarily bad, but implementation can be lacklustre to say the least.

Fairness comes if all basic requirements can be met with a surplus. The less surplus, the less fair it will be possible to be.

PK