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

[Zak33]

/dons his well worn flame retardant suit... about to defend high earners again.

Is it right that from 2010/11 onward anyone earning over £100k will have their basic tax free allowance (£6475 this year 09/10 I think) reduced by £1 for every £2 they earn over £100k?

I'm not entirely sure that's very fair..... I know very few people earn anywhere near that, but they're getting shafted to the tune of 50% tax in 10/11 if they earn over £150k anyway, so why remove thier tax free allowance too?

We really are gonna drive the top earners away, and that surely means they won't be here to spend their money in our economy?

So.. no tax up to £6500 ish.. then 20% tax on the next £37400 and then 40% on everything else this year....

but next year....
No tax up to £6500 ish, then 20% tax on the next £37400 (or whatever they set it too) and then 40% up to £150k, but once past the £100k mark your initial £6500 starts reducing by a quid for every two you earn..so by the time you've earned £113000 you're paying 20% on everything up to £37400 then 40% and then 50% from £150k up?

I mean... apart from the complexity, it's hardly motivational, is it?

[dave87]

Unfortunately it is the only way that Labour could balance the books with their political ideals unaffected. If we changed blanket tax - ie 20% became 21% or whatever, there would be an outcry of Labour not following its core values, and unfortunately taxing the (perceived) rich and bankers is the only politically jusifiable route at the moment.

As you say though, whilst I'm no great fan of the top down approach of the Tory governments, I do think we need to retain the entrepreneurs and leaders which are on wages above that in order to ensure the strength of our economy.

[Zak33]

it's not just abuot keeping the top boys here.. it's about keeping their SALARY here.. to spend in B&Q, and in Restaurants, and in bars.. in hotels and in car showrooms, in bathroom shops and PC World. etc....

they need to LIVE somewhere and spend their dough in that country.. petrol, fags, booze etc.. all the money would stay here...

[shaithis]

Most won't even notice it....unlike many who would notice an extra 1p tax increase.

If people who earn obscene amounts of money want to leave the country just because of a (relatively) small rise, I say good riddance to them......a lot will "only" lose the 6.5k because they earn substantially more then the 113k you would need to earn to get zero allowance.

[Rob_B]

I always thought a sliding scale is better anyway, 0/20/40/50% is to 'steppy'

Just means higher paid folks will find more ways to cheat the system. I guess it is only affecting those earning between 100-113k though so it could be worse, I wish I was being paid enough for me to have to pay 50% tax!

[dave87]

Thing is though, how many people that are on £100k pretax actually are obscenely rich?

By my count, post tax that is £65k - so £5.4k a month. Ok, high, but not obscene. Take away from that say, a £350k mortgage (which is about right if you live anywhere in the commuter belt/southeast for a decently sized family home) and that is £2k a month out of that already. Add in overpayments and you are left with less than half of your monthly take home pay left. Remove from that the cost of car/utilities/health insurance etc and you've got a few quid you can put away for a rainy day.

That to me is a comfortable lifestyle, but by no means rich?

So yes, they are wealthy, but not rich.

[PeteSmith]

I mean... apart from the complexity, it's hardly motivational, is it?

Have taxes ever been motivational?

[BUFF]

Most won't even notice it....unlike many who would notice an extra 1p tax increase.

If people who earn obscene amounts of money want to leave the country just because of a (relatively) small rise, I say good riddance to them......a lot will "only" lose the 6.5k because they earn substantially more then the 113k you would need to earn to get zero allowance.

thing is that it's been proven on several occasions that raising tax rates on high earners actually reduces total revenue (because they move away or it becomes more worthwhile to look into tax avoidance) & with less total revenue there is less available to spend on the NHS, schools etc.
Also, chances are that those people don't use public schools & have private medical so whilst they contribute quite heavily they don't actually use the public resources much.

[manwithnoname]

It's good that when the 10% tax band was removed no one seemed that bothered (some lower paid workers were worst off) but when some of the higher earner have their tax increased ...

I'm sure newsnight when through the figures and it won't raise that much (even if you take into account the number of high earner that will just ship or have an accountant that "will sort it out") it's more a political statement that something that will balance the books.

[SiM]

If people who earn obscene amounts of money want to leave the country just because of a (relatively) small rise, I say good riddance to them......

Most people don't realise that the top 10% tax payers pay like 70-80% of all income tax*... good riddance to all of them = 3rd world economy. Then you will all have a proper reason to complain about public healthcare and education!

*don't know the exact number but you get the point...

[Kumagoro]

I would love to be able to be taxed 50%

[Gavin]

if your self employed there are very easy ways to cheat it.

[scaryjim]

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

I earn less than 1/3 of that. My wife is at uni and therefore brings in her student loan plus a few very helpful bits of extras from selling books on Amazon, doing mystery shops, stuff like that, but probably no more all told than ~ £5k a year. But once you account for all our expenses, bills, shopping, rent, council tax, etc. we end up with around £300 a month, effectively spare.

So please, please tell me who on earth needs to earn more than £100k a year. Seriously.

[matty-hodgson]

[AndyRoa]

Sorry guys I agree with Zak33 (dons crash helmet)

I don't want the guys with the cash going anywhere other than to the shops and spending it.

Once again people in the uk are quick to punish individuals for working hard, being successful and earning more money than is regarded by others to be acceptable or reasonable.

Let us not forget that we are talking about "only" a 100k a year which is I agree an excellent annual income but it's not crazy money for a person that works 80 hrs a week in a pressure job.

[Saracen]

...

Is it right that from 2010/11 onward anyone earning over £100k will have their basic tax free allowance (£6475 this year 09/10 I think) reduced by £1 for every £2 they earn over £100k? ....

Yes, that is the Personal Allowance rate for this year, and for next year (2010/11) too. So, given inflation, that's a real terms tax rise for every tax payer right there.

As for whether it's right or not, well yes, it is. IMHO, of course.

Face it, we are ALL going to get right royally dinked by the government in the next few years, so it's perfectly equitable that those most able to pay more tax get dinked too. What wasn't equitable was Brown removing the 10% introductory tax rate, thereby screwing the poorest layer of taxpayers.

Look at it this way. The country is close to broke. We have a ruddy great deficit, and an absolutely huge debt burden, both private and governmental ... though the private one has been going down as people got a shock and started paying off cards and loans, but the public one has been going up as Brown and the muppet .... sorry, puppet ... in the Treasury "saved" the country ..... by getting us even further into debt. And that's without all the "off the books" stuff he's hidden away.

But regardless of how Brown's rampant economic incompetence got us into this mess, we are in it and have to get out of it.

And that is going to involve pain.

We're going to see unemployment rise. In the last recession, unemployment peaked two years after the recession technically ended, like this one has (provisionally) just done. And that was without the debt payoff problems that we face. Birmingham council announced this week that due to budget restraints, they expect to lay off 2000 people this year. Two thousand from one council, albeit admittedly one extremely large one. If you extrapolate that across other councils, and then add in other public services, you can get a feel for the scale of the pain that's coming.

So ... just on that score alone, a lot of people are going to be paying a very nasty price. The recession might be over, but people, take a prediction from me ... the pain is just about to start. No seriously, with the amount of money the government has pumped in, most people aren't yet feeling that this "recession" was that bad, unless you're one of the poor <bleeps> that's already lost their job. And all the indicators are they're going to be getting plenty more company.

And those that only lost their jobs are the lucky ones. The unlucky ones are those that lost their home too, and again, there'll be more of that to come.

So can I feel too much sympathy for those earning upwards of £100k paying a bit more tax, or having their PA's incrementally cut? Erm .... not a lot, no.

If you take £1000 extra tax from someone earning £20k (and therefore taking home about £13k), that £1000 really bites. If you take an extra £1000 from someone earning £100k, or £150k, how much does it hurt?

Do you tax someone that can afford a new Beemer or Merc for self and wife every couple of years, and £1000 (or more) suits, or do you tax someone that's struggling to pay the mortgage and keep the kids fed, and struggles to pay for new trainers let alone Saville Row suits?

We are ALL going to pay, one way or another. And what was the point of exempting the first £x,000 of income from Income Tax in the first place? It was to provide a safety net to allow people with low incomes to pay for essentials, like food, clothes and shelter. It wasn't to allow wealthy people and high earners to reduce their tax bill.

To be honest, this move is WAY overdue. And it ought to be accompanied by a substantial increase in the PAs for those on low incomes.


Of course, the reason this is being done, and done now, is (IMHO) entirely political. It's to appeal to grass-roots Labour, the core vote. It's to appeal to the social engineers in the party that want to bleed the rich, and it's designed to appear to do that. In other words, it's naked political opportunism and electioneering, and it's designed to allow Brown to pose as the "socialist" that's addressing inequality, while he prattles on about the Tory's inheritance tax policy, ignoring the fact that as Chancellor, Brown could have done this and any number of other things to address social inequality over 13 years, and instead, abolished the 10% tax band.


So, while I'm incredibly cynical about why they're doing this and doing it now, I still think that in the circumstances, there's nothing at all wrong with doing it.

And while those that are lucky enough to be adversely affected by it no doubt won't much like it ... I mean, none of us like paying tax let alone more tax, they really need to be bloody grateful that they earn enough to actually be paying it and spare a thought for those struggling just to live. If this is the worst that they get to suffer during the coming storm, they have nothing to moan about.

The rest of you ... hang on, it's going to be a bumpy ride. Thanks in no small measure to the plonker at Number 10.