Who Will Pay More Tax?

[GeoffF100]

"Who Will Pay More Tax? IFS Paul Johnson | IEA Interview":

https://www.youtube.com/watch?v=vO9pkyzQKEU

Very interesting, particularly in the level of agreement between the left and right leading economists. We have had the socialist Tories, and now we have blue Labour. What happens next?

[Lootman]

Depressing to hear that taxes have gone from 33% of UK GDP to 38% of UK GDP since 2019, and yet all the talk is still about which taxes have to go up and by how much.

It feels like, other than when Maggie was in charge, we have been reverting to Healey's 1975 tax levels ever since then. And I recall 1975 taxes well because it was 1975 when I got my first job after university, and was horrified to see that I was paying a 35% rate of income tax despite being only on a junior salary.

[Alaric]

It feels like, other than when Maggie was in charge, we have been reverting to Healey's 1975 tax levels ever since then. And I recall 1975 taxes well because it was 1975 when I got my first job after university, and was horrified to see that I was paying a 35% rate of income tax despite being only on a junior salary.

As I recall it, that was the basic rate of tax (7 shillings in the pound for those old enough). I think even the 1974-79 government nibbled away at it to reduce it towards 30%.

There were some chunky allowances though, relief on mortgage interest being one of them. Also the benefit in kind rules on things like comapny cars were only barely established.

Until they raise the 40% threshold, it's a level of tax we are heading back towards.

[GeoffF100]

It is noteworthy that not only did the Tories greatly increase the tax burden, but those increase was heaped on the higher earners. Workers earning over £100,000 p.a.were hit very hard. As Paul Johnson said, you do not hear much about that from either of the main parties. The Tories had spent decades claiming that they would not do that, and Labour is embarrassed that it was the Tories that did it rather than them. Johnson also pointed out that our taxes on the less well paid are now very low in comparison with similar economies.

[scrumpyjack]

Depressing to hear that taxes have gone from 33% of UK GDP to 38% of UK GDP since 2019, and yet all the talk is still about which taxes have to go up and by how much.

It feels like, other than when Maggie was in charge, we have been reverting to Healey's 1975 tax levels ever since then. And I recall 1975 taxes well because it was 1975 when I got my first job after university, and was horrified to see that I was paying a 35% rate of income tax despite being only on a junior salary.

Well remember it - I was lucky enough to have some dividends too which got taxed at 98%! (That rate started at 2k of income )
You ain't seen nuthin yet!

[monabri]

Not Reeves

https://assets.publishing.service.gov.u ... o_2024.pdf



"Dear Our Client"...ahh, the personal touch!

Lovingly prepared for you by " your chartered accountants "

[swill453]

Not Reeves...

I don't see anything surprising or concerning there. It's all for the tax year before Labour came into power.

I note there's not much savings interest. Presumably she's got a load in cash ISAs...

Scott.

[Arborbridge]

Not Reeves...

I don't see anything surprising or concerning there. It's all for the tax year before Labour came into power.

I note there's not much savings interest. Presumably she's got a load in cash ISAs...

Scott.

Seems pretty modest. Strange how some people have missiles launched in their direction, but others (many Tories, for example) don't. In fact I can't remember seeing any other poster going to the trouble of posting such a thing, so I do wonder why one should go to such bother researching if the result is so unremarkable.
Sounds like an itch someone cannot scratch.

[77ss]

I don't see anything surprising or concerning there. It's all for the tax year before Labour came into power.

I note there's not much savings interest. Presumably she's got a load in cash ISAs...

Scott.

Seems pretty modest. Strange how some people have missiles launched in their direction, but others (many Tories, for example) don't. In fact I can't remember seeing any other poster going to the trouble of posting such a thing, so I do wonder why one should go to such bother researching if the result is so unremarkable.
Sounds like an itch someone cannot scratch.

Ever had the strides bored off you in a saloon bar? Or by a taxi driver? Some boards are just like that. Facts? Relevance? Reasoned discussion? Many posters just don't care - all that matters is their world view.

[Spet0789]

We need to broaden the tax base. For too many people in this country, tax is something that others pay, not that they realise it.

Of course the silver bullet should be to restrict the franchise to net contributors - those who have non-govt earnings (so excluding state pensions or other benefits) exceeding around £30k pa. That really would fix the problem. No representation without taxation.

[Lootman]

We need to broaden the tax base. For too many people in this country, tax is something that others pay, not that they realise it.

The guy in the video made a good point that the UK doesn't really have a tax strategy or policy. HMG is simply reactive, having an annual budget piece of theatre that basically just tinkers with the existing system. There is no real plan.

Thatcher had a plan and a part of that was to broaden the tax base as you suggest, by increasing indirect taxes like VAT and council tax, enabling lower rates on direct taxes.

He also hates stamp duty, as do I, although I may hate IHT more. I'd abolish both of them.

[Charlottesquare]

Depressing to hear that taxes have gone from 33% of UK GDP to 38% of UK GDP since 2019, and yet all the talk is still about which taxes have to go up and by how much.

It feels like, other than when Maggie was in charge, we have been reverting to Healey's 1975 tax levels ever since then. And I recall 1975 taxes well because it was 1975 when I got my first job after university, and was horrified to see that I was paying a 35% rate of income tax despite being only on a junior salary.

Stop living so long and problem will mend a little.

[Charlottesquare]

It feels like, other than when Maggie was in charge, we have been reverting to Healey's 1975 tax levels ever since then. And I recall 1975 taxes well because it was 1975 when I got my first job after university, and was horrified to see that I was paying a 35% rate of income tax despite being only on a junior salary.

As I recall it, that was the basic rate of tax (7 shillings in the pound for those old enough). I think even the 1974-79 government nibbled away at it to reduce it towards 30%.

There were some chunky allowances though, relief on mortgage interest being one of them. Also the benefit in kind rules on things like comapny cars were only barely established.

Until they raise the 40% threshold, it's a level of tax we are heading back towards.

Do take a look at NI rates- the Thatcher magic of the 80s went with increasing NI rates- I give with one hand I partially take with the other.

http://www.taxhistory.co.uk/National%20 ... 0rates.htm

[Grisom]

It is noteworthy that not only did the Tories greatly increase the tax burden, but those increase was heaped on the higher earners. Workers earning over £100,000 p.a.were hit very hard. As Paul Johnson said, you do not hear much about that from either of the main parties. The Tories had spent decades claiming that they would not do that, and Labour is embarrassed that it was the Tories that did it rather than them. Johnson also pointed out that our taxes on the less well paid are now very low in comparison with similar economies.

Paul Johnson mentions in the video that, in times gone by, only "rich" people paid the higher rate. But, due to policies such as freezing thresholds, we find ourselves in a situation where a huge percentage of folk are now in that higher rate band. From memory it is something like 25% of income tax payers will be in the 40p band by 2028/29. (the current additional rate is the new higher rate-of-old, where you become un-personed).

I recall thinking a couple of years back, when this state-of-affairs became evident, that perhaps it wasn't such a bad thing for those who believe in a smaller state: surely, there is a high correlation between the number of people who suddenly find themselves in a much higher marginal tax bracket, and Damascene conversions with respect to public expenditure? Maybe that offers a glimpse of hope to smaller state advocates. Having said that, there is another reading of the situation ... we are bombarded with messages about how high taxation is. Record highs, in fact. Never been higher outside of war time. The problem is --- that isn't true for the average bod. In fact personal taxation hasn't been lower for 50 years. But average bod presumably thinks he's heavily taxed. Record highs, in fact. So who's gonna pay? The rich, of course.

[Lootman]

As I recall it, that was the basic rate of tax (7 shillings in the pound for those old enough). I think even the 1974-79 government nibbled away at it to reduce it towards 30%.

There were some chunky allowances though, relief on mortgage interest being one of them. Also the benefit in kind rules on things like comapny cars were only barely established.

Until they raise the 40% threshold, it's a level of tax we are heading back towards.

Do take a look at NI rates- the Thatcher magic of the 80s went with increasing NI rates- I give with one hand I partially take with the other.

http://www.taxhistory.co.uk/National%20 ... 0rates.htm

Yes but as I mentioned above, wasn't that thematic of the tax revolution that Maggie adopted? That is to say increase indirect (or "regressive") taxation (NI, VAT, Council Tax) to ensure a broader tax base? Thereby enabling cuts in the rates of direct ("progressive") taxes like income tax which were as high as 83% and 98%?

For a while we had a 40% top rate of income tax and a 18% or 20% top rate of CGT. Although that is not as good as the equivalent 37% and 15% rates in the US, it was not bad either, whilst it lasted.

Everyone should pay some tax and nobody should pay too much tax. In my view no tax rate should exceed 40%.

[Charlottesquare]

It is noteworthy that not only did the Tories greatly increase the tax burden, but those increase was heaped on the higher earners. Workers earning over £100,000 p.a.were hit very hard. As Paul Johnson said, you do not hear much about that from either of the main parties. The Tories had spent decades claiming that they would not do that, and Labour is embarrassed that it was the Tories that did it rather than them. Johnson also pointed out that our taxes on the less well paid are now very low in comparison with similar economies.

Paul Johnson mentions in the video that, in times gone by, only "rich" people paid the higher rate. But, due to policies such as freezing thresholds, we find ourselves in a situation where a huge percentage of folk are now in that higher rate band. From memory it is something like 25% of income tax payers will be in the 40p band by 2028/29. (the current additional rate is the new higher rate-of-old, where you become un-personed).

I recall thinking a couple of years back, when this state-of-affairs became evident, that perhaps it wasn't such a bad thing for those who believe in a smaller state: surely, there is a high correlation between the number of people who suddenly find themselves in a much higher marginal tax bracket, and Damascene conversions with respect to public expenditure? Maybe that offers a glimpse of hope to smaller state advocates. Having said that, there is another reading of the situation ... we are bombarded with messages about how high taxation is. Record highs, in fact. Never been higher outside of war time. The problem is --- that isn't true for the average bod. In fact personal taxation hasn't been lower for 50 years. But average bod presumably thinks he's heavily taxed. Record highs, in fact. So who's gonna pay? The rich, of course.

If you are the squeezed middle it really hurts.

Up here, with HR IT rates running before NI rates cool, you are 42% IT and 8% NIee, with Student loans add 9%, and that all starts at £43,663, marginal 59% deduction. (Sort of Son in Law is just about there, daughter is just a few k shy)

[Charlottesquare]

Do take a look at NI rates- the Thatcher magic of the 80s went with increasing NI rates- I give with one hand I partially take with the other.

http://www.taxhistory.co.uk/National%20 ... 0rates.htm

Yes but as I mentioned above, wasn't that thematic of the tax revolution that Maggie adopted? That is to say increase indirect (or "regressive") taxation (NI, VAT, Council Tax) to ensure a broader tax base? Thereby enabling cuts in the rates of direct ("progressive") taxes like income tax which were as high as 83% and 98%?

For a while we had a 40% top rate of income tax and a 18% or 20% top rate of CGT. Although that is not as good as the equivalent 37% and 15% rates in the US, it was not bad either, whilst it lasted.

Everyone should pay some tax and nobody should pay too much tax. In my view no tax rate should exceed 40%.

EE NI is not really indirect, it moves with earnings albeit some cliff edges

[scrumpyjack]

It is noteworthy that not only did the Tories greatly increase the tax burden, but those increase was heaped on the higher earners. Workers earning over £100,000 p.a.were hit very hard. As Paul Johnson said, you do not hear much about that from either of the main parties. The Tories had spent decades claiming that they would not do that, and Labour is embarrassed that it was the Tories that did it rather than them. Johnson also pointed out that our taxes on the less well paid are now very low in comparison with similar economies.

Yes, the personal allowance in Denmark for example is only £5,900 (and there's an 8% Labour market tax on that. Above that it's 43.8% tax.
So the low paid here get off very lightly!

[Lootman]

Yes but as I mentioned above, wasn't that thematic of the tax revolution that Maggie adopted? That is to say increase indirect (or "regressive") taxation (NI, VAT, Council Tax) to ensure a broader tax base? Thereby enabling cuts in the rates of direct ("progressive") taxes like income tax which were as high as 83% and 98%?

For a while we had a 40% top rate of income tax and a 18% or 20% top rate of CGT. Although that is not as good as the equivalent 37% and 15% rates in the US, it was not bad either, whilst it lasted.

Everyone should pay some tax and nobody should pay too much tax. In my view no tax rate should exceed 40%.

EE NI is not really indirect, it moves with earnings albeit some cliff edges

Yes but the fact that it is capped means that it is often seen as a "regressive" tax (not that there is anything wrong or bad with regressive taxes).

And the fact that it only applies to employment income and not investment income (which again makes sense to me, but not to some others apparently).

[Charlottesquare]

EE NI is not really indirect, it moves with earnings albeit some cliff edges

Yes but the fact that it is capped means that it is often seen as a "regressive" tax (not that there is anything wrong or bad with regressive taxes).

And the fact that it only applies to employment income and not investment income (which again makes sense to me, but not to some others apparently).

Not capped, just a lower rate- 2%