Beer and taxes

[Easy_Rider]

Good analogy, but for total tax revenue, is it not the middle tax payers who pay the most because of the numbers who are paying. Not many pay the very high band but most fall into the middle band.

Assuming a standard distribution you are, of course, correct. This is (allegedly) (one reason) why (some) politicians (might) (allegedly) (perhaps) embark upon headline-grabbing budgets to tax the very rich, rather than the greatest number of people.

Then again, studies (and experience) show that there is a rate above which tax increases have a negative effect on total taxation income. That level is somewhere around 50%. I wish I had the details on the top of my head - if people are interested I will dig around the bottom of my brain to try and substantiate this!

There comes a point where the very rich start to move away, or find ways around the system and for every person earning 100k at 40% tax (40k tax) you need to find 10 people earning 20k at 20% (4k tax). (Numbers very simplified)

But 100k at 40% tax doesn't mean they pay 40k tax :?
They have the same allowances as everyone else.
So the first 34k ish is taxed at 20% for everyone, anything earned over 34k is taxed at 40%, so if you earned 35k then only 1k is taxed at 40% the rest remains at 20%

Then they introduced the 45% (soon to be 50%) tax band on anything over 100k, same again, if you earn 101k then only the 1k is taxed at 45% (or 50%), between 34k and 100k is 40% and the first 34k at 20%

Now the rest of what you said I agree with, there does come a point where too much tax will have a negative effect, look at labour in the 70's there was an 83% tax band on earning over 20k :shock:
My Grandad was most pissed off at this one.

 

[Easy_Rider]

Quick calcs, please check, but this is how it works

20k income 4k tax paid
40k income 6.4k tax paid not 16k

have a look at this link http://www.ifs.org.uk/ff/income.xls if you think we pay a lot of tax now think again!

Income tax rates and limits
Year Starting rate Basic rate Higher rate(s)a Starting rate limitb Basic rate limitb
1973-74 — 30% 40-75% — 5,000
1974-75 — 33% 38-63,73,83% — 4,500
1975-76 — 35% 40-75,83% — 4,500
1976-77 — 35% 40-75,83% — 5,000
1977-78 — 34% 40-75,83% — 6,000
1978-79 25%c 33% 40-75,83% — 8,000
1979-80 25%c 30% 40-60% — 10,000
1980-81 — 30% 40-60% — 11,250
1981-82 — 30% 40-60% — 11,250
1982-83 — 30% 40-60% — 12,800
1983-84 — 30% 40-60% — 14,600
1984-85 — 30% 40-60% — 15,400
1985-86 — 30% 40-60% — 16,200
1986-87 — 29% 40-60% — 17,200
1987-88 — 27% 40-60% — 17,900
1988-89 — 25% 40% — 19,300
1989-90 — 25% 40% — 20,700
1990-91 — 25% 40% — 20,700
1991-92 — 25% 40% — 23,700
1992-93 20% 25% 40% 2,000 23,700
1993-94 20% 25% 40% 2,500 23,700
1994-95 20% 25% 40% 3,000 23,700
1995-96 20% 25% 40% 3,200 24,300
1996-97 20% 24% 40% 3,900 25,500
1997-98 20% 23% 40% 4,100 26,100
1998-99 20% 23% 40% 4,300 27,100
1999-00 10% 23% 40% 1,500 28,000
2000-01 10% 22% 40% 1,520 28,400
2001-02 10% 22% 40% 1,880 29,400
2002-03 10% 22% 40% 1,920 29,900
2003-04 10% 22% 40% 1,960 30,500
2004-05 10% 22% 40% 2,020 31,400
2005-06 10% 22% 40% 2,090 32,400
2006-07 10% 22% 40% 2,150 33,300
2007-08 10% 22% 40% 2,230 34,600
2008-09 — 20% 40% — 34,800
2009-10 — 20% 40% — 37,400

 

[tintin40]

Looking at those figures gave me headche But interesting. I happy for the very rich to be taxed alot more. If they don't like it. give me your money and they can be low paid. And I'll be rich

 

[Kestonian]

But 100k at 40% tax doesn't mean they pay 40k tax :?
They have the same allowances as everyone else.
So the first 34k ish is taxed at 20% for everyone, anything earned over 34k is taxed at 40%, so if you earned 35k then only 1k is taxed at 40% the rest remains at 20%

You're right - I oversimplified that more than I thought. My excuse was that I was including National Insurance but that still only takes it up to 30k tax + 5k NI

 

[kaiser]

The answer is free beer for all

 

[tintin40]

The answer is free beer for all

I'll vote for you. But make mine a smoothie

 

[barry2017]

¡Viva la revoluçion!

 

[Easy_Rider]

But 100k at 40% tax doesn't mean they pay 40k tax :?
They have the same allowances as everyone else.
So the first 34k ish is taxed at 20% for everyone, anything earned over 34k is taxed at 40%, so if you earned 35k then only 1k is taxed at 40% the rest remains at 20%

You're right - I oversimplified that more than I thought. My excuse was that I was including National Insurance but that still only takes it up to 30k tax + 5k NI

I'm not sure on nthe NI rates, is it the same % for all?

Anyway, we are nowhere near the hights of tax 1974-1979 83% top tax band dropped to 60% from 1980-1988 the down to 40% from 1988-present, so going back up to 50% is not a huge increase when looked at historically, and the lower band of 20% for the majority has never been so low

Some interesting graphs and pie charts

http://en.wikipedia.org/wiki/File:Incom ... ountry.svg
http://en.wikipedia.org/wiki/File:UK_taxes.svg
http://en.wikipedia.org/wiki/File:UKExpenditure.svg

Health and Social is a huge slice, but what is this "other" :shock:

 

[Kestonian]

National Insurance confuses me.

Here is the "official" page

http://www.hmrc.gov.uk/rates/nic.htm

I think it's 11% up to the earnings threshold, then 1% over that. And no reduction for having medical insurance (sorry, couldn't resist)

 

[Easy_Rider]

Now that is confusing :?