General Chat

Do you feel successful and aspirational because you pay tax at the 40% rate?

I ask this because it is being reported, that the Chancellor George Osborne, in a private meeting of the Conservative 1922 Committee said - Let’s not forget there are advantages in more people paying tax at 40% as it means they feel they are a success and joining the aspirational classes.

I do know during my life that those hovvering just above threshold do sprinkle their speech with "it really does not seem worth working that extra bit just to get hammered by tax".

I have had my moments but have not been aspirational in any way for many years now (life is too short and heart is too wonky) - though I have learned many ways to reduce tax.

I think saying things like that is very "Tory English". I doubt many in Wales, Scotland and the North are that bothered how much they earn - as long as it is sufficient for needs. Success is not always money to most of the electorate.

It is difficult to see £ 41,500 per annum as the pass mark for joining the well off. My niece and family ( in the north of England not London ) earn well over that and find making ends meet with several kids challenging.

What has actually happened is that the old standard rate of tax of about 7/6 (37.5p) has now become the 40p rate ( 42p with extra NI ) while the low paid (at one time untaxed) are now expected to be grateful for returning to not being taxed so long as they don't earn enough money to live on it. Everybody else between £ 10 500 pa and the 40p rate is for the most part paying more of their income as tax than in the 1960s. More income tax, more NI and more sales tax(VAT). In 1976 VAT was 7.5%.

Those earning from about £ 70pa to around £ 250 K pa have done best out of the changes in tax since the days of Nigel Lawson. Beyond £ 250 K it is possible to arrange ones affairs to be tax efficient regardless of PAYE scales.

Those who have suffered most are those earning from £ 35K to £ 65 K who tend to have largish mortgages and young families. Geo Osbourne and Milliband have both suddenly picked up on this hence the bromides. Neither have the faintest intention of improving their lot. Indeed as mortgage rates edge up to 2.5% and then 5% they have even more pain in store.

There are all sorts of reasons for this but politicians of both the left and the right taking up cudgels for the "squeezed middle" or "ordinary people" earning under £ 15 K are looking at the symptoms not the disease.

All talk of any real reduction of tax will cease the day after the next election. The ravening monster of government debt and indexed linked state sector pensions will not allow it.

I have been paying higher rate tax since my 20s and did not regard it as an emblem of success but state theft after years of living on buttons as a student. As a direct consequence I worked abroad for many years. Incredibly taxes are now lower in France than the UK if you earn less than £700 K per annum !!!

:-(

I earn less than £700k, Rollo. Anybody else earn less? Seems like France is the place to live. I could have tea with gorgeous Judith off Eggheads.

I would simplify tax totally. Pay no tax at all up to living wage, then whatever percentage is needed to pay debts - say 25%. And clamp down on all these corporate and individual tax avoidance schemes.

We would be amazed how many of the £700k plus people (and there are quite a few) would stay here and happily pay their dues). And everyone would automatically be lifted out of poverty and needing benefits (unless old or sick or unemployed).

I think John you misread what I said about French tax. For those on ordinary incomes French tax is now appreciably lower than in the UK ( though employers have to pay a lot more NI ). OTOH those earning over £ 700 K get hammered. The downside is that unemployment is over 10%.

England is the other way around.

In an open global economy clobbering those earning more with tax doesn't work out at all for the economy as the French are rapidly finding out. Socialists have always believed that the better off will accept any sort of taxation for the dubious privilege of living in the UK. They won't.

The living wage for a married man in London is probably £ 40 000 - about the same as a bus driver and less than a tube driver thanks to Bob Crow. Do you think they should be tax free ? There are > 8 million people living in London.

To describe a house in London as a "mansion" if the valuation is £ 2 million is risible. Does Ed Balls want to go back to the activities of the Levellers during Cromwell's regime when families were forced to agree to exorbitant levies on their property ? AFAICS Milliband and Balls are well on the way to grabbing defeat from the jaws of victory.

:-P

Not going to apologise, Rollo. Your fault :-)

When writing or teaching, you have to think of your lowest common denominator. If you kept people like me in mind when you write, you would do much better :-D ;-)

Think we all know that what the chancellor said has some truth, but some will prefer to take it the wrong way. I am no longer in the higher tax bracket but wish I were and would be quite happy if ever I join the happy ? echelons.

Happy days

Thanks for those comments JustJohn and RolloTheRed - If my memory serves me right, in 1985 I paid tax at 30% up to £16,200, then 40% on the next £3,00 of what I earned, then 45% on anything above that, as my salary increased the more tax those starving creatures at HMRC took from me.

The amount I handed over in tax made me think twice about any aspirations I had to move up the career ladder, in fact I declined a directorship, as I did not think the extra responsibilities were worth working my socks off just to pay my hard earned money into the government coffers.

I personally favour a single rate of income tax and a two tier rate of VAT - lower rate for household & everday items and a higher rate for luxury goods, but there again I often fly off into cuckoo land :-S

I begrudge paying 40%, ....

I do not see why, at the end of my working life of paying my dues and taxes, I should pay any taxes what so ever .....

Let pensioners be tax free is my motto .....

Many pensioners this tax year could find they be worse of if they have even a small private pension, this is due to the current Chancellor doing away with the age related allowance for pensioners :-(

we will be taxed until we die, and even then, there will be VAT on the funeral...........

Bob :-) :-)

Sorry VAT on a funeral it just sounded funny! Not a laughing matter as funerals are not a luxury and should be VAT free as should a lot of other essentials in life!

last year my oh did a lot of extra night shifts at the weekend to pay off some of our outstanding bills created from when he was paid off for 7 months. But when we got his P60 and it showed he had earnt just over 40k(about 43k) he was hammered for the tax and so the extra money went out the window. Now when they ask him to do extra he says no because we dont end up better off but the HMRC do!!

Florence
in the hebrides :-P