As the page says, this would affect 4% of people in the country. Seems like an issue HN will assign disproportionate importance to but would not really have been a decisive issue for the country.
We are talking about 1.6M employee/small business owner, who has families as well. So Labour supposed to punish the most ambitious, hard-working people and their families with even higher taxes (40+20+13.8+... percent) they already pay.
That's a lot of rhetoric. Where is this 40+20+13.8 coming from?
Employer NI is 13.8%, but rarely counted as a tax on the worker (crazilly)
Of course plenty of people earning big bucks don't do it via PAYE, just take their money as far lower capital gains, split income amongst multiple people, leave income in businesses for longer, etc.
2017-2018 figures [0] and taxes [1]
Someone on 90%ile 45,500 pre tax, has a cost (including employer NI) of £50,616, and a net wage of £34,322, total tax of 32%
Someone on 95%ile 59,300 pre tax, has a cost (including employer NI) of £66,320, and a net wage of £42,413, total tax of 36%
Someone on 99%ile 116,000 pre tax, has a cost (including employer NI) of £130,845, and a net wage of £72,099, total tax of 45%
I believe Corbyn's income tax proposals were to increase the rate for 80k-150k to 45%. That would only affect the top 2.5% of income tax payers, but the person on the 99%ile above would pay an extra £1800 a year in tax. Their tax rate would change from 45% to 46%, hardly an earth shattering change.
That £1800 a year extra is about what the tories took off single mothers earning £60k when they introduced the child tax [2]
> Employer NI is 13.8%, but rarely counted as a tax on the worker (crazilly)
It is a cost of the employment. As I wrote above, it goes to the treasury and proportionate to the salary. It doesn't matter how we label it. Doesn't matter neither to the company's, nor the individual's taxation.
> Of course plenty of people earning big bucks don't do it via PAYE, just take their money as far lower capital gains
No, the people who earn big bucks do it in a non tax-resident way. They don't declare tax in the UK or any high-taxpaying region.
> That would only affect the top 2.5% of income tax payers
"The top 5% of income tax payers contribute half of all income tax revenues today." With the current level of digitalisation, there is only so much weight you can put on the most performant segment of the workforce before they pack and leave.
> Their tax rate would change from 45% to 46%, hardly an earth shattering change.
No, the former 45% would be higher than 50%, because it would have started from £125K, and they would introduce a 45% above £80K.
I provided the percentile points of income tax payers (and many people don't pay income tax at all) from the government. IFS don't provide their source.
80k is between 97 and 98.
I also provided the breakdown of how much income tax, employer NI and employee NI is paid.
My high income friends tend to get their income from dividends and avoid NI completely. Only working schmucks pay NI.
The 20% aries1980 refers to is almost certainly VAT which is charged on a great many goods.
I agree with your point that your effective tax rate is always lower than your marginal tax rate - but anyone earning £100,000 who has asked themselves "How much of a bonus do I need to earn to pay for a £20,000 loft conversion" will have done a calculation like aries1980 has and winced.
That's less than 2% of the country, not going to swing an election.
Besides
100k income in 2009/10 (when Labour were last in power): Net income £65,312. 120k income in 2009/10: Net income £77,112.
Marginal tax 41%
100k income in 2019/20: Net income £66,539. 120k income in 2019/20: Net income £74,139
Marginal tax 62%
That's not even the top level. If you're a masters graduate on £50k with 2 kids your marginal tax is 75%.
There are many myths, that conservatives are good for the economy, that they don't have boom and bust, that the stock market does better, than employment does better, that taxes are lower for everyone, that taxes are lower for "rich" workers, that the country has less debt.
They're all myths, but they all seem to stick in the national psyche.
