Where the income tax burden falls in the UK

[petagny]

Interesting article on the BBC website analysing income tax data from HMRC:

http://www.bbc.co.uk/news/business-17397199

I was somewhat surprised to learn how much income tax revenue is raised from higher earners. The top 1% of earners are the source of 27% of total income tax revenue and the top 10% account for 57%.

[harnett]

Yes - also pleasantly surprised! 

Though a word of caution... "Now all these figures, published a year ago, were estimates by HMRC.  We will not know the facts until the Revenue has carried out its calculations.  It should be in a position to have a first stab soon, now that it has most of the forms in from the 2010-11 self-assessment tax payers."

Are you suggesting that the 50p top rate should be maintained?
 

[petagny]

Yes! (In answer to Harnett's last question.)

It's fairly clear that this it's not the thin edge of a wedge that will take us back to the bad old days of 90% marginal rates -  no party would dare go above 50%. It's probably raising some extra revenue (at little additional administrative cost). And the disincentive effects are not clear to me - do the people affected really make their big decisions on the basis of an extra 10% tax on earnings above £150,000? I doubt it. The symbolism is also important at present and in the tough(er?) years to come.

[harnett]

Good man yerself - was always wondering how many people moved country as a result of tax rates - sure 90% is a big incentive but a cut down from 50% seems analagous to Gordon Brown's nemesis on the lower band.  50% economically and politically good!  51%..... 52%......?

[John Short]

But of course it is not 50% - NI has to be added!  And there is the loss of allowances at a certain income level  -  simplify the system and make it transparent and then talk about rates.