Thread: Hey!! Who's pulling the Bandwagon????

Originally Posted by majurey

This is a fallacy. The fact is, those tiered rates continue to apply to each tier within your basic salary. In other words, someone earning £110k pays zero tax on the first £6475, then 20% on the next £30k, then 40% on the next xxx etc. Even if you tick over into the next bracket by £1, you cannot be taxed more than you were on the salary you were on last year. The higher rate only applies to the monies above the respective rate. E.g. say there's a 10% increase in tier at £100k and I'm currently paid £99k, if I'm given a pay rise that takes me to £110k, I only pay the higher rate on the£10k above the 100k mark. Under that I still pay the lower rate. Sorry, I've not been very clear. But basically the tax tiers apply only to those brackets and not across your entire salary..

I agree, your income tax is tiered, but once you go over £100k you start losing that tax free allowance on the first £6475 from 2010/2011. Look at the income limit for personal allowances from HMRC here:

HM Revenue & Customs: Rates and Allowances - Income Tax

Thats what pushes the tax rate up for those over £100k and means the effective rate is pushed up. Its the loss of the tax allowance at the bottom rather than the additional tax at the top. And you also lose your tax allowances on your pension over £150k as well.

Originally Posted by majurey

The bankers are not innocent parties here. And from what I can see of other financial centres around the world (US, Europe, Asia) they'll be hammered in one way or another. Where will they run to then? The threat of losing our best bankers is a hollow one.

I agree again. But not all the bankers are to blame either, just a small minority who got involved heavily with CDO's and the debt markets. So why should the majority of bankers, who've been holding their own in tough times, be hammered because of a few spivs?

I also think that shareholder pressure has played a large part. Companies report quarterly, and if shareholders dont see improved returns quarter on quarter they have the option (and have in the past) to sack the board. So the board put pressure on the guys below them to make the returns, come what may.

I do also wonder why these same shareholders werent asking any questions when the banks were returning record profits on their investments.

If the companies move, they'll go to the BRIC economies which are screaming out for foreign investment at the moment.

There are also places that charge lower income tax (China, Singapore, Australia and the US) than the UK. So if someone wants to protect their salary, they'll move to another country and the UK loses the tax revenue.

Originally Posted by majurey

It's not as simple a picture as that. Public sector workers pay taxes on their income, and indeed if it helps to reduce overall levels of unemployment it reduces cash lost to benefits. But more importantly in times of economic stress, public spending has played a vital role it its recovery throughout history. Whether it's a sound argument is of course hotly debated by academics on both sides of the political spectrum. But my point is that saying public spending doesn't create income is a little simplistic if you're looking at the situation we're in.

Again, I agree. Public sector workers do pay income tax, but they dont contribute to GDP. Repairing roads is not a profit making business as its paid for by the local authority and the work done by staff on their payroll, either directly or via a third party supplier. Skimming profit off the top anywhere would be a pretty big vote loser for a public body.

I also agree that it helps reduce unemployment. However, someone being paid £25k a year, plus pension, as a five a day nutrition coordinator costs the economy more than someone being handed unemployment benefits. And we cant keep creating jobs to keep unemployment down indefinately, theres already a massive break between tax revenue received and expenditure. At some point we need to cut spending back.

Originally Posted by majurey

Believe me, all three parties intend to make cuts to public spending. But NONE of them are giving us any detail as to what, how or when. That's because they're well aware that a general election has been called and none of them have the conviction to give us the bad news straight.

I reckon you're right there..! No bad news before May!