Quote:
|
Originally Posted by G.K Zhukov
there is no progressive tax in the uk?
|
Well, only just. The UK tax system is split - the average tax payer pays 22% (or whatever it is now) in Income Tax and 11% to National Insurance contributions. There are allowances for both which doesn't make calculations straight-forward, but because there is a ceiling on NI Contributions (after which you only pay 1%) it's not as progressive as it might seem. So I could receive a 20k raise tomorrow (unlikely, admittedly) and while I'd be paying quite a bit more tax, I'd only end up paying £500 extra NI a year or so. Since if I was earning more money I'd probably be part of a private pension scheme I'm not even sure what would happen to my NI contributions.
To look at another way, people on
£11k (crap wage) - 15% of total salary goes to deductions (ish)
£16k (still crap wage) - 20% of total
£26k (below median wage I think) - 25% of total
£40k (start of higher rate) - 28% of total
£60k - 31% of total
£100k - 35% of total
£300k - 39% of total
So as you can see, the % of total salary rises quite quickly at the lower end but the acceleration slows - 5% at the bottom is only £5k where 5% at the top is £40k or more. Of course, if you analyse household income then you get different results because if you were on 11k in the real world there's a good chance your family income would be supplemented by benefits, especially if you had children.
Obviously this is all PAYE stuff, there's probably not that many people earning over £300k who aren't either self-employed or have slightly more complex finances which allow them to (at the very least) be flexible when they pay the taxman.
That's the direct taxation bit, which is obviously the most progressive part of the tax system. Indirect taxes for a variety of reasons are probably regressive in their effect, although it depends on your lifestyle. If you drive, smoke or drink you obviously pay quite a bit.
There are other effects of the tax system like the effect on owner occupation versus private renting (overall) but as the UK's had high rates of owner occupation generally, this probably isn't as noticable as it could be. As rates of owner occupation drop it might have more of an impact.
edit : They're all shite, but Alan Johnson drove past me the other day and didn't smile, Harriet Harman didn't reply to my letter so they're immediately discounted. Peter Hain probably get's my notional support, but only just.