6 ms·

The pound is low against the dollar, as is the Euro low against the dollar. The pound dropped in value a few days ago, but the price has recovered since then.

by cbeach 4y ago

The pound is low against the dollar, as is the Euro low against the dollar. The pound dropped in value a few days ago, but the price has recovered since then. The media chooses to focus on the drop rather than the recovery, because the drop coincided with a government announcement of some pro-growth economic policies that mainstream pundits disagree with. If you speak to people in the U.K. many would agree that paying less tax is a positive thing, especially during a global cost of living crisis. But some people on the Left are angry that the wealthiest are also getting tax cuts. What a lot of those people don’t realise is that the wealthiest 1% are paying 28% of income tax receipts - and this percentage has increased over the last decade. In my opinion, I’m glad to see government reduce the tax burden on productive workers, as this stifled well-paying jobs, growth and investment. I speak from personal experience. Due to the insidious tax policy of withdrawing the personal allowance when income reaches £100K, there is a marginal tax rate of over 60% at that income level. For that reason I chose to quit my job as a software team manager in an investment bank and instead went to work as a developer in a startup. I decided there’s no point in working long hours in a responsible job helping other people advance their careers if I keep less than 40p of every pound I earn at that point. I may as well do less responsible work that I enjoy instead.

buf 4y ago
The pound was .87 ten days ago and it's .92 now, up from it's low of .93. It doesn't appear recovered to me.
- bigfudge 4y ago
  Plus, the real damage is on value of gilts. Sterling is a secondary concern (although obv also inflationary)
- leg100 4y ago
  The dollar was 87p ten days ago, it's 92p now. It get you're quoting USDGBP but what you say doesn't make any sense to anyone not sitting at a forex desk.
pfortuny 4y ago
Wow, removing the personal allowance is bonkers and totally against the principle of equality. But, of course, “the rich”…
bscphil 4y ago
> For that reason I chose to quit my job as a software team manager in an investment bank and instead went to work as a developer in a startup. > I decided there’s no point in working long hours in a responsible job helping other people advance their careers if I keep less than 40p of every pound I earn at that point. I may as well do less responsible work that I enjoy instead. This is an extremely funny takeaway in that anyone who doesn't agree with your ideological position is likely to see this as the tax working as intended.
- cbeach 4y ago
  Oh yes, you're not wrong. Many people on the left see tax as an appropriate punishment for wealth. In their worldview, wealthy people are demonised and dehumanised. The left are convinced that wealthy people are parasitic on society. This leftwing ideology seems peculiar to me, having seen the data on who's funding public services, and who's benefiting from public services.
  - fnimick 4y ago
    How can you possibly justify keeping even more of your money that you earn from profiting from the work of others, when people in need are freezing and starving? I know HN runs libertarian but this is just abhorrent.
    - imdsm 4y ago
      Many people make this point, but very few are willing to defend their views with some good old pragmatism. In the nature of HN, let's have a go at that, shall we? 1. Who works harder, an office worker working for 7.5 hours or a nurse who works for 12+ hours? 2. Who works harder, a person who works 37.5 hours in an office, or someone who works 80 hours a week, founding a company? 3. Who has worked harder to get where they are, an office worker who spent 6 months getting an NVQ in Microsoft Office or a nurse who spent 4-5 years getting a degree in nursing? 4. Who takes more risks, a person who works 37.5 hours in an office or a founder who puts their own capital in to try and create a company? 5. Which brings more value to a community, a person who is employed, or a person who employs people?
Nursie 4y ago
Wow, this might be the most ideologically driven take I've seen so far. Not even all of the Tory party are this extreme in their interpretation. > "policies that mainstream pundits disagree with" That the Bank of England have had to scramble to compensate for by bringing back QE in a limited form, that previous governers of the BoE have spoken out against, that the IMF has spoken out against, that previous heads of the US treasury have spoken against, that conservative peers and MPs have spoken against, that the markets responded to by having a fire sale? Those are a few mainstream pundits? LOL. > If you speak to people in the U.K. many would agree that paying less tax is a positive thing, especially during a global cost of living crisis Very few of those people would be paying less tax under these plans, as the major reduction is for people earning over 150k per annum - and those are the people already best placed to weather the cost of living crisis. It's not that the wealthiest are also getting tax cuts, it's that virtually nobody else is. I'm a high earner and I like money, but this is some self-interested bull**** right here
- cbeach 4y ago
  The BoE made another huge mistake by using QE during a period of temporary global inflation, and during a temporary blip in the value of the pound. QE is the worst possible strategy. And the IMF has consistently got it wrong about the UK economy. In the past it has actually made public apologies for doing so (IMF head: "do I have to go on my knees?" regarding incorrect warnings on UK economy): https://www.telegraph.co.uk/news/politics/10884632/Do-I-have-to-go-on-my-knees-grovelling-apology-from-IMF-head-for-incorrect-warnings-on-UK-economy.html https://www.telegraph.co.uk/news/politics/10884632/Do-I-have... We have to be careful to avoid the Argument from Authority fallacy, using the IMF and BoE reaction to judge government policy. https://en.wikipedia.org/wiki/Argument_from_authority https://en.wikipedia.org/wiki/Argument_from_authority > It's not that the wealthiest are also getting tax cuts, it's that virtually nobody else is. When the most productive members of society got landed with a 45% tax rate in 2013, it was higher than many G7 nations, and there's no evidence to suggest it actually increased revenue. Have you heard of the Laffer Curve?
  - Nursie 4y ago
    > We have to be careful to avoid the Argument from Authority fallacy Indeed, but we also have to be careful of writing off numerous opinions from multiple diverse sources in multiple countries, from politicians, economists, bankers and many other roles, as well as the actual actions of the people on the ground that have born out the criticisms, as the ill educated musings of a few 'pundits'. > When the most productive members of society... LOL. Seriously? I'm paid in that bracket (or I was until last year when I left the UK, and I'm now paid in that bracket somewhere else) and I don't believe for a second that we're the most productive members of society, we've just figured out ways to get people to pay us a lot. I look around at some of the unutterably useless arseholes that are on similar money and litter the offices of London, particularly in anything adjacent to city finance, and can only laugh at this ridiculous piece of libertarian orthodoxy. Most productive ... most productive at clumsily and innappropriately flirting with the disinterested secretary, most productive at clearing off for a long lunch somewhere new, most productive at looking busy, passing the buck and collecting the cheque, maybe. Yes I've heard of the laffer curve, no I'm not a particular believer that it's some sort of cast-iron truism, and neither apparently are the people you're defending, who are forecasting the various tax cuts to cost the treasury multiple billions, at least in the short term, until their miracle of growth happens, if it happens. There's a lot of argument about whether (for instance) the continuation of the lower corporation tax rate is even useful for that. These decisions are a kick in the pants to the people who actually need a tax break, your man on the street that you mentioned above, who would quite like a bit more money in his pocket due to the spiralling cost of living and energy crisis. He could do with a tax break to keep the family going this winter and deal with the higher mortgage payments that will come about because of the further interest rate rises these new changes will necessitate. But I guess my highly paid contractor friends will get to stick another few tens of thousands in their pension pots instead. The best thing that can be said about this budget is that it was done at completely the wrong time.
greybox 4y ago
I don't want to get in to discussing the politics or ideology here, but. I wouldn't say that it's just "some people on the left" - I dont want to place myself on either side of the fence but sky news are doing interviews with cross sections of Conservative / Labor / Swing voters and most of them think that this is Truss's fault. You are correct that this has coincided with the dollar making gains against most other currencies, and the effects of the mini-budget may be difficult to dis-entangle from that, but from the people I've seen interviewed, most people agree that the mini-budget has at least made things worse for the pound. It's worth pointing out that the pound has fallen significantly against the euro too[0]. [0] - XE dotcom
ajsnigrutin 4y ago
Yep, same thing is happening in slovenia right now... our previous government did one good thing (in a bunch of other bad things), and that was to lower taxes on paychecks. The current (left-er) one is bringing out the tax reform to "tax the rich", where even people earning average wage (~2k eur gross, ~1300eur net) will get taxed more.
Brakenshire 4y ago
I think that tax credit withdrawal still exists, so now the effective tax rate is 40% from £50k to £100k, then 60% from £100k to £125k, and 40% above that. Also, despite 10% inflation they’ve frozen the tax bands, so all workers earning above about £12k will have more of their income pulled into higher tax bands. So they’re left with that artificially high rate which blocks progression, and most workers up to about £150k will pay more.
fnimick 4y ago
> the wealthiest 1% are paying 28% of income tax receipts - and this percentage has increased over the last decade Without any information on how wealth inequality has increased, and the 1% have more income and assets now than they did last decade, this is misleading at best. If the top 1% are paying more taxes but are also making more money, this hardly seems unfair.
- cbeach 4y ago
  So you think 1% of people shouldering 28% of the cost of public services is fair?
  - lm28469 4y ago
    Actually it's not too crazy as the top 1% own about 20% of the total wealth > The wealthiest 1% of households hold about 20% of household wealth, the top 5% of hold approximately 40%, and the top 10% hold over 50% of wealth https://ifs.org.uk/articles/distribution-household-wealth-uk https://ifs.org.uk/articles/distribution-household-wealth-uk If you don't tax them they just amass more and more money without contributing more, if anything their wealth is due to the work of the bottom xx% of society that work for these ultra rich families
  - tikkabhuna 4y ago
    Do you think inequality should increase or decrease? If we keep current spending the same. We could reduce the % the top 1% bare by reducing inequality and by having the 99% earning and paying more tax. Or we could reduce taxes for the 1% and reduce spending which would likely increase inequality.
    - bigfudge 4y ago
      I agree that equality is a desireable goal. But, this argument doesn’t persuade people who don’t care about equality. Better is to focus on the benefits gained bu the wealthy from stable legal systems, public health, education etc. If you are Bezos your money is only possible because these expensive services are paid for. You gin more than most, and so must pay a greater share than most.
steve_gh 4y ago
Quite frankly, you are hugely privileged to be earning at that level. The median average salary in the UK is just under £26k. Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. SO if you are doing the sensible thing and putting money into a pension, the threshold you talk of is effectively at a £140k salary.
- cbeach 4y ago
  Yes I do pay plenty into my pension. It's not my "privilege" to earn at that level. I was born into an average economic background. I worked really hard at school and university, and then over a period of seventeen years, I worked really hard in responsible jobs. If all people from average backgrounds took the attitude that only "privileged" people get good careers, then unfortunately it would be a self-fulfilling prophecy. Luckily there are plenty of aspirational people in the UK looking to better their family's situation by advancing their careers.
  - tikkabhuna 4y ago
    The poster you replied to was not saying you didn't earn it, they're saying you're in a privileged position now. > having special rights, advantages, or immunities > Similar: wealthy rich affluent prosperous lucky fortunate special
    - bigfudge 4y ago
      Although worth noting that luck plays a much larger role on most peoples success than is acknowledged. Uk and Us are also much less likely to recognise use role of chance in personal success than wealthy Europeans.
  - Al-Khwarizmi 4y ago
    If you lived in a dysfunctional country without public services, you wouldn't have been able to do all that, though. You took more benefit from the system than others, regardless of whether it's by merit, it still makes sense that you pay more back.
Nextgrid 4y ago
The problem I see is that these tax cuts only really help those who don't need the help, all while the lower classes still can't pay their energy bills/rent/food. The issue is that most of the economy relies on people (including the lower classes) spending, which they aren't going to do if they already spent all their money on rent/bills. This in turn means businesses may go underwater if they aren't getting enough customers to stay afloat and operate profitably, leading to losses of jobs and less business for the companies that serve those businesses, and so on and so forth in a cascading failure. So even if you are selfish and say "fuck the poor", it's a bad idea because your ability to stay rich relies on there being "poor" people who spend their money at your establishment. Not to mention that with extreme poverty comes crime, something that ultimately costs all of us money. It's like "tricke-down economics", except it trickles up and unlike the former, this one actually does happen for real and we're already seeing the effects of it. I say this as someone who otherwise is in favour of tax cuts and sees taxation as theft, but that's a discussion for another day. But if you're going to cut taxes to help with cost of living and can't cut them all, then focus your efforts where it actually helps. The ones who will actually see a non-trivial increase in their income due to this cut are those who already didn't need any help.
- bigfudge 4y ago
  Plus, even taking at face value the notion that tax cuts were to inject money into the economy and stimulate growth, giving money to poor people guarantees it’s spent in the economy immediately.
rymate1234 4y ago
> Due to the insidious tax policy of withdrawing the personal allowance when income reaches £100K The affect of removing that doesn't seem to be that major, with the figures [1] appearing to work out at almost 1.5% less tax for those on £100k, and a little over 2.5% less tax for those on £200k -- hardly a huge decrease in the tax burden for those people. [1]: https://blogsmedia.lse.ac.uk/blogs.dir/8/files/2022/09/28september2022bppfigure1crop.png https://blogsmedia.lse.ac.uk/blogs.dir/8/files/2022/09/28sep...
mattgperry 4y ago
Mainstream pundits like... Dan Hodges? We're trying to boost the economy by cutting taxes on the group of people who are most likely just to stuff the extra money into investments rather than spending it? Great idea.
dan-robertson 4y ago
I don’t understand your logic? It sounds like you’re saying you changed jobs for less money so that your marginal tax rate would be lower even though your net income would be lower. In theory you could also change jobs to something that pays £125k where your marginal tax rate would be back down to 40%, though obviously you’d need to find such a job. You specifically wrote ‘marginal’ so I don’t think you’re confused between marginal and effective tax rates so are you suggesting that the 60p rate did not provide sufficient incentives for you to try to get paid more? That would maybe make sense but I think it can also be useful to think of pay raises on a logarithmic scale rather than a linear one (as in an equal amount of raise-worthiness would be expected to lead to a proportionally larger raise in absolute terms if your starting pay is higher), which would mean an x% raise at a higher marginal tax rate may still be worth it if your starting pay is higher. But then another common model is log utility for money which cancels out that effect. It’s fair enough if you want to work at the startup but this seems like a strange rationalisation. I agree that the 60% marginal rate from the personal allowance reduction is kinda silly.
- bigfudge 4y ago
  In what circumstances the does UK have a 60% marginal tax rate. I think the op is confused.
  - tikkabhuna 4y ago
    Between £100k and £125k your personal allowance is reduced to £0, so for every £1 you gain, you lose more of that allowance and that works out to a 20% reduction. That on top of the 40% rate equals 60%.
    - wave_function 4y ago
      If I’m understanding correctly, that makes the effective marginal tax rate between 100k and 125k higher than after 125k? Feels kind of crazy
      - MattPalmer1086 4y ago
JohnCClarke 4y ago
Truss is borrowing £45B to pay for tax cuts this year. But like you ask any addict: "What are you going to do next year?" The trickle-down maths looks "optimistic". Cutting £45B means that the economy needs to grow by £112.5B for the top rate 40% tax rate take to come out even. That is GDP growth of 4.5%. I.e. far in excess of what the economy has been capable of ever since 1997. Talking of further tax cuts just pushes the assumed GDP growth further into fantasy land.
stefantalpalaru 4y ago
chimprich 4y ago
> when income reaches £100K, there is a marginal tax rate of over 60% at that income level Can't you just put that in your pension to avoid that effective 60% rate? > no point in working long hours in a responsible job helping other people advance their careers if I keep less than 40p of every pound I earn at that point I think the way the UK calculates tax at that level is a stupid way of setting it up, but "only" taking 40% of the 100k to 125k is hardly terrible. If you're in that range, you're incredibly well paid for the UK (or pretty much anywhere in the world). I would personally like to pay more tax if it meant decent public services instead of people dying waiting for ambulances.
solumunus 4y ago
Wow, what a silly comment. Enough people have already rebutted this nonsense so I don't need to, but it just shocks me to find such uninformed takes on a forum with these demographics. Also, this isn't just the left, it's practically anyone with a brain. Any conservatives from David Cameron's administration (not far right ideologues) are horrified by this, as are most of the current MP's who overwhelmingly wanted Rishi Sunak, who is also horrified by this...
- psd1 4y ago
  Funny - I thought the Cameron government was extremely ideological. Osborne wasn't thick, he must have realised the damage that austerity would do in a recession. Debt was extremely manageable going into the 08 recession. Interest rates were nearly zero. I always viewed it as a cynical way to weaken labour.

by cbeach 4y ago

buf 4y ago

The pound was .87 ten days ago and it's .92 now, up from it's low of .93. It doesn't appear recovered to me.

bigfudge 4y ago
Plus, the real damage is on value of gilts. Sterling is a secondary concern (although obv also inflationary)
leg100 4y ago
The dollar was 87p ten days ago, it's 92p now. It get you're quoting USDGBP but what you say doesn't make any sense to anyone not sitting at a forex desk.

pfortuny 4y ago

Wow, removing the personal allowance is bonkers and totally against the principle of equality. But, of course, “the rich”…

bscphil 4y ago

> For that reason I chose to quit my job as a software team manager in an investment bank and instead went to work as a developer in a startup. > I decided there’s no point in working long hours in a responsible job helping other people advance their careers if I keep less than 40p of every pound I earn at that point. I may as well do less responsible work that I enjoy instead. This is an extremely funny takeaway in that anyone who doesn't agree with your ideological position is likely to see this as the tax working as intended.

cbeach 4y ago
Oh yes, you're not wrong. Many people on the left see tax as an appropriate punishment for wealth. In their worldview, wealthy people are demonised and dehumanised. The left are convinced that wealthy people are parasitic on society. This leftwing ideology seems peculiar to me, having seen the data on who's funding public services, and who's benefiting from public services.
- fnimick 4y ago
  How can you possibly justify keeping even more of your money that you earn from profiting from the work of others, when people in need are freezing and starving? I know HN runs libertarian but this is just abhorrent.
  - imdsm 4y ago
    Many people make this point, but very few are willing to defend their views with some good old pragmatism. In the nature of HN, let's have a go at that, shall we? 1. Who works harder, an office worker working for 7.5 hours or a nurse who works for 12+ hours? 2. Who works harder, a person who works 37.5 hours in an office, or someone who works 80 hours a week, founding a company? 3. Who has worked harder to get where they are, an office worker who spent 6 months getting an NVQ in Microsoft Office or a nurse who spent 4-5 years getting a degree in nursing? 4. Who takes more risks, a person who works 37.5 hours in an office or a founder who puts their own capital in to try and create a company? 5. Which brings more value to a community, a person who is employed, or a person who employs people?

Nursie 4y ago

Wow, this might be the most ideologically driven take I've seen so far. Not even all of the Tory party are this extreme in their interpretation. > "policies that mainstream pundits disagree with" That the Bank of England have had to scramble to compensate for by bringing back QE in a limited form, that previous governers of the BoE have spoken out against, that the IMF has spoken out against, that previous heads of the US treasury have spoken against, that conservative peers and MPs have spoken against, that the markets responded to by having a fire sale? Those are a few mainstream pundits? LOL. > If you speak to people in the U.K. many would agree that paying less tax is a positive thing, especially during a global cost of living crisis Very few of those people would be paying less tax under these plans, as the major reduction is for people earning over 150k per annum - and those are the people already best placed to weather the cost of living crisis. It's not that the wealthiest are also getting tax cuts, it's that virtually nobody else is. I'm a high earner and I like money, but this is some self-interested bull**** right here

cbeach 4y ago
The BoE made another huge mistake by using QE during a period of temporary global inflation, and during a temporary blip in the value of the pound. QE is the worst possible strategy. And the IMF has consistently got it wrong about the UK economy. In the past it has actually made public apologies for doing so (IMF head: "do I have to go on my knees?" regarding incorrect warnings on UK economy): https://www.telegraph.co.uk/news/politics/10884632/Do-I-have-to-go-on-my-knees-grovelling-apology-from-IMF-head-for-incorrect-warnings-on-UK-economy.html https://www.telegraph.co.uk/news/politics/10884632/Do-I-have... We have to be careful to avoid the Argument from Authority fallacy, using the IMF and BoE reaction to judge government policy. https://en.wikipedia.org/wiki/Argument_from_authority https://en.wikipedia.org/wiki/Argument_from_authority > It's not that the wealthiest are also getting tax cuts, it's that virtually nobody else is. When the most productive members of society got landed with a 45% tax rate in 2013, it was higher than many G7 nations, and there's no evidence to suggest it actually increased revenue. Have you heard of the Laffer Curve?
- Nursie 4y ago
  > We have to be careful to avoid the Argument from Authority fallacy Indeed, but we also have to be careful of writing off numerous opinions from multiple diverse sources in multiple countries, from politicians, economists, bankers and many other roles, as well as the actual actions of the people on the ground that have born out the criticisms, as the ill educated musings of a few 'pundits'. > When the most productive members of society... LOL. Seriously? I'm paid in that bracket (or I was until last year when I left the UK, and I'm now paid in that bracket somewhere else) and I don't believe for a second that we're the most productive members of society, we've just figured out ways to get people to pay us a lot. I look around at some of the unutterably useless arseholes that are on similar money and litter the offices of London, particularly in anything adjacent to city finance, and can only laugh at this ridiculous piece of libertarian orthodoxy. Most productive ... most productive at clumsily and innappropriately flirting with the disinterested secretary, most productive at clearing off for a long lunch somewhere new, most productive at looking busy, passing the buck and collecting the cheque, maybe. Yes I've heard of the laffer curve, no I'm not a particular believer that it's some sort of cast-iron truism, and neither apparently are the people you're defending, who are forecasting the various tax cuts to cost the treasury multiple billions, at least in the short term, until their miracle of growth happens, if it happens. There's a lot of argument about whether (for instance) the continuation of the lower corporation tax rate is even useful for that. These decisions are a kick in the pants to the people who actually need a tax break, your man on the street that you mentioned above, who would quite like a bit more money in his pocket due to the spiralling cost of living and energy crisis. He could do with a tax break to keep the family going this winter and deal with the higher mortgage payments that will come about because of the further interest rate rises these new changes will necessitate. But I guess my highly paid contractor friends will get to stick another few tens of thousands in their pension pots instead. The best thing that can be said about this budget is that it was done at completely the wrong time.

greybox 4y ago

I don't want to get in to discussing the politics or ideology here, but. I wouldn't say that it's just "some people on the left" - I dont want to place myself on either side of the fence but sky news are doing interviews with cross sections of Conservative / Labor / Swing voters and most of them think that this is Truss's fault. You are correct that this has coincided with the dollar making gains against most other currencies, and the effects of the mini-budget may be difficult to dis-entangle from that, but from the people I've seen interviewed, most people agree that the mini-budget has at least made things worse for the pound. It's worth pointing out that the pound has fallen significantly against the euro too[0]. [0] - XE dotcom

ajsnigrutin 4y ago

Yep, same thing is happening in slovenia right now... our previous government did one good thing (in a bunch of other bad things), and that was to lower taxes on paychecks. The current (left-er) one is bringing out the tax reform to "tax the rich", where even people earning average wage (~2k eur gross, ~1300eur net) will get taxed more.

Brakenshire 4y ago

I think that tax credit withdrawal still exists, so now the effective tax rate is 40% from £50k to £100k, then 60% from £100k to £125k, and 40% above that. Also, despite 10% inflation they’ve frozen the tax bands, so all workers earning above about £12k will have more of their income pulled into higher tax bands. So they’re left with that artificially high rate which blocks progression, and most workers up to about £150k will pay more.

fnimick 4y ago

> the wealthiest 1% are paying 28% of income tax receipts - and this percentage has increased over the last decade Without any information on how wealth inequality has increased, and the 1% have more income and assets now than they did last decade, this is misleading at best. If the top 1% are paying more taxes but are also making more money, this hardly seems unfair.

cbeach 4y ago
So you think 1% of people shouldering 28% of the cost of public services is fair?
- lm28469 4y ago
  Actually it's not too crazy as the top 1% own about 20% of the total wealth > The wealthiest 1% of households hold about 20% of household wealth, the top 5% of hold approximately 40%, and the top 10% hold over 50% of wealth https://ifs.org.uk/articles/distribution-household-wealth-uk https://ifs.org.uk/articles/distribution-household-wealth-uk If you don't tax them they just amass more and more money without contributing more, if anything their wealth is due to the work of the bottom xx% of society that work for these ultra rich families
- tikkabhuna 4y ago
  Do you think inequality should increase or decrease? If we keep current spending the same. We could reduce the % the top 1% bare by reducing inequality and by having the 99% earning and paying more tax. Or we could reduce taxes for the 1% and reduce spending which would likely increase inequality.
  - bigfudge 4y ago
    I agree that equality is a desireable goal. But, this argument doesn’t persuade people who don’t care about equality. Better is to focus on the benefits gained bu the wealthy from stable legal systems, public health, education etc. If you are Bezos your money is only possible because these expensive services are paid for. You gin more than most, and so must pay a greater share than most.

steve_gh 4y ago

Quite frankly, you are hugely privileged to be earning at that level. The median average salary in the UK is just under £26k. Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. SO if you are doing the sensible thing and putting money into a pension, the threshold you talk of is effectively at a £140k salary.

cbeach 4y ago
Yes I do pay plenty into my pension. It's not my "privilege" to earn at that level. I was born into an average economic background. I worked really hard at school and university, and then over a period of seventeen years, I worked really hard in responsible jobs. If all people from average backgrounds took the attitude that only "privileged" people get good careers, then unfortunately it would be a self-fulfilling prophecy. Luckily there are plenty of aspirational people in the UK looking to better their family's situation by advancing their careers.
- tikkabhuna 4y ago
  The poster you replied to was not saying you didn't earn it, they're saying you're in a privileged position now. > having special rights, advantages, or immunities > Similar: wealthy rich affluent prosperous lucky fortunate special
  - bigfudge 4y ago
    Although worth noting that luck plays a much larger role on most peoples success than is acknowledged. Uk and Us are also much less likely to recognise use role of chance in personal success than wealthy Europeans.
- Al-Khwarizmi 4y ago
  If you lived in a dysfunctional country without public services, you wouldn't have been able to do all that, though. You took more benefit from the system than others, regardless of whether it's by merit, it still makes sense that you pay more back.

Nextgrid 4y ago

The problem I see is that these tax cuts only really help those who don't need the help, all while the lower classes still can't pay their energy bills/rent/food. The issue is that most of the economy relies on people (including the lower classes) spending, which they aren't going to do if they already spent all their money on rent/bills. This in turn means businesses may go underwater if they aren't getting enough customers to stay afloat and operate profitably, leading to losses of jobs and less business for the companies that serve those businesses, and so on and so forth in a cascading failure. So even if you are selfish and say "fuck the poor", it's a bad idea because your ability to stay rich relies on there being "poor" people who spend their money at your establishment. Not to mention that with extreme poverty comes crime, something that ultimately costs all of us money. It's like "tricke-down economics", except it trickles up and unlike the former, this one actually does happen for real and we're already seeing the effects of it. I say this as someone who otherwise is in favour of tax cuts and sees taxation as theft, but that's a discussion for another day. But if you're going to cut taxes to help with cost of living and can't cut them all, then focus your efforts where it actually helps. The ones who will actually see a non-trivial increase in their income due to this cut are those who already didn't need any help.

bigfudge 4y ago
Plus, even taking at face value the notion that tax cuts were to inject money into the economy and stimulate growth, giving money to poor people guarantees it’s spent in the economy immediately.

rymate1234 4y ago

> Due to the insidious tax policy of withdrawing the personal allowance when income reaches £100K The affect of removing that doesn't seem to be that major, with the figures [1] appearing to work out at almost 1.5% less tax for those on £100k, and a little over 2.5% less tax for those on £200k -- hardly a huge decrease in the tax burden for those people. [1]: https://blogsmedia.lse.ac.uk/blogs.dir/8/files/2022/09/28september2022bppfigure1crop.png https://blogsmedia.lse.ac.uk/blogs.dir/8/files/2022/09/28sep...

mattgperry 4y ago

Mainstream pundits like... Dan Hodges? We're trying to boost the economy by cutting taxes on the group of people who are most likely just to stuff the extra money into investments rather than spending it? Great idea.

dan-robertson 4y ago

I don’t understand your logic? It sounds like you’re saying you changed jobs for less money so that your marginal tax rate would be lower even though your net income would be lower. In theory you could also change jobs to something that pays £125k where your marginal tax rate would be back down to 40%, though obviously you’d need to find such a job. You specifically wrote ‘marginal’ so I don’t think you’re confused between marginal and effective tax rates so are you suggesting that the 60p rate did not provide sufficient incentives for you to try to get paid more? That would maybe make sense but I think it can also be useful to think of pay raises on a logarithmic scale rather than a linear one (as in an equal amount of raise-worthiness would be expected to lead to a proportionally larger raise in absolute terms if your starting pay is higher), which would mean an x% raise at a higher marginal tax rate may still be worth it if your starting pay is higher. But then another common model is log utility for money which cancels out that effect. It’s fair enough if you want to work at the startup but this seems like a strange rationalisation. I agree that the 60% marginal rate from the personal allowance reduction is kinda silly.

bigfudge 4y ago
In what circumstances the does UK have a 60% marginal tax rate. I think the op is confused.
- tikkabhuna 4y ago
  Between £100k and £125k your personal allowance is reduced to £0, so for every £1 you gain, you lose more of that allowance and that works out to a 20% reduction. That on top of the 40% rate equals 60%.
  - wave_function 4y ago
    If I’m understanding correctly, that makes the effective marginal tax rate between 100k and 125k higher than after 125k? Feels kind of crazy
    - MattPalmer1086 4y ago

JohnCClarke 4y ago

Truss is borrowing £45B to pay for tax cuts this year. But like you ask any addict: "What are you going to do next year?" The trickle-down maths looks "optimistic". Cutting £45B means that the economy needs to grow by £112.5B for the top rate 40% tax rate take to come out even. That is GDP growth of 4.5%. I.e. far in excess of what the economy has been capable of ever since 1997. Talking of further tax cuts just pushes the assumed GDP growth further into fantasy land.

stefantalpalaru 4y ago

chimprich 4y ago

> when income reaches £100K, there is a marginal tax rate of over 60% at that income level Can't you just put that in your pension to avoid that effective 60% rate? > no point in working long hours in a responsible job helping other people advance their careers if I keep less than 40p of every pound I earn at that point I think the way the UK calculates tax at that level is a stupid way of setting it up, but "only" taking 40% of the 100k to 125k is hardly terrible. If you're in that range, you're incredibly well paid for the UK (or pretty much anywhere in the world). I would personally like to pay more tax if it meant decent public services instead of people dying waiting for ambulances.

solumunus 4y ago

Wow, what a silly comment. Enough people have already rebutted this nonsense so I don't need to, but it just shocks me to find such uninformed takes on a forum with these demographics. Also, this isn't just the left, it's practically anyone with a brain. Any conservatives from David Cameron's administration (not far right ideologues) are horrified by this, as are most of the current MP's who overwhelmingly wanted Rishi Sunak, who is also horrified by this...

psd1 4y ago
Funny - I thought the Cameron government was extremely ideological. Osborne wasn't thick, he must have realised the damage that austerity would do in a recession. Debt was extremely manageable going into the 08 recession. Interest rates were nearly zero. I always viewed it as a cynical way to weaken labour.