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How do people still confidently completely misunderstand “Progressive income tax”. Deliberate feigned ignorance? Ignoring because it has the word “Progressive”

How do people still confidently completely misunderstand “Progressive income tax”. Deliberate feigned ignorance? Ignoring because it has the word “Progressive” in? I misunderstood this when I was 14. Then I grew up.

kypro 3y ago
It was somewhat deliberate, partly a misunderstanding (maybe). Let me try to clarify. I think people who cite effective tax rates are being equally misleading, but I appreciate I'm a minority in that opinion and therefore said what I said knowing it would likely cause some controversy. The point I'd make here is that if you're earning more than £37,500 in the UK you are still paying 40% on anything beyond that £37,500 – it's not inaccurate to say you're paying 40% tax – it's just not the full picture. These brackets cause many people to want to work less because the way they see it anything they earn beyond £37,500 is worth significant less since they are quite literally paying that 40% on the additional income. So if I get a job paying me £60,000 I'd have to consider the fact I'd be paying 40% tax on a decent percentage of that when I calculate my take home pay. So I'd argue it's simply not the case that someone would look at it this purely from the perspective of what their effective tax rate is in any given financial year – especially if they're working overtime or have other forms of income which might get pushed into a higher tax bracket. I know plenty of people who refuse work when they hit the 40% tax bracket because they feel too much is taken from them at that point. While saying someone is paying 40% tax isn't the full picture, citing an effective tax rate isn't the full picture either when considering incentives for promotions, overtime and side income. I'm sure we disagree on this though which is fine. I was considering wording it differently, but ultimately felt putting it in a slightly controversial way would at least prompt people to ask the right questions. The general point I wanted to make is that tax is quite a bit higher in the UK than the US so you can't directly compare gross pay – hopefully we at least agree there.

kypro 3y ago

It was somewhat deliberate, partly a misunderstanding (maybe). Let me try to clarify. I think people who cite effective tax rates are being equally misleading, but I appreciate I'm a minority in that opinion and therefore said what I said knowing it would likely cause some controversy. The point I'd make here is that if you're earning more than £37,500 in the UK you are still paying 40% on anything beyond that £37,500 – it's not inaccurate to say you're paying 40% tax – it's just not the full picture. These brackets cause many people to want to work less because the way they see it anything they earn beyond £37,500 is worth significant less since they are quite literally paying that 40% on the additional income. So if I get a job paying me £60,000 I'd have to consider the fact I'd be paying 40% tax on a decent percentage of that when I calculate my take home pay. So I'd argue it's simply not the case that someone would look at it this purely from the perspective of what their effective tax rate is in any given financial year – especially if they're working overtime or have other forms of income which might get pushed into a higher tax bracket. I know plenty of people who refuse work when they hit the 40% tax bracket because they feel too much is taken from them at that point. While saying someone is paying 40% tax isn't the full picture, citing an effective tax rate isn't the full picture either when considering incentives for promotions, overtime and side income. I'm sure we disagree on this though which is fine. I was considering wording it differently, but ultimately felt putting it in a slightly controversial way would at least prompt people to ask the right questions. The general point I wanted to make is that tax is quite a bit higher in the UK than the US so you can't directly compare gross pay – hopefully we at least agree there.