Quote:
Originally Posted by astra
If I understand correctly, he says that there is very high tax if you earn more than a certain figure.
For example:
If you eran 15K pa., the tax is 20%, so you pay 3K
If you earn 40K pa., the tax is 30%, so you pay 12K
If you earn 51K pa., the tax is 40%, so you pay 20K
If you earn 100K pa., the tax is 50%, so you pay 50K
However, if the percentage was the same 20% for everybody, then people who earn would not have to find ways to hide their income.
It would look like that:
If you eran 15K pa., the tax is 20%, so you pay 3K
If you earn 40K pa., the tax is 20%, so you pay 8K
If you earn 51K pa., the tax is 20%, so you pay 10K
If you earn 100K pa., the tax is 20%, so you pay 20K
Thus people who earn more would not be discriminated.
Although, I belong to the first line in the list, I think it is unfair on people who earn more. There is a point when you don't want to earn more, because there is no point, the tax man will get everything.
Then again...better them than us...
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I don't think it quite works like that.
There are thresholds, so you only pay the higher rate tax on any earnings above that threshold, e.g.
If you earn 15K pa., the tax is 10%, so you pay 1.5K
If you earn 40K pa., the tax is 10% on the first 20k and 15% on the rest so you pay 5k
If you earn 100K pa., the tax is 10% on the first 20k and 15% on the next 20k and 40% on the rest so you pay 29k
These aren't the actual thresholds in use in the UK, I think that they are 22%, 40% and 50% (40% kicks in at 40k and 50% at 100k I think, but don't quote me on it). This means that you don't get the situation where it's better to be paid 99k rather than 100k for example.