Top 1% of UK wage-earners pay 25% of all income tax

[dipsydoodle]

The top 1 percent of wage-earners in Britain will pay almost one-quarter of the country’s income taxes this year, according to a study by HM Revenue and Customs (HMRC).

By contrast, the Daily Telegraph paper pointed out, during the late 1970s (a period of UK history associated with “super-taxes”), the top one percent paid only 11 per cent of all the tax revenues.

The latest data, analyst suggest, reflect how “the rich had got richer over the last three decades, while the tax burden on them had increased substantially in recent years.”

Just two years ago, during the 2008-2009 tax period, it required 648,000 of the wealthiest taxpayers to pay 25 percent of total tax revenues.

http://www.ibtimes.com/articles/112266/20110214/uk-taxes.htm

That's from a year ago and from discussions on our tv news here in the UK today the projection is looking to be correct. That gives rise to a paradox - if their earnings are lowered then how is the shortfall made up elsewhere ?

I cannot equate this to the USA whose tax system I simply do not understand.

[CJCRANE]

1. "The rich are getting proportionately richer, and therefore are paying more tax"

There seem to be two different conclusions but they could both be right...i.e. the rich in the UK are earning a lot more proportionately and their tax burden is higher than it it used to be (due to the 50% top marginal rate).

[dipsydoodle]

3. Marginal rate is actually 52%

The odd 2% being additional NH payment.

[yodermon]

2. what do you mean "if their earnings are lowered" ?

do mean "if we tax them more (and thus lower their earnings)"?

or do you mean "if they lower their own wages 'voluntarily' so as to be more equitable to society at large" (i.e. lower the CEO/worker pay ratio) ??

I'm not familiar with taxes in the UK so forgive me as well.

[dipsydoodle]

5. No - there may be separate legislation to control directors salaries and bonuses.

The other oddity is if they simply gave money away before tax and the recipients paid any tax liability then overall tax receipts would still plummet.

In an extreme case of farcical proportion if they all said "fine, we'll go year without pay" the UK would be competely fucked.

[CJCRANE]

6. But the money still exists.

It's not a case of if the CEOs don't get humungous salaries the money disappears.

As I mentioned below, they can pay the workers more or reinvest the money in infrastructure or whatever to keep it moving around in the real economy.

[dipsydoodle]

8. What would actually happen

is that if they lowered their earnings the companies bottom line would go up and increase corporation tax paid but that's at a lower rate than 52%.

[CJCRANE]

4. "if their earnings are lowered then how is the shortfall made up elsewhere ?"

My suggestion is..lower the CEOs' salaries and pay the workers more.

As the working and middle classes spend more of their wages this will stimulate the consumer economy, the money will be made back by the government in income tax and indirect taxes and a lot of businesses will benefit by getting more customers (or customers who spend more).

It's the Henry Ford principle in action.

[dipsydoodle]

7. I wondered how long it be before that came up.

Wouldn't work - some wouldn't be liable to pay any tax at all whilst others would pay at a lower rate. Net receipts would fall.

[CJCRANE]

9. Workers spend more of their income

so I assume you'll get it back on the VAT at 20% and other sales taxes.