Oh Dear: 1.6million more to bought into 40% tax threshold...

[milanbenes]

Oh Dear,

it gets better....

'An additional 1.6 million people will be dragged into the higher rate of income tax for the first time under government proposals, a report warns today.
'

1.6m to pay higher rate of tax for first time - Telegraph


kerching


Milan.

[Churchill]

The Institute of Fiscal Studies (IFS), the country's most respected economic think tank, says 750,000 extra people face paying the 40 per cent higher rate of income tax from April. Another 850,000 will be drawn in by 2014, taking the total number of higher-rate taxpayers above five million by the next election.

The stealth tax-raising measure on the middle classes is part of government plans to remove hundreds of thousands of lower-paid workers from the income tax system. From April, the level at which people begin paying tax will be raised by £1,000 to £7,475 a year under heavily publicised reforms. The threshold will rise to £10,000 by the next election.

However, a less well-known feature of the plan is that the increase will be accompanied by a reduction of the threshold at which workers begin paying higher-rate tax, from £43,875 to £42,475. Higher earners will also have to pay more National Insurance from April. The IFS estimates that the richest 10 per cent of people will lose three per cent of their net income from April 6, compared with a one per cent loss for the population as a whole.

In today's report, James Browne, a senior research economist at the IFS, says: "While taking 500,000 out of tax altogether, the way that the Government has increased the personal allowance to ensure that higher rate taxpayers don't gain will increase the number of higher rate taxpayers by 750,000."

A spokesman for the Treasury defended the changes. "The Government has had to make tough choices but has always been clear those with the broadest shoulders should carry the greatest burden."

So Milan, what's wrong with the above?

Let's have an opinion instead of your quest for headlines.

[thunderlizard]

The stealth tax-raising measure on the middle classes is part of government plans to remove hundreds of thousands of lower-paid workers from the income tax system
...
the increase will be accompanied by a reduction of the threshold at which workers begin paying higher-rate tax, from £43,875 to £42,475.

Reducing the threshold is hardly "stealth". These new boys are amateurs compared with the old lot. Gordon Brown would have raised that £((43875-42475) * (40-20)%) = £280 by means of a cunning nursery-voucher-direct-credit-registration-fee ruse.

[milanbenes]

Winston,

opinons are above my pay scale.

Milan.

[AtW]

Reducing the threshold is hardly "stealth".

It's very much stealth when Govt publicly shouts about increasing personal allowance by £1k and quietly reducing threshold for "higher rate" taxpayers.

Personally I think it's not a bad idea provided 40% changed to more reasonable 30%.