I've just checked
"Adrian Boliston" wrote
Yes, of course. It used to "plummet" to zero...
"Adrian Boliston" wrote
Or they assume that, once they've paid
11% upto 645pw, they've already paid enough for NHS service etc?
NI has nothing to do with the NHS. It's supposed to be an insurance which entitles you to claim benefits such as unemployment benefit (JSA), state pension, SERPS, maternity/paternity pay etc.
But as most benefits are flat rate whereas most contributions are percentages of salary, as you can claim for events which you caused deliberately (eg pregnancy), as it is compulsory, and as there are means tested alternatives to most benefits which you can get if you paid no premiums, it is clearly now a tax rather than an insurance.
"Andy Pandy" wrote
Not quite - when it was first introduced it was considered to fund, among other things, the NHS.
Also, do I remember correctly that *all* of the recent increase of 1% is supposed to be channelled directly into extra funds for the NHS alone?
"Andy Pandy" wrote
Agreed.
But then why does Income Tax work in the opposite way? It rockets from a fairly reasonable 22% to a massive 40%, yet surely by the time they have paid their tax on all their standard rated income then they have "paid enough" to cover the costs of eductaion, defence, transport etc?
Looking at
Bitstring , from the wonderful person Andy Pandy said
=WAS= supposed to be, maybe. These days you are not allowed to starve regardless of whether you have NI contributions or not. Actually you're sometimes better off if you don't have, iirc.
Likewise SERPS, Graduated Pension, and various other things which have gone down the government plughole over the years. The whole concept of 'you gets what you paid for' is completely foreign to governments which believe 'you pays what (we think) you can afford, you gets what (we think) you need'.
"Why not simply combine Tax & NI into a single tax and have a 41% higher rate and a 33% basic rate?"
Lots of people think they should. There are a few practical obstacles due to NI exemptions for people over a certain age etc., but these could be dealt with by adjusting tax bands for different groups.
I suspect the main reason is that for at least the last 27 years governments have been terrified of increasing the headline rate of income tax. There's probably some justification in that - as voters seem more sensitive to it than other taxes (e.g., Thatcher didn't lose many votes by massively hiking the tax burden via VAT and Blair/Brown haven't for their NI increases). However, the bottom line is that it is a lcak of political courage.
Thom
Because it does.
It's interesting to note (well I find it interesting anyway) that most (if not all) European countries' calculate Social Security deductions the same way as the UK does (usually at a somewhat higher percentage).
tim
"Why not simply combine Tax & NI into a single tax and have a 41% higher rate and a 33% basic rate? "
It was the principle of 'universal welfare'. Everyone is in the system, everyone pays and and everyone can draw when needed. We were all in the same boat, cradle to grave etc. etc.
The expansion of means testing eroded the principle so that many think that NI is now more and more indistinguishable from income tax.
I don't think you can ever be better off through *not* having an NI record.
It's true that some means tested benefits are more generous than their contributory equivalents (eg the MIG, JSA for a couple), but where this is the case you can claim the means tested element to top up the contributory element you're already getting. It may make the contributory element completely worthless though.
A better summary would be 'you pay regardless of how much you can afford, you get what helps up achieve some bullshit targets'.
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