Why the fuss over 50p Tax Rate...

...when income between 100k and 120k is already taxed at 60p*?

Thomas

• Assuming a personal allowance of 10k which is reduced by ?1 for every ?2 of taxable income above 100k. Marginal tax rate would be nominally 40%, but for each ?2 over 100k you'd pay 80p on those ?2 and an additional 40p on the ?1 you lose from your personal allowance. So you pay an extra 120p for each ?2 you earn between 100k and 120k which is equivalent to paying 60p per ?. Or am I missing something?

Because it's a very limited case - it "goes down" to 45p/50p again above that £120k - even if you're earning £1.5m/year.

Oh, yes - and because it doesn't make good headlines...

You missed the 2% National Insurance contributions; it's 62% really.

Robert

Well my reading of the income distribution figures is that there will be a comparable number of people earning between ?100k-?120k as earning above ?120k and many many more than are earning over ?1.5m. For those taxpayers, this isn't a limited case, this is their true marginal tax rate.

Agreed.

And another thing.....

The effect of this tax is that people earning over 120k pay a lower marginal tax rate than those earning between 100k and 120k. I thought it was generally accepeted these days that income tax (at least) should be progressive!

Humph!!!

Thomas

It's an attempt to distract the public from the fact that the economy is still f***ed.