I totally agree, but I just realised -- there’s another cliff edge here!
I surveyed opinions on tax brackets a while back, and it seemed like there was a big psychological barrier at the 50% rate.
Most high earners would be willing to pay a 50% marginal tax rate (albeit some very grudgingly) but almost nobody was willing to go over 50%.
What’s good enough for the rich should do for the poor as well. The benefit drop off rate (effectively a marginal tax rate) should be 50% at the very most.
“For each dollar earned, I get to keep more than I give away in tax/benefits” is a cliff edge, but I think a reasonably justifiable one.
This was in the context of a political discussion about what the tax bands should be, not about paying the current taxes in reality.
Some people want higher taxes and some want lower; what I’m saying is, 50% stood out as an arbitrary threshold that many people seemed possibly willing to agree on.
Some complained that rich people shouldn’t be expected to prop up the rest of society, but conceded that progressive tax bands might be okay as long as the top rate was no more than 50%. Others felt that highly progressive taxes were essential; they wanted at least 50% as the top rate.
They might accept the raise and try to work less hours to keep the total similar. Or it works as an incentive to start finding ways to pay less taxes, out of a notion of fairness.
They're being paid hourly? How many people making six figures are paid hourly, and what kinds of job do they do?
To be clear, I easily understand how a high marginal rate is demoralizing and unfair at the low end. I'm not convinced it's a problem if tax brackets at the high end go to some number above 50%.
Yes! That’s silly and should be fixed (although it’s hard to drum up any sympathy for those poor folks earning only 110K or so).
Edit to clarify: if your salary is £100K and you get a £10K raise, you see almost none of it in your payslip. But if you’re on £120K and get the same raise you get to take a good chunk of it home. That’s what seems silly to me.
I surveyed opinions on tax brackets a while back, and it seemed like there was a big psychological barrier at the 50% rate.
Most high earners would be willing to pay a 50% marginal tax rate (albeit some very grudgingly) but almost nobody was willing to go over 50%.
What’s good enough for the rich should do for the poor as well. The benefit drop off rate (effectively a marginal tax rate) should be 50% at the very most.
“For each dollar earned, I get to keep more than I give away in tax/benefits” is a cliff edge, but I think a reasonably justifiable one.