Is 50/50 fair?

Ritchie\’s new report.

Is 50/50 fair?
Richard Murphy

It\’s possible that it could be.

However, that\’s not the tax system we have so it\’s not a question we can ask about the tax system we have.

Employers\’ NI is payable at 13.8% on such sums, employee\’s at 2% when such incomes are earned through the PAYE system. The system which Richard Murphy states covers the majority of those earning such sums.

Second, I argue that the scope for revenues to fall as a result of the use of this rate is far smaller than claimed by many, especially since almost 60% of those paying this tax rate are employees for whom avoidance opportunities are, to be candid, often quite limited,

Yes, employers\’ NI is indeed, at the very minimum in large part, in reality probably in whole, a deduction from wages received (again, R. Murphy has stated so).

Thus, in order to have a 50/50 marginal tax rate we need to have an income tax rate of more like 40% (the exact rate is left to the reader to calculate).

If our conclusion is that 50/50 is indeed fair then we need to lower the top income tax rate.

As Ritchie has QED\’d for us.

6 comments on “Is 50/50 fair?

  1. Not forgetting VAT, fuel, alcohol or tobacco duty so any such payments should be refundable, no?

  2. I don’t have a terrific amount of respect for RM’s analytic prowess, but I still can’t believe he left such an open goal.

  3. No I don’t think 50 / 50 is fair – how can you possibly argue that it is correct to take away half of what I earn to spend on idiot policies I didn’t vote for.

    In my view anything over 20% (which is one day a week for most people) is too much.

    And yes of course you are right R Murphy is a fucking idiot

  4. This stuff about fair is for the playground. I would have thought we start with ‘what is the optimal size of the govt to maximise welfare’ and tax to reach that target in a way that introduces the minimum possible amount of deadweight costs.

  5. And VAT!

    VAT is payable on your wage bill and profits both.

    (Technically it is payable on sales but reclaimable on purchases except wages, profits, imports and taxes – which is the same thing).

  6. @Gary

    “tax to reach that target in a way that introduces the minimum possible amount of deadweight costs.”

    Not necessarily. If it can charge for its services, then do that rather than taxing. Unless of course you wish to suggest that govt is only providing proper public goods (non-rivalrous and non-excludable) in which case, yes, tax is a sensible way but you’ve already limited the role of govt to no more than a few percent of GDP.

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