Jackie dear?

. He\’s approved higher taxes for top earners and promised further help to pensioners and the poorest. In all this, we see the return of Labour values, which seemed at times over the last 10 years to have vanished into history. Nobody wants a state-run economy or 97% marginal taxes, but the notion of a slightly fairer, less materialistic and longer-term polity is not an ugly one, and is now sellable.

Haven\’t you noticed, we do have 97% marginal taxes? It\’s just that we charge them on the poor, where the tax and benefit systems meet.

1 thought on “Jackie dear?”

  1. As far as I can see David Cameron plans to reintroduce 100% marginal rates for larger earners.

    Savings income will be taxed at zero % for lower rate taxpayers, and 40% for higher rate taxpayers.

    So take someone who is on the higher rate threshold of £40,835 and has savings of £40,000 earning (say) 4% a year, thus £1,600 a year in interest. They get a £1000 salary increase for working ever so hard. They will pay 40% of £1000 (I’m going to ignore NI), which is £400 in tax. But also now 40% of £1,600, which is £640 in tax. So they will pay £1,040 more in tax for a £1,000 salary increase, ie a marginal rate above 100%.

    No-one will ever earn more than the higher rate threshold again!

    Have I made a mistake in my calculations?

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