Mr Osborne also plans to merge income tax with National Insurance to show more clearly how much tax people are paying. By merging the two rates, the basic rate of tax will rise from 20p in the pound to 32p and for higher rate earners from 40p to 52p.
That\’s good but not great. For there\’s a further 13.8% of so called \”employers\’\” national insurance there.
And just because it\’s called \”employers\’\” doesn\’t mean that the economic incidence of the tax falls on employers. The calculation of quite where it does fall is slightly fraught, but the general consensus is that between most and all of it is really paid by the worker.
So to really clarify matters that should be merged in as well. Certainly, as a political move, it should be merged in.
For, when basic rate tax is shown to be (as it actually already is) 45%, top rate 65%, where then the calls for higher income taxation?