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The UK now has a marginal rate of tax of 61.5%

2010/04/08 19:10


Income tax
Originally uploaded by alancleaver_2000

There’s an interesting blog posting in The Telegraph today, pointing out that on incomes between £100k and £113k the effective marginal tax rate is now 61.5%.

Note that this has nothing to do with the new 50% tax rate, which applies only to people earning more than £150k.

Instead it is the effect of three different measures being combined:

Combining the 40pc top rate of income tax with National Insurance at 11.5pc and the withdrawal of personal allowances above £100,000 has created a new marginal rate of tax of 61.5pc.

I hate this kind of peaks in the tax system that makes certain ranges of income unattractive.

If I was in charge, I’d introduce negative income tax instead.

Filed under economics • lang • en • politics

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