The UK’s biggest earners pay 30% of all income tax but only take home 10% of all earnings, according to the latest research.
The figures show a huge turnaround in the tax burden. Looking at who paid what over the past 34 years, the wealthiest earners have shouldered an increasing amount of tax. In that time, the tax man has almost tripled the money they pay into Treasury coffers.
In 1989, those earning the most paid 11% of income tax when the highest rate was 83%. Now it’s 30% paying the most, while the top tax rate has dropped to 45%.
Secret strategy
The research, by accountancy firm BDO UK, was in response to Deputy Prime minister Nick Clegg calling for the amount paid before tax to rise to £10,500 to take more low paid workers out of the tax net.
However, the government cannot afford to lose income tax while juggling an austerity budget, so has to claw the money back from other taxpayers.
While Tories do not want to increase the top rate of income tax, the only way the Chancellor can balance his books without more borrowing is to reduce the threshold at which higher paid workers pay 40% tax.
While increasing the income tax allowance in successive budgets to £8,105 this year and promising to keep pushing the ceiling up to £10,000, Chancellor George Osborne has also quietly pulled down the threshold where earners pay 40% tax.
Before 2011, the threshold was just over £43,000. This tax year, the figure is £32,010, bringing thousands more into the government’s secret strategy to soak the highest earners.
Votes and taxes
Osborne has repeatedly protested those who earn more should pay more tax, but when ordinary taxpayers think of high earners, they are not looking in the mirror but at those taking home the big bucks – like City bankers.
Even Labour, who tirelessly campaign for higher top rate taxes, have said nothing about Middle Britain who are squeezed with paying more taxes on lower wages.
Jim O’Neill, the ex-chief economist of investment bank Goldman Sachs, told the media: “It’s fair play to ask those earning more to contribute more tax and few would complain about that.
“However, the politicians who rely on the same people for votes that they are squeezing for more tax to pay for the country’s public services are not going to support them forever if they do not get something back.”
