I have long been concerned about the regressive nature of the UK tax system; regression that is in part caused by the wholly unfair way in which our social security charges work.
National insurance is charged on earnings up to £34,840 this year (and £40,040) next with a small exemption (£87 a week this year). Any tax at 11% (in the main) that stops (bar 1%) when a bit above average earnings is reached is obviously regressive. It is also a cause of massive tax planning as investment income is, wholly unreasonably and without any cause, exempt from charge, a fact that should be remedied by imposition of an investment income surcharge on all investment income over £5,000 at a rate of 10% per annum.
What pleases me is the fact that the Democratic presidential candidates seem to have noticed the same inequity in the States, where the charges stop at about $100,000. It’s being suggested (bar the odd minor squabble) by both Clinton and Obama that charges should start again at $200,000. It’s not a perfect solution. But action to stop the regressive nature of modern tax systems that have a massive built in bias to investment income and, as a result and inevitably, towards the wealthiest in society, must be taken.
For once, I’m hoping we might follow suit.
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Have you ever noticed that the “exemption ranges” (about $98K-$200k) in incomes suggested by the three US Senators who are running for nomination always seem to include the bulk of a Senators current salary?
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[...] But Richard, National Insurance isn’t a tax, is it? It’s payment into a social insurance policy. [...]
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