Birds ignore fiscal drag while on the patio
I can remember to being young and the alien world of tax. I am sure that there were people who were warning that young ambitious people like me could not cope with taxes as we faced in the last twenty years of the 1990s and of course they were wrong.
This weekend, the press is determined to show us how paying more tax than ever before will stymie our wish to do well. Here is a graph from the FT which makes a point, I have no idea what the vertical bar is telling me but its full of cliff edges that I might fall off.
But the accountants talking with the Financial Times are unanimous, the young and ambitious will stop being ambitious when faced with a higher share of income tax they pay relative than others.
Andrew Timpson, employment tax partner at RSM UK, warned that these measures, alongside plans to charge national insurance on salary sacrifice pension contributions, would make many people think twice about earning more.
I know people in their twenties and some earn the minimum wage and one earns over £250,000. Most complain about the need to get out of the housing horror of having to live with Mum and Dad or pay horror rent or get trapped in the leaseholders nightmare.
I do not hear young people worrying about income tax , national insurance, certainly not the cost of pension planning,
They spend a lot on festivals , on holidays in general and they find ways to enjoy themselves by being smart. They understand money through their phones, and like every generation before them , they ignore the droning on of tax specialists telling them they can’t be ambitious
This for instance
Nimesh Shah, chief executive of Blick Rothenberg, says people earning between £50,000 and £150,000 would feel the most pain from the measures.
He added that Reeves’ decision to extend the freeze, plus previous chancellor Jeremy Hunt’s decision to cut the threshold from which the top 45 per cent rate of tax applies, from £150,000 to £125,140, meant the top rate of tax was capturing more and more people. If the additional rate had risen in line with inflation, it would have reached around £210,000 today.
“It’s that middle group, the government knows that’s where they generate the most money, so it’s them they’re hitting,” says Shah. “It’s really killing any aspiration and ambition for people to earn more money.”
My memory of being young gets fainter but if I ever felt worried about the amount of tax I had to pay, I don’t remember it. I just got on with earning more to pay the bills. To suppose that people live their lives to minimise the impact of the fiscal drag is ridiculous.
It is also absurd to think that Governments are at best incompetent and at worst vindictive towards any one sector of society. The intergenerational transfers which are dreamed up by politically aware accountants and journalists to explain fiscal injustice is beyond me, my young friends- anyone in fact but the experts in tax and pensions who beset us with misery – after budgets.
Last night I was at the Swan Pub in Clewer listening to, singing with and eating Sri Lankan food. Some of the people in the pub were teenagers , most were workers and more than a few were pensioners.
In the four hours I spent enjoying myself, I did not talk with anyone who was interested in discussing anything but fun!
