Monday, 20 April 2009

Income tax mysteriously related to income, journalists discover

Some shocking stats in today's Mail, where it turns out that people who receive more income pay more income tax. This was fearlessly revealed in Tax map of Britain shows middle-class towns clobbered by the Treasury. How long has this so-called 'income' tax been going on, and why weren't we informed? Witness the grotesque disparity:

Taxpayers in middle-class towns are handing over up to four times more to the Treasury than those in less affluent areas, a tax map of Britain has revealed.
FOUR TIMES? What sickening bias.

The tax map reveals that in St Albans, the average paid in income tax is £10,500. This is almost a quarter of the average income of £43,500 in the Hertfordshire town.

By contrast, in Hull, which is at the bottom of the table, the average wage is £17,300 and each taxpayer hands over an average of £2,360 in income tax - equating to around a seventh of income.
The references to towns are something of a red herring, since your income tax is only related to what you earn, and not where you live. If you live in St Albans but only earn £17,300, then you will be taxed the same as the average person in Hull, likewise rich people in Hull will be taxed the same as an equally rich person in St Albans (admittedly the cost of living may be lower, but that's offset by having to live in Hull).

The 'tax map' aspect of this is strange, it seems to just be a way of bringing a memorable new angle to the tedious tradition of the well-off moaning about how much they're getting taxed. You could take the same figures and complain about how the average person in St Albans gets earns 2.5 times the amount of money that someone in Hull does. But then the demographic of the Mail is the middle-class, and the wannabe middle-class, leading to the grim spectacle of people who earn £43k a year effectively complaining about lucky people living in Hull on £17k are.

Surprisingly, this income tax business seems to come as news to some people, who had apparently hitherto been unaware of the concept of progressive taxation. Despite the figures telling you nothing other than that the income tax is doing what it has always been intended to do, folks in the comments are unhappy:

Stealth tax by another name. What's next - a return to window tax?
Dr Stephen Fox, Sydney Australia,

Mail readers, and the paper itself, love to talk about 'stealth taxes'. Originally this used to refer to hidden charges in the tax system that most people didn't know about, whereby they'd be hit by unexpected levies, but now it seems it's become synonymous with tax itself. It's hard to think of a way income tax could be any less stealthy. Announced annually in the Budget, written about in the press, rates published for all to see, and the figure literally printed on your monthly payslip under the none-too-stealthy name of 'Income tax', it seems to me that Alastair Darling is not perhaps the most cunning of pickpockets in this regard. Short of coming round to everyone's house at the end of each month in a massive Income Tax Collection Tour Bus with flashing neon signs on the side and the words 'WE'VE COME TO COLLECT YOUR TAX!' blared out over a loudhailer, before making you fill out a ceremonial oversized cheque for the amount, it's difficult to know what would actually prevent a Mail reader from deeming a tax 'stealthy'.

Another doctor writes:

Income tax is robbery under threat of jail. It is an immoral tax on the family and should be abolished. the left squeal it is about ability to pay. I say it's my money and I know how best to spend it. Half of it taken before it is even seen is disgusting.
Dr Nick Ashley, Huntingdon England,

Not only stealthy, but robbery! Immoral robbery at that. I'm not sure why Dr Nick (who disappointingly fails to begin his reply 'Hiiii everybody!') wants to see his tax money before it's taken away from him, but whom am I to judge one man's deeply personal attachment to his money?

Next up, Claire arrives to put obligatory Token Reasonable Commentator Dereck in his place, with a winning mix of condescension and factual inaccuracy:

Seems like stating the obvious to me, the more you earn the more you pay, as it should be.
- Dereck Smith, Insch United Kingdom

Perhaps you haven't quite understood this article. Of course logically the more you earn the more you pay, but surely the percentage should be the same? How is it right that people in St Albans pay 25% tax, whilst those in Hull pay only 14%? What happens to those people who work hard to make £43,000 a year, and get their pay rise which takes their earnings to £43,874? Their tax doubles, and they end up taking home less than they did before their pay rise!

Classic stealth tax, by a very clever government who could foresee that the average rise in wages would quickly bring many 'average' workers into the 40% tax band!
Claire (ex-pat), California, USA, 20/4/2009 9:11

Perhaps the California sun has affected Claire's brain, but she's voicing a misapprehension held by a surprising amount of people. Let's re-read the funniest part of that again; "What happens to those people who work hard to make £43,000 a year, and get their pay rise which takes their earnings to £43,874? Their tax doubles, and they end up taking home less than they did before their pay rise!". Of course, that's not what happens at all. When you cross a tax threshold, your earnings ABOVE THAT THRESHOLD are taxed at a higher rate. This makes it literally impossible for the situation Claire mentions to occur. She's right that it would be daft to do it that way, because it would result in people actually refusing pay rises. That's exactly why it doesn't work like that. Wealthy people get the same tax allowance as everyone else, and their income below the 40% threshold is taxed, amazingly, at the same 22% 20% rate as everyone else!

Next, Jessica from Poole steams in:

Why is it people think the more you earn the more right people have to take your money. The people with the most money are in fact the so called 'poor' who take everthing they can in benefits and housing and pay nothing back to society. It sickens me that decent hard working individuals who have always worked and paid whats fair, who would be ashamed to go on the dole if they were jobless despite paying into it, are the ones that are always targeted for tax hikes. If people honestly think £40,000 is a high wage think again. Factor in mortgages, pension contributions, NI, food prices, fuel prices and normally looking after a family on top of the ridiculus amount of tax they have to pay and what you find is a class of people with very little disposable income. It is disgusting, something has gone seriously wrong in this country and it needs to be sorted out.
Jessica, Poole, Dorset, 20/4/2009 9:44

Aside from the hilarity of claiming that earning double the national average wage doesn't constitute a 'high wage', I had to re-read that a couple of times to make sure that Jessica actually said, without irony, that "The people with the most money are in fact the so called 'poor'". Impressively, that's not actually the most unhinged comment:

Typical Mclabour and Mcbaldrick.
Where are all these cities?
England, of course - WHERE ELSE?
Mcbaldrick loathes and detests us hard working thrifty ENGLISH taxpayers and savers.
No votes from us to him - AND HE KNOWS IT.
ROGER, brighton, in the USSR - Union of Scottish Socialist Regulators, 20/4/2009 10:18
There seems to be a growing aversion to calling Gordon Brown by his real name, instead substituting any number of increasingly bizarre names with the prefix 'Mc', He's Scottish, you see. It won't be long now before his name is so unspeakable that he'll be referred to in hushed tones as 'The Scottish Prime Minister', lest saying his real name bring bad luck. The Scottish income tax conspiracy that Roger darkly hints at is an intriguing one, to say the least. In order for it to work, Brown merely has to ensure that his fellow Scots earn considerably less money than the English, and thus somehow win! Welcome to the technicolour dreamworld that is the inside of a Mail reader's head; a world in which Gordon Brown opens his paper to see Dundee listed as one of the ten poorest towns in Britain, and cackles with Machiavellian glee. "Ah, I see my plan to ensure that my Scottish brethren pay low income tax by virtue of being really quite poor is working perfectly!".


  1. lol, this is almost unbelievable. great post.

  2. Great stuff. Surely the Daily Mail's lunacy knows no bounds.

    But shouldn't that standard rate of tax read 20%, not 22%?

  3. Quinn, yes, you're right, it was 22% but they cut it to 20% for 2008-09, cheers for pointing it out. I'll amend it now.

  4. I'm always entertained by people who make a point of informing us all about how little they understand the world, thanks for sharing..