Tax Research: According to the Daily Mail this morning: George Osborne should slash tax for top earners further still, say senior Tories after figures showed a cut from 50p to 45p raised an additional £8 billion. The Chancellor said income tax data for 2013/14 “completely” defied predictions made by Labour that cutting the rate would cost £3 billion and give top earners an average £10,000 tax cut.
This argument makes no sense at all. It is true that latest estimates (not data) suggest that those with the highest incomes will have paid more than £8 billion more in 2013/14 when compared to 2012/13 but let’s be clear why. They were told that if they delayed their income from March 2013 until sometime in April 2013 the tax rate would fall by 5%, and so they did just that. And as a result income was understated in 2012/13 and overstated in 20913/14. Official estimates show there is no expectation that this pattern should recur and of course there is not. This is a not a phenomena of the tax rate; it is a phenomena of the change in rate.
Full story: http://www.taxresearch.org.uk/Blog/2016/03/03/a-40p-top-rate-of-tax-is-on-its-way-on-16-march/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+org%2FlWWh+%28Tax+Research+UK+2%29