Time Waster
Guru
Not been on here for some time so I've been spending some time catching up. One thread was on pensions, please I am not opening that topic up again, but I got to then end of 3 pages to find it had been heavily moderated and locked. I am not trying to open up the pension topic or go political here but I thought it would be interesting to see what people think of the point or value of taxes and why there is a personal allowance below which you pay no tax. Above it you pay at an even rate on the extra earned, where the percentage tax rate increases in bands as your earnings go over the threshold. AIUI you pay tax at the higher rate only on the earnings over that threshold.
I am sure people know more about this than I do, but what is the purpose of the allowance both originally when it was quite low and more recent when it got to a decent level?
It appears to be to not tax the really low earning and a system where you pay more tax the more you earn but still at the same rate (until the next tax band). The thing is does it make any difference how you are earning the money? If you were someone working full time and earning above the higher tax rate threshold it is quite acceptable that your earnings above the thresholds get charged tax. If you were a retired person with several pensions that are paying you a regular income that puts your earnings above the higher tax rate threshold then is there any real difference? You are not getting taxed on the amount in the pension pot but the payments every month from that pot surely? Is that not earnings as much as salary payments or interest on savings or any other kind of earnings. So why not get taxed? I mean it is all going into the tax take pot that pays for the state and its services. If taxation of workers is for the greater good then taxation on all earners under the same rules is for the greater good.
Sorry this sounds like a reopening of the pension tax take debate but in my low level knowledge of financial matters it is the only example of "not acceptable" taxation on earnings above the allowance threshold that I could think of. My question is really whether taxation on earnings is equally right or wrong on all earnings under the same rules? Is this not agnostic of the source of the earnings right or wrong?
I hope this last paragraph makes it clearer why I am not intending to reopen the pension taxation thread. It is just the trigger to my curiosity about the rightnes of earnings getting taxed being unrelated to source of earnings. Pensions payments are a kind of earning as are salaries, income from investments, etc. So agnostic taxation is surely better than the state putting a value judgment on earning types wrt taxation???
I am sure people know more about this than I do, but what is the purpose of the allowance both originally when it was quite low and more recent when it got to a decent level?
It appears to be to not tax the really low earning and a system where you pay more tax the more you earn but still at the same rate (until the next tax band). The thing is does it make any difference how you are earning the money? If you were someone working full time and earning above the higher tax rate threshold it is quite acceptable that your earnings above the thresholds get charged tax. If you were a retired person with several pensions that are paying you a regular income that puts your earnings above the higher tax rate threshold then is there any real difference? You are not getting taxed on the amount in the pension pot but the payments every month from that pot surely? Is that not earnings as much as salary payments or interest on savings or any other kind of earnings. So why not get taxed? I mean it is all going into the tax take pot that pays for the state and its services. If taxation of workers is for the greater good then taxation on all earners under the same rules is for the greater good.
Sorry this sounds like a reopening of the pension tax take debate but in my low level knowledge of financial matters it is the only example of "not acceptable" taxation on earnings above the allowance threshold that I could think of. My question is really whether taxation on earnings is equally right or wrong on all earnings under the same rules? Is this not agnostic of the source of the earnings right or wrong?
I hope this last paragraph makes it clearer why I am not intending to reopen the pension taxation thread. It is just the trigger to my curiosity about the rightnes of earnings getting taxed being unrelated to source of earnings. Pensions payments are a kind of earning as are salaries, income from investments, etc. So agnostic taxation is surely better than the state putting a value judgment on earning types wrt taxation???
