Wednesday 1 June 2011

Adele's tax grievances won't resonate with fans

"I'm mortified to have to pay 50%! [While] I use the NHS, I can't use public transport any more. Trains are always late, most state schools are shit, and I've gotta give you, like, four million quid – are you having a laugh? When I got my tax bill in from [the album] 19, I was ready to go and buy a gun and randomly open fire." - The Guardian
Wow!  Quote-tastic or what!

Not content with singing like an angel and seemingly spending her every waking moment at the top of the charts, she’s even able to feed the press with gems like this.

She’s a multi-talented lady, for sure.

All hilarity aside, in the process of quite probably incurring the wrath of the world’s entire working-class population, Adele has brought up an interesting topic: the dreaded income tax (or all taxes to an extent).

Firstly, it’s probably worth clearing up that no-one in the UK pays 50% on their entire income.

Only the earnings over the first £150,000 are taxed at 50%.  You can actually earn a certain amount (just under £8,000) which isn’t taxed at all, and then you pay 20% on any earnings up to £37,400 and 40% on any earnings between 37,401 and £150,000.

But what’s the point of tax, and why should you pay more than others just because you earn more?

For starters, tax pays for many things that people in the developed world take for granted.

As Adele has touched on the fact that public transport, public healthcare, roads, rubbish collection, state schools, the police and the fire brigade are all examples of services are all funded by the taxpayer in one way or another.

And of course, those street lights that people use to find their way home at night didn’t appear out of nowhere, and electricity isn’t free.

Now, you can argue forever about the lack of quality of these services in your country, or that too much total money is pumped into them, but taxes – of one kind or another – are what funds these services.

Also, it could justifiably be argued that these tax-funded services have a great part to play in what makes the “civilised” western world civilised.

For example, I’ve just noticed that Afghanistan and the Central African Republic have a very reasonable 0% income tax rate, but I don’t know what the public healthcare is like there, so you might want to check that out before upping sticks.

In contrast, Denmark’s income tax ranges from a low 30% to an eye-watering 60% (not to mention VAT at 25%), but I know in which of these three delightful countries I’d rather get hit by a bus.

Some people are also fond of complaining that the higher tax bands “punish” you for being successful and earning more; it’s the “Where’s the incentive to earn more?” argument.

In reality, of course, while you will pay more total money in tax if you earn more, you also end up with more net income in your pocket than someone that earned less to begin with.

There are lots more arguments for and against taxes, but it’s probably fair to say that no-one is ever likely to come up with a tax system that pleases everyone, so let the arguments rage on.

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