In 1967-68, the special charge was imposed. So with income tax at 45% and surtax at 52.5%, the effective rate was 147.5%. For investment income over £5,000 it was 50%. income tax rates in certain circumstances were above 100%.įor 1947-48 a special contribution was payable when a person’s total income exceeded £2,000. But Britons face progressivity that remains far worse (or better, depending on your view) than Americans. In Brittain, a surtax or "super tax" causing rock stars to expatriate (and inspiring the George Harrison Beatle's song " Taxman" ) was repealed in 1973. taxpayers once paid 70% on some income.īut that was nothing. This march of progressivity has resulted in some bizarre history. Progressive rates tax larger amounts at higher rates, so each additional dollar could be subjected to higher marginal rates even though the first dollars qualify for the lower ones. They reviewed "special arguments, however intricate their formulations, constructed on notions of benefit, sacrifice, ability to pay, or economic stability.” They ultimately concluded that the "stubborn but uneasy" case for progressivity hinged on notions of equality and distributive justice.Īxiomatically, with a flat tax everyone pays the same percentage rate, although those with higher incomes obviously pay larger amounts. Yet Blum and Kalven’s rigorous examination revealed the theoretical and practical weaknesses of progressive tax rates.
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