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Income Tax

Volume 976: debated on Friday 21 December 1979

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asked the Chancellor of the Exchequer if he will publish a table showing the gross income levels, in local currencies and in sterling equivalent, at which income tax becomes

GROSS INCOME LEVEL AT WHICH INCOME TAX BECOMES PAYABLE ON THE NEXT POUND OF INCOME AT 50 PER CENT. (OR NEAREST RATE) BY A MARRIED COUPLE WITH TWO CHILDREN
CountryLocal currencySterling equivalentRate
£Per cent
United Kingdom16,81650·0
United States of America$64,00029,63050·0
France443,845 F49,94049·5
Germany121,860 DM32,19550·0
Japan25,223,500 Yen46,49549·5
Notes:
1. Conversions to sterling were made at the exchange rates prevailing in London on 26 November 1979. Such conversions may not reflect differences in domestic purchasing power between the United Kingdom and individual foreign currencies.
2. The income is assumed throughout to be wholly employment income of the husband.
3. Personal reliefs, minimum expenses, employment income reliefs and other flat rate reliefs have been taken into account, as have deductible social security contributions.
4. Figures are for the tax year 1979 or 1979–80, except for France (1978) which fixes its rates in arrear at the end of the income tax year.
5. The figures do not take into account local income taxes.

asked the Chancellor of the Exchequer if he will publish a table showing the gross income levels, in local currencies and in sterling equivalent, at which income tax plus compulsory social security contributions becomes

GROSS INCOME LEVEL AT WHICH INCOME TAX PLUS COMPULSORY SOCIAL SECURITY CONTRIBUTIONS BECOMES PAYABLE ON THE NEXT POUND OF INCOME AT 50 PER CENT. (OR NEAREST RATE) BY A MARRIED COUPLE WITH TWO CHILDREN
CountryLocal currencySterling equivalentRate
£Per cent.
United Kingdom16,81650·0
United States of America$64,00029,63050·0
France443,845 F49,94050·2
Germany121,860 DM32,19550·0
Japan25,223,500 Yen46,49549·7
Notes:
1. Conversions to sterling were made at the exchange rates prevailing in London on 26 November 1979. Such conversions may not reflect differences in domestic purchasing power between the United Kingdom and individual foreign currencies.
2. The income is assumed throughout to be wholly employment income of the husband.
3. Personal reliefs, minimum expenses, employment income reliefs and other flat rate reliefs have been taken into account, as have deductible social security contributions.
4. Figures are for the tax year 1979 or 1979–80. except for France (1978) which fixes its rates in arrear at the end of the income tax year.
5. The figures do not take into account local income taxes.
6. In the United Kingdom, the United States of America and Germany the marginal rates for income tax plus social security contributions are the same as those for income tax only. This is because there are no additional social security contributions payable at these income levels in these countries.

asked the Chancellor of the Exchequer if he will publish a table comparing the starting rates and the top rates of income tax in each of payable at 50 per cent. by a married couple with two children, in the United Kingdom, the United States of America, France, Germany and Japan.

The information requested is given in the table below:payable at 50 per cent. by a married couple with two children, in the United Kingdom, the United States of America, France, Germany and Japan.

The information requested is given in the table below:the United Kingdom, Germany, Netherlands, Canada, Denmark, the United States of America, Belgium, France and Japan.

The information requested is given in the table below:

Starting rate of income taxTop rate of income tax
United Kingdom25·060·0
Germany22·056·0
Netherlands19·272·0
Canada15·543·0
Denmark14·439·6
United States of America14·050·0
Belgium14·272·0
France7·260·0
Japan6·067·5
Notes:
1. The rates are those for the tax year 1979 or 1979–80, but the French rates are provisional (French tax rates are fixed in arrear).
2. All figures relate to national or federal tax only. In Canada, Denmark, the United States of America, Belgium and Japan there are also local income taxes. Sample starting rates and top rates of local income taxes on employment income are:
Starting rate Per cent.Top rate Per cent.
Canada (the Ontario rate)2·618·9
Denmark (the Copenhagen rate)25·525·5
United States of America (the Californian rate)4·011·0
Belgium (the rate applicable to the great majority of the population)0·94·3
Japan (the rate applicable to the great majority of the population)2·416·2
In the United States of America local income taxes are deductible in computing taxable income for federal income tax purposes.
3. Figures relate to employment income only. The starting rate of tax on investment income in the Netherlands is 20 per cent. And in France 10 per cent. The top rate of tax on investment income in the United Kingdom is 75 per cent., in the United States of America 70 per cent. (excluding local income tax) and in Japan 75 per cent. (excluding local income tax).
4. All figures relate to a married man with two children, except for the United States of America where a single man begins to pay tax at the rate shown. The starting rate in the United States of America for a married man with two children is 26·5 per cent. (excluding local income tax) because of the progressive withdrawal of tax credits for such a man at this income level.
5. The starting and top rates are those applicable, respectively when tax actually becomes payable (excluding, in the case of Belgium the first £160 taxable income which is taxed at an unusually high rate) and when the highest point of the scale of income tax rates is reached. These actual rates, which take account of the operation of employment income reliefs and minimum expenses deductions, differ from nominal rates in some countries.

asked the Chancellor of the Exchequer if he will detail the increases in the percentage of income paid in tax and national insurance contributions for a single person, a married couple and a married couple with two children when earning (a) two-thirds of average earnings, (b) average earnings, (c) twice average earnings, (d) five times average earnings, and (e) 10 times average earnings from 1964–65 to the latest available date.

The figures are shown in the following tables.For years up to 1969–70 the average earnings are the annual equivalents of the average weekly earnings of males aged 21 and over in manufacturing and certain other industries at October in each year. For 1970–71 to 1978–79 the figures are based on the averages of the new earnings survey estimates of the average earnings of full time adult male manual workers at the start and finish of each tax year. To give an estimate for 1979–80 the April 1979 NES figure has been updated to September 1979 taking account of movements in a centred three-month moving average of the whole economy index of average earnings of all employees. In the case of the married man with two children, the figures of income include family allowance or child benefit, as appropriate, in addition to earnings.It has been assumed that the employees were not contracted out of the earnings-related or graduated pension schemes.It has been assumed that married men with children would relinquish family allowance between 1968–69 and 1976–77 if on 10 times average earnings and between 1970–71 and 1976–77 if on five times average earnings.

Figures for a single man are as follows

Percentage of income paid in Tax and NIC

Two-thirds average earnings

Average earnings

Twice average earnings

Five times average earnings

Ten times average earnings

Year

Tax

NIC

Tax

NIC

Tax

NIC

Tax

NIC

Tax

NIC

Per cent.

Per cent.

Per cent

Per cent

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

1964–6511·15·917·25·323·62·728·21·139·40·5
1965–6612·36·618·95·425·52·730·61·144·40·5
1966–6713·06·619·35·525·72·831·11·144·50·6
1967–6813·96·820·05·826·02·831·81·145·90·6
1968–6915·27·420·85·626·52·933·01·148·10·6
1969–7016·57·521·75·726·93·034·31·250·30·6
1970–7118·37·122·95·927·53·036·41·254·00·6
1971–7218·56·822·45·826·23·335·21·348·80·7
1972–7315·66·620·55·925·33·637·71·453·40·7
1973–7417·46·421·65·925·83·637·31·452·20·7
1974–7521·06·225·05·929·03·544·41·460·20·7
1975–7623·75·527·55·532·650·31·365·40·6
1976–7724·15·827·85·833·04·052·21·666·90·8
1977–7821·85·825·95·830·74·050·41·666·30·8
1978–7920·26·524·56·528·84·548·81·865·50·9
1979–8018·86·522·56·526·34·439·41·849·70·9

Figures for married couples without children are as follows:

Percentage of income paid in Tax and NIC

Two-thirds

Twice

Five times

Ten times

average earnings

Average earnings

average earnings

average earnings

average earnings

Year

Tax

NIC

Tax

NIC

Tax

NIC

Tax

NIC

Tax

NIC

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

1964–65 5·45–912·25·321·22·727·21·138·60·5
1965–66 6·86·614·05·423·12·729·51·143·50·5
1966–67 7·46·614·75·523·42·829·91·143·60·6
1967–688·26·815·55·523·82·830·71·145·10·6
1968–699·37·416·75·624·42·931·91·147·30·6
1969–7010·77·517·85·725·03·033·21·249·60·6
1970–7112·47·118·95·825·53·035·21·253·20·6
1971–7213·46·819·05·824·63·334·11·348·10·7
1972–7311·26·617·55·923·83·636·61·452·70·7
1973–7413·66·419·05·924·53·636·41·451·50·7
1974–7516·46·221·95·927·53·543·11·459·40·7
1975–7619·05·524·45·530·63·149·01·364·60·6
1976–7719·05–824·35·830·74·050·71·666·10·8
1977–7315·25·821·55·828·14·048·51·665·20·8
1978–7914·26·520·56·526·74·547·01·864·50·9
1979–8013·16·518·76·524·44·438·01·848·90·9

Figures for married couples with two children aged under 11 are as follows:

Percentage of income paid in Tax and NIC

Year

Two-thirds average earnings

Average earnings

Twice average earnings

Five times average earnings

Ten times average earnings

Tax Percent.

NIC Per cent.

Tax Per cent.

NIC Per cent.

Tax Per cent.

NIC Per cent.

Tax Per cent.

NIC Per cent.

Tax Per cent.

NIC Per cent.

1964–655·74·55·216·32·625·31·137·00·5
1965–666·45·95·318·52·727·61·141·80·5
1966–676·46·55·419·02·727·91·142·10·5
1967–680·66·77·45·719·62·828·71·143·70·6
1968–693·17·010·85·421·22·830·21·145·60·6
1969–704·77·112·55·022·12·930·91·248·00·6
1970–715·76·814·25·723·33·033·41·251·70·6
1971–724·96·513·15·621·53·231·81·346·40·7
1972–733·86·412·35·821·13·534·31·451·00·7
1973–747·16·214·65·822·23·534·31·450·00·7
1974–758·96·116·85·824·83·540·71·457·80·7
1975–7612·75·320·05·427·43·146·91·363·20·6
1976–7711·65·619·35·627·44·048·21·664·60·8
1977–7810·05·517·85·625·83·946·81·664·20·8
1978–7911·06·017·96·125·24·445·81·863·70·9
1979–8011·75·817·36·023·44·237·41·748·50·9