HL Deb 01 August 1978 vol 395 cc1272-3WA
Lord VAIZEY

asked Her Majesty's Government:

Whether they will estimate the number and percentage of taxpayers paying at the following marginal rates of tax on earned income:

  1. (1) Standard or basic rate.
  2. (2) 40 per cent.
  3. (3) 45 per cent.
  4. (4) 50 per cent.
  5. (5) 55 per cent.
  6. (6) 60 per cent.
  7. (7) 65 per cent.
  8. (8) 70 per cent.
  9. (9) 75 per cent.
  10. (10) 83 per cent.

Lord PEART

Counting married couples as one, the estimates at 1978–79 income levels are as follows:

Marginal rate (on earned income) Estimated No. of tax units ('000s) Percentage of all tax units
(1) (a) Lower rate 2,900 13.8
(b) Basic rate 16,940 80.5
(2) 40 per cent. 155 0.7
(3) 45 per cent 105 0.5
(4) 50 per cent. 45 0.2
(5) 55 per cent. 50 0.2
(6) 60 per cent. 35 0.2
(7) 65 per cent. 25 0.1
(8) 70 per cent. 20 0.1
(9) 75 per cent. 20 0.1
(10) 83 per cent. 20 0.1
Total 20,315 96.5

It has been assumed that married couples would make an election for separate taxation of the wife's earnings when to their advantage, and the marginal rate shown is that payable by the higher earner. Since income tax is levied on income regardless of source, there are difficulties in allocating tax liabilities to earned or investment income. The Answer relates to the marginal rate on earned income treating any investment income as the top slice of total income.

The numbers given as having the lower rate of income tax as their marginal rate are single persons liable at the lower rate only and married couples where the husband's income is liable at the lower rate only. The figures account for 96.5 per cent. of all tax units. The remainder are persons who are liable to tax only on investment income. The total of 25,600,000 taxpayers includes a further 4,500,000 earning wives, but there are difficulties in breaking these down by reference to their marginal rates since, except where there is an option for separate assessment or an election for separate taxation of wife's earnings, the wife's income is included with her husband's for the purpose of assessment to income tax.