Latest news with #progressivetax
Yahoo
07-07-2025
- Business
- Yahoo
Wealth tax may not be fully formed proposal - but could be put in the mix
I want to take you into the daily Downing Street briefing for political journalists to try and explain the likelihood of the government introducing a wealth tax. Referred to as 'lobby', the sessions are the main chance for reporters to grill the prime minister's official spokesperson about the big political issues of the day. Now, occasionally the spokesperson comes to these sessions with a clear and obvious update that will 'create news'. Most of the time though, we're left trying to read between the lines of what's being said, searching for hints or steers that could indicate whether Number 10 is trying to shut a story down or let it run. This isn't always straightforward, as was proven in this briefing. Politics latest: Take this first answer from the PM's spokesperson when asked if backed a wealth tax. "Those with the broadest shoulders carry the greatest burden and the choices we've made reflect that… our progressive tax system means the top 1% of taxpayers contribute nearly a third of income tax with revenue from wealth and asset taxes… going towards funding tens of billions of pounds for public services." Now, one way of interpreting that is Downing Street saying they're already hitting the wealthiest so there's no need to whack them with more taxes. But then again, he could also be saying that raising money from the super-rich is a preferred policy of this government and as such may happen again. So which is it? Well, we asked that, and this is the answer we got. "The has said that we are not going to be bringing in a wealth tax". Pointing to a previous on the record statement is a classic lobby method of shutting a story down without commenting on it directly. So a clear answer? Well in this instance, the spokesperson still seemed somewhat reluctant to throw his full weight behind this previous comment from Rachel Reeves. It all meant the few dozen journalists left the briefing room perplexed at where Downing Street stood on the policy with the only solid outcome being the fact that the government had certainly not ruled anything out. Read more:Government declines to rule out wealth tax For what it's worth, my read on the situation - based on other conversations and the many lobby briefings I've sat in over the years - is that the wealth tax idea hasn't (at this time) reached the point of becoming a formal proposal but may yet be put in the mix. The reason it's being talked about now is because the former Labour leader Neil Kinnock suggested on Sky News' that cabinet ministers may be sympathetic to it. Lord Kinnock, who was leader from 1983 to 1992, said that imposing a 2% tax on assets valued above £10m would bring in up to £11bn a year. Whether this party veteran is reflecting back chatter from within government or simply pitching fresh suggestions is unclear. But you can see how such a measure would slot into the existing crease hardening down the middle of the cabinet between those more inclined to tax and spend (Angela Rayner, Lisa Nandy, Ed Miliband) and others more concerned about making savings and investing (Rachel Reeves and Darren Jones). For now, three to four months from a budget that will need to raise a significant amount of money, we can probably think of this as something of a Schrodinger's tax - simultaneously on and off with its final state only revealed when the chancellor opens her red box come the autumn.
Yahoo
05-07-2025
- Business
- Yahoo
Shona Robison urges Prime Minister to follow Scotland on taxation
Scotland's Finance Secretary said Labour needs a 'new direction' as she called on the Prime Minister to look north of the border for a more progressive tax system to protect public spending. Ms Robison said that if Labour had followed the Scottish model, where higher earners pay more tax, Labour would not be in the 'complete fiscal mess that they are in now.' Her comments come after Sir Keir Starmer's Government was forced into a last-minute climbdown in order for welfare legislation to pass its first parliamentary hurdle earlier this week. In a late concession on Tuesday evening, ministers shelved plans to restrict eligibility for the personal independence payment (Pip), with any changes now only coming after a review of the benefit. These changes are expected to put pressure on other parts of the Government's finances. Ms Robison said: 'People voted for a Labour government last year because they wanted change from the Tories – but after a year of attacks on the incomes of pensioners, the poor and the disabled, they are rightly wondering exactly what, if anything, is different. 'When Keir Starmer took office, he could have chosen to ask people on higher incomes to pay a little more in tax in order to protect public spending. 'Choosing instead to target the vulnerable is not leadership – frankly, it is political cowardice. 'If Keir Starmer had done in England what the SNP have done in Scotland with taxation, Labour would not be in the complete fiscal mess that they are in now. 'After a year of mistakes, Labour needs a new direction – and they should look to Scotland. By asking people on higher incomes to pay a bit more in tax, we have ensured a majority of taxpayers pay less than they would elsewhere in the UK, and are able to unlock more spending for services like the NHS, as well as cut poverty by introducing a Scottish Child Payment, and ensure that everybody can benefit from important services like free tuition and free prescriptions.' She added: 'Labour used to tell Scotland that we didn't need independence and we just needed to get rid of the Tory government – but the last year has completely demolished that argument. 'No Westminster government will ever deliver the truly fair society which I believe the vast majority of people in Scotland want to live in – and that is why independence is the best future for Scotland.' Scottish Labour's economy, business and fair work spokesperson Daniel Johnson MSP said: 'SNP ministers have a brass neck to think they can lecture anyone after their atrocious financial mismanagement. 'The SNP use higher taxes on Scottish nurses and firefighters as a substitute for economic growth, waste billions on out-of-control prison and ferry projects, and have created multibillion-pound black holes in the public finances. 'Labour is delivering the largest funding settlement in the history of devolution, with £50 billion for Scotland's NHS, schools and public services this year alone. Despite that, the SNP are now gearing up to make cuts to fill their fiscal black hole. 'The SNP government has the money, they have the powers, but they are out of ideas, out of excuses and out of time. 'Next year, we have the chance to kick out this SNP Government that cannot be trusted with taxpayers' money.'
Yahoo
31-05-2025
- Business
- Yahoo
Marginal tax rate: What it is and how to find yours
Your marginal tax rate is the highest income tax rate you'll pay on your income. Because the U.S. has a progressive tax system, different tiers of your income are taxed at different rates. The marginal tax rate is the rate that applies to your last dollar of income. It's important to understand how the marginal tax rate — and tax brackets in general — work, because your income isn't taxed at one single rate. What's more, by claiming all applicable tax deductions you may be able to reduce your marginal tax rate. As your income increases, portions of it are taxed at higher rates. The tax rate that applies to your final dollar of income is your marginal tax rate. Because only a portion of your income is taxed at the highest rate, your effective tax rate — which takes into account that some portions of your income are taxed at lower rates — is likely lower than your marginal rate. Suppose you're a single taxpayer who earned $70,000 in 2024. While your income falls into the 22 percent tax bracket — that's your marginal tax rate — a majority of your income is actually taxed at much lower rates. Based on the 2024 tax brackets, for taxes due in 2025, this is how your income is taxed: In other words, $11,600 of your income is taxed at 10 percent, $35,550 of your income is taxed at 12 percent and the remaining $22,850 of your income is taxed at 22 percent. As the above illustration shows, you pay the lowest tax rate on a subset of your income, until you've surpassed the top end of the income range for that tax bracket. Then the next tier of your income is taxed at the next highest rate, until you've surpassed the top end of the income range for that bracket, and so on. One of the biggest misunderstandings many Americans have about income taxes is that they think falling into a particular bracket, such as the 22 percent bracket, means that all of their income is taxed at that rate. In truth, that rate only applies to a portion of your income. Here are the 2025 income tax brackets, for taxes due April 2026, or October 2026 with an extension: Tax rate Single Head of household Married filing jointly or qualifying widow Married filing separately 10% $0 to $11,925 $0 to $17,000 $0 to $23,850 $0 to $11,925 12% $11,925 to $48,475 $17,000 to $64,850 $23,850 to $96,950 $11,925 to $48,475 22% $48,475 to $103,350 $64,850 to $103,350 $96,950 to $206,700 $48,475 to $103,350 24% $103,350 to $197,300 $103,350 to $197,300 $206,700 to $394,600 $103,350 to $197,300 32% $197,300 to $250,525 $197,300 to $250,500 $394,600 to $501,050 $197,300 to $250,525 35% $250,525 to $626,350 $250,500 to $626,350 $501,050 to $751,600 $250,525 to $375,800 37% $626,350 or more $626,350 or more $751,600 or more $375,800 or more Here are the 2024 income tax brackets for taxes due April 2025 (or October 2025 with an extension): Tax rate Single Head of household Married filing jointly or qualifying widow Married filing separately 10% $0 to $11,600 $0 to $16,550 $0 to $23,200 $0 to $11,600 12% $11,600 to $47,150 $16,550 to $63,100 $23,200 to $94,300 $11,600 to $47,150 22% $47,150 to $100,525 $63,100 to $100,500 $94,300 to $201,050 $47,150 to $100,525 24% $100,525 to $191,950 $100,500 to $191,950 $201,050 to $383,900 $100,525 to $191,950 32% $191,950 to $243,725 $191,950 to $243,700 $383,900 to $487,450 $191,950 to $243,725 35% $243,725 to $609,350 $243,700 to $609,350 $487,450 to $731,200 $243,725 to $365,600 37% $609,350 or more $609,350 or more $731,200 or more $365,600 or more Need an advisor? Need expert guidance when it comes to managing your money? Bankrate's AdvisorMatch can connect you to a CFP® professional to help you achieve your financial goals. To calculate your marginal tax rate, you need to know your taxable income and relevant filing status. With this information, it's simple to determine your marginal tax rate. Refer to the tax brackets above and identify the bracket with the income range that matches your total taxable income — that's your marginal tax rate. That said, your taxable income is a bit more complex to calculate: First, add up all of your sources of income to determine your gross income. Then, subtract certain adjustments to determine your adjusted gross income (AGI). Then, determine whether you will take the standard deduction or itemize deductions. Finally, subtract your standard deduction or itemized deduction from your AGI to get your taxable income (some taxpayers may also be able to deduct the qualified business income deduction from their AGI). On Form 1040, your adjusted gross income, or AGI, is listed on line 11, and your taxable income is listed on line 15. To reduce your marginal tax rate, you must reduce your taxable income. While it may be possible for some people to defer income that they earn late in the year to the following year, most people will need to take advantage of tax deductions. By reducing your marginal tax rate, you'll reduce your total tax bill. To reduce your taxable income, consider maximizing contributions to tax-advantaged accounts and claiming all applicable deductions. The more money you contribute to tax-advantaged accounts — like a 401(k), traditional IRA, health savings account (HSA) or flexible spending account (FSA) — the more you will reduce your taxable income, while also setting yourself up financially for the future. You should also make sure you're claiming all eligible deductions, even if you take the standard deduction. There are several 'above-the-line' deductions that will reduce your gross income, even if you don't itemize, including deductions for student loan interest and educator expenses, along with certain business expenses and self-employment taxes. Maximizing your deductions could lower your marginal tax rate. Finally, you may want to carefully assess whether it makes sense to itemize deductions instead of taking the standard deduction. By itemizing, you can take advantage of even more deductions, including those for charitable contributions, mortgage interest, property taxes, state and local taxes (SALT), and qualified medical expenses. Still, for it to make sense to itemize, generally your itemized expenses need to add up to more than the standard deduction. The standard deduction is worth $15,000 for single filers and those who are married filing separately, $22,500 for head of household filers and $30,000 for married filing jointly couples for tax year 2025. Another way to trim your tax bill is by realizing losses; that is, selling investments at a loss. Not only can capital losses offset capital gains (when you sell an investment for more than you bought it), but you can also reduce some of your taxable income. You need to be mindful of how long you've owned an asset before selling — the IRS generally uses the one-year mark to differentiate between short- and long-term gains and losses. By realizing net capital losses, you can reduce your taxable income by up to $3,000 a year, which will reduce your overall tax obligations and potentially reduce your marginal tax rate. Learn more: Short-term vs. long-term capital gains: How they work For most taxpayers, your marginal tax rate will differ from your effective tax rate. Knowing the difference between your marginal tax rate and effective tax rate is important because it informs how much you owe the IRS. Your marginal tax rate is the highest rate that applies to only that portion of your income that's in the highest tax bracket, whereas your effective tax rate is your average tax rate — or the tax rate you actually pay. Consider the example above of a single taxpayer earning $70,000. While that person's marginal tax rate is 22 percent, their effective tax rate is about 15 percent. To determine your effective tax rate, simply divide your total taxes owed by your taxable income. Learn more: Marginal vs. effective tax rates: How they differ and how to calculate each rate While the federal income tax system in the U.S. is progressive, some states impose a flat tax on income. With a marginal tax rate, you pay different tax rates up to your highest rate, but with a flat tax system all of your income is taxed at the same rate. There has been a movement in recent years among states to adopt flat tax systems, though specific rates across states vary widely. The 14 states with a flat tax system in 2025 are: Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Mississippi, North Carolina, Pennsylvania and Utah, according to the Tax Foundation. Another nine states don't levy an income tax at all. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
