I wasn't around at 18:15 - I didn't get home until 18:35, sorry.
I was around in the days of high direct taxation in the 1970s when what was then called the standard rate of tax was 8s/6d in the pound, then reducing to 7s/9d. That's 42.5% reduing to 38.75% for the standard rate, but there was a reduction on earnings of 2/9ths and the effective rate was about 35%. That's obviously pre decimal currency in 1971, and I didn't actually pay tax at those rates.
When the system changed in 1973, the standard rate was set at 35%. Higher rates of tax started at 40% and went up in 5% bands 45 -50 55 etc - 75 - 80 - 83. Why 83%? Because there was a surcharge in investment income of 15%, and if they'd stopped at 85% the full rate of tax would have been 100%
The higher rates were abolished from 45% upwards in one fell swoop in I think 1980. I thought at the time that it was a mistake because those people who had been paying 75% would have been quite happy with a top rate of 50%. Not like today.
One big problem, as I see it, is that back in 1973 if you became a higher rate tax payer, the levy went up from 35% to 40%. Now it doubles from 20% to 40% - that's a big leap.
The other is that the pre 1973 system took less of your money if you earned it - they charged more (15% more) on investment income above a certain level. Last time I worked it out I think that it was the equivalent of about £15000 of investment income at todays prices, but that's from memory.
These days, of course, the government charge less tax on investment income than it does on earnings. (It's called National Insurance, but that's a tax and nothing else) I think most people would think it fairer the other way round, if only because most people have earnings and don't have investments - see my comment in an earlier post.
Back before 1973 income tax was the main way that the government got paid but that year they introduced VAT, at 10%, and that's brought in a bigger and bigger slice of the national cake and it's been extended to take in more products than when it was introduced. But overall, tax on income hasn't gone down - it's 31% tax and NI these days, but the government raises more and more and more cash to spend - I'm not an economist and don't know what proportion of the total economy is from government spending but I'd bet it's far far more than 40 years ago, most of it on civil servants, quangos and little empires
There's a potted history of tax in recent years. I've always thought it inevitable that the higher rates would go back up, particularly under a Labour government. People have forgotten or never knew, the much higher rates that we had in the past,
Oh and as an aside there was once a proposal for a tax rate of 100% - it was called development land tax and was aimed at people who made money by changing use of land. If you got planning permission and turned your £1,000 an acre farm to £100,000 acre (or whatever) building land, the government would have all of the £99,000 profit. They very generously started the rate at 66%, and waited for the cash to roll in.
But it didn't - for fairly obvious reasons. Landowners said stuff that for a game of soldiers and didn't sell, leading to a shortage of development land. Can't remember if the government (Labour, obviously) backed down or simply got kicked out, but it didn't last too long.
