But are we a million miles from that now? Add in national insurance and the tax rate is 33% below 50k and 42% over it, it’s not so different.
Add in income from dividends, investments, interest and inheritance tax and it makes a good argument for simplicity in the system.
How much is wasted on creating tax codes and then making sure people pay the correct tax?
Yeah, we are a million miles away from it.
Somebody working full time on the minimum wage earns ~£17,500 currently pays ~£2000 in tax, under your scheme they would have to pay almost 3x that.
The average UK salary is ~£31,000, somebody earning that currently pays ~£6k in employment tax and under your scheme would now have to find an additional £3k a year.
You haven't solved a problem for head teachers, consultants, engineers or 'normal working people' as you refer to high earners - you're massively dicking on financially stressed hard working people, some whom are already being pushed in to poverty by the cost of living crisis by reverse robin hood'ing them in the name of simplification.
Tax codes are rows on a database somewhere. The magic of PAYE is it sorts itself out (eventually).
FWIW - here's my idea for extending PAYE and addressing the fundamental fairness of taxation issue.
Currently PAYE works like a filter through which employers pass their employees earning through, PAYE keeps a record of how much has been passed through it, and passes back running totals for the employer to fill out their employees payslips with. It also tells them how much of their earnings should go to their nominated account, and how much should be paid to HMRC.
Rather than acting like a filter, I would like to see PAYE act as an account for each and every taxpayer - employers put in to which the entirety of employees earnings (minus pretax deductions like pension and cycle2work). The employee can elect for the PAYE system to immediately pass that money on to a nominated bank account if they choose, or they can have it pay a set amount weekly or just move money in to personal accounts manually.
As well as forcing employers to pay earnings in to this new super-PAYE system, I would also insist that any transaction currently subject to CGT also must go through the system (so that includes dividend payments an major asset sales) as well as any benefits payments (and all benefits as well, state pension, universal credit, PIP, child benefits/tax credits - all of them are paid in as payments). Also, fringe benefit, you have a method of summarily paying everyone a few hundred quid to help with their utility bills.
You can now scrap employer's national insurance, capital gains tax and income tax, and replace them with an 'earnings tax' which follows a similar scheme to the present income tax but with higher rates.
How much higher? It depends which other taxes you want to remove.
You could feasibly scrap council tax, whack up income tax a few points across the board and display that as a precept - and people would contribute to their local council on the concrete known of their earnings rather than the ridiculous notional value of their property in the early 90s.
On the more progressive/expensive end of changes you could even exempt UK taxpayers from paying domestic VAT.
