| Income. | Abatement allowed. | Income Tax on Earned Income. | ||||
| Tax payable. | Nominal Tax. | Virtual Tax. | ||||
| £ | £ | £ | s. | d. | Pence in £ | Pence in £ |
| 160 | 160 | — | Exempt | — | ||
| 200 | 160 | 1 | 10 | 0 | 9 | 1.8 |
| 300 | 160 | 5 | 5 | 0 | 9 | 4.2 |
| 400 | 160 | 9 | 0 | 0 | 9 | 5.4 |
| 500 | 150 | 13 | 2 | 6 | 9 | 6.3 |
| 700 | 70 | 23 | 12 | 6 | 9 | 8.1 |
| 800 | Nil | 30 | 0 | 0 | 9 | 9.0 |
| 1,000 | " | 37 | 10 | 0 | 9 | 9.0 |
| 2,000 | " | 75 | 0 | 0 | 9 | 9.0 |
| Income. | Abatement allowed. | Income Tax on Unearned Income. | ||||
| Tax payable. | Nominal Tax. | Virtual Tax. | ||||
| £ | £ | £ | s. | d. | Pence in £ | Pence in £ |
| 160 | 160 | — | Exempt | — | ||
| 200 | 160 | 2 | 0 | 0 | 12 | 2.4 |
| 300 | 160 | 7 | 0 | 0 | 12 | 5.6 |
| 400 | 160 | 12 | 0 | 0 | 12 | 7.2 |
| 500 | 150 | 17 | 10 | 0 | 12 | 8.4 |
| 700 | 70 | 31 | 10 | 0 | 12 | 10.8 |
| 800 | Nil | 40 | 0 | 0 | 12 | 12.0 |
| 1,000 | " | 50 | 0 | 0 | 12 | 12.0 |
| 2,000 | " | 100 | 0 | 0 | 12 | 12.0 |
In order to give further effect to the principle of graduating the Income Tax, Mr Lloyd George at the same time imposed a Supplementary Income Tax, or Super-Tax, upon persons whose incomes exceeded £5,000 a year.
The Super-Tax is nominally 6d. in the £, but in practice it is always less. For the Super-Tax of 6d. is payable only upon that part of the income which exceeds £3,000 a year. That, reflection will show, creates a graduated Super-Tax, thus:
THE LLOYD GEORGE SUPER-TAX
AS IT REALLY IS
| Income. | Abatement on Income. | Income really Taxed. | Tax Payable. | Nominal Rate of Supertax. | Virtual Rate of Supertax. | ||
| £ | £ | £ | £ | s. | d. | Pence in £ | Pence in £ |
| 5,000 | Exempt | — | — | — | — | ||
| 5,001 | 3,000 | 2,001 | 50 | 0 | 6 | 6 | 2.4 |
| 10,000 | 3,000 | 7,000 | 175 | 0 | 0 | 6 | 4.2 |
| 50,000 | 3,000 | 47,000 | 1,175 | 0 | 0 | 6 | 5.6 |
| 100,000 | 3,000 | 97,000 | 2,425 | 0 | 0 | 6 | 5.8 |
It will be seen that it is a great gain under this system to have £5,000 a year rather than £5,001. The extra £1 of income costs the tax-payer £50, 0s. 6d. Thus a premium is placed by the State upon false declarations, for if a Government is so unfair as to tax £1 of income £50, 0s. 6d, who can blame a tax-payer who retorts in kind?
It will be seen that it is impossible for the alleged 6d. Super-Tax to reach 6d. It can at the highest reach 5.9 pence.
But while the Super-Tax is so unfortunate in method it is excellent in principle, and largely carries into effect the suggestions made in "Riches and Poverty," edition 1905. It effects a rough graduation in the taxation of incomes over £5,000 a year, and extends the gamut of the Income Tax scale from zero at £160 a year to 19.8 pence in the £ at £100,000 a year.
I am now able to show the total effect of all the obscure provisions which it has been my misfortune to attempt to describe in plain language. The table on page 307 gives a faithful picture of the Income Tax, as graduated and differentiated by all the reforms made down to 1910. The table is the expression of the following provisions, existing in 1910, which I recapitulate for its better elucidation.