Employment Income: Scope |
31 |
is sometimes alleged that the PAYE system, while providing refunds if income drops, also taxes more steeply if income goes up and thus directs the taxpayer’s attention to the fact that the increase is taxed at the marginal rather than the average rate. This may have a disincentive effect in that the repayments side of the PAYE system could encourage absenteeism later in the tax year when the tax refunds may be greater. A survey in 1954 found little evidence to support this.195 A fourth disadvantage lies in the very perfection of the structure. Its complexity meant that it could become something of a straitjacket in the days before computerisation.196 As was seen above, the absence of PAYE from incentive payments such as that in Glantree Engineering meant that an employer could leave the employee to pay the tax if the employer so chose, especially if the employee had left the employment. |