Taxing the rich to pay for the poor

Norah

GrannyRose15

Germanshepherdmum. My figure of 20% was for illustrative purposes only. Though do you really think that having marginal rates of tax at 72% is a good incentive to work hard. Or for two earners on £ 40000 each to be better off that 1 earner on £80000 with a stay at home wife looking after the children. Our tax system is totally unjust and sometimes borders on the bizarre. It’s time we had a simple system and doing away with divisive tax rates would be a start. I’m not an economist but some of them say really interesting things.

I view the stay at home partner (me), never paying NI, with a partner in work (my husband), paying additional rate and NI as just. Stay home partner pays nothing - allowing working partner time to work.

I do know this logical argument is a waste of my time.

We've been here before, so I see my reply as a waste of my time, but just for the record. . .

Where is the logic that says two people should pay one lot of tax/NI between them, yet get two lots of benefits (in the generic sense of the word) that come from living in the UK?

Education, health, roads, law and order, defence and more are all used by everyone, but not everyone contributes. Yes, a SAHP enables the other parent to work, and that benefits their own family, but how is it fair that when both parents work they pay two lots of tax to the SAH family's one lot, and also pay for childcare, and work-related expenses?

It doesn't matter how much people earn or into which tax band they fall - nobody pays tax on behalf of anyone else, so of course a high earner will pay more than a lower one. That doesn't absolve the person who 'makes it possible' though. Most people manage to make work possible one way or another, and also contribute tax.

Doodledog

Norah

GrannyRose15

Germanshepherdmum. My figure of 20% was for illustrative purposes only. Though do you really think that having marginal rates of tax at 72% is a good incentive to work hard. Or for two earners on £ 40000 each to be better off that 1 earner on £80000 with a stay at home wife looking after the children. Our tax system is totally unjust and sometimes borders on the bizarre. It’s time we had a simple system and doing away with divisive tax rates would be a start. I’m not an economist but some of them say really interesting things.

I view the stay at home partner (me), never paying NI, with a partner in work (my husband), paying additional rate and NI as just. Stay home partner pays nothing - allowing working partner time to work.

I do know this logical argument is a waste of my time.

We've been here before, so I see my reply as a waste of my time, but just for the record. . .

Where is the logic that says two people should pay one lot of tax/NI between them, yet get two lots of benefits (in the generic sense of the word) that come from living in the UK?

Education, health, roads, law and order, defence and more are all used by everyone, but not everyone contributes. Yes, a SAHP enables the other parent to work, and that benefits their own family, but how is it fair that when both parents work they pay two lots of tax to the SAH family's one lot, and also pay for childcare, and work-related expenses?

It doesn't matter how much people earn or into which tax band they fall - nobody pays tax on behalf of anyone else, so of course a high earner will pay more than a lower one. That doesn't absolve the person who 'makes it possible' though. Most people manage to make work possible one way or another, and also contribute tax.

I know. I somewhat understand. I have read it all before.

I've a new question, just came to me.

Out of any collection of partners/ couples, families - with one working partner or two - how many children is NI supporting?

There is no per family member within NI, is there?

Asking for a friend. {grin]

Wong I really don't think that you fall within the definition of rich.

Lizzyflip

Tax Avoidance isn't illegal. Tax Evasion is illegal. Well that's what I've always understood. People need to learn the difference between the two.

Avoidance isn't illegal. However, many of the avoidance schemes should be stopped. If you look at my pension example above the tax liability was around £8k. If that person had just earnings of £60k - the tax liability would be £15k.
To my mind this is not fair.

Dinahmo

Wong I really don't think that you fall within the definition of rich.

I agree.

Define rich.

Everyone could attempt -- perhaps a politician reads GN!

What is wealthy, curious I looked up median wealth for UK, surprising to me was it’s only £550,000, highest was the 55yrs+. Another surprise was the wealthiest 1% begins at £3 million.
So there aren’t too many over that level but a lot £550k - £3m..

Goodness GSM, I'm sure there are plenty of rich, entitled Tory voters who haven't done much work (because their wealth is inherited) , sitting on their backsides in more luxurious conditions than pubs and bingo clubs! People are entitled to their choices of leisure venue, and they may well have worked a long hard day before making it to the pub. We aren't going to get closer to fair policy while bandying about cliches based on emotional reaction.

So much complaining goes on about 'benefit cheats' but I wonder where the statistics on these 'cheats' comes from? The tabloids? I'm willing to bet that the cheats cost the taxpayer a vanishingly minute fraction of what is wasted on government projects that turn out to be useless. (A few Covid scams spring to mind)

Being punitive and resentful gets us nowhere. If the system were fairer then perhaps fewer people would try to 'buck' it.

Maybe we should try the approach of the Yequana Indians (as written about by anthropologist Jean Liedloff.) If someone is too lazy and doesn't get round to putting a roof on his hut, for his family, the rest of the tribe smilingly do it for him. The individual concerned invariably ends up joining in. So much wisdom in certain indigenous people whose habitats we are destroying, by our 'productivity.'

I don’t mind anyone sitting on their backside if they are not taking taxpayers’ money. I very much mind people claiming benefits when they could work (or work in a different job or longer hours).

David49

What is wealthy, curious I looked up median wealth for UK, surprising to me was it’s only £550,000, highest was the 55yrs+. Another surprise was the wealthiest 1% begins at £3 million.
So there aren’t too many over that level but a lot £550k - £3m..

A small business owner could have assets (building, stock, machinery etc.,) along with their home in the S E easily adding up to £3 million on paper whether or not they would reach this figure on sale is debatable.

The 1% figure being £3 million being classed as wealthiest frankly shocks me, I would have said £10 million plus and then add on the mega rich billionaires.

I am surprised that you only have to have £3m to put you in the top 1%.

Germanshepherdsmum

I am surprised that you only have to have £3m to put you in the top 1%.

Surprised I am amazed 😱😱😱

Dinahmo

Plunger

Who remembers the 'Brain Drain'when Labour promised to tax the 'rich until the pips squeaked'.? What happened was an exodus of doctors, scientists and other professionals to the US, Australia etc.

And many came back for a variety of reasons - family, culture, schools, lifestyle. All sorts of reasons.

And every one that didn't return was a lost asset to this country that had educated them probably at great expense.

www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/totalwealthingreatbritain/april2018tomarch2020

This survey refers to Household Wealth so not really comparable in a business environment, the top 1% is £3.6m, in addition ONS say 48% of wealth is owned by 10% of the population.
Also wealth of the highest group has grown by 43% ahead of inflation whereas the poorest group has fallen by 12% since 2006. Undoubtedly this is due to property price inflation which the lowest group cannot benefit from.

I pass no comment on the stats, but they will not have escaped the Labour Party, who have been very tight lipped on capital taxation.

Haven’t they just? Unlike the Greens.

I still find the top 1% being £3.6m plus very hard to believe.

I would suggest that the increase in wealth of the highest group is not solely due to property price inflation especially as the period covered by the survey encompasses the crash which wiped vast sums from all manner of assets. I would suggest that many of those whose wealth has increased have worked hard and invested wisely. That is certainly the case for us. Those who have dead-end jobs and/or rely on benefits cannot reasonably expect to do as well as those who work virtually 24/7 and take the risks which employers take.

That's what Labour does all the time every time they are in power . The really rich will still find ways of avoiding it, the poor will benefit and the working people and pensioners will pay for it. The Shadow Chancellor has already complained that the State Pension is costing too much.

MaggsMcG

That's what Labour does all the time every time they are in power . The really rich will still find ways of avoiding it, the poor will benefit and the working people and pensioners will pay for it. The Shadow Chancellor has already complained that the State Pension is costing too much.

"The Shadow Chancellor has already complained that the State Pension is costing too much"

Please can you give details of that please, I have tried to look it up but cant find any reference. Its a pretty strong allegation in a run up to an election.

I have already said that the Labour manifesto is about working people . To hell with the retired - they have refused to increase the income tax threshold for pensioners. What does that tell you about their priorities?

A major priority of the Labour Manifesto is the provision of better services in Health and Social Care, and we as pensioners cost more than any other group as regards care and health needs.

There are a lot of very painful choices indeed to make, and investment in the future for our children and doing the very best we can for the NHS and Social Care, raising minimum wage, and investment to promote growth all had to be looked at.

I'm quite clear that the L Party would like to raise the threshold and its understandable that on GN we should focus on pensions, but we will benefit from some of the other aspects I've alluded to above and you shouldn't promise what you cant deliver.

Conservative priorities have promised the raise in order to vote win

- but the 17 million cuts in taxes promised is going to hit pensioners very hard indeed.

Didn’t this happen a few years ago and it caused what they called the ‘brain drain’. Many of the very rich people went abroad so that they could keep more of their money.

foxie48

If I were chancellor of the exchequer I'd find a way of targetting the increase in house prices aimed at the house owner rather than a house purchaser. I know this wouldn't be a popular choice but it is home ownership that drives so much of the disparity between those who have and those who don't. Also it has driven rents up to a punitive level, so if it prevents so many young people from being able to save for their own home as well as decreasing social and geographical mobility. Take X who I have written about, she bought her holiday home for less than 100K in the mid 80's for cash. It's now worth well over a 3 million. She hasn't scrubbed floors, worked nights or slaved to make that amount of money, she's just sat in a beautiful garden overlooking the sea watching the gardener at work and it is now sitting in a trust fund in her grandchildren's name earning more money. Surely she can pay some sort of tax on it?

As I said on another thread, it doesn’t matter to most people if their house increases in value because the value makes absolutely no difference to them, because they live in their house. Most people have one house and they live in it So what difference does an increase in value make? None! It makes no difference to them at all. It may make a difference to the state if the unfortunate person ends up in care, because the house would be sold to pay for the care, so the state benefits because it doesn’t have to pay for that person’s care. If the person is lucky enough to not need care, their children, if they have any, will benefit by inheriting, but by the time they inherit, they likely will be old enough to be reasonably settled in their own home anyway.

"Those who have dead-end jobs and/or rely on benefits cannot reasonably expect to do as well as those who work virtually 24/7 and take the risks which employers take."

In hospital a couple of weeks ago I had a brief chat to a health care worker. Lovely young woman, extremely kind and caring. She does 12 hour shifts on top of a 2 hour journey each way. She can't afford a car, relies on public transport and to get into the hospital from where she lives she has three separate journeys, two by bus and one by train. The average pay for a health care worker is £12.70 per hour, hardly a fortune is it? Would you consider this a "dead end" job?

Yes.

Certainly dead end wages, you can’t afford to live on those wages but that’s the way it is, the same for many semi skilled jobs, That’s all my wife gets in the local supermarket but at least you get a discount on the shopping, and she enjoys the work.

I agree that house values are on paper for the owner until the sale, maddie, so that is the point at which tax should be levied. House price rises in some areas causes huge inequality. People in cheaper areas struggle to move to more expensive ones, so stay where pay is lower and opportunities fewer. Obviously they also have less to leave the next generation too, so the geographical differentials get even more pronounced. Investment goes to areas where there is more money, which pushes prices up further, and the cycle continues.

Those whose houses have risen in value like foxie's X have the ability to move to cheaper areas and release significant sums by buying an identical house. Similarly, if they are unfortunate enough to need care it will take a lot longer to use up their capital, and they are far more likely to have money to leave to their children when the time comes than Y, who may well have spend an equivalent sum on her own house when she bought it, but been unable to leave the cheaper area, probably earned less as a result, and will have less (if anything) to leave behind.

Any government interested in levelling up needs to look at this one way or another. It wouldn't be right to cause people to be unable to afford to live in their own houses, so I'm not in favour of taxing people that way. Maybe owners of houses which have risen in price by an average of more than X% (or £X) per year from buying to selling, or by more than the national average rise, should pay a price inflation tax on sale? Or some other formula that brings back some of the unearned money in housing. I don't know what would be fairest, but whatever the formula the money should be ring-fenced to be spent on social housing.

David49

What is wealthy, curious I looked up median wealth for UK, surprising to me was it’s only £550,000, highest was the 55yrs+. Another surprise was the wealthiest 1% begins at £3 million.
So there aren’t too many over that level but a lot £550k - £3m..

I'm very very surprised by the median (and yes I do know what median is). I'm equally very very surprised by the 1%. I agree that the number between £550k - £3m must be quite large.

Link please?