Britain's Tax Con

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“Despite claims by other posters, it is well known by economists that the very wealthy tend not to spend into the domestic economy and certainly don't spend enough to keep it afloat. 'Trickle down' is a complete fantasy.”

That depends what you term as the “Domestic Economy”
If you are wealthy you spend on better quality goods wether that is food, clothes, cars or houses that is going to be your main spending, all of which is taxed at whatever level in the UK. If you still have spare cash you invest it maybe a pension or buy to let, even shares all of that is or could be the Domestic economy. What dilutes the trickle down is the amount of goods that are imported into the UK you could buy almost all UK, conversely it could be almost all imported.

You might have a cruise or overseas holiday, most of us don’t have time to do that often, it’s only the super rich that have that choice, even then the travel industry in the UK, benefits from that spending. The amount that is spent directly outside the domestic economy is quite small

it’s the constant lumping together of all earners over £50,000 as rich, which in the 21st century they are not.

I really don't think that that is the target group for progressive tax reform, though. I think that sights are set much higher than that. For a start, I doubt that anyone earning £50,000 a year is getting any tax advantages from the current set up (unless, of course, it is all income from dividends or speculation in the financial markets).

I think it is the point at which the wealthy pay proportionately less tax than the 'average' earner which is being targeted.

I agree again MaizieD Dinahmo’s posts are always clear and precise.

MaizieD I agree, I think the super rich spend a lot, but it goes into big business (designers, high end cars, property etc) some is obviously squirrelled away. This is a fraction of the population.

Middle income and the relatively rich do in my opinion spend more in their local economy.

In the S E to own a family home you have to earn upwards of £75,000 and the closer to London in a desirable commuter location much more to get on the housing ladder.

It’s the constant lumping together of all earners over £50,000 as rich, which in the 21st century they are not.

GrannyGravy13

Dinahmo our SME has been running for over 40 years, I am well aware of the tax liabilities of a limited company, its directors and employees.

Perhaps other people aren't, though.

Dinahmo's posts on taxation from an accountant's perspective are always informative.

Grantanow

The reality of the UK is we don't pay enough tax to provide the public services we all want. It's true that there is waste but it's trivial compared with the overall costs. The question of how the tax burden is distributed is obviously contentious but essentially we should tax the super rich much more (yes, I know they contribute by spending but they have massive tax mitigation schemes) and the rich more. In both cases we should tax their non-monetary benefits. And the middle income earners need to pay a bit more too.

Taxation doesn't fund spending; taxation follows spending. This is proven by research.

Understanding this makes a difference. We can provide the services and the provision of the services, by creating economic activity, will increase the tax take (the money the government gets via taxation)

Despite claims by other posters, it is well known by economists that the very wealthy tend not to spend into the domestic economy and certainly don't spend enough to keep it afloat. 'Trickle down' is a complete fantasy.

Grantanow middle income families definitely do not need to be taxed more.

Dinahmo our SME has been running for over 40 years, I am well aware of the tax liabilities of a limited company, its directors and employees.

The reality of the UK is we don't pay enough tax to provide the public services we all want. It's true that there is waste but it's trivial compared with the overall costs. The question of how the tax burden is distributed is obviously contentious but essentially we should tax the super rich much more (yes, I know they contribute by spending but they have massive tax mitigation schemes) and the rich more. In both cases we should tax their non-monetary benefits. And the middle income earners need to pay a bit more too.

Dinahmo

Germanshepherdsmum

What about the elderly people now living alone in a big old family house and existing on a state pension with little or no savings? There are many such people who live (if you can call it living) in Asset Britain as well as Austerity Britain, too old and frail to consider moving.

Those people living in the big old family home with just the state pension could not possibly live comfortably or afford to maintain their homes. Which is why it's a good idea to think of downsizing before it gets too late.

Years ago there were two sisters living in an old farmhouse next door, 10 bedrooms, they moved from room to room to avoid the roof leaks. Eventually their nephew moved them into a bungalow in the next village and the house was sold, they could have done it years before, but had lived their entire lives in the house and didn’t want to move.

Many older people resist change to ridiculous levels, when they finally are forced to move to a smaller place or a care home, they often quickly realize they should have done it sooner.

Germanshepherdsmum

I couldn’t agree more - but perhaps if you’re alone it’s just too daunting a prospect. Big old house, many years’ worth of stuff, no family to help.

And a complete lack of suitable properties to which to downsize!!

Town and Country planners are so shortsighted.

Not everyone wants to move to a retirement village away from family and friends and facilities. Nor a tiny flat with other retirees in the block.

Dinahmo

Germanshepherdsmum

It seems she thought that if you earn above £50,284 you pay 2% NIC on your total income.

Strnge. Varian's post was quite clear to me.

No it wasn’t clear at all, it simply read that those earning over
£50,284 were only paying 2%.
That’s how it reads to most people.

Germanshepherdsmum

It seems she thought that if you earn above £50,284 you pay 2% NIC on your total income.

That isn't what Varian said GSM. You even quote what she actually said:

and above the income of £50,284 pa you pay ONLY 2%!

Since when did that translate to: you pay 2% NIC on your total income.

Germanshepherdsmum

It seems she thought that if you earn above £50,284 you pay 2% NIC on your total income.

Strnge. Varian's post was quite clear to me.

It is highly unlikely that those people paying tax at 40% in the higher rate band are actually paying tax on income of £50271.

The chances are they are paying pension contributions - either through their employment or into a personal pension scheme. If in employment the premium will be deducted from their salary before PAYE is operated. Self employed people pay their contributions net of tax. So, if they decide to pay £10000 one year, they will actually pay £7500 and the govt will pay over £2500.

We are regularly told about all these rich people who make charitable donations and I'm sure that they do. If you make a charitable donation through Gift Aid the charity receives the notional tax relief from the govt.ie if you donate £20 the charity will receive an additional £5. if you are an higher rate taxpayer you will get a reduction in your tax liability of £5.

Many people will also receive benefits in kind. Here is a list:

Accommodation, supplies and services on your business premises

Free or subsidised meals

Meal vouchers

Expenses of providing a pension

Medical treatment to help employees return to work

Health screening and medical check-ups

Cost of nurseries and play schemes

Childcare vouchers

Other employer-supported childcare

Certain living accommodation

Payments towards additional household costs where employees work at home

Incidental overnight expenses

Disabled people’s cost of travel between home and work

Certain retraining costs

Employer-funded or employer-reimbursed training

Long-service awards

Suggestion schemes

Encouragement awards

Financial benefit awards

Goodwill entertainment

Car, motorcycle and bicycle parking

Certain gifts

The employer will pay and the employee will be taxed on the benefit although some of them are not taxable.

So you see, to say that people earning £50271 and over pay tax at 40% on that isn't quite true. I think that taxation is a rather more difficult subject than some of you seem to think.

It seems she thought that if you earn above £50,284 you pay 2% NIC on your total income.

Germanshepherdsmum

Will we get an acknowledgment from varian of her error? If only I had paid so little NIC! People read something, totally misunderstand it and rant to others, who then believe them and spread the misinformation.

Please read my above comment.

GrannyGravy13

varian

I cannot understand the logic of National Insurance contributions.

NI is after all , just another form of income tax.

BUT those who earn less than £242 per week (£12,584 per year) pay nothing. Those who earn between ££242 and £967 per week (£12,584 pa and £50, 284 pa) pay 12% and above the income of £50,284 pa you pay ONLY 2%!

WHY!

Should the higher earners not pay a higher, not lower percentage of their excess earnings?

www.gov.uk/national-insurance/how-much-you-pay

High earners pay 12% on income up to £50,284 and 2% on income over that amount.

Not 2% overall.

That is exactly what Varian wrote

"and above the income of £50,284 pa you pay ONLY 2%!"

so why are you querying it?

I couldn’t agree more - but perhaps if you’re alone it’s just too daunting a prospect. Big old house, many years’ worth of stuff, no family to help.

I imagine the poor and middle income members of our society are equally "fed up" with being ground into poverty by the entitled and their use of gross inequality.

Germanshepherdsmum

What about the elderly people now living alone in a big old family house and existing on a state pension with little or no savings? There are many such people who live (if you can call it living) in Asset Britain as well as Austerity Britain, too old and frail to consider moving.

Those people living in the big old family home with just the state pension could not possibly live comfortably or afford to maintain their homes. Which is why it's a good idea to think of downsizing before it gets too late.

I’m equally fed up with it and I couldn’t agree more with everything you say. This sort of thread recurs with depressing regularity.

Germanshepherdsmum

Will we get an acknowledgment from varian of her error? If only I had paid so little NIC! People read something, totally misunderstand it and rant to others, who then believe them and spread the misinformation.

Don’t hold your breath.

I am just so totally fed up to the teeth with the lets tax the rich more brigade

There is a universe of difference between the rich and the top 5% super rich. It’s blatantly obvious that the super rich spend their money on houses, accessories, jewellery, holidays, staff and much more which all incur tax.

Those who have been fortunate enough to have money in the bank and paid off their mortgage, have paid taxes on virtually every purchase.

I am all for a safety net for those in ill health (whether mental or physical) along with those who have been made redundant or lost their jobs through no fault of their own.

Just because some haven’t got something doesn’t mean that those who have should automatically pay for them.

Everyone should have a goal.

Will we get an acknowledgment from varian of her error? If only I had paid so little NIC! People read something, totally misunderstand it and rant to others, who then believe them and spread the misinformation.