With the income tax threshold frozen at £12,570 since 2021-22, anyone with a state pension next year of more than £242 a week will have some tax to pay.

So are you saying that the charts and graphs are fictitious? Why would anyone go to the trouble of inventing pie charts based on nothing? And does nobody audit these things?

Again, if tax pays for nothing, why levy it?

It's not about resenting people, or being 'so worried about it' - that is emotive language designed to make me look bitter and petty, which is unfair. I just don't understand why 'the system' allows some people to opt out of paying tax by not working, when it is actually illegal for those who do work not to pay it.

I apologise, Dd, but it did read as being resentful. Which surprised me, I must admit, as you always seem so balanced and 'liberal'.

I was surprised when the transfer of part of the non working partner's personal allowance to the working partner was reinstated. When I was married in the early 70s my then husband was a student on a grant, I could transfer the then 'married mans allowance' to me instead of just having a single person's personal allowance. This was stopped by the tories at some time in the 1980s.

I suppose that it was based on the old concept that a husband earned the family income while the wife looked after the house and children, The extra money helped to fund the entire family. I wonder if the reintroduction of a version of this had the same rationale?

I suppose that the way one looks at the whole question of women not working (particularly when bringing up children) depends on whether one believes that such women are making a valuable contribution to society in general (even though it can't be determined in monetary terms) or thinks that they are just freeloading skivers...

I have read the thread, as unlike some others I always do DAR. I have yet to identify an issue other than that the tax threshold is frozen for everyone. If that results in someone on a state pension paying a paltry sum in tax, so what? Why should they be in any different position to a working person who has to start paying tax, or tax at a higher rate, due to a pay rise?

Doodledog

So are you saying that the charts and graphs are fictitious? Why would anyone go to the trouble of inventing pie charts based on nothing? And does nobody audit these things?

Again, if tax pays for nothing, why levy it?

Well, they're not fictitious in that they are compiled from actual government data, but the concept behind them is fictitious.

For start, where is the contribution to 'revenue' of government 'borrowing' shown on these charts ? (i.e money from the purchase of government bonds and from deposits in national savings schemes?) Where is the revenue generated by the Crown Estates? Where is the revenue from licence fees, fines etc?

Why levy tax?

Tax takes excess money out of the economy and prevents excessive inflation.
Tax can act as an agent of redistribution
Tax obliges us to accept and use the government issued currency as a unit of exchange.

But tax isn't redistributing if it takes a higher percentage from those who work most.

Why should they be in any different position to a working person who has to start paying tax, or tax at a higher rate, due to a pay rise?

I rather think, GSM that state pensions were supposed to enable old people to live without the fear of destitution after a working life. Although it was introduced well over 100 years ago this still seems to be an alien, even a deeply annoying, concept to some people.

The idea of 'National Insurance', although it soon proved to be inadequate to the task it was meant to perform, was to reassure people that they had in fact 'earned' their right to a state pension. So, having worked and paid NIC and taxes the state pension would be free of both because it had been 'earned' and paid for.

It rather negates the intention of the 'triple lock' if operating it to keep the pension up with the cost of living brings old people who, if their state pension is their only source of income will be finding it hard to survive on it, into the tax bracket. However derisory an amount that tax might be it sets a precedent... and will cost more to collect than it produces in revenue...

I very much doubt that the amount of tax someone in receipt of a state pension will have to pay is going to make them fear destitution Maizie.

Germanshepherdsmum

I have read the thread, as unlike some others I always do DAR. I have yet to identify an issue other than that the tax threshold is frozen for everyone. If that results in someone on a state pension paying a paltry sum in tax, so what? Why should they be in any different position to a working person who has to start paying tax, or tax at a higher rate, due to a pay rise?

That's okay GSM. If you haven't got the issue brought out in the OP articles, you haven't. Not really any point in taking this further though, is there.

growstuff

But tax isn't redistributing if it takes a higher percentage from those who work most.

Well, that was my next train of thought!

In a capitalist society money flows upwards towards the people who profit from the supply of goods and services, while the domestic economy also depends on incentivising people to buy those goods and services. The upward flow of money could be controlled by limiting profits, but then it wouldn't be a capitalist society.

So tax has to be the method of redistribution of the money the state supplies.

The problem is that our tax system is skewed in favour of the profit makers, who use the power that money gives them to influence government tax policies in their favour. They don't stop to consider that tax policies that favour them can place a greater burden on the people who work to create the goods and services they profit from, and which they expect the non wealthy portion of society to buy in order to create their profits.

Adam Smith saw the problem. First:

No society can surely be happy and flourishing of which the far greater part of its members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged

Then he says (can't find the actual quote ATM) that any proposals made by the profit takers to the government should be very carefully considered because they are acting for solely their own interests, not for the interests of society as a whole. I assume that Smith thinks that government should have the interests of all citizens at heart, not just the wealthy ones.

I think that Smith is far more concerned with a 'moral economy' than people think he is...

What I am trying to say is that in an ideal world, redistribution should enable people both to earn, and to earn enough to sustain, by spending their earnings, the capitalist society in which they live.

those who work most. Now there's a loaded concept! It could be debated for hours and hours...

Germanshepherdsmum

I very much doubt that the amount of tax someone in receipt of a state pension will have to pay is going to make them fear destitution Maizie.

I'm sure you do, GSM, but the whole exercise is so pointless...

tax can act as an agent of redistribution

But how, if it is not paying for anything? It could redistribute life chances by paying for health and education (as per the charts), or it could take cash from some and give to others in the form of benefits, which is still 'paying for' things.

I'm not sure that there is a binary choice of views about SAHPs (not just women) with scrounging freeloaders at one end and valuable contributors at the other, either . Do working parents not contribute? They still provide the next generation, still do things such as volunteer and staff PTAs and the like, but also contribute via their work, and by paying tax, however that tax is spent. If that is factored into the argument, there are several nuanced viewpoints that go way beyond those you offer.

The question should not be about whether people work but about whether it should be an option to have others subsidise some lifestyle choices over others. Few (I hope) would argue against using collective taxation to pay for the sick, or for those who look after others who are sick or disabled, but outside of that, who decides which lifestyles are advantaged? I thought we had moved on from social engineering via tax and other breaks for married heterosexual couples, in the name of 'family values'.

Germanshepherdsmum

I very much doubt that the amount of tax someone in receipt of a state pension will have to pay is going to make them fear destitution Maizie.

GSM When you were so cross, because you were not being agreed with, that you said Do you have any friends! I pointed out that yes, of course I do, but my friends will be more like me, and yours more like you. You friends and acquaintances group seems to be even more limited than might have been assumed.

We are talking about those in their mid seventies up to the oldest of pensioners. People who don't deal with such things normally and possibly have no one to turn to.

The fact that you cannot picture the fear an unexpected demand for any amount of tax - or even a letter saying they may owe tax is sad, therefore, but not surprising.

DaisyAnneReturns

Germanshepherdsmum

I very much doubt that the amount of tax someone in receipt of a state pension will have to pay is going to make them fear destitution Maizie.

GSM When you were so cross, because you were not being agreed with, that you said Do you have any friends! I pointed out that yes, of course I do, but my friends will be more like me, and yours more like you. You friends and acquaintances group seems to be even more limited than might have been assumed.

We are talking about those in their mid seventies up to the oldest of pensioners. People who don't deal with such things normally and possibly have no one to turn to.

The fact that you cannot picture the fear an unexpected demand for any amount of tax - or even a letter saying they may owe tax is sad, therefore, but not surprising.

Well said. She obviously doesn't realise the fear aroused when a bill drops through the door, without knowing how on earth it will be paid. I certainly do. But hey, let's tax the already taxed.

The reason that I was exasperated with you was not because of your failure to agree with me DAR. Why would anyone expect everyone to agree with them?

What makes you assume that my group of friends and acquaintances is limited? I wouldn’t describe it in that way, but of course those I choose to socialise with tend to have similar views and life experiences.

If someone has never received a communication from HMRC that can only mean that they have never paid tax. Not a situation I have much sympathy with if they are able-bodied and have not been undertaking full-time caring responsibilities ever since leaving school.

I’ve been there Freya - but the emotive response is no excuse for not paying tax if it’s due.

By the way, I was taught as a child that ‘she’ is the cat’s mother.

But how, if it is not paying for anything? It could redistribute life chances by paying for health and education (as per the charts), or it could take cash from some and give to others in the form of benefits, which is still 'paying for' things.

It can redistribute by taxing the poorer less and the wealthier (and that includes big businesses) more.

When the bottom 10% of the population pays 38% of their gross income in taxation and the top 10% pays 36% of their gross income in taxation there is something wrong with the tax system.

Don't forget that the remaining part of the poorest 10%'s gross income ends up as profit for business, because the poor spend all of their income, whereas the remaining part of the top 10%'s income isn't all spent into the economy. What they save isn't taxed until it's spent. And what they save usually attracts more income through interest and dividends. The rich become richer because they can use their excess money to make more money. The poor stay where they are. Poor.

It could redistribute life chances by paying for health and education

Of course it could, but it doesn't need taxation to pay for it. I feel that I am wasting my energy trying to explain this. Taxation doesn't pay for anything, the government creates the money it spends then taxes it back... The charts just perpetuate the fiction that taxes are needed before the government can spend.

If you are a pensioner on the bread line, every £ of your income is likely spoken for, and spent, before the end of the tax year.

Any tax demand will I agree cause fear, and there are plenty of scams purporting to be from HMRC as it is.

Some with very modest private pensions will also find they have to pay tax for the first time as the personal allowance is frozen, until 2026.
Why don’t the government come clean for a change and say they will ignore the triple lock, or reduce state pensions I wonder??
It is a stealth tax on those who can least afford it.

The increase in the pension via the triple lock is vastly more than the tax which will be payable. And those on a small occupational pension are probably already paying tax.

Not necessarily GSM.

I'm not assuming, l'm simply grasping at an explanation as to why you can't see the issue GSM.

There really are people, well you will know as you read all the posts and I have said this before, who have never paid tax.

Minimum income didn't come in until 1998. The people we are talking about will not have had it's benefit. Add to that the fact that many of these will be women. Although the original Equal Pay Act came in in 1970, it took a long time to affect those in jobs such as cleaners, carers and dinner ladies, etc which were almost wholly women. Im sure others can think of more such jobs.

They worked very hard for very little - and you still say that you don't have much sympathy. You certainly don't seem to have much understanding for people who don't have your life GSM, which, as I said, is sad.

Of course a lot of cleaners have always been paid cash in hand, so who can say if they earned enough to pay tax or ever paid NI? But no, I don’t have sympathy for those who don’t keep themselves informed, still less for those who could have worked full time, thus triggering payment of tax, but chose not to.

When the bottom 10% of the population pays 38% of their gross income in taxation and the top 10% pays 36% of their gross income in taxation there is something wrong with the tax system.

Don't forget that the remaining part of the poorest 10%'s gross income ends up as profit for business, because the poor spend all of their income, whereas the remaining part of the top 10%'s income isn't all spent into the economy. What they save isn't taxed until it's spent. And what they save usually attracts more income through interest and dividends. The rich become richer because they can use their excess money to make more money. The poor stay where they are. Poor.
I understand all of this, and agree that it is wrong. But it only explains how tax is taken from those who work, not how it is spent.

It could redistribute life chances by paying for health and education

Of course it could, but it doesn't need taxation to pay for it. I feel that I am wasting my energy trying to explain this. Taxation doesn't pay for anything, the government creates the money it spends then taxes it back... The charts just perpetuate the fiction that taxes are needed before the government can spend.
So what does happen to the money that goes to HMRC? And again, why do governments (and potential governments) of all stripes persist in taxing if the money is not needed? It is unpopular, and as I said upthread, if someone said 'vote for me and you will keep every penny you earn, but still have public services' they would be guaranteed to get in.

Smoke and mirrors Doodledog. The government wouldn’t be creating money it didn’t know it would be getting back in tax - money simply created with no corresponding tax take would be worthless.

Both my grandmothers cleaned factories on the night shift and their husbands were paid their salaries

Gordon Bennett!

I think it's easy to forget how far things have moved on for women in the past 100 years or so.