Surely we must pay more taxes!?

Barleyfields

That is simply the salary level which tips someone into the top 5%. The additional income tax rate, which is the highest rate, starts at just over £125k, and of course the personal tax allowance is lost.

I know, the point is that tax is graduated based on income at the top end of the income scale, which is where there is capacity without compromising living standards to an unacceptable level.

growstuff

PoliticsNerd Your quote: "However, those in younger generations that I have spoken to seem to accept it as fact."

Not in my experience.

Can you tell me which post that came from, please.

That is simply the salary level which tips someone into the top 5%. The additional income tax rate, which is the highest rate, starts at just over £125k, and of course the personal tax allowance is lost.

But the highest rate tax is only payable on earnings above that level Barleyfields?

I have already explained to PN that one only has to earn just over £87k to be within the top 5% of earners. That is not a king’s ransom, though obviously some will think it is. I don’t think she commented on that.

PoliticsNerd Your quote: "However, those in younger generations that I have spoken to seem to accept it as fact."

Not in my experience.

PoliticsNerd: *"I expect you'll nitpick here, but I'm going to ask who exactly you mean by those on middle incomes."
Not much point as I have tried once and received a reply about as pleasant as this quote. However, I did suggest we are looking at the top 1%or possibly the top 5%. I haven't suggested going any further than that but obviously I cannot have the clarity of government. Our suggestions on any of this can only be outlines.*

You have not at any stage attempted to define the "middle", but your passive-aggressive deflection doesn't surprise me.

What the State does with taxes is not necessarily what the individual taxpayer would choose their money to be spent on - hence many have a preference for donating to well-researched charities to make a difference. That is my choice.

David49

We live in a global economy anyone can choose where they base their business it’s totally unrealistic to suggest that wealth should not be accumulated by the successful. If that happened there would be nothing to tax, we should certainly limit the way that wealth is transferred to family members a lot more than the UK does now.

To start any enterprise you have to have capital/wealth even if it’s only a set of tools or a computer, then your aim is to pay your own living costs plus a surplus to expand or provide a pension, buy a house or whatever.

Actually David there is plenty to tax. Unless somebody lives totally off-grid, I doubt if there's a single person in the UK who isn't taxed - and in many cases, those with the least pay a lower percentage of their income and wealth than those with the most.

Barleyfields

Limiting the amount which can be transferred to family members on death would lead to the creation of more lifetime trusts and greater lifetime giving. I cannot comprehend why anyone - unless they themselves have little to leave - would think that even more money than is currently the case should be taken by the State from the estates of the dead.

Maybe because those people have a greater understanding of macro-economics and trends in economies over the long term. What do you think the "state" does with taxes? It's not like some medieval king with pots of gold in his counting house.

Barleyfields

Limiting the amount which can be transferred to family members on death would lead to the creation of more lifetime trusts and greater lifetime giving. I cannot comprehend why anyone - unless they themselves have little to leave - would think that even more money than is currently the case should be taken by the State from the estates of the dead.

Greater lifetime giving would result in more money being spent. An economy survives on money being spent and circulated, not being hoarded.

PoliticsNerd

David49

We live in a global economy anyone can choose where they base their business it’s totally unrealistic to suggest that wealth should not be accumulated by the successful. If that happened there would be nothing to tax, we should certainly limit the way that wealth is transferred to family members a lot more than the UK does now.

To start any enterprise you have to have capital/wealth even if it’s only a set of tools or a computer, then your aim is to pay your own living costs plus a surplus to expand or provide a pension, buy a house or whatever.

The people we are talking about are getting very rich on the wealth of this country.

It may be necessary to tax the passively made income at source. I doubt that it's easy but if you get wealthy from a British investment, you should pay tax in Britain at the British rate. It might even make it easier for the Inland revenue, just as PAYE on active income does. In fact, why are we not already doing that? If the two are rolled together that may even help those who have little but only unearned income.

Here we go again! Your definition of passive income isn't the same as the one I (and others) found when Googling. Passive income includes activities such as "influencing" and writing a book/song which earn royalties for life. Such activities are taxable at the normal PAYE rates.

You need to discriminate between the various forms of passive income, which include receiving interest on capital (which might not have been earned in the first place) and rental income (the property having been bought with unearned income). It has little meaning in serious economic discussions.

I can't get my head around why the only explanation that is ever put forward for people wanting a more equal society is that those wanting that must be (a) poor, and (b) envious. It is as though no other motives are available beyond the ones that (presumably) drive those who make such sweeping statements.

A meritocratic system benefits everyone. If you succeed, you earn more, and live a better lifestyle. This encourages people to aim higher, which benefits others in the form of job creation, inventions, taxation etc. If, however, you get the lifestyle without the success, and at the same time others are held back from being able to succeed (eg by not being able to afford to retrain, being geographically stuck because of house price disparities etc) the economy stagnates, and people feel resentful, resulting in the rise of populism and worse.

A system whereby those who earn the money get to spend and/or save it, are able to pass on a reasonable amount to the next generation, but are not able to finance the next generation to the point where they are significantly better off than others without having done anything to earn it is fair to both groups and those in between, as well as to the country as a whole.

Is that motive too complicated? It has nothing to do with envy, and says nothing about the posters' financial circumstances, which may be at any point on the poverty-riches scale, unless they have chosen to share.

GrannyGravy13

I really cannot get my head round why posters are so against families giving their family members help in the form of monetary assistance or an inheritance on death.

The starting rate of 40% is punitive, I might be persuaded if there were to be an introduction of a sliding scale beginning at £2 million at 20% all the way up to 10% at 40%

Families should be able help each other in whatever way they can.

I also believe that the state should provide an adequate safety net for those who fall on hard times, or are unable to work due to health problems.

I don't know that anyone is GrannyGravy13. Our explanations may not always be clear if we are thinking things through as we post.

Perhaps you could quote what has disturbed you and the poster can expand or clarify. Conversations can move quite quickly too, and leave some things unanswered or unclear.

David49

We live in a global economy anyone can choose where they base their business it’s totally unrealistic to suggest that wealth should not be accumulated by the successful. If that happened there would be nothing to tax, we should certainly limit the way that wealth is transferred to family members a lot more than the UK does now.

To start any enterprise you have to have capital/wealth even if it’s only a set of tools or a computer, then your aim is to pay your own living costs plus a surplus to expand or provide a pension, buy a house or whatever.

The people we are talking about are getting very rich on the wealth of this country.

It may be necessary to tax the passively made income at source. I doubt that it's easy but if you get wealthy from a British investment, you should pay tax in Britain at the British rate. It might even make it easier for the Inland revenue, just as PAYE on active income does. In fact, why are we not already doing that? If the two are rolled together that may even help those who have little but only unearned income.

Limiting the amount which can be transferred to family members on death would lead to the creation of more lifetime trusts and greater lifetime giving. I cannot comprehend why anyone - unless they themselves have little to leave - would think that even more money than is currently the case should be taken by the State from the estates of the dead.

Oops £10 million at 40%

I really cannot get my head round why posters are so against families giving their family members help in the form of monetary assistance or an inheritance on death.

The starting rate of 40% is punitive, I might be persuaded if there were to be an introduction of a sliding scale beginning at £2 million at 20% all the way up to 10% at 40%

Families should be able help each other in whatever way they can.

I also believe that the state should provide an adequate safety net for those who fall on hard times, or are unable to work due to health problems.

We live in a global economy anyone can choose where they base their business it’s totally unrealistic to suggest that wealth should not be accumulated by the successful. If that happened there would be nothing to tax, we should certainly limit the way that wealth is transferred to family members a lot more than the UK does now.

To start any enterprise you have to have capital/wealth even if it’s only a set of tools or a computer, then your aim is to pay your own living costs plus a surplus to expand or provide a pension, buy a house or whatever.

Growstuff:

"Firstly, I do not agree that we should accept the excessive and ever growing wealth of the extremely wealthy."
Where did I suggest that we should? From the point of introducing the effect the "extremely wealthy" have had in hollowing out the middle class to date I have suggested that this could be offset initially by a one off tax surcharge.

"I expect you'll nitpick here, but I'm going to ask who exactly you mean by those on middle incomes."
Not much point as I have tried once and received a reply about as pleasant as this quote. However, I did suggest we are looking at the top 1%or possibly the top 5%. I haven't suggested going any further than that but obviously I cannot have the clarity of government. Our suggestions on any of this can only be outlines.

"After the boom years, the UK is in a mess. Our infrastructure is crumbling and our economy is stagnant."
I have suggested that, as well as the, shall we call them mega-rich, sucking weath from other people in this country they have also sucked the wealth from the country itself, now owning much of the infrastructure that was once government owned.

"However, what seems to have happened is that there has been no planning for the future and change"
The problem is that there was planning. The mega-rich did not get that way by accident. Inequality is there for all to see. The strangling of growth that comes from education and hard work is well documented and there has been much discussion (inside and outside GN) of inherited wealth.

"I don't know where you got the idea that nothing should be done about them." Again, where did I say that?

"Lastly, I don't know where you get the idea that younger people accept the status quo."
And again, where did I say that?

PoliticsNerd Firstly, I do not agree that we should accept the excessive and ever growing wealth of the extremely wealthy. I have long been interested in 18th and 19th century social history and I've seen for myself primary sources which show the immense inequality between those at the top and those at the bottom. The 20th century began to redress that with (for example) socialism and universal suffrage. It does seem that the tendency for more equality is being reversed. I don't accept that as a good thing for individuals or for the kind of society which I think most of us really want. The big question, of course, is what can be done about it, especially given that most people want to hang on to what they have and (as we have seen with Musk in the US), money buys political power.

I expect you'll nitpick here, but I'm going to ask who exactly you mean by those on middle incomes. Income distribution follows a classic bell curve with the vast majority of people having an income somewhere near the middle of the curve. There is, in fact a very long tail at the top. I'm not sure what the lowest threshold is to be in the richest 10% in the UK, but I know that my partner was (until his recent retirement) at the bottom end of that 10%. His income was far nearer the median of all people than it was to the richest 1%. He has far more in common with the "middle" than he does with the mega-wealthy.

At the other end, my own income is in the bottom 10%, but I cope - maybe frugally and I'm sure many GNers wouldn't like my lifestyle, but I survive (I have food, a roof over my head and a warm home). I accept that there are people who really don't have enough for the very basics, but there aren't many of them. I conclude from the statistics that probably over 90% of people are in the "middle".

After the boom years, the UK is in a mess. Our infrastructure is crumbling and our economy is stagnant. As a country, I don't think we've adapted well to an ever-changing world. It's not surprising that the "middle" is having to pay for it because the "middle" is nearly everybody.

Compared with 50 or 60 years ago, our lives are generally more comfortable. However, what seems to have happened is that there has been no planning for the future and change. In simplistic terms, we've lived on credit and people don't like having to pay for years of neglect. The "middle class" makes up a greater percentage of the population than it did half a century ago. It really isn't surprising that they're seen as being hollowed out. They are the majority and the country as a whole is in a mess. People squabble amongst themselves over a few pounds - and have taken their eyes off what's happening with the 1%. I don't know where you got the idea that nothing should be done about them. Personally, I'd like to see them hammered and not be taken in by arguments that they'll move their money elsewhere. Most of them have their money squirrelled away abroad anyway. We should be asking the question how much their money benefits the vast majority of the rest of us. I suspect it's much less than people are being conned into believing.

Lastly, I don't know where you get the idea that younger people accept the status quo. The ones I speak to most certainly don't.

Mollygo

Some posters accusing people of being aggressive, come across as being exactly that.

Occasionally, meekness just won't do when challenging aggression. All I did was ask for clarification and was greeted with rudeness and aggression. There was a time in my life when I would have just shrugged my shoulders, but I'm too long in the tooth now to put up with that sort of thing.

"According to the definitions I found, I have passive income."

Next thought from me growstuff. Your comment is why I tried to separate out those on middle incomes (the middle class) and the exceedingly weathy. It is the middle of society whose income is being hollowed out. So far, that leads me to to agree with those who suggest that we have to adjust the excessive and evergrowing wealth at the top of society. I'm not comfortable accepting this as it seems like an extreme view. However, those in younger generations that I have spoken to seem to accept it as fact.

If we allow that we have increasing poverty in those with the lowest incomes and the middle class is being hollowed out, we also need to look at the countries wealth. We can see this too has been hollowed out by the "rich". For instance, council houses were sold. Initially the same people lived in those houses so the situation seemed stable. But then they were sold on, rarely to those the council needed house and often bought to provide passive income.

Does this make sense so far?

Some posters accusing people of being aggressive, come across as being exactly that.

You do realise that constantly calling someone aggressive, simply because they disagree with you, is aggressive itself don't you MaizieD

I don't think that I have ever before called you, or anyone else 'aggressive'. But if you want to nurture even more grievance I will now say that you are being illogical and obsessive.

Illogical because my comment had nothing whatsoever to do with the topic being discussed, it was merely about your response to growstuff asking for clarification of the meaning of 'passive income'.

Obsessive because associating MMT, or my economic beliefs, with that comment, which, I remind you, was merely a request for clarification of a term, tells me that you are overly invested in demonising MMT and those who subscribe to its tenets.

And to think that I thought we'd settled in for an interesting discussion