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By (user no longer on site) OP
over a year ago
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Has anyone ever worked out how much of your household income ends up in the taxman coffers?
Obviously we pay tax and Nat ins on our pay, but add vat on all your spending plus fuel duty,interest on savings,insurance tax,airport tax,road fund licence, this tax and that tax etc. I was once told it amounts to an average of over 60% of gross household income.
Has anyone got an accurate and recent figure for this? |
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I saw figures recently that the lowest 10% income earners pay an average of 43% of income in tax whilst the top 10% only pay 34%. Obviously in absolute terms, top earners pay more as their salaries are greater, but things like VAT and fuel duty are not progressive taxes, so those least able to pay, get hit hardest. |
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As above, the poorest 10% will typically pay 45% tax, whilst those above, far up the income scale, will pay considerably less.
The poor in effect are super tax payers. Their overall tax paid is the largest share to this country. Contrast this with many corporations shifting their loot around, who pay very little.
It holds true for charity donations too - the poorer paying a greater share of of their income as charity, but not claiming tax back, of course.
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I've seen some figures from earlier in the decade, where for VAT alone, people in lower/working class income brackets, 58% of their spending included VAT.
This helps contribute to lower income households paying massive proportions of their income as tax. |
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Then there are the super rich who basically have individual negotiations with HMRC. Their premise is, that they can always live somewhere else and HMRC can have 100% of nothing from them.
I read once that Mohammed Al-fayed only pays 2% of his income in income tax. |
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"I saw figures recently that the lowest 10% income earners pay an average of 43% of income in tax whilst the top 10% only pay 34%. Obviously in absolute terms, top earners pay more as their salaries are greater, but things like VAT and fuel duty are not progressive taxes, so those least able to pay, get hit hardest."
That's 'sort of' right. The figures are from the Equality Trust, a left-leaning think-tank.
The problem is that, if you actually think it through, it seeks to exaggerate the figures in order to inspire class unrest.
It does not consider benefits in the calculation in a sensible manner: for example, a poor person would get council tax benefit, but 'shock, horror' 100% of this income goes on paying their council tax.
The worst effective tax rates actually fall on those on earning between 10-16k, due to the claw-back of tax credits, I believe. Plus people earning around this level are more likely to be spending on goods which atttact VAT, rather than basic necessities which don't.
Mr ddc |
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"I've seen some figures from earlier in the decade, where for VAT alone, people in lower/working class income brackets, 58% of their spending included VAT.
"
Only 42% of their income on housing, food and energy? Lucky blighters! We spend more than that on our mortgage alone!
At the risk of sounding like Marie Antoinette, I truly don't understand what 'the poor' spend their money on...
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"I've seen some figures from earlier in the decade, where for VAT alone, people in lower/working class income brackets, 58% of their spending included VAT.
Only 42% of their income on housing, food and energy? Lucky blighters! We spend more than that on our mortgage alone!
At the risk of sounding like Marie Antoinette, I truly don't understand what 'the poor' spend their money on...
"
Mortgage isn't tax.
20 years ago I made it briefly in to the top 1% earners for a couple of years. I never moaned about the amount of income tax/NI I was paying (over £30k a year), I was happy that I was earning so much.
To be frank, I couldn't spend it all, as I was incredibly busy and naturally frugal.
I retired in my 40s and since have lived very frugally, though I now work part time on less than £18k pa. If it wasn't for the fact I have no mortgage, I don't know how I'd manage. All my earnings go on commuting, food and utilities.
My point is, there is a level of earnings, that when you cross it, life gets very easy and income tax is inconsequential, unless you're greedy. There is another level, below which, life is a constant struggle to make ends meet. |
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"
My point is, there is a level of earnings, that when you cross it, life gets very easy and income tax is inconsequential, unless you're greedy. There is another level, below which, life is a constant struggle to make ends meet."
Agreed.
That is why I think the solution is to help people out of poverty through education and training, not pay them to remain poor via tax benefits.
The tax-payer paid for an education that sent me to a top university, whereas my gran died in a workhouse, and my mum was sent, from the children's home, into service aged 12.
Sometimes I think some people don't appreciate how far we have come. |
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"I've seen some figures from earlier in the decade, where for VAT alone, people in lower/working class income brackets, 58% of their spending included VAT.
Only 42% of their income on housing, food and energy? Lucky blighters! We spend more than that on our mortgage alone!
At the risk of sounding like Marie Antoinette, I truly don't understand what 'the poor' spend their money on...
Mortgage isn't tax.
20 years ago I made it briefly in to the top 1% earners for a couple of years. I never moaned about the amount of income tax/NI I was paying (over £30k a year), I was happy that I was earning so much.
To be frank, I couldn't spend it all, as I was incredibly busy and naturally frugal.
I retired in my 40s and since have lived very frugally, though I now work part time on less than £18k pa. If it wasn't for the fact I have no mortgage, I don't know how I'd manage. All my earnings go on commuting, food and utilities.
My point is, there is a level of earnings, that when you cross it, life gets very easy and income tax is inconsequential, unless you're greedy. There is another level, below which, life is a constant struggle to make ends meet."
I've been in a similar situation, now a student.
As a civilised culture, it's important that we take care of those who are least able to take care of themselves. Those unable to build up a safety net, and to curtail those aspects of capitalism that would potentially price those people out of a life. This covers not only those who are poorly paid. I've always felt very fortunate to earn and pay as much as is appropriate, however much that has been. |
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"
Agreed.
That is why I think the solution is to help people out of poverty through education and training, not pay them to remain poor via tax benefits.
"
Not everyone is motivated or cut out for higher education and higher skills. Many just want fairly simple job with defined responsibilities that pays them a living wage. Nor are there enough higher paid jobs to accommodate everyone - someone has to empty the bins and sweep the roads.
I'd rather society relieved the tax burden on the lower waged so they can afford to live. It's better than having them unemployed being totally supported by taxpayers.
Obviously, there are several factors at play, such as ensuring employers don't take the piss by deliberately paying low wages, and what level of earnings does the tax relief kick in at.
I used to get some tax credits when I first went back to work part time, but the rules changed and I no longer qualify. But for the fact that I was able to increase my hours and thus my income, the job would have been unsustainable as my monthly commuting bill is around £300. I don't qualify for any other benefits due to savings and assets, but it did get to the point where it was no longer viable for me to work and I would have been better off doing odd jobs locally for cash. |
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By (user no longer on site)
over a year ago
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"I saw figures recently that the lowest 10% income earners pay an average of 43% of income in tax whilst the top 10% only pay 34%. Obviously in absolute terms, top earners pay more as their salaries are greater, but things like VAT and fuel duty are not progressive taxes, so those least able to pay, get hit hardest.
That's 'sort of' right. The figures are from the Equality Trust, a left-leaning think-tank.
The problem is that, if you actually think it through, it seeks to exaggerate the figures in order to inspire class unrest.
It does not consider benefits in the calculation in a sensible manner: for example, a poor person would get council tax benefit, but 'shock, horror' 100% of this income goes on paying their council tax.
The worst effective tax rates actually fall on those on earning between 10-16k, due to the claw-back of tax credits, I believe. Plus people earning around this level are more likely to be spending on goods which atttact VAT, rather than basic necessities which don't.
Mr ddc"
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