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will there be a tipping point where there are not enough tax payers?

(20 Posts)
gramercy Mon 19-Sep-11 10:27:39

This has been bothering me.

In view of the huge number of pensioners there will be soon, and the increasing number of people claiming benefits, what will happen if there is insufficient income tax being raised?

Surely people on modest incomes will throw in the towel and not work at all if they are taxed so heavily that they would be better off on benefits. And if the majority of the voting population are retired then can we expect a future of self-interested pensioner politics?

CogitoErgoSometimes Mon 19-Sep-11 10:58:46

That's precisely the dilemma facing those looking at the balance of pensions, benefits, tax income, job creation, growth etc. The 'demographic time-bomb' has been known about for a long time but was largely ignored by the last administration. I don't think there has ever been a point where low/middle income earners threw in the towel and went on benefits rather than pay tax, but there are plenty of wealthy people that already live overseas because they find UK taxes cost them too much.

worldgonecrazy Mon 19-Sep-11 11:06:57

I don't think they will throw in the towel because they'd be better off on benefits because many people believe in the work ethic and are happy to work regardless of whether it makes them only slightly better off.

I'm not sure what the tipping point is? Does anyone know what the actual number of people/tax payers is compared to those on state benefits including pensions?

scaevola Mon 19-Sep-11 11:07:59

Does anyone have a good link which would show what proportion of UK government revenue actually comes from income tax? I may be completely wrong in this, but I always thought more came from corporation tax, and then there's also things like fuel/alcohol/cigarette duty, VAT, stamp duty, inheritance tax, tax on investments/savings, fines, repayments of international loans, etc.

niceguy2 Mon 19-Sep-11 11:25:46

Scaevola, try this link en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom There's a pie chart fairly early on.

Income tax brings in the most. Corporation tax brings in relatively little. Whether you think that's right or wrong depends on your politics I suppose.

Gramercy. This is exactly why we need immigration. To bring in more taxpayers. But we need controlled & targeted immigration rather than the free for all, jumping on the train type under the last administration.

scaevola Mon 19-Sep-11 11:32:43

Thanks!

missymarmite Thu 29-Sep-11 23:56:30

Besides, you can't just jack in the job and claim benefits. To qualify for benefits you have to show that you have been made unemployed involuntarily. In theory, even if you are fired due to bad behaviour you aren't entitled to JSA for 13 weeks, but I'm not sure how much this is enforced.

I was (briefly) toying with the idea of quitting my job because as the price of petrol keeps going up there will be a tipping point where I will be unable to afford to get to work, yet I can't because I wouldn't be eligible for benefits.

I am very frightened. On the one hand, as a public sector worker, I see my (very low) wage stagnant, my job under threat, no other jobs to apply for, while every basic need for normal life is rising (food, fuel, clothing, rent). I hear the news about Greece and the Eurozone, and fear the loss of tax credits and benefits for all. Maybe even a loss of the NHS. It is so scary.

MrPants Fri 30-Sep-11 17:54:38

With regards to the original question, "will there be a tipping point where there are not enough tax payers?", I think you could easily argue that we're already there. I know I have a tendency to bang on about the levels of debt that our governments have built up (a debt which is still increasing despite those nasty cuts which everyone seems so fixated upon) but all debt is is living beyond your immediate means.

If there were more taxpayers and fewer public sector workers and benefit claimants (and, unfortunately, non-productive public sector workers are every bit as much of a cost to the economy as a benefit claimants), we wouldn't be in the mess that we are in.

[Dons flameproof suit]

JLK2 Sat 01-Oct-11 11:50:40

I think we've been there for a while. We need to lower benefits to make work more attractive. When benefits started they weren't nearly as close to wages as they are now.

I don't see why immigration helps because it just keeps wages low and keeps people unemployed. We'd be far better off today if Labour hadn't opened the floodgates.

SinicalSal Sat 01-Oct-11 12:05:55

Everything good costs money - even public sector workers. Wouldn't like to live in a teacherless, doctorless, roadmenderless, even local government administrator-less world.

NetworkGuy Sun 02-Oct-11 10:16:45

Agree JLK2 - immigrant workers often get a raw deal, whether legal or illegal, and if they are on really low wages there's no tax element to speak of (if tax is even being payed).

Low wages in many jobs mean that there are Britons unwilling to do those jobs and while in some cases the wages are below minimum wage, in other cases, it comes down to laziness, or if the alternative is having benefits, and lost benefits could not be fully replaced by the wage, one can understand the poverty trap people might find themselves in.

I'd not advocate reducing benefits in most cases, but investigating any where household income is suspected of exceeding 20K from benefits and part-time work, in case it is a household where there are undeclared sources of income (eg buying from charity shops and selling on Gumtree or Ebay, to a level where it must be regarded as a business and not just hum drum buying and selling of household bits and bobs).

crazynanna Sun 02-Oct-11 10:22:48

Isn't the level of benefits paid legally the minimum amount the government say people need to survive? (note I say survive,not 'live)
Surely the answer is to raise wages to an acceptable living amount,rather than reduce the breadline anymore?

StarlightMcKenzie Sun 02-Oct-11 10:29:06

N

usualsuspect Sun 02-Oct-11 10:34:03

The more public sectors workers that get made redundant ,the more benefit claimants there will be

because I can't honestly see where all the private sector jobs are going to come from

StarlightMcKenzie Sun 02-Oct-11 10:36:56

No, there is enough tax, the government just likes to use it to bail out banks fund individual landlords and public transport companies despite having the most expensive fares and rents already. The money is there and there is plenty of it, but it is in the wrong places.

Social housing and nationalised companies can be much cheaPer for the users AND cheaper fror the tax payer when economies of scale are introduced and no profits.

StealthPolarBear Sun 02-Oct-11 10:39:12

MrsP, as a public sector worker I take your point. Any unproductive worker is a drain on wherever the money comes from - taxes in this case.
And yes, public sector workers are not wealth creators - that isn't their role.

StarlightMcKenzie Sun 02-Oct-11 10:45:09

But yes, efficiency and accountability need to be sorted in the public sector as well as better salaries. My ds has SN. You could very well make redundant 85% of the people who have him on their caseload, double the salaries of those who actually achieve outcomes and you'd still be quits in.

StarlightMcKenzie Sun 02-Oct-11 10:46:21

Quids in

StarlightMcKenzie Sun 02-Oct-11 10:49:21

Also, don't forget that public sector workers are employed by the government. If they are so shit at managing their own staff, they're badly fit to run a country.

Nancy66 Sun 02-Oct-11 10:55:15

that's already happened - there are some already some months when the government pay out more in benefits then they collect in tax

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