When people say ‘the rich should pay more taxes’ who exactly are they talking about and how much extra should they pay?

[Ollyscarecrow]

Do most people think of celebrities, footballers, and a few exceptional entrepreneurs as ‘the rich’. Or is £100k household income in the UK ‘rich’?

If your household income is £100,000 (take home £60kish) that puts you in the top 10-14% of earners in the UK, and the top 3% globally.

If your household income is £30,000 (net pay £23k)then that puts you at the bottom of the middle 1/3 in the UK (you earn more than 35% of the population) but in the top 15% globally.

The Norwegian historian Rutger Bregman (who’s comments at Davos went viral) talked about ‘the rich’. Whilst he mentioned tax avoidance, he also talked a lot about the rich paying their fair share (which was up to 91% for the very richest) When you look at the figures above, and consider ‘the rich’ in global terms, most of the population of the UK is ‘rich’. So if we want a fairer UK who should be paying more and how much? If we want a fairer world then almost all of the UK should be paying a bit more tax. However, having mentioned this to a few friends/ colleagues (with a wide variation in earning) it seems that no-one actually wants to pay more tax either for UK or world benefit, and ‘the rich’ seems to apply to anyone that earns slightly more than they do. Thoughts please.

I would like to see NI contributions changed - but unsure how, it’s unfair that someone on £80k pays £435 per month NI earn half at £40k and you pay £315 per month earn £100k and your NI is £468 .... I can fathom how that is a fair system where the less you earn the higher proportion of tax you pay
The personal allowance I would like to see to fall in line with minimum wage so that anyone on minimum wage doesn’t pay income tax and income tax to rise by 2% in every band but the lowest

so I'll be £240 a month better off and I'll be contributing £80 more to society

But you won't because your employer will have £240 less profit per month, so they'll pay similarly less corporation tax, so overall tax revenue will be the same.

I'd like to see arseholes like this pay a bit more,

www.independent.co.uk/news/uk/home-news/duke-of-westminster-son-avoids-inheritance-tax-billions-britains-richest-men-family-trusts-rules-a7998246.html

News > UK > Home News
One of Britain's richest men inherits billions and avoids paying inheritance taxes
The Duke of Westminster's £8.3 billion fortune is believed to have been handed down to his son, Hugh Grosvenor
Jeff Farrell
Friday 13 October 2017 11:53
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The Independent

Hugh Grosvenor, now the seventh Duke of Westminster, was passed down his billions tax-free because of a ‘glaring loophole’ in the law ( PA Archive/PA Images )
The Duke of Westminster, one of the richest men in Britian, reportedly inherited the bulk of his father's £8.3bn fortune without having to pay a penny in death duties.
The late Gerald Cavendish Grosvenor earned his wealth on the back of a vast portfolio of property and land. Part of his portfolio was made up 300 acres across West London, which included upmarket areas like Belgravia and Mayfair.

But the personal estate left to his widow Natalia, 58, amounted to slightly more than £600m, The Times reported – a fraction of the fortune he had accrued when he died, aged 64, last August

He was named as the ninth wealthiest person in Britain this year in the Sunday Times Rich List, which put his fortune at £9.5bn. He also earned his father's title, and is now the seventh Duke of Westminster.

Wealth handed down through trusts also escapes the levy because they are set up when the person was alive.

The big issue here is the way very, very wealthy families have for generations used trusts to pass assets on outside the sphere of inheritance tax," he told The Times. "It is a glaring loophole. It's a political choice to have it and it means dynastic wealth is passed down the generations intact, leading to a much greater concentration of wealth."

would like to see NI contributions changed - but unsure how

NIC is the worst of taxes as it's only paid by workers. It's not paid on pensions, investment income, property income, etc. Far better would be to completely scrap it and add a few percent onto income tax rates so that everyone pays, not just the workers who are already having workplace pension deductions, student loan deductions and commuting costs paid out of their wages.

The personal allowance I would like to see to fall in line with minimum wage so that anyone on minimum wage doesn’t pay income tax and income tax to rise by 2% in every band but the lowest

Something like that might be a good idea. The current two-tier model can be a disincentive to seek promotion or work longer hours so probably impacts productivity. A higher upper tax rate would exacerbate that effect.

Raising the personal allowance is a very ineffective way of redistributing money to the least well off because most of the benefit goes to people who earn well above the minimum wage (unless you simultaneously increase taxes on higher incomes).

Wealth handed down through trusts also escapes the levy because they are set up when the person was alive.

Whilst unfair, banning trusts wouldn't solve the problem. They're literally "once in a lifetime" avoidance, and there are very few billionaires. It would do nothing to "plug the gap" that needs plugging every month of every year. So, fine, let's change the law and ban trusts, but we also have to accept that it doesn't solve the funding crisis and may have adverse unforeseen consequences.

The current two-tier model can be a disincentive to seek promotion or work longer hours so probably impacts productivity.

It's not just the personal allowance and tax rates that has the detrimental effect - the bigger effect is on state benefits such as tax credits, free prescriptions, etc., which is more of a disincentive to working more hours or taking a promotion. You can't look at one aspect on it's own - you have to look at the bigger picture.

NIC is the worst of taxes as it's only paid by workers. It's not paid on pensions, investment income, property income, etc.

That doesn't need to be the case. NI is just a tax and there is no reason its scope can't be widened.

However what would be better would be to treat all investment income as earned income. Here in France I pay tax at my marginal rate (about 43% for me) on all my capital gains and I think that is absolutely right. I make about £10k selling shares last year and I'll pay about £4K tax on that. In the U.K. I would have paid nothing, because my gains would be below the capital gains tax allowance.

If you’re only get what you’ve put in - what happens to your state pension (which is a benefit) if you live longer than you’ve put in money for?
Pensions are the biggest cost to the DWP with over 50% to pensions

Thanks for putting a link in, @ErrolTheDragon!

If it had loads of taxes to pay, people blindly assume amazon would just cough up out of its magical bottomless bank account.

Not the best example - do you know how much profit Bezos personally makes per day? Let’s not pretend that Amazon is running on wafer thin margins here - they’re not necessarily cheaper than alternative retailers, their warehouse staff are on shitty pay and zero hours contracts not because they can’t pay more (they easily could and still be vastly profitable), but because they can get away with it. The staff’s wages are topped up by tax credits because you can’t live on what they pay, and the difference between actual wage and a living wage is pocketed by Bezos and anyone else with shares.

Sales tax would make it fairer, across the board. As effectively everyone is then paying the tax they can afford, and no one can avoid it and adjust it. But absolutely no one would want that

But that's what VAT is.

I have discussed the high taxation in the UK with colleagues in the USA. The question they all pose is when the tax is so high what's the incentive to earn more and better yourself. I have never been able to answer that.

"Rich" almost always means "anyone who earns more than me".

And it almost always ignores the fact that higher earners pay disproportionately more tan lower earners already. If all those higher earners were taxed as these soundbite-shouters wanted, they would find ways to mitigate it (remember the 70s when lots of pop stars buggered offshore for example).

Then, the taxation eye of Sauron will swivel round to those shouty people and they'll be in the firing line as the "new rich"

And you can guarantee they won't like it up 'em.

To play devil's advocate, Bill and Melinda Gates have committed to giving away almost their entire fortune to good causes. They're currently trying to eradicate malaria, for example.

So should we (forgetting they fact they are Americans for now) have taxed them heavily so they didn't have these billions to help the world on a much larger scale than a domestic government? Would that government have spent it better?

I am fortunate to be fairly well-paid, but I also have low living costs and a very low "take" from the state - no children, no health issues, no benefits etc. So I have diverted most of my salary into my pension.

This supports my retirement income which is obviously good; but also reduces my income tax (although that figure is still more than many people make in a month).

Does that make me one of the bad guys or not? Obviously saving for my retirement is good, but it feels like some people think I should take the full salary and associated taxation as some kind of punishment for earning well.

Sales tax would make it fairer, across the board. As effectively everyone is then paying the tax they can afford, and no one can avoid it and adjust it. But absolutely no one would want that

But that's what VAT is.

But even that is not without issue. What products should be VAT free (sanitary products, condoms, educational books and resources, adult clothing

I have discussed the high taxation in the UK with colleagues in the USA. The question they all pose is when the tax is so high what's the incentive to earn more and better yourself. I have never been able to answer that.

Because you do still earn more, because money isn’t the only reason to “better yourself”, because it enables you to get a larger mortgage and buy property that will rise in value more quickly than a less expensive property, etc.

Personally I have no issues paying the tax I owe and would happily pay more if public services were properly funded, if important things that were sold off were renationalised, etc.

Of course higher earners pay a larger proportion of their income in income tax, but significantly lower in VAT.

Our country deifies the rich, allows them to exploit the working class, with a wage gap between CEOs / company directors and lower level staff which has become a giant chasm in the last decade or two. Our taxes go towards propping up their businesses and greater returns for their shareholders via tax credits, and then we run scared of forcing them to at least pay corporation tax properly. A few years ago, the amount of
uncollected tax (that’s not including tax evasion or avoidance, just tax that HMRC know they should be receiving but didn’t) was equal to the annual tax credits bill.

I don’t know anyone on PAYE who’s gotten away with not paying their income tax in full, do you? These loopholes are literally designed to only be accessible to the rich, meanwhile single mothers of disabled kids are being forced to pay back overpayments of tax credits, even when it wasn’t their error / fault.

The fact that some people are comfortable with things as they are is very disturbing.

They always mean people richer than them. People who make blanket statements like the rich should pay more tend to either be prejudiced (very common prejudice in the UK I have noticed) or economically ignorant (not realising that raising taxes will result in rich people leaving. Taxes in that income bracket are already quite high and rich people find it much easier to move abroad to avoid paying more than they want to).

@deathgrip you do realise that the rock are paying for pretty much everything for the working class. Education, healthcare, aged care.

You also seem to be overlooking that earning more usually means working significantly harder. Most high earners I know are working at least six days a week pretty much all day without stopping or seven days with a bit of leisure time here and there. No one is going to do this kind of work if they don’t receive anything in return.

And getting a bigger mortgage just means paying more money in interest with no garubtee that your property will actually go up in value. It’s not an insentive.

More Tax?

It would be nice if the greedy bastards paid some tax instead of burying it in the Bahamas like Cameron's dad.

What do you class as rich deathgrip?

I think everyone who earns over £25,000 should be taxed a little bit more.
This sounds about right to me. Graded to be more increase for over £50k or £100k. Only problem is London isn't it? If you're a single parent in London, £25k wouldn't go very far. I don't know how you get around that.

You also seem to be overlooking that earning more usually means working significantly harder.

Please tell me you are kidding with this? I mean, are you really that naive?

And getting a bigger mortgage just means paying more money in interest with no garubtee that your property will actually go up in value. It’s not an insentive.

Of course it is. Being able to borrow enough to purchase a nicer, larger home is of course an incentive, as is the fact that a 5% gain on a £900k property is significantly more than on a £200k property.

I’m still astounded by your other comment - I have a lot of people in my social circle who are in the top 10-15% of earners. Most (but certainly not all!) do work hard, but not harder than the nurses I know on an actual pittance, the firemen I know who are working removals jobs on their days off, the single mums I know working up to two full time shitty jobs on minimum wage just to keep a roof over their children’s heads, the childminder who gets a pittance from the government to look after the 3 year olds of far richer people, the cleaner i know who has MS and can’t get any other job and works such long hours cleaning other people’s houses she can’t stand at the end of the week. I have friends working their asses off in horrible environments for less than a third of what I make an hour in a very easy part time job.