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.

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

Often more responsibility as well

More responsibility, perhaps - unless you’re talking about the people caring for other people’s kids, elderly relatives or saving people’s lives as paramedics and nurses or taking 999 calls.

Thanks for all your views.
One obvious answer would be to tax on worldwide earnings like the US does. There is no escaping to a tax haven. It kind of baffles me why the government doesn’t do this; the crazy thing about tax havens is that often the salary is enormous (compared with the same job in the UK) and then you don’t pay tax on top. So even if the government taxed on worldwide earnings, you’d still be considerable better off.
The other thing is, as has been previously mentioned, a different type of sales tax. Bermuda does this. So everyday items (food for example) become very expensive, but it means that people really have to consider what they buy.

If you take a young family in London with an income of 90k which a lot of people would class as high that’s 5-5.5k a month (depending how the wages are split). However once you take out pensions & maybe student loans you are looking at maybe around 4.7k, take out 1.5-2k for mortgage/rent & the same again for childcare. Then take out transport costs, household bills, food etc & it doesn’t leave you loads to play with. Now clearly not on the bread line but also not rolling in it.

It makes a huge difference if & when you got on the property ladder in terms of disposable income.

I think the main thing is ensuring that both wealthy individuals and companies pay all the tax they are legally supposed to, having a hard look at all these 'loopholes '.

Slightly off topic but Rutger is Dutch not Norwegian...

ErrolTheDragon

IIRC the Laffer Curve was discredited because it wasnt able to accurately predict economic outcomes and there has been studies on this

fancynancyclancy so how is a nurse working at St Thomas’s going to survive on his or her wages, rent, childcare, transport, pension still all have to be paid

kind of baffles me why the government doesn’t do this because if this is what a government proposed in its manifesto people like Rupert Murdoch wouldn’t like it & they would prevent the government winning the election

ivykaty44 I said a household income of 90k, not one person earning 90k.

When i say it i am thinking about corporations and individuals with land and big trust funds of the type that mean the same groups of families have been in britains rich list for centuries. Im less fussed about taxing earnings

IIRC the Laffer Curve was discredited because it wasnt able to accurately predict economic outcomes and there has been studies on this

One factor on its own is never going to accurately predict economic outcomes in the real world. It's a theory which may form a part of taxation considerations. It's pretty clear that there ought to be some optimum (variable according to the circumstances) between either impossible extreme of 0 and 100%.

This might be of interest:

play.acast.com/s/reasonstobecheerful/73.forricher-forsuperricher-taxingtheultra-wealthy

fancyclancy two nurses aren’t going to earn £90k

But a nurse & an accountant might or a doctor & a nurse.

Anyway my point still remains that you cannot just look at income tax. How much percent do you think earnings over 50k should be taxed at?

Over 25k? Really? Maybe £35k but no not 25 that's crazy.

high taxation in the UK

The UK doesn't have high taxation. Tax rates were higher in the UK in the past including under Thatcher and they are lower than in other European countries.

Over 25k? Really? Maybe £35k but no not 25 that's crazy

Why is it crazy? I’m not saying people on £25K should pay thousands more. But yes over £25K they start to pay a bit more. I don’t get why that is crazy.

Because you might as well apply it to everyone then?

Just Economic outcomes are notoriously difficult to predict accurately (cf Brexit) because we use all sorts of variables, but still can't get close to replicating human behaviour accurately. There's all sorts of differing models that attempt to do this, but few of them are better than average in terms of predictive capacity.

We can model these things more accurately working backwards from outcomes, so can construct explanatory theory that way - but it's the weird quirk of human variables that these models are rarely accurate without hindsight.

Personally, I'm a huge fan of Kahnemann and Twersky, mainly because Rational Choice Theory shows humans don't choose rationally

One of the reasons that economics isn't a science!

How much percent do you think earnings over 50k should be taxed at? proportionally more than someone earning £25k which at present isn’t happening, this is why I don’t like NIC ad they stand and why I believe that the personal allowance should be raised to meet a 40 hour week on minimum wage - then raise the income tax by 2%

The tax free personal allowance has already been doubled in the last few years from around £6k to £12k, so more people than ever aren't paying income tax at all and everyone earning under £100k has benefited from the increase in tax free allowance. I think that's gone far enough.

Increasing it to around £16k (min wage at 40 hours) would need a hell of a lot bigger of a income tax rate increase than 2% as it would take millions more out of paying tax and transfer the burden to middle earners who are already being squeezed.

Middle to higher earners pay a small percentage more income tax in Scotland than elsewhere in the UK and the sky hasn't fallen down around our ears. In fact I barely noticed the difference, and would be happy to pay a bit more in order to fund public services.

To the best of my knowledge there hasn't been a mass exodus to Berwick on Tweed.

The problem with increasing the lower threshold for paying income tax at all is that it creates a divide between those who contribute and those who don't despite often working full time. There's a reason it's a Tory policy.

Far better to raise minimum wage to the actual living wage (not the pretend on that's currently used as a minimum) and then use the money saved on topping up low wages to subsidise the small locally owned companies who need the support and not the Amazons and Sports Directs who don't.

Why tax those on a low income more proportionally than those on an income above £50k and how is that fair? By raising the personal allowance and increasing income tax, the lower paid gain and need less in benefits, those earning more will neutralise there earnings

The problem with increasing the lower threshold for paying income tax at all is that it creates a divide between those who contribute and those who don't despite often working full time. There's a reason it's a Tory policy.

Most of the massive increase in tax free personal allowance was under the coalition as it was actually a Libdem policy!