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.

"Those earning more" are likely to also be paying student loan repayments that lower earners won't be. Those earning over £50k are losing child benefits that lower earners won't be. Those earning over £100k are losing their tax free personal allowance. Pension contribution limits are also impacting "higher" earners too.

Just look at any online forums. There are people asking how they can avoid higher rate tax, asking how they can keep child benefit, asking how they can keep their personal allowance. The answers are quite alarming and damaging to the UK - usually the answers are to reduce working hours (adding to the shortage of GPs and dentists!), or pay into pension schemes (meaning less tax revenue).

If I could I would scrap all tax and completely overhaul the system following a Libertarian manifesto.

Backwoodsgirl

How would you pay for stuff? Roads, police, schools, coastal defences etc?

I don't think the rich should pay more tax. I think they should just pay what they owe (both companies are individuals) and not go to enormous lengths to avoid paying. I DO think the rich should pay more wages though so that company profits are shared out better amongst ALL those who helped generate them, even if you only contribute by keeping the offices clean, and not just sucked up by the few at the top. I remember I saw on TV a while ago a programme about the economy, it said that over the last 25 years 100% of the economic growth has been sucked up by the rich, and 0% has trickled down to the bottom.

@KennDodd

The government should be able to support itself, so smaller government that is funded through a diverse handful of state owned enterprises such as oil, arms etc

Roads should be toll roads
State parks should be paid entry

The US does tax its citizens abroad, but only a small percentage of us and not very well. Mostly, it just keeps American abroad from using certain banking products because the banks don't want to deal with their threats of fines and sometimes the US makes scary-sounding threats about refusing passport renewals to those who don't file.

I do agree there needs to be international agreements and efforts, though I think mostly on corporations. I think what some British (and other wealthy countries) corporations get up to, taking a lot of resources and knowingly doing a lot of damage to people whose countries' governments either can't or won't fight back, is a big part when I think 'the rich should pay more'.

Yes, it may put my prices up, but it could bring the price they're having to pay for us down. In many places, corporations used to have to prove a public benefit and I think that should be brought back and that benefit and the burdens they're putting should be shown in each area they're doing business & part of that would be taxes. I don't think this will fund any of our or anyone else's problems, but I do think the ethical parts of it should be looked at and pretty much no sector or businesses is going to do that without regulation that actually works.

As for the Gates, as much good as some are able to do with the funding the Gates Foundation provides, they've also contributed to a lot of failures and arguably very questionable situations. Do we think a rich guy should be able to essentially bribe underfunded state services to do what he thinks is best with absolutely no experience or evidence for it? As much hate as Gove and other education ministers have got, would we be okay if any of them changed school curriculums purely because they were rich enough to bribe schools to do so? Whether through taxes or other ways, there needs to be checks and balances for the rich playing with others' lives and public services.

Catching up.

Someone who earns 25k would potentially entitled to tax credits, CB & housing benefit though. I just plugged my details into a calculator & all things the same but no partner & I would be entitled to £283 a week. So my 25k wage plus benefits gives me approx £2843 a month.

If you earn 50k you take home £3127, a difference of £284.

I don’t think there are many places that you can claim tax credits or HB

"People who make blanket statements like the rich should pay more tend to either be prejudiced (very common prejudice in the UK"

Yes Its likely because of all those programmes on Channel 4 and Channel 5 demonizing well off people

I don’t think there are many places that you can claim tax credits or HB

I don’t understand this, do you mean globally? I live in London, you referenced a nurse working in London for 25k.

I don’t think individual rich people should pay more tax, I think everyone should pay the tax that’s set for their income and not avoid it but most of all I want companies like amazon, Starbucks and amazon to pay the full rate

Sales tax is not fairer at all!! Sales taxes are regressive i.e., poorer people pay a HIGHER proportion of their income in tax than richer people, because poor people spend a higher proportion of their income, and with sales taxes everyone pays the same rate of tax.

I think our household should probably pay more tax (income more than 100 but less than 200).

I also think there should be a wealth tax. And definitely much higher inheritance tax. I'm just about to inherit from my father and was shocked to learn that a couple can pass on 900K in total to children if it includes a house, increasing to 1 million soon. That could all go to one child. It is a disgusting propagation of inequality.

Rant over.

nancy unless your on pension credit or in supported living you can’t claim HB & TC anylinger - it’ll be universal credit claim in London

This is interesting in relation to the tax gap - what HMRC calculates should be paid and what is paid. The gap is 5.7%. Tax avoidance is estimated at £1.7 billion out of £33 billion and most of the gap (£13.7billion) is attributed to small businesses. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/715742/HMRC-measuring-tax-gaps-2018.pdf

Based on that, enforcement of tax doesn’t seem to be the overwhelming issue, with the rates and exemptions/reliefs and offshoring of large businesses having a bigger impact.

In relation to personal income tax, I think a greater number of tax bandings would be fairer plus a greater willingness to vary rates depending upon the performance of the economy and social need.

Btw, trusts are taxed to inheritance tax at 6% every 10 years, which is supposed to be equivalent to 40% inheritance tax paid in one go once per generation, so they are actually not that tax-efficient, especially as it usually costs 20% inheritance tax to add amounts to trusts that exceed your tax-free amount.

^^ unless they are are offshore no?

Offshore actually has less to do with it than personal tax status.

If a person sets up an offshore trust from which they might benefit (even if they never do) the assets are treated as theirs for inheritance tax purposes (on top of the 6% charge). The income and gains of the trust are also taxable directly on them.

The non-UK element is that brits living abroad are not subject to these rules, although inheritance tax still applies to them. The trust income isn’t taxed on them, although the trust would pay UK tax in relation to most UK assets it owns.

Foreigners coming to the UK are not subject to UK tax on their foreign income and gains or to inheritance tax on their non-UK assets unless they bring them to the UK. That special treatment for non-doms lasts for 15 years, although after 7 years they have to pay £30-60k on top of their usual tax to get it.

The big hole is that a trust funded by a non-domiciled person is only subject to inheritance tax on its UK assets, even after the person who has created it has lived in the UK for 15+years.

nancy unless your on pension credit or in supported living you can’t claim HB & TC anylinger - it’ll be universal credit claim in London

Well that’s great news as according to the entitled calculator I would get £283 under the current system but actually £318 under UC!!!

I just don’t think people paying 50/60k should have to pay more tax. That’s not to say I don’t think that the bands could be looked at but my point remains that you cannot just keeping trying to tax income in order to fund the deficit.

So any single person earning £25k can get £318 by applying for UC? So that helps towards the pension, mortgage and childcare

*Someone who earns 25k would potentially entitled to tax credits, CB & housing benefit though. I just plugged my details into a calculator & all things the same but no partner & I would be entitled to £283 a week. So my 25k wage plus benefits gives me approx £2843 a month.

If you earn 50k you take home £3127, a difference of £284.*

1. That’s only true if you don’t own a home, if you did you’d get no HB. Apparently people on more than the average wage for the country shouldn’t be able to buy a home.

2. The similarity in figures is not because those earning £50k are being penalised - it’s because, thanks to the incompetence of this and previous governments, we have to top up wages or people couldn’t afford to live. Rather than making companies pay their staff an actual living wage, HMRC subsidises their employees via tax credits - which is a double whammy when companies aren’t paying the right amount of tax and the tax gap (only what HMRC knows about) would cover or almost cover tax credits most years. The government has spent over a billion removing disability benefits from some of the most vulnerable I society despite the low fraud rate, yet they’re letting £30b+ just not get paid every year that they know is owed. How big is your tax gap? Because if you’re on PAYE it’s £0 and will always be £0.

*This is interesting in relation to the tax gap - what HMRC calculates should be paid and what is paid. The gap is 5.7%. Tax avoidance is estimated at £1.7 billion out of £33 billion and most of the gap (£13.7billion) is attributed to small businesses. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/715742/HMRC-measuring-tax-gaps-2018.pdf

Based on that, enforcement of tax doesn’t seem to be the overwhelming issue, with the rates and exemptions/reliefs and offshoring of large businesses having a bigger impact*

But if you add tax evasion, it’s £7bn total. That’s a significant amount of money. Much of that is recoverable if they could be bothered but they are not incentivised to do so - the government would much rather spend money on getting at the poorest (ATOS, UC, sanctions etc). There’s an obvious reason for that.

So any single person earning £25k can get £318 by applying for UC? So that helps towards the pension, mortgage and childcare

Nope, that’s not what I said.

SinkGirl
But how many people on 50k in London do you think own a home? I agree that it’s wrong that tax payers have to subsidise the wages instead of big companies paying the bill themselves. However I don’t think the problem can be solved by taxing people earning 50/60k more.

I’ve always been happy with the idea of paying more tax. I’m a high earner and have always set aside 10% of my salary pa which I donate to charity. In the past I’d have happily paid that in tax instead though. However, this government is now so far away from anything that I think represents (or should represent) this country that if tax rise came at the moment I’m more likely to emigrate. I’m fairly seriously considering it at the moment anyway and it would just be the final nail in the coffin

Those earning over £150k should pay more income tax imo

Those earning over £150k should pay more income tax imo

How much more? What rate? Why? How do you enforce it? What if they earn £149,999?

Without any solid reasoning it just sounds like the "because they earn more than me" populist-but-ultimately-useless soundbite again.

Those earning over £150k should pay more income tax imo

If they are on PAYE, they already pay quite a lot. I think their marginal rate is 45% plus possibly some NI.

According to Listen to taxman they already pay nearly £60k in tax and NI. Isn't that enough already?