Tax and privilege

[howcometoday]

This might be a bit of a clumsy question, but I’d love to understand different perspectives on taxation/economic models. I’m not a high earner, so I am mindful that my own situation shapes my view.

To me, higher taxes on higher salaries feel fair. For example, if a CEO makes £15k a month and a train driver makes £3.5k, both are contributing to society in different ways. While the CEO has of course worked hard in education and putting in long hours, high earning ability often relies on a mix of luck, privilege, and opportunities that aren't available to everyone.

Personally I think using tax to level the playing field so everyone can live a decent, comfortable life is a positive thing. Surely a CEO doesn't objectively work 'harder' than a nurse or a cleaner?

I wonder if the resentment towards high tax comes down to a lack of collective responsibility (eg "why should I support random strangers?") or frustration that the dream of keeping wealth isn't being realised?

I'm trying to understand beyond my own thoughts and the people around me- so I welcome some gentle educaiton!

I mean you don't need lots of CEOs so it's fine if there are less of them. They're also replaceable by algo decision making tbh.... Can't replace a street cleaner or nurse.

Amazon for eg collects VAT and digital services tax, but they hide profits reduce corporation tax. They're left alone because them not providing a service in the UK would be worse as they generate significant VAT.

But it's not 60% of your pay though. It's 60% of your pay over the taxable limit. I can completely get that having a pay rise that tips you over that limit and then realising 60% of the pay rise goes to the government is super annoying. But the rest of the salary is still taxed at the rate it was before

@EmeraldRoulette

The priority now for her would be to keep her out of hospital. I have actually had a doctor confirm that. It would be more safe to keep her out of the hospital than in one. How mad is that?

Likewise with DH who has incurable, but treatable cancer. His haematologist tells him she doesn't want to see him in person as it's "too risky" for him to come to the hospital due to risk of infection etc, so they have a monthly phone call instead. She also told him which health centre is best for his blood tests which he needs every month, being the "quieter" one with larger/spacious waiting area - again, she tells him never to go to the main hospital's phlebotomy dept for blood tests due to the tiny/unventilated waiting room!

He's now got a fracture in his femur (due to the cancer which affects his bones) and even the othopaedic surgeon has advised him to "watch and wait" with x-rays every month instead of his "preferred" option of surgery to insert a rod as he says a short in-patient stay for the surgery would be too risky due to risk of hospital acquired infection from being on a ward!

When hospital consultants are telling you they don't want you in their hospital, you know that things have gone terribly wrong with the NHS!

I honestly don't know if I completely understand it. @Badbadbunny has been very helpful introducing new concepts to me, but its needed a lot of contextual googling tbh. I am taking notes!

I do better understand why it's so frustrating for high tax payers, and why they would rather reduce their work at that stage. They can get 0 back for extra effort.

I also do see that it's not as easy getting a high level promotion. Maybe the work they do, and the pressure and stress they take on, is insulated from the little people. The more I read, the more I think transparent communication is needed.

You don’t understand what a CEO does quite clearly!

and Amazon doesn’t = Jeff Bezos. He avoids tax in the states on his personal wealth and income but Amazon is a corporate so a completely different taxable person.

they don’t hide profits to reduce corporation tax. They use transfer pricing on brands etc etc to legally move profits out. Most transfer pricing policies are agreed with tax authorities under international frameworks. If The UK suddenly changed the approach it would cause an international incident or the companies winding down in the UK (we really aren’t worth the sacrifice). Employment and the associated taxes are not worth losing.

the one area I do think the tax should be changed is business rates so that they are more comparable to high street shops to reduce the move online

Yes, people know that, but it's the behaviour aspect. When 62% disappears in tax and NIC, then probably another 9% in student loans, taking it to 71%, then costs of commuting, parking, etc., maybe even having to pay child care, you can soon see why the "extra" shift, or promotion, etc simply isn't worth it. And that's before the loss of enjoyment of your time off.

People really need to stop minimising the behavioural aspects of our crazy tax system. It's detrimental to the country and it's economy.

Work should ALWAYS pay. I'd say people should be guaranteed to keep at least 50% of every extra pound they earn, whether it's an upper limit of payroll deductions, or at the bottom end, an upper limit on benefit removal (or both in tandem where the tax/benefit thresholds cross). There should be no marginal tax rate over 50% and no marginal loss of benefits rate over 50%.

Someone managing a nursery or a care home will have the stress, the unpaid overtime, phone calls during their annual leave, supervision of junior staff, safeguarding etc etc all for not much more than minimum wage.

@Badbadbunnyim sorry, that’s sounds very tough.

I had no idea that universities actually mismanaged their money. I actually had accepted it was just the general cost of management and there wasn't enough money to go around anymore.

Something else to Google, thanks!

There should be no marginal tax rate over 50%

What about companies making billions in profit?

You're basically arguing against capitalism. The whole premise of our capitalistic society is everyone working for themselves and working to make money. So while we accept we have to have taxation, people are always going to look at the benefit to themselves. If higher pay means more stress, less hours with your kids etc etc and most of your extra pay goes in taxation, then most people will say 'sod it, its not worth it'.

You don't have to like capitalism but it's what we have and how our western societies run.

@BeardySchnauzer

the one area I do think the tax should be changed is business rates so that they are more comparable to high street shops to reduce the move online

A huge yes to this. High Street premises are unfairly over-taxed compared with online retailer warehouses etc. High Street premises still suffer a huge penalty in terms of a higher "per square metre" business rate multiplier than a warehouse on an industrial estate. That was justified 3 decades ago when High Streets were prime real estate, but that no longer applies. An Amazon warehouse should be paying the same amount per square metre than your High Street M&S, likewise the same as your out of town Retail Park Dunelm or Currys. In actual fact, with the run down High Streets in many towns and cities, perhaps their rate per square metre should actually be less than your huge Amazon warehouse.

You've just repeated what I've said about playing around with taxes, but okay.

Also I very much understand what a CEO does, but thanks for the patronising assumption :)

Tax is always a percentage of profits. Companies pay a fixed percentage on profits which is far less than 50%. I'm talking personal taxes here not company taxes. But no, no company should be paying 50% or more in corporation tax on profits either. Most will already be paying 20% VAT on all sales and 15% employers NIC on wages and 25% corporation tax, so already paying a hefty amount of tax.

I don't understand your point.

Yep I understand that thank you and both have LISAs and it’s a race to gift them and stay alive for 7 years so they don’t get taxed

Im being very simple here I know, but say my company makes 100million in profit and Im the only shareholder. Cant I just pay myself that as a salary and avoid higher coportation tax?

I don't think you understand what CEOs do if you think they are replaceable by algorithms. Having excellent CEOs is a key driver of economic growth in the way that an excellent bus driver or nurse will never be. We all need economic growth to grow the pie. Without this we have no money to pay for the essential workers that you value so much and we just end up taxing everything so much that the pie shrinks and state takes more and more money from citizens and businesses and becomes less globally competitive.

It's like saying who is more important, the Prime Minister or a carer? If you are the vulnerable person being cared for them the carer is most important but we all need a competent and capable Prime Minister including the vulnerable person. We should offer big incentives for people to take the most impactful roles for us all as we all stand to benefit if these roles are done well.

I'm so sorry to hear you and your DH are going through this

I think a gradual increase in tax rates would be more sensible than the cliff edges we currently have. It would mean people would keep more of their pay and therefore I expect remove a current barrier to productivity.

Alongside this I would want to see free childcare extended to all without the income cap. The full costs are prohibitive and stop people, especially women, climbing the career ladder.

I don't feel this way but higher earners can feel like they pay a lot to the state in various forms and receive very little back, especially if they have to pay for private school or health care. This can cause them to have little stake in the public realm and community. Scandinavian countries have high tax rates but a lot of services are available to all regardless of income. I think that helps create more social cohesion regardless of income and because their public services and public realm are good people feel fine about paying taxes.

I believe that those earning more should pay more. However, I was recently out of work for seven months having lost my job and I was entitled to nothing more than job seekers allowance despite having paid into the system for almost 30 years.

As a homeowner and having collective savings of above £16k, you are not entitled to universal credit. It's only available to people who rent, which seems odd as the system effectively props up landlords, many of which are private rather than social. This is a problem that needs fixing. I totally get it's to help people who could be vulnerable to losing accommodation but I could have been left homeless too when mortgage holiday ran out.

I don't think you understand what agentic AI does and can do.

Also- I would 100% vote for an algo Prime Minster. The ramifications of human error in decision making, hiring, allocation is wild for a PM and no human could compete. There are hundreds of other reasons why it could go wrong, but thats another discussion.

But why do you think you should get universal credit when you having saving you could use first?

Or individuals who become trillionaires 😑

I have no issue with paying taxes. The issue arises when you pay a huge amount in tax and are not able to access benefits which should be universal. At £100k you lose the free childcare hours, at £125k you take home only £500 more a month than at £99k but you pay full nursery fees, £1,400 a month where we are per child. If we were still entitled to nursery hours we would happily pay the extra tax but to be much worse off for more responsibility and less time with our children makes no sense.