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!

Because I have saved that relatively small amount over the years to pay for my kid's living expenses at university

You said earlier how you dont understand how people aren't happy to pay more tax.

Short answer - capitalism. Everyone works for themselves and doesnt want to send huge amounts of their earned money to the government. Not hard to understand.

I agree with you (based on my limited understanding of economics and the reality of being a high taxed person).

It also seems like a simple fix- get rid of the cliff edges and provide free childcare. The free childcare could also be doubly impactful in stimulating the workforce.

Although I don't think the Scandinavians high earners any very happy either (based on a conversation with a Swedish woman at a dinner)

Your post makes no sense. I just read it again and I have no idea what point you are trying to make!

I guess the whole point of universal credit is it's given to you if you need it now. Your child could take out a loan or work while studying (I did both)

And? So what? Why do we all see "billions" and think "oh evil bad bad bad" grrr

I view tax as mandatory sharing.

Most people are fine with sharing, with caveats. They don't want what they share to be wasted, or to enrich the administrators of the scheme. And at the end of the mandatory sharing they don't want to look at their remaining portion and feel that it is less than someone who was required to share nothing (no labour or money).

I did the same as you but times were different then

I graduated in 2024.

@howcometoday the biggest thing has been being over ambitious

So a few universities have spent literally millions buying up new buildings for new campus space. It was questionable when they did it, but now there is a cap on foreign students, it's even more questionable. I would also question some of the salaries paid to vice chancellors and so on. And I believe in London, it comes with a flat as well. The arguments for these things are always the same - whether it's charity CEOs and use of donation, money or universities - they always say that they cannot do business effectively without spending this money. But buying new buildings and refurbishing them and trying to build massive new campuses, it was a mistake. And a really obvious one.

It would definitely help them if they were allowed to charge what they wanted for their courses. But that's linked to government funding so that won't happen.

I'm sure AI can give you a list of questionable expenditure. UCL seem to have brought up half of the Euston area, but whether or not it's paying them back, I don't know. I was under the impression they were one of the ones who are doing okay but maybe not

I remember talking to someone at my local networking group
about this and she said that "it's never ill intentions. It's that people are just far too optimistic". I don't really understand that. In a private company, you would have to make the case for the likelihood of a return on your investment. So why is it not the same outside?

The reason I worry so much about this country at the moment is that we are facing years of being totally unrealistic about stuff.

Meanwhile, the CEO of a small local hospitality group is faced with this bizarre choice... they've got the talent and the proven ability in running bars and restaurants and there are empty premises on the High Street where they could expand. But with the increased cost of hiring staff and there's increased tax on disposal of business assets now I think - is it worth it? We have people tightening their belts while they wait for a solution to the economy, when normally they would be out spending money.

So nobody wins. it's not worth the risk of opening up a new anything at the moment. The only person who might do it is the sort of person who has enough wealth to take a risk. But if that person is worried about increased taxes, they will take their money and invest somewhere else

See also the founder of Revolut - isn't losing him as a resident costing us a fortune? He used to pay us lots of lovely tax. But no more.

Do you want to make the UK a bad place to do business? Would you want to set up or have UK bases if they are taxed to death?

The problem is the tax system does not account for our expenses or where we live. For those of us with multiple kids who live in eg London with a very high cost of living, our employers are having to pay more for us to live, but the taxman just takes the majority of it. So we are objectively better off moving somewhere else (including other countries now) if we can work remotely and can have a much better quality of life. A lot of professionals are preprogrammed to just keep going and often our kids join the similar hamster wheel without a second thought. However, the only thing that really is scarce on this planet for all is time.
I do not see why time should be limited by the taxman in an arrogant so I have gone part time too. It is a question of philosophy now more than anything. I do not wish to give up my life entirely as a slave to the system and I am not encouraging my children to do it either. We are literally funding ancient systems and rich old people and enabling lots of flaws in the system as well.

@howcometoday also I don't understand your comment about CEO's and "little people". I'm going to assume that you are here in good faith but the term "little people"is quite a red flag.

Thanks for sharing a view on this.

I do think that the uber rich are the most mobile and generally already spending a certain number of months outside of the UK each year.

It wouldn't take much of a lifestyle change to spend 6 months and a day of the year abroad, instead of 6 months+1 at home, if you were saving 2 million a year.

Saying that, it is easy to criticise and put forward no solutions, and I have no idea what the solution actually is.

On paper, as a country we are taxed lower at the median salary, compared to other high tax countries. We tax roughly equally as high at high tax levels.

I think that crunch comes from higher childcare and housing costs. But what would actually help that. Rent control? More social housing for working people? Further childcare subsidies? I don't know.

What don't you understand?

There is a limit on how much tax anybody is willing to pay , whether it's percentage or monetary terms, and that's because of the whole way our society operates.

I dont really know how to make it any clearer!!

Very unlikely that you'd be the only shareholder. But yes, you can, but you'd then pay a lot more tax/NIC, on the wages, so you really wouldn't do it. Anyway, usually a lot of the "paper profit" doesn't translate to available cash as it'll be used to buy new assets, pay off loans, etc.

It's not about being evil, it's about practical economics. If the world real economy is growing at 1% and billionaires wealth is growing at 88%, then this isn't production, but acquisition. The rich are using their capital growth to buy up assets in the real economy that productive actors actually need to build businesses, start families, and run societies. So it's not an economic benefit for anyone. It's not even good for the ultra rich, long term, who will gradually consume all buyable goods until the economy that produces them is starved of its ability to reproduce itself.

If the world economy was growing at 4% and the ultrarich were growing their wealth at 3.99%, this could still be a net positive for the world, but as it is, it's a risk.

To get your head round the increases and the speed of the increases, in 2020, the richest man in the world was worth about 100 billion dollars. Now, it's a trillion. The world economy is, approx, 15-20% larger, but the top 1% has captured (roughly) 60 - 65% of all new global wealth created in that time.

Ultimately, it’s a mathematical countdown to neofeudalism, where we will rent everything as our great grandfathers did. It's really not about anyone being evil it's just maths! We can actually structure things differently. We have done it already! It's the world we all lived in until five minutes ago. We know it's possible.

What don't you understand?

There is a limit on how much tax anybody is willing to pay , whether it's percentage or monetary terms, and that's because of the whole way our society operates.

I dont really know how to make it any clearer!!

I think it’s hard to pay so much tax and see schools struggling to afford pens, roads full of potholes that damage my car, 10 hour waiting time at A+E, no mental health services, food prices increasing every time you go to the supermarket and bills creeping up and up. It seems that we pay a fortune in tax but the outcome is shoddy services and bills everywhere!

Your assumption is a choice you made, but everything is a red flag to a bull.

The phrase little people is used as a colloquial or idiomatic term for everyday, ordinary people contrasted with the wealthy or powerful.

Don't worry about it. I've learned so much from other posters, I'm good with not understanding your contribution.

This is a really insightful take, thanks for sharing.

People say things like this. But when around 4,400 current and former employees became millionaires. Blue collar workers now are millionaires are in such great financial positions.

What did you study then?

Maybe this is generational? (Anyone else have a bit of a reaction to that term? )

Did you mean that people don't understand enough about what CEOs are doing?

edit - I'm about as unbullish as possible

It's rare to get a calm discussion on these things here and I am enjoying having a calm discussion.