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!

But 62% tax and NI, plus say £300 for childcare on that day, plus cost of commute in, people would be paying to go to work. Why would you if you could get some of your time back

Did you think I meant people with dwarfism? How would that have even worked in this context?

@EmeraldRouletteI was waiting to be lambasted for that 😆😆

OK. I'm not contributing in bad faith though. I said that there's a limit on how much tax anyone is willing to pay and thats what capitalism is ....what dont you understand about that ?

Maybe to her she just doesn't understand that after work hard and studying people actually want to enjoy the fruits of their own labour. Maybe to her it's seen as the ultimate "good" thing to pay tax to fund the benefits of others.

Okay, now I'm totally lost - was it you who first use it? It's too hot to remember who said what on the thread.

@howcometoday seems to have turned on me and now talking about dwarfism

Did the ubiquitous AI check and it described it as being highly offensive if used in the economic context

I'm not somebody who wants to take offence at everything

I didn't know if I was being a grandma or if it was one of those phrases that's come back into fashion. So that's why I was asking.

I think so! But maybe not, definitely too hot.

Okay. It's just that I don't understand what you mean by saying this is capitalism. I know what capitalism is but I'm not sure on what you're linking it to.

My question was why so people become much more anti-tax after a certain income level (to the point they change their behaviour drastically, politically etc). Previously, I had thought it was fuelled by wanting to keep the rewards of their hard work, but didnt understand why it only kicked off that this point. They were happy to pay taxes before they became high earners. Lots of posters have explained how the tax cliff (and after the cliff) work, and I understand peoples behaviours and feelings more now.

I also didnt understand your point about this is the western way. Does that mean it cannot be questioned?

the “lmiit” of tax that anyone is prepared to pay is cultural - it’s not the same in every capitalist society .

and yes some people earn rather a lot compared to the effort and value to society that others provide.

but what I have observed is that people who are in those higher paid jobs are often very money oriented - the concepts of work life balance , or working to live are not for them. It’s work for money to the detriment of everything else. And the money doesn’t make them very happy because it’s never enough - hence the tax resentment. And they think they are objectively better than others because they get paid more - whereas many people see someone who is kind or has time to spend with someone as objectively better. They measure everything in money terms not love and peace and happiness terms

High earners pay a larger % than low earners of their PAYE income. Every pay increase up. Every pay band up you see the government just take take take more.

Are we talking about the phrase little people?

Well that's fine if she feels like that but the majority of people don't and that's what I was trying to explain!....judging by the reactions on my post, plenty of others understood what I was saying so I'm not sure why she didn't or what was so hard to understand , hence me asking her to clarify.

people who are in those higher paid jobs are often very money oriented - the concepts of work life balance , or working to live are not for them.

Interesting point!

Maybe it becomes addictive and it sets up a gamification of sorts? Work harder, make more reward. Working in high paid industries, you must experience spending and lifestyles we only see on screens. But after taxation, they might realise all the extra hours cant give them the benefits they imagined.

I mean I've just given you a reply in good faith as you said. Not sure why you're talking about me this way tbh.

If you're earning 30k and get to take up 24k
You keep 80%

Someone earnings £150k might take home around £80k. That's around 53%. Do you want to work basically for free for half the year?

Every time you earn more the government gets more too … gee

you don’t really see people say “oh I pay so much tax I’ll just go and work down the supermarket , pay less tax and get childcare benefits in real
life do you ?

A lot of it is workers being squeezed.

Using a very simple illustration. If inflation is 2.5% and a worker gets a pay rise of 2.5%, you'd expect the equilibrium to remain the same. BUT because of fiscal drag, they pay at least 20% tax on their wage rise, so only get a net wage increase of 2%, so they're 0.5% worse off in real terms. As I say, a very simple illustration but hopefully proves the point about fiscal drag, i.e. tax free allowance and tax bands not increasing in line with inflation.

Same happens with the small business VAT registration threshold. Because of inflation, sole trader has to increase his prices by 2.5%. If previously his turnover was £89k (NB turnover not profit) but his overheads have gone up by 2.5% he needs to increase his prices by 2.5% to stand still. That would increase his turnover to £91k. Bang, now ALL his turnover is liable to VAT, so up to a whopping £15k (max, but realistically less due to VAT he'll be able to recover on some business costs), but still a fair few thousand. So now his "net" turnover is below what it was before he put up his prices, and he's thousands worse off. So, no sane person would do that, so instead, he puts his prices up, but does less work/opens fewer hours, so stays under £90k of turnover.

These are brakes on economic growth and are holding back the UK.

How does this square with (for example, both mentioned on this very thread):

People on various benefits also not wanting to undertake paid work where it impacts the benefits they receive?

People at tax cliff edges who have stated they chose to reduce their hours and preferred to enjoy better work-life balance?

The Industrial Revolution did not lead to neofeudalism at all though. It led to the destruction of existing power structures like monarchies and then world wars and ultimately to democracy and more equality.
Like I said, time is the only really limited thing each individual has. Then there are the essential things you need to live like water, food, shelter and community and human connection.
Where the state overreaches to take from some to the point that their human connection with their own family and friends is reduced, and they otherwise have the rest, humans with normal psychology alter their behaviour. Some humans have a different psychology in that they value posterity/fame/their name living on way beyond above immediate human connection and time on earth.

So let’s take a CEO. Even a lot of CEOS or politicians will only do the job for a set amount of time given the cost to most of them on a personal level. Some will sacrifice quality of time with loved ones, for the financial benefit of the loved ones long term. But plenty of people would never do that.
Being PM or CEO of a huge company - that is not something that most humans would ever be able to do. Simply lacking in the skills and ability to react etc

Anyway, the PM said it all at the end of his speech this week. It is all in there really at the end.

Reasonably high earner here (personal allowance is a dim and distant memory). I don’t resent paying tax and wouldn’t mind paying more of it was put to (what I consider) good use: education, public and active transport, public health, facilities for young people, scientific research in clean energy,

I don’t know anyone on a good salary who has considered working less to avoid paying tax - in me experience people with that sort of mindset aren’t ever going to become high earners in the first place.

<approaches cautiously> yes

I am really not trying to start an argument on what is a very useful thread. I'm not going to police your language. As I explained, I thought it was one of those phrases that was victorian era levels of offensive - but times have changed so maybe I'm not keeping up

And I probably count as one of those people.

<slinks off after being called a bull>

‘The little people’ is perjorative in this context.

Surely it’s not hard to understand that we all make calculations on what our time is worth to us. People preferring to work four days to get a whole day a week back rather than work five and hit a tax cliff edge is completely rational behaviour.

You've articulated my feelings so well, especially your last sentence.

This view has become increasingly common amongst across all generations since the pandemic hence people taking early retirement, purposely being underemployed or taking on less stressful jobs. We only have one life so of course people would choose to spend it with loved ones or doing what they love rather than work ridiculous hours to derive little benefit. The social contract in this country is broken and until it is repaired we will continue with stagnating productivity and low morale which is a shame as this country is brilliant in so many ways.

Yes, but it's when the government get far more out of proportion with what the worker gets that you have the problem or the many cases where the worker ends up worse off due to high marginal rates, cliff edges, etc. That's why I've maintained for years that there should be an over-riding limit of 50%. Workers need to keep at least 50% of any extra they earn to make it worthwhile for them, cover their additional costs, and compensate for loss of their free time. I personally, think the state taking 50% is enough. And it's a massive psychological/barrier threshold.

Of course it can be questioned.

I actually don't think people do become more anti-tax after a certain income level. However our current tax system - the UK I mean - has some huge flaws and I would say that most people don't realise these flaws until it affects them directly. So someone hits the 100k cliff edge and suddenly realises exactly how much it will impact them by losing childcare support, tapering of the personal allowance, etc and then they start saying how unfair it is and they're not happy.

It's not exactly that they're unhappy with taxation, its more the flawed system.
I've seen it on mumsnet many times , it's assumed that people earning 100k are taking home roughly double to someone earning 50k !! Whereas its's not even close.

My point about capitalism was that everyone is always going to look at the benefit to them selves first and if earning another 10k means it tips you into a higher tax bracket and you only end up taking home 4k of that, then most people won't think 'oh well that's 6k extra going to the taxman, yippee'!