If we are all in this together, what cuts have the rich suffered?

[Grennie]

I know mumsnetters seem to be better off than average. So just want to point out that in 2012 the mean national average wage is £29,900. The median was £20,000. And only 10% of people earned £50,500 or above.

So what cuts have this 10% of people suffered?

I agree completely that salary is only determined by supply of and demand for a skillset a.k.a. how much are you needed to perform the task and how replaceable you are

I don't really agree with this tbh. It looks like common sense, but there are so many jobs where people are immensely skilled, and there are extremely few candidates, but the pay is comparatively poor. It just takes a quick flick through the back pages of the New Scientist to see that there are lots of highly skilled people in competitive sectors who still earn peanuts.

Certain job markets have their own internal logic, but the reasons behind different payscales don't map across sectors easily.

But anyway, I wasn't even originally trying to say that low paid workers ought to be paid more (though I do think that the minimum wage, as it stands, is obviously insufficient to support independent living) just that the idea that only wealthy people work hard for their money, and perform stressful jobs is daft.

but there are so many jobs where people are immensely skilled, and there are extremely few candidates, but the pay is comparatively poor.

but surely these are very specialised roles? so if you are looking for a job there will be very few that you can apply for.

so the demand for your specific skill set is low.

also the salary for this role is price elastic (???) - if its too expensive to hire someone, its not work getting someone to do the job.

(demand changes with price)

oh dearie me - its not work getting someone to do the job = its not worth getting someone to do the job

Yes, they are specialised roles. My point is just that being highly skilled doesn't necessarily mean you'll be well remunerated. You might be practically irreplaceable and crucial to your institution, yet still paid comparatively badly. I don't think that's controversial.

Anyway, to get back to the OP, I agree with Mrs Bethel. I don't think anyone really begrudges anyone earning a high salary. Unearned income is the real issue.

amici I just think that some people don't realise how simple it is for quite a large number of rich people to choose and move to a lower tax domicile.

also the option of using various schemes to minimise tax. I was offered one recently by my accountant which meant I could pay my whole profit as a pension so avoid paying tax - but owe it to myself - so have the money as cash now.

this is a scheme registered with HMRC so legal under current legislation and under the new generalised avoidance rules.

the setup fee was 10% of year 1 profits (so you paid 10% effect 'tax' on year 1 plus corporation tax of 20%). after that you paid your corporation tax of 20% and that's it - however much you earnt).

I didn't like the sound of it but would increasing taxes encourage more people to use such a scheme? Undoubtedly.

you cannot tax people to the point that they look for alternatives. and the whole Make the Rich Pay attitude can only encourage this behaviour.

YouAre I think your post illustrates some interesting points. Firstly

'this is a scheme registered by HMRC' - I think this can mean many things and all too often not what the speaker wants you to believe. With a very few exceptions (which I don't think applies to this) 'schemes' aren't 'registered' with HMRC - at least not in such a way that implies any sort of approval. A large number of chemes need to be notified to HMRC, and may be given a 'number' under the Disclosure of Tax Avoidance rules - some of these may be benign but for many more that just means they may or may not work but are on HMRCs list to look at and change the rules if they work but HMRC don't like them.

'and under the new generalised avoidance rules' - you are right that the GAAR has a list of examples in Part D which illustrates some things HMRC see as fine and some that they don't. See link. Out of interest I searched briefly for 'pension' and couldn't find the one you mention.

www.hmrc.gov.uk/avoidance/gaar.htm

'which meant I could pay my whole profit as a pension so avoid paying tax - but owe it to myself - so have the money as cash now.'

I have seen a lot of posts (not yours) that sometimes equate pension payments with avoidance. There are good social reasons for pensions to be encouraged, and when they are taken out as a pension tax is payable then (maybe at a lower rate but actually who knows). You are correct in thinking the 'dubious' part is the 'owe it to myself - so have the money as cash now'.

cleaned - I agree - I am aware that hmrc being aware of the scheme does not means approval. the scheme claims it get around GAAR but it was a 15 minute conversation with my accountant and I was not interested in pursuing the scheme so I know little of the details.

I did suggest to a friend she used an entrepreneur's relief to save tax on a small business her actions seemed within the sprit of law rather than 'owing a pension to myself' (until death) which just seems wrong to me.

Youaremyfavouritewasteoftime, if I am reading you correctly you are saying that rich people's tax is always going to be essentially voluntary, so you shouldn't ask them for too much in case you annoy them and they flouncily refuse to pay anything at all? Seriously?

Wouldn't it be better to set a fair rate of tax - what you would now call I guess according to the spirit of the law - and make it impossible for them to get out of it?

(on a side note - I have enjoyed imagining the last few posts on this thread being read by people in the press who imagine mn is all about frocks and nappies)

I think to be fair many wealthy people are interested in and good at the financial aspects of their underlying business, but the main people driving these schemes are the financial advisors and accountants who are hoping to get fat fees from a captive population of very busy rich people. I wonder how much the wealthy really want to avoid quite so much tax with quite such fancy schemes, and how much they feel sort of obliged as everyone else is doing it, silly not to, etc.

mildred I am suggesting taking a very pragmatic view to get the most taxation from people with money.

too high and they more will seek avoidance and the overall take from them will drop. too low and they could contribute more.

I don't think you can stop all avoidance. unless you stop international trade and people being able to leave the UK.

beat financial advisors and accountants who are hoping to get fat fees yes.

But is it really the case that if you don't ask for too much, you will get it all? - surely a substantial proportion will pay as little as possible no matter what. and why is paying tax voluntary for some but not others? What about an honour system for everyone?

no - it is the case the more you ask for as a percentage, more people will seek to avoid paying. I recall the optimum is around 30%-40% to get the most money in.

surely a substantial proportion will pay as little as possible no matter what.

as far as I know non doms pay the least tax as a percentage but they could live anywhere in the world so putting pressure on them doesn't work. I cannot see why they owe the UK particularly anyway.

why is paying tax voluntary for some but not others?

because some people you can force to pay all their tax some you cannot.

It's not just the rich who can avoid tax. Anyone who doesn't PAYE but owns a business, even just a one-man consultancy firm, probably has a bit more 'flexibility' with their taxes - eg. able to be a bit more creative about their income, profits etc... and certainly able to put a lot of expenses against their business which is a huge savings.

certainly able to put a lot of expenses against their business which is a huge savings

I confess to putting toilet rolls and peppermint tea bags through the company (well I just take the items home from the store).

but does anyone really put large personal expenses through the company? I cannot think of anything that would be possible.

what would be allowable?

You can put a car purchase against a business and my brother considers part of his rental property as 'office' and therefore a 'tax write-off'. I'm not a tax expert so dont know the ins and outs of it but as you say there are a lot of 'domestic expenses' which one could put against their business.

I just think it's important to remember that there are builders, taxi drivers, people who work in sectors of the economy where they are able to get payment in cash who are able to avoid paying tax on these earnings and sometimes by a considerable amount. So while we complain that we want those at the top of banks to pay more tax we have to remember that there are a lot of others lower down the spectrum doing various tax 'dodges'.

You can put a car purchase against a business but it effects your personal tax code so you still pay tax on it.

part of his rental property as 'office' and therefore a 'tax write-off' I think you can claim 1 room in your house. so if you have say a 4 bed house, kitchen, 2 reception rooms , that's something like 7 total rooms so you can count 1/7 of your home expenses.

but then you would be working from home so would incur business related expenses.

I have a 1200sq foot office so I doubt I could claim needing an office at home as well.

I agree about cash in hand work being a sizable problem.

I think this charging things against a business is a bit of a tax dodge. I knew a farmer's wife once getting a state of the ark cooking type thing similar to an aga but even more fancy costing thousands. Of course they didn't pay vat as it was for the farmhouse registered as a business. I was a bit