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?

(sorry, I think I explained that really badly, I hope it's clear what I'm trying to say!)

Bloodiedwellies Australia has a massive unburst house price bubble, huge social problems amongst low-income people, especially indigenous people, and is running it's economy mainly on the exploitation of natural resources (eg mining) and export proximity to China and SE Asian markets. Not much to do with IHT but I'm sure the Telegraph would like to think so.

I agree with you Trazzle, don't get me wrong.

I live in the centre of London, single, no kids, have a relatively high salary and my income really doesn't go very far.

For years, 60% of my net income has gone on my housing costs (I have to be at my desk at 7am on office days, so living further out of town was never an option). My rent was rising 10% a year until I was finally able to buy this year (at the top of the market, no doubt). My flat is small and fairly squalid (there are people on MN who can confirm this) and it's not in a nice part of the city, but the mortgage payment is £2000 pcm.

My travelcard costs have risen hugely - £117 a month when it used be £70. A sandwich lunch at my desk can set me back £10 - it was half that in 2007. I have a written budget for food and household expenses and don't own a car. I do have a pension but I'm still replenishing my savings from buying my flat so an unexpected expense would have to go on credit cards.

It's not quite the lifestyle that six figures or fifteen years of working in a professional career suggests.

So it F*CKS me right off that people living in houses worth £2m are pleading against the mansion tax, or that Lakshmi Mittal pays less tax as an individual than I do because he isn't officially domiciled here.

georgette thats exactly the point... I HAVE paid paye on the salary that I then want to give to my kids. And it's not just cus I want to... That's a bit of a facetious point. I pay many many taxes that I don't want to but I understand the economic and moral arguments for them.

It's because iht is an inherently badly thought out, morally wrong and poorly executed tax in modern day society. It was never designed to encapsulate so much of the population and has stealthily taken in more and more.

The point that was made earlier by Bloodiedwellies is the accurate one. It doesn't make economic sense to continue a tax burden beyond a certain level (I too remember this from economics at uni). And a number of societies have demonstrated that it makes economic sense for a country to get rid of it.

I think this will become increasingly relevant as the next generation of pensioners (ie those currently in their 20s and 30s) discover they have little pension, have to work many more years, have to pay for their social care and generally have a pretty crap "later life". They will want to assist them children to make sure they are not in the same position. If there are large chunks of anything left then taken up in tax all it will do is chat a circumstance where every following generation needs further assistance from the government. It then becomes a vicious cycle.

If I can find the link to the articles on why iht doesn't work for a nation I'll stick it on.

(One might even speculate that the lower a country's IHT, the more likely it is to see damaging boom-and-bust housing bubbles in it's economy, since inheritances encourages property speculation and hoarding).

Dontmind Your explanation makes sense but there are a lot of earning (rather than just financially independent) people on that list way ahead of Dyson and Rowling. I used to work for one of them. All his companies were listed in Liberia and the Cayman Islands, though all his work was in the UK.

Re Lakshmi Mittal and the type, the government could replenish the coffers overnight if it just removed this loophole for foreigners.

It won't. Politicians are all in the pockets of the rich and they want to work for them once they're out of office.

Maggietess - you're missing the point though. The tax is not on you, it's effectively a form of CGT on the money your children receive as unearned income. It's only collected as IHT because historically it has been easier to collect it via the estate.

A lot of evidence for the so-called Laffer curve theories of taxation is pretty contentious (cf. the recent scandal when two Ivy League economists arguing similar to this had their research paper proven wrong by a grad student for having not added up their figures in a spreadsheet properly). The idea was mainly taken up by right-wing policymakers in the US to support their own low-taxation policies. In reality it is not at all certain that above certain taxation points tax receipts drop! The Telegraph would certainly love to claim so though (I wonder why ;) )

But Maggie you've also paid PAYE on the money you spent to buy the google shares when they floated (or whatever) - you still have to pay CGT if you made enough out of them.

I agree, £50k isn't a great threshold to start shouting "unreasonably rich!". That person could be paying (all off the net salary):

£20k in childcare (easily - this is for a childminder or a nursery, not a nanny)
£18k mortgage repayments (for a modest property)
£1.5k council tax
£2k transport (vital for work)

We're at £41.5k outgoings without touching food, clothes, utilities, extras for the children, phone / internet etc, savings for the inevitable broken boiler or washing machine, general maintenance, presents, books...

Of course you can live on it, you are whiney idiot if you think you can't, but it's not a champagne lifestyle. Maybe the occasional bottle of lidl cava if you're lucky (or reckless)

Just read this thread from the top (sorry, know I should have done that earlier ).

There is a distinction between higher-rate taxpayers and the super-rich, and many people are confusing the two.

Some of the finance jobs I research have salaries of £250k and then bonuses and shares which will easily double that.

Yet the people who do these jobs are not actually "rich". They're not having holidays in the Maldives or driving Ferraris.

Their extravagances tend to be a third child, private school and domestic help for these kids, and a mortgage for a five bedroom house in London's Zone 2 - which sounds lavish until you realise it's just a bedroom each for all the kids, and one for the live-in nanny or au pair. We're talking terraced houses in slowly gentrifying areas, not townhouses in Belgravia. The house next door may well be social housing, with three kids also having a bedroom each, though theirs is financed by benefits.

Right, thesaurus girl, it is depressing to realise that if you were to attempt to advise a young person with options to be materially comfortable, you really do have to be talking proper corporate career preferably in finance, and forget about doctor / teacher / even solicitor

It is kind of depressing, Mildred. My parents fall into one of those lesser paid jobs, but a generation ago they managed three kids and private school and a bedroom each for us with only a little grumbling.

Now it's plain impossible.

I realise a lot of people struggling on smaller incomes will think a live-in nanny or private school the height of luxury. It does sound obnoxious.

If you want a £250k+ job, they're almost the tools of your trade though. You can't manage business travel without a nanny if you have children and your OH is also working. Private school is a luxury everywhere but in London it's so competitive to get into a state school it's actually the easier option.

The great irony is that we're failing to attract top-class talent. The best people in the world come and interview, accept the job, come back to house-hunt, and then back out when they realise how "poor" their life will be in London.

The private schools round my way (south west) are full to bursting - but we have a lot of Russian/Chinese pupils and I live near a pretty city where lots of people invest in property.

Re. being not much better off if you're DH is a surgeon than someone on benefits. I totally get your outgoings will be high, ours are too - but they will be on things like a mortgage which is getting you something pretty worthwhile.

My favourite example of the 'rich' suffering was a friend who was lameting that he could no longer afford a pony for his DS - now that really did make me smile

Not read through all posts but it does depend on where you live as to how 'rich' you are. We are nowhere near classed as rich but I think the 'rich' should keep child benefit. The way I look at it if you pay more tax than anyone especially over a long period then you should get something back even if not needed, it's a principal and the child benefit did that.

Couldn't read the thread for laughing after the bit about people earning over £50k paying for private school.

Yes private schools and 2nd homes. Ha ha.

Just the one home would be nice...

JK Rowling always comes across as a very principled person. I can't imagine she would for one minute consider putting her earnings through some offshore tax dodge.

yourtoast
You can fund a perfectly comfortable lifestyle here in the north on a doctor or solicitor or yes even a teacher's salary. Most people do not live in the south east.

I find it odd that people think taxing the beneficiaries of totally unearned inheritance (and it has to be quite a lot of money to attract inheritance tax) is somehow immoral and unfair, but taxing people on income they've worked to earn is totally fine, even where their earning are quite low.

It is absolutely not a tax on the dead. If you could take your money with you, no one would pay tax on it. Instead those you pass it on to pay some tax on it. Maybe it might be better to have the tax assessed by individual recipient rather than the estate as a whole, but it seems that's to make it harder to avoid.

When I am dead, I will not need any of the stuff I've accumulated in life. If there's enough left over that my children have to pay some IHT, then they're very bloody lucky. They don't necessarily deserve a windfall any more than all those whose parents haven't got a bean to leave them, and they have already benefitted from being part of a family with a higher than average income (although neither of us earns £50k). I can totally understand wanting to make sur your children are set up comfortably for life, but that doesn't make them being liable for IHT unfair.

Sorry georgette we're going to have to agree to differ because I think you're missing my point (and you clearly think I'm missing yours, which I'm not, I just dont share your view).

My point is that a tax on wealth at the time of death is not equitable. I get that you're saying it's a tax on the next generation, not me, but that's semantics... It's a tax on that income that I have already been taxed at source on.

And sorry, no the Google shares or whatever argument is not the same. That's me being taxed on a gain I have made for investing my taxed at source money... Totally different. I'm not talking about cgt, iht is totally different.

However, as I say we'll have to agree to differ! Dh has just brought a takeaway and bottle of wine and that's definitely worth me investing my money in on a Friday night... Screw the kids inheritance

'Tax on income I have already been taxed on'

Such a crap argument. We all pay tax with already taxed money. My taxed salary pays for petrol which is taxed, as is everything else I buy.

[feeltheforce Fri 04-Oct-13 14:45:42
People who earn 50K aren't rich! Nor are those on £100K actually. They pay high taxes, lose personal allowances, don't get any tax credits etc. and slog away just the rest of workers]

no, they actually slog harder than the rest of the workers. I have worked for a high flyer and he was in at 8am, working a frantic schedule till 6 pm, then work in his office typically until 8-9pm every night. Of course, the mobile is always on and the e-mails are dealt with whether on holiday or not. And yes, he did moan that he pays for everybody else through tax which in my heart of hearts I agree he does.

Would I want to be in his shoes earning his income? no thanks. Keep the money, I would rather spend a bit of time with my family while earning my relatively modest income.