to wonder why many people assume that rich people don't pay tax

[Redpipe]

when the figures today show that the top 0.5% of earner actually pay a third of all tax collected.

I have seen many posters here immediate jump to the assumption that the rich don't actually pay tax in debates about taxation or about government cuts.

AIBU to think that people who claim the rich don't pay enough or that many of them evade tax are actually talking about a tiny percentage of top earners and that the vast vast majority of top earner pay their share.

[ivykaty44]

69 billion is lost in tax in the Uk each year by tax avoiding

154 billion will be raised in income tax

so roughly 51 billion is paid by the top 1% of tax payers

69 billion is lost by none paying

so that is more than is lost than the top tax payers pay

[BigBoobiedBertha]

The problem really is defining what is rich. Earning £160k to me is not rich. A lot of MN think it is. It is extremely well off, of course it is. It is much, much more than a lot of people are earning, but it is isn't seriously, properly rich.

People earning £160k are often salaried and paying their taxes through the usual PAYE. If they are not they pay through a limited company. They don't get to evade tax that easily.

[Redpipe]

ivykaty

Is that 69 billion lost in corporation tax or personal income tax?

[BrokenSunglasses]

I agree with you OP.

It's just another way for the inverse snobbery to out itself on MN. Some posters are very small minded and think that if you are a higher rate tax payer you must be immoral and going out of your way to avoid taxes. It's no better than the assumption that everyone who claims benefits is a scrounger.

In reality, I expect a lot of tax evasion that goes on is done by people who earn around average. People like the teachers that will do a little tutoring, or plumbers and tradesmen that won't bother to put their smaller jobs through the books, music teachers that teach from a room in their home, cleaners that don't declare all of the jobs they do, and I'm sure I could think of plenty of others.

Not all of the lost revenue from tax avoidance or evasion will be from the rich.

[Redpipe]

Only 0.1% actually earn over 1 Million a year.

So there are around 300,000 of the 308,000 top earners, earning between £160-£999K a year. I don't think anyone can argue that these people would be considered rich on here and through society. Most of this group of rich people will be paying tax.

It seems wrong to read so often that 'the rich' get away with paying tax, that "the rich are getting richer" which is bandied about so often.

Just as it's wrong to generalise about people on benefits it's wrong to generalise about the rich.

[WilsonFrickett]

My DH is close to the top bracket and he pays loads of tax. I have my own business and my attitude to tax is that I am happy to pay what I owe on the money I make (according to my accountant this is a refreshing attitude ). We pay in a lot and are happy to do it.

So yes, it does fuck me off mightily when people assume everyone earning over 100k has some sort of hotline to a tax haven.

[racmun]

DH got stung by the self assessment requirement even though he's PAYE. It's not very well
Advertised and HMRC levied a £3k fine. Fortunately they saw that it was a genuine oversight and wiped the fine.

Apparently it's to do with the loss of the personal allowance over £100k they can't sort the tax code out to do it properly so you then get an extra bill despite paying nearly £3k a month tax. It's a fucking joke!!

The problem with the top 1% of earners category is that includes people earning £150k and £10m - there is a bigger gap at the top than the bottom.

[BrokenSunglasses]

When rich bashing, it's worth remembering that while 'the rich' may pay less income tax in terms of percentage of income, they are also likely to pay more in tax and into the economy in other ways.

They are more likely to pay a high amount of stamp duty, council tax, inheritance tax, and they are the ones that keep cleaners, gardeners, nannys, childminders, laundry services etc in business.

The fact that they take significantly less out of the system counts for something too, as does the fact that they often make charitable donations.

[NotDead]

you can still pay 30% of all taxes and be tax avoiders you know!

[Redpipe]

notdead

Have you read my posts?

[dialpforpizza]

I agree there is a lot of unhelpful stigma at both ends.
The total value of tax estimated to be avoided at each end is more relevant - does anyone know what that is? (I don't)

[dialpforpizza]

And actually not just at each end. The total estimated within each tax category to be avoided would be interesting to know.

[Toadinthehole]

The OP is nonsense. No one says the top 1% of earners pay "no tax".

The point people make is that they don't pay their fair share of tax. The OP neglects to mention what share of income the top 1% have. According to this it is 14%.

Well, that all seems quite fair doesn't it? The top 1% get 14% of income but pay 30% of the tax? Well no, something isn't quite right actually. It is fair to assume that the figure of 14% doesn't take into account the amount of income reduced by various mechanisms which, although quite legal, are immoral, as they enable people to avoid the taxes that Gvt policy suggests they should fairly pay. If the very rich were declaring and paying their taxes like lesser mortals, I expect the proportion of income would rise to more like 30%. What that would mean is that despite the massive disposable income the rich have, they would be paying on a flat rate percentage basis. Not fair at all.

[Redpipe]

Toadinthehole

Firstly I am not talking 'nonsense'
Secondly I did not neglect to mention, I did not have the figures
Thirdly you are right people don't say "the top 1% of earners pay "no tax""
but they do generalise about rich people (which most people would agree are the top 1% of earners) getting out of paying tax.
This in my view is a lazy generalisation that is factually incorrect and is as bad as people generalising that all benefit claimants have never paid in etc etc!

[Redpipe]

toadinthehole

"If the very rich were declaring and paying their taxes like lesser mortals"

This kind of language (lesser mortals) is exactly the kind of sarcastic commentary I hear/read in regard to the rich. It makes the assumption that the rich think themselves above doesn't it?


I hear people all the time foaming at the mouth generalising about 'the rich' not paying their share (which obviously SOME aren't) and yet the same people have, in their life, paid cash in hand for a builder or got paid cash in hand and not declared it. But hey it's ok for them because it's peanuts compared to 'the rich'. And yet many/most of the top 1% of earners pay their fair share and don't complain.

[eurochick]

The thread has moved on but I wanted to reply to this.

ThingsThatMakeYouGoHmmmmmmmmm I get that, but at current investment rates, that makes a difference of about a fiver a year for me, if that, and is more than balanced out by tax relief on charitable donations. I suspect it costs HMRC more than that to do the admin. I just don't see how it is worthwhile for people on PAYE, regardless of the level of PAYE. Also, the higher rate point would apply to all higher rate tax payers, so many under the £100k cut off at which HMRC automatically requires a return.

[NotDead]

Wealthy people DO think they are above others - they very often equate the choices they are able to make with positive character values they see in themselves, instead of the reality which is that they are able to afford to make discerning and sensible choices.

I see this even in my friends 'who would eat at wetherspoons for a night out' - er people who can't afford £40 a person.. who would dress from ASDA .. er people who can't afford £80 jeans.. who would let their car run into the ground like that/not be repaired .. er people who can't afford a new one/comprehensive insurance/garage fees.. Who would drink at home from cans .. er people who can't afford more than two quid on a night in... etc etc.

'The rich' or more accurately anyone over the median, completely blind themselves to the fact that most 'value choices' and many 'character values' - eg max honesty are often only a reflection of structural issues, not personal values.

The mistake is then carried forward into 'the reason they are poor is because they made bad choices' when the reality is 'they make bad choices because they are poor'

Take for example a case close to me (me!) I know my best choice would be to do an MBA, but I can't afford to, so I am working in jobs I am more than capable to do, because I can't afford the keys to the castle - no matter what choice I make, it is limited by finance. My friends who are wealthier cannot understand why I don't have a nicer house 'you choose to live like this?!' - I have tired of explaining the barriers because they say 'you need to be more positive' yet their positivity also comes from having choices (and massages, nice hair dos, better clothes, more holidays newer computers, better sofas, nicer mattresses .. etc etc etc.)

[YouAreMyFavouriteWasteOfTime]

notdead - I don't understand your list. in your view are they bad things you are listing or good ones?

[Redpipe]

"Wealthy people DO think they are above others"

Notdead you are just proving my point over and over again! Can you not see the irony. Change wealthy for poor and see how you sound!

[sparechange]

NotDead With all due respect, we aren't talking about people who spend £40 on dinner and £80 on jeans
These are people who spend £400 on dinner and £8k on a handbag...

[Redpipe]

Not dead "The mistake is then carried forward into 'the reason they are poor is because they made bad choices' when the reality is 'they make bad choices because they are poor'"

Really? Are you for real? Do you honestly think that rich people have never tried to do any charity work or have empathy for others. Or set up schemes for less fortunate or less lucky? Your generalisations are insulting.

[hermioneweasley]

If you aren't resident in this country then how is it wrong to live somewhere else and pay tax in your country of residence? People leave the UK in their thousands every year, should they all pay UK tax just because they grew up here?

And it slightly undermines the argument that high earners won't leave the UK due to high tax rates.

I know several high earners (six figures, not Times Rich List) who travel a lot for work and have done just that.

[Wellwobbly]

The people who pay the most tax proportionately, is the low paid, which is outrageous, disgusting and immoral. [Please note: they are also the biggest pool. You can raise a lot of money from the poor].

Who happily and gladly keep voting Labour, who instituted this tax regime, because they bribe them with credits and God knows what else.

Since the government term of 1997 - 2010, I have become increasingly disenchanted with democracy. Most people are simply not informed enough to vote, and that they were bribed with some nice words and a honey smile (Tony Blair)... In the words of Black Adder, 'Oh, God'.

I think Plato was on to something.

[bachsingingmum]

Parliamentary Material - Tax Avoidance


House of Lords - Fair Share and Beer (from Lord Courtown,s blog)
Beer and who pays for the visit to the pub.
I have always been partial to a pint of ale and I particularly welcomed the action of My Right Honourable Friend, the Chancellor of the Exchequer, when he reduced the tax on beer. Something I hope will allow moderate enjoyment for many and also help the pubs and inns that are finding life tricky at the moment. The piece below, with thanks to Professor David K Kamerschen Phd and Professor of Economics, links beer drinking with higher rate tax payers.

THE TAX SYSTEM EXPLAINED IN BEER

Suppose that once a week, ten men go out for beer and the
bill for all ten comes to £100.

If they paid their bill the way we pay our taxes, it would
go something like this..
The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18
And the tenth man (the richest) would pay £59.

So, that's what they decided to do.

The ten men drank in the bar every week and seemed quite
happy with the arrangement until, one day, the owner caused
them a little problem. "Since you are all such good
customers," he said, "I'm going to reduce the cost of your
weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our
taxes. So the first four men were unaffected. They would
still drink for free but what about the other six men? The
paying customers? How could they divide the £20 windfall so
that everyone would get his fair share? They realised that
£20 divided by six is £3.33 but if they subtracted that from
everybody's share then not only would the first four men still be
drinking for free but the fifth and sixth man would each end up
being paid to drink his beer.

So, the bar owner suggested that it would be fairer to
reduce each man's bill by a higher percentage. They decided
to follow the principle of the tax system they had been
using and he proceeded to work out the amounts he suggested
that each should now pay.
And so, the fifth man, like the first four, now paid nothing (a 100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).
Each of the last six was better off than before with the
first four continuing to drink for free.

But, once outside the bar, the men began to compare their
savings. "I only got £1 out of the £20 saving," declared the
sixth man. He pointed to the tenth man, "but he got £10"

"Yes, that's right," exclaimed the fifth man. "I only saved
£1 too. It's unfair that he got ten times more benefit than me"

"That's true" shouted the seventh man. "Why should he get
£10 back, when I only got £2? The wealthy get all the
breaks"

"Wait a minute," yelled the first four men in unison, "we
didn't get anything at all. This new tax system exploits the
poor" The nine men surrounded the tenth and beat him up.

The next week the tenth man didn't show up for drinks, so
the nine sat down and had their beers without him. But when
it came time to pay the bill, they discovered something
important - they didn't have enough money between all of
them to pay for even half of the bill.

And that, boys and girls, journalists and government
ministers, is how our tax system works. The people who
already pay the highest taxes will naturally get the most
benefit from a tax reduction. Tax them too much, attack them
for being wealthy and they just might not show up anymore. In fact,
they might start drinking overseas, where the atmosphere is
somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

[BrokenSunglasses]

Wealthy people DO think they are above others

This really is just proving the OP right.

There are wealthy people that are arrogant and think they are better than others, but then there are poor people who are equally arrogant and think they are better than others.

Lots of the very wealthy people I meet are very down to earth and you can see that they appreciate what they have, even when they have worked extremely hard and made sacrifices to earn it. They are often vey compassionate, because they aren't so self involved with their own worries that they can't be open minded to a bigger picture. They are often in a position where they can dedicate a lot of time and money to causes they care about, they aren't immune to the feel good factor you get by showing kindness and altruism.