The poorest half of the Uk own 3% of the wealth

[ThinkAboutItTomorrow]

Am I being unreasonable to think we should be taking steps to change this as a country.

And in case you wonder if your household income is less than around £33k you are in the bottom 50%

It didn't use to be this bad. So it CAN be better, we don't have to shrug and accept it.

Possibly controversial point BUT...

I'm always wary of unqualified stats, so, how is 'wealth' defined? Are we talking monthly disposable income? Lifetime earnings? Net assets? Take the latter for example, if people have high value, interest only mortgages their net assets may be low but they could be cash rich and blowing it all. (admittedly extreme example of frankly crazy person)

I do think there is an issue with perceived value and relative remuneration. I work in a profession which is reasonably critical to modern life but most people take for granted (nothing to do with finance, i should add!) Internationally it is significantly much more respected and paid more too as a lot of countries see how essential it is. Its high pressure, high stress and high responsibility (if i screw up, people could die). Also requires substantial professional qualifications to get to where i am. But, i am paid less than SIL who works in a shop with significantly fewer demands (in no way dismissive of this, just making comparison).

The same imbalance exists all over, many highly skilled people flogging themselves in teaching, nursing etc for money which in no way reflects what they do.

Thankfully i enjoy my job and earn enough to have a reasonable standard of living and am ok with that.

I also get fed up with rich tax bashing though. I also know people who work damn hard and do earn a lot but get a significant wedge taken off them. They accept that as part of the world they live in and recognise that we are lucky to have the system we do to pay fir education, health and support others in times of need.

We need to get back to understanding value to society not just ability to generate income. Then paramedics might get paid more money than footballers. Though taxes would need to go up to pay for said paramedics and there would be fewer HR tax payers as we'd have devalued their roles and be paying them less. Certainly no easy quick fix however you look at it!

I will freely admit to not knowing much about this.

I do feel the minimum wage should be higher and that people in lower paid jobs awarded the same benefits as those in professional jobs (sick pay for example.) I think this would be one way of redressing the balance.

However wouldn't the poorest half of the UK be claiming benefits rather than working?

There is a long established economic theory that shows that above 50% tax rate people will change their behaviours - this includes being less motivated or tempted to mitigate taxes (legal) or avoid the taxes (illegal!). The UK found out to its cost with the ill conceived 50% tax rate. As soon as the rate dropped to 45%, HMRC collected more money from the the top 10% of earners who are subject to the highest rate than in the previous year when it was 50%. This is important because that top 10% (about 350, 000 people) contribute 30% of all uk income taxes. Yes, they may have most if the wealth

The vast majority of that group earn between £150,000 and £550,000 (ish) and they pay 16% of all taxes. The UK is actually reliant on just 47,000 people who earn over £550,000 and contribute 14% of all taxes. That is 47,000 out of a nation of 30 million workers.

Yes those 350,000 top 10% earners earn many multiples more than the bottom 10% but equally they contribute 30% of the taxes. Asking them to contribute more, will result in less money for the government and more public sector cuts, which will hit that bottom 10% not the top 10%.

A lot of people on mumsnet like to bang on about the rich avoiding taxes. In reality, it is a tiny tiny number of people that get into illegal tax avoidance. HMRC issue a report each year that shows that more money goes missing from the Exchequers hands through "cash in hand", from the bottom 50% of earners than from tax planning schemes implemented by the top earners. Yet this fact is always ignored.

Erm...with regards to wealth tax, isn't this what IHT and CGT are effectively designed to do?

That's an interesting post novice, thank you for sharing.

If you want to take a step to stop encouraging inequality OP you should stop giving money to the labour party.

What novice said

I Just don't buy this argument that the richest are paying their fair share of tax when HMRC's sweetheart deals with the likes of big corporations such as Vodaphone, Amazon and Starbucks and the super rich like Bernie Ecclestone are so well known. It's a bloody disgrace. And I appreciate that they employ lot of people etc etc but when the average Joe on the street running his own business has to stump up his share of tax and NI, then it sticks in the throat to hear that others legally avoid it withwhat appears to be HMRC's blessing.

Novice makes a point on income taxation, but the problem we face in our society is the distributuon of wealth in assets, not just income. Income makes up a tiny proportion of overall wealth...

I don't buy it either as simply ' rich bashing' it is pointing out facts.

There is a difference between income and wealth. Whoever pointed this out up thread is correct. It is significantly easier to make money off unearned wealth in this country than it is to earn it. And the inequality in wealth is much worse than income. We should look at the way that is taxed (or more how it is avoided through capital gains etc)

And yes the high earners bear the greatest tax burden but as someone else said it is still disproportionate to what they have vs the tax burden of low and middle income earners. They don't pay as much as they should.

When you tot up the impact of regressive taxes on low and mid income families it brings the proportions out of kilter.

ANd skipping back to income tax HMRC didn't earn less with a 50% tax rate because people were dissuaded from earning but because they avoided tax. The answer isn't then to reduce tax it is to reduce avoidance. And I say that as someone who in a year or so is likely to pay that tax.

Exactly. If we had a socially responsible government, as opposed to our current capitalist system, tougher legislation would be in place regarding tax avoidence, for both the high and low earners.

Right now what we have is a system designed to pour money into the pockets of the wealthy, and keep wealth out of the hands of everyone else. This system is working very well. Better than ever in fact. This is the capitalist system.

A socally responsible system is what we need, rather than a government in bed with big business.
You can have socialism without dictatorship or 'shock' communism, look at the French or the scandanavian countries they do not have these extremes.

I think the problem is not so much rich individuals as rich corporations avoiding tax. Companies like amazon, costa, starbucks etc that derive their profit from UK customers but avoid most UK taxes. I can't understand why profits derived from us can't be adequately taxed here. The government needs to stand up and forbid certain corporates from trading here if they aren't willing to play fair. With no UK customer base they'd have no UK profits!

The shenanigans of the financial services industry is an essay in and of itself. However I would like to see a clear published repayment plan of monies borrowed during the crash, as they don't seem in much hurry to pay us back. Shades of the car industry subsidies and subsequent failures spring to mind. It's a different industry but like the car industry our banks don't seem to be fixing the structural problems that caused their implosion in the first place.

Workfare is a direct taxpayer subsidy to big Corp. A more counterproductive scheme from the perspective of creating social mobility I have yet to see. It's not unreasonable to require companies the size of tesco's or walmart to pay all workers minimum wage and not to need free labour plus a £3K subsidy of OUR money per essential role.

We no longer have a truly free market, we have a system that is beginning to eat itself.

www.theguardian.com/commentisfree/video/2013/oct/08/inequality-how-wealth-distributed-uk-animated-video

The richest 20% have over 100 times more than the poorest 20%

Does that really sound like a recipe for a good society?

I agree with WooWooOwl and noviceoftheday has set out the argument I wanted to make far more eloquently than I could have.

ThinkaboutitTomorrow I think the point you are missing is that a significant proportion of the 47,000 referred to by Novice would become non dom if UK taxation became any less favourable and then nobody would benefit from the vast amounts of money they already pay and which they pay willingly because they like it here.

Novice also touches on the black economy and I'm sure every single person who has posted on this thread has paid a cleaner, a window cleaner, a builder, a plumber, a gardener, etc., in cash at some time or another and has no idea whether that money is fully declared or not. That's where taxes drip out of the system but I wouldn't shop any of those people, would you?

Last night- I define wealth as assets minus liabilities, as opposed to income.

Yet our tax system ignores most wealth eg value of home.

Woowoo- the poorest do pay the highest proportion of tax. Consider fuel duty, VAT, tobacco and alcohol duty, council tax, the bedroom tax, the tv licence.

These are all regressive taxes.

We need more progressive taxes.

I'd also prefer a system like the US where British citizens abroad still have to pay tax.

All these sportspeople who compete under our flag but don't contribute really p me off.

IHT is only for wealth over c.£600,000 per couple and CGT allows £10,000 tax free pa.

If we taxed people's own homes then we would gather more tax (this is vv difficult to avoid/evade) and we wouldn't have the property bubble which is causing even more inequality.

To people who say the rich pay enough- my father is a paper millionaire yet legally paid no income or capital tax last year. Council tax and VAT/duties are all he pays. The system sucks. I'm really ashamed of the situation tbh.

I accept that the low and middle rangers probably pay a higher proportion of their income in tax, but if you tax the rich more, there comes a point where you are taking more than is reasonable.

The very wealthy will be hit with capital gains, inheritance tax, high stamp duty, higher council tax, they probably employ people and pay tax and NI on that, they pay their own high income tax, and they will be significantly contributing to the economy just by buying the nice things they want and the vat on those things. All of that is fine, and the way it should be, but individuals should not be treated as cash cows.

There is nothing wrong with being rich and successful and we should not treat those that are as if they doing something wrong that needs to be punished when they are the ones propping up the country and paying what is needed to support those less fortunate, and they are the ones that cost less and take less out of the system.

Society needs it's wealthy as much as it needs it's low paid workers. And a decent society will pay to support those who cannot work like the elderly, disabled and children, but don't attack the people who are doing the most to pay for that.

Clock's link is superb.

Even joined.
And 3 more joined after me.

But if people's homes were taxed they would sell them and downsize and therefore pay less tax. If he did that your dad could gift you a nice £500,000 flat and providing he lived for seven years I bet you wouldn't say "no thank you dad, I believe that to be immoral".

There is nothing wrong with being wealthy.

Not intrinsically no. It is the wealth imbalance that is wrong. there is something very wrong with 5 families having the same value of assets as 12,600,000 families. That sort of wealth disparity is not good for a society.

Societies with the steepest inequality have worse health, educational attainment, happiness and higher crime, levels of anxiety and depression. Even the rich suffer on these measures in an unequal society. In an unequal society money can't buy you out of this. Which is weird and counter intuitive but fairly well researched.

Also, I dont think that the wealthiest realise that they are more at risk of crime themselves when society gets very inequitable.

Tax loopholes should have more attention and be tightened imo.

I dont agree that tax should be more than 40%, that is quite high enough.
But if they all paid it, it would make quite a difference.

I agree with everything everyone above has said. And Blochead, I agree with everything you said too except for your last statement
"We no longer have a truly free market, we have a system that is beginning to eat itself."

What we have firmly in place in the UK is a very effectively working free market. Thatcher and successive governments reduced and further reduced all legislation restricting the free market, removed so-called 'red tape' moved legislation closer to business interest and capital gain.

We are experiencing first-hand exactly what a free flowing, free-market capitalist society is like. (to repeat myself) It makes the wealthy even wealthier, and increases the gap between rick-and-poor.

I will only end up repeating myself again regarding what needs to be done, so I won#t but things need to change.