To be annoyed/hurt by my good friend and think high earners should be willing to pay more ?

[whatislife]

i have been lurking on MN for a long time and never posted. Decided to join today and thought I'd mark the occasion with a rant.
I got in an argument with my friend (2 days ago) and the anger re-appeared when she sent me a text this morning. This doesn't really matter though.

The argument started when she made a snarky comment about an old friend of ours (not very close to be honest). The woman had been complaining about money and started ranting about high earners, tax and all sorts. My friend , a very high earner (think 6 figures), kept quiet the whole while and then started talking about it to me. This is where she said something along the lines of 'No one forced her to messed around at school and screw her life up. Im not going to feel bad because I worked hard' and 'why should I pay more tax when I already pay a ridiculous amount and she doesn't pay any'. These comments really angered me because I am also a low earner and rely on benefits - she knows this ! So we got into an argument about tax and benefits (silly i know but personal comments were also made).

My question is ; AIBU to think my close friend (and high earners in general) should realise how lucky she is and be willing to pay more tax so people like me can also have a normal life?

So this thread basically seems to boil down to 'its the poor's fault that the country is in trouble , lets make them poorer , that'll learn em '

Hmm, my sister works 16 hours minimum wage, (has absolutely studied the system), gets tax credits and her rent paid, and raises three kids without a penny from her violent, abusive ex.

She runs a car, manages a (low budget) family holiday in Spain most years, kids have plenty of gadgets.

However my sister is a bright and resourceful person, well able to stretch her money a long way.

She also has a very serious knee injury which means she is in constant pain and can hardly get around. And a genetic condition which frequently leaves her exhausted. She has been turned down for disability benefits though. To an outsider she does pretty well but her life is far from easy.

Great post Pounding

Further up the thread there was a lot of talk about hard working successful immigrants. One of the reasons people leave other countries in search of a new life in the UK is the inequality in their homelands. Also it is patently not the case in all countries with high levels of emigration that everyone is poor and uneducated. In fact the emigrants tend to come from the priveleged segments of society. There are good universities in Africa and India for example and there are also those with the funds to be educated overseas.

I actually think UK benefiting from immigrants is often largely a case of UK benefiting from the inequities overseas rather than giving anyone a help up. Plenty of nurses in the NHS with home countries in far greater need of their services.

Mia The poor in the West are infinitely far better off than most of those in the developing world.

I disagree with "infinitely far better off". How are you measuring that? In money only I presume? I know someone who moved abroad, in relative terms has no money behind her, no health insurance/access to healthcare etc. She has willingly given that up for a different climate and culture, and is living at a subsistence level. (She even commented about having children now being necessary to see her through old age.)

I'm not saying everyone would want to do that but frankly if you're on the streets in a hot country, it's better than freezing to death on the streets here, isn't it? (In case anyone here is under the illusion the council will house you - they only have a duty to certain people, without children most of us would be left to fend for ourselves.) And the countries I have visitied seem to have so much more opportunity for the poorest (growing economies) not like here where you have hundreds of people applying for the same min wage job. Since JSA changes it's much easier to end up penniless and homeless... Healthcare is the one area that sticks out - but then look at access to healthcare in the US for a vision of where the UK is heading... (I really hope not.)

I mean, it depends where you're comparing really. And clearly I have decided to stick around here and not go and be penniless elsewhere..! But it's the "infinitely" and "far" in your statement that I think is innaccurate. And the cariacature of the thing. It's hard to put into words... but seems to come together with criticising the poor in the UK for not being "hardworking" enough or implying they're greedy - a race to the bottom "some people are starving" type argument generally presented by those who really do have plenty, even in relative terms.

I don't believe taxing earnings is fine. I think about 10% tax/NI would be fair for me so and also that IHT shoudl be zero as that money is already taxed on me at highest rates (I do not have any equity in a home from price rises by the way - all of it is from earned fully taxed income).

That's a more supportable position than most I've seen on IHT, though it does ignore the fact that almost all money, apart from capital gain, is taxed multiple times, often each time it changes hands (for example, I just paid VAT on money I paid my builder, despite the fact that I'd already paid income tax on it, and my employer had paid tax on it before that). Which makes the 'I've already paid tax on it' argument sit a little oddly.

The difference with IHT is that the hands it passes between are family members, which makes people view it differently in my opinion.

I'll admit to it being a simplification, wasonthelist but would query whether it's ridiculous

It is ridiculous in the same way "would you like to save dying children" is when a chugger asks you. There's only one "correct" answer, but you have to consider the context.

but frankly if you're on the streets in a hot country, it's better than freezing to death on the streets here, isn't it?

You haven't got a clue have you ? That's the most asinine statement I've ever read on here.

These images are so common all across the Indian sub-continent that after a while it fails to shock.

And the countries I have visitied seem to have so much more opportunity for the poorest (growing economies) not like here where you have hundreds of people applying for the same min wage job

India is a growing economy. Next time I'm there I'll be sure to let all those starving street kids know how lucky they are....Just think of the prostitution and drugs as a stop gap.... there's unlimited opportunities just round the corner.

It sticks in my mind that there is an optimum tax as a percentage of GDP for an advanced economy. I think it is around 33/34%. If you accept this (and I am sure some of you won't!), then you just have to decide where you want to take that 33.5% from. Should it be income, capital gains, VAT, IHT, tariffs, etc.

At the moment the UK stands at 39%, so a little bit over taxed. (We are less taxed than the Scandinavians, but more taxed than the Swiss or Australians.)

The question is, where to cut the 4%, and, once done, where should the 33.5% of revenue be raised?

You mean from the Laffer Curve - the rate of taxation at which maximal revenue is generated.
This varies from society to society and also with changing factors such as the world economy, wars etc

I'm another one who would rather raise IHT than income tax. In fact I would advocate an annual wealth tax:

The lack of social mobility in the Uk is partly due to the tiny minority at the top who have generations of inherited wealth accumulated and derive large incomes lifelong from that alone.
Maybe more important than inequality in straight income from work.

It is v difficult to accumulate sufficient income without inherited wealth, before having kids, so they can compete on equal terms at school, networking, uni, 1st home etc.

I'd still increase income tax at graded levels from say 200k

Yes, I know earned income is then subject to VAT when you spend on things other than food and children's clothes and rent. Same with paying stamp duty. My daughters paid £40k stamp duty between them on tiny starter flats in London - ludicrously high stamp duties for cash strapped first time buyers making do with second hand furniture and also having to pay solicitors etc. If I swapped this family house for a London flat of the same value I'd have to pay the state about £300k and I won't so there and many other older people won't either. 12% stamp duty will ensure there are no homes for families in inner London.

The best thing I give my chidlren is a good paid for education and no student loans which no one can rob them of later. However on social mobilty what about my postman son? Surely that shows social mobility still works - not too difficult to move downwards and he's therefore made a place for someone to move up. Do I get a prizer or an IHT exemption?

No annual wealth tax. The good thing is that the Corbynites will push for all this and it will be even more off putting than at the last election and we will get 10 years of Tory rule. So we are probably safe from the London housing tax/wealth taxes for now.

Surely that shows social mobility still works - not too difficult to move downwards and he's therefore made a place for someone to move up.

I'm not sure there's an annual quota...

Would a mansion tax coupled with lower stamp duty persuade you to downsize grazia?

howabout A mansion tax wouldn't make any difference if Grazia bought a London flat of the same value. Unless you think mansion tax should only be applied to mansions?

I think the laffer curve is quite disputed (ie it's shape for different economies etc) and it's also pretty much just theoretical. As I understand it there is no real consensus on the 'optimum' tax rate for highest tax take.

Corbyn seems to believe that Peoples' QE / aka Money Fairy will let him avoid income tax raises for most of the mc.
I still suspect that use of QE would violate the Lisbon Treaty.

On your proposed 10% flat tax, I don't think there would be enough to pay for the NHS, Pensions and Education, let alone all the rest.
What would YOU cut so you enjoy that much lower tax ?

FYI: This is where tax went from a £25k salary in 2012 - I presume fairly similar today (and could be roughly scaled up for 250 k):

£2,080 Pensions & benefits
£1,094 on the NHS
£824 on Education
£339 on Defence
£160 on the Police
£44 on Prisons
£92 on Roads
£71 on Railways
£59 Overseas Aid
£28 EU

Posted too soon. Also do you think ending the preferential treatment of private residences within the IHT and benefits regimes would lead to more productive investment decisions and better pension planning?

Another one here in favour of 100% inheritance tax. Or near enough. Maybe you could allow a maximum level of gift of £2000 or £5000 per child/grandchild, as long as it was not enough to distort the property market by giving people massive deposits due to accident of birth. Yes there is the argument that people have worked all their lives for their wealth and want to pass it on, but its they that have worked for it, not their children. I see nothing wrong with a level playing field and no reason why £5000 or so can't be a sufficient memory of a deceased relative. Trust funds for tax avoidance would also need to be targeted.

I'd also get away from the planning system which encourages massive developments by large scale housebuilders, landbanking and some lucky landowners making massive fortunes by selling land to them that they have often done very little to achieve.

I'd also sort out the public sector, by cracking down on inefficient middle managers and banning golden handshakes. Oh, and "developer's contributions" basically bribes and small useless sports centres without new roads to reach them which wouldn't be needed if the housing estate weren't built in the first place are hardly a useful contribution anyway.

I would not have a wealth tax. Norway is hardly a good country to follow. Have you ever been there? Theres hardly any restaurants and hotels because Norwegians themselves can barely afford to use them. If its such a rich country, why is everything so expensive and if the oil fund is so great, why is it needed to fund people's pensions and does nothing else of benefit for the country? Awful roads and infrastructure outside the capital too, and the health service is pretty poor.

I'd reduce income tax and re-incentivise people to work harder, rather than punishing them for getting a pay rise or promotion.

I think the Laffer Curve is accepted as a concept and is built up from empirical data. The debate is about a couple of percentage points this way or that way.

Sorry, a little sarcastic. But I don't think anyone's saying that social mobility isn't possible, simply that it Britain it's much lower than pretty much anywhere else in Europe.

And while anecdotes are interesting, data should drive public policy. This OECD report, among others, shows how strong the link between an individual's earnings and their parents' earnings are in Britain, compared to other countries. The government has published its own data, and there's plenty of other reputable evidence out there.

What I find particularly interesting is the correlation between (lack of) social mobility and income inequality.

I consider an annual wealth tax to be fairer and more comprehensive than a mansion tax. However, a straight mansion tax might be easier to collect.
If you have a mortgage, your wealth is only the equity.
So at say 1% p.a. you would pay 10k p.a. wealth tax if you own £1 million in equity, shares etc.
The UK aristocracy with billions in land might have to sell off some of it. What a shame.

My reason for a wealth tax is because IHT doesn't seem to affect those massive fortunes of hundreds of millions, even billions, passed down the generations and still accumulating. They seem able to dodge IHT quite easily, whereas someone leaving a single house doesn't.

Part of the reason for our housing problem is that a few families own a surprising amount of the available land in some areas.

Jassy Sorry. Thought I'd been clear. I was saying that it looked like you were equating disability and lack of academic ability (some of the PP's examples of disadvantage, quoted by you) with laziness and being disorganised, and that if that was the case, I found it disgusting. I'm not sure I can get much plainer than that, but I'm happy to keep jumping through the hoops in whatever game you're playing.

I'm sorry, but WHAT? How on earth did you come to that conclusions? Wtf would there be any correlation between disability and lack of academic ability?? Are you off your bloody head?

You have waffled and picked through, quoted and misquoted me continually to discredit my views. Why the hell do you keep doing this and why are you so obsessed with it?

Your views on that correlation you have extrapolated above are so offensive, so off the wall, that I honestly do question what goes on in your mind. You seem so keen to demonise perfectly decent people. I also find such a concept disgusting. Which is why I certainly didn't say it, or anything like it. I am not playing any game. I simply object to someone making up stories to discredit a decent person.

developer's contributions" basically bribes
Section 106 contributions or "Community Infrastructure Levys" aren't bribes! What a ridiculous comment. It is the government's preferred method of collecting money from developers.
If it is being spent on 'useless sports centres', that is entirely the fault of the local council, who decide where the money gets spent.

As an aside, some councils are sitting on 106 reserves running into tens and sometimes hundreds of millions of pounds, which could be used to build or improve council housing, or build community infrastructure, but isn't being spent.

sparechange A flat rate mansion tax wouldn't help but a graduated one might. Alternatively the council tax could be properly rebanded with lots more charged at the upper levels. My own preference would be local income tax and close to 100% IHT rather than wealth taxes, but it is really interesting to understand what drives alternative views.