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?

I think a lot of people pay too much tax.

I also understand someone on a low income being frustrated too.

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

Fair enough if you know more about it than me, but it was presented as an uncertain and likely different shape for different economies, with very little reliable data and a large range of uncertainty for optimum rate at any given time. This was by a Cambridge economics professor, but it was a few years ago so may have been updated, or I might be remembering wrong.

Howabout
Just before the election, I read an article in the Economist where they split the UK up into regions, and calculated the threshold for a 'mansion tax' if it was to tax the top few % of houses only, as per was being proposed nationally.

If it was calculated like this (ie not a 'London tax'), the threshold for the NE and NW was about £300k. Perhaps that would work as a local income tax, as it takes into account the huge variations in local economies across the country? Similar to state taxes in the US?

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?

I've explained, civilly, a number of times what led me to draw the conclusions I did (not a correlation between disability and academic ability by the way - you may wish to re-read) based on you quoting one poster's examples of disadvantage and then you appearing to paraphrase it with your own. I don't think I've misquoted (I'm generally quite careful if directly quoting another poster), though I may have misinterpreted your reason for posting in response to another poster. My motive for posting all along has been to figure out whether I have done the latter.

Given that you don't seem willing to engage in civil discussion, how about we leave it there. I've already apologised if I got the wrong end of the stick, and frankly what read like rants from you about my posting style and your (creative) view of my character and motivations don't feel like a very good use of either of our time.

"In economics, the Laffer curve is one possible representation of the relationship between rates of taxation and the hypothetical resulting levels of government revenue". per wiki but I think more reliable sources would define similarly.

I have an economics background and suspect that just like the Phillips curve which purports to show the Keynesian growth inflation trade off there will be changes to circumstances or extremes which cause the relationship to break down.

Mind you I tend to think in terms of Schumpeterian waves and chaos theory rather than neat mathematical econometrics. Very much believe many of the current problems could be better managed if people remembered economics is more stylised art than science (even most science is far from certain anyway).

howabout, I tend to work on the basis that economic theories and models are like cars - they are perfectly reliable until they break down catastrophically.

Interesting Time article on Laffer himself and some of his claims. Not about the curve per se, but useful to know the political standpoints of economists promoting certain theories or actions, whether they're on the Laffer or Krugman ends of the spectrum.

We certainly found when Lawson brought upper rate tax down to 40% (we had had up to 99% in the UK in the 70s) tax take went up. Similarly when the very brief period of upper rate at 50% more recently (Labour brought it in for its last year) came down to 45% there was little difference in the tax take. Bring th 45% down to 40% and there will probably be more money for the less fortunate.

Well, I am going to surprise you now. I actually am a Krugman devotee.

I did not study Econ at Cambridge Binky so you win. Unless someone from the LSE wants to come along and up the ante! I do think the US and UK are the economies that have been studied the most on this and have the most data. Are we in an extreme situation at the moment where all this would have broken down?

I'm actually less interested in what the optimum extraction rate is, and more interested in how much the state can spend efficiently. Just thinking of Blair pumping more money into hospitals than they could "eat" at one point, for example.

did not study Econ at Cambridge Binky so you win. Unless someone from the LSE wants to come along and up the ante

Me neither - it was a crash course in economics I did through my work!! Sorry - it did rather give that impression, didn't it? So you probably do know more than me

I agree on the second point totally. Taxing shouldn't be a punishment!

Tax is indeed far too punishing.
i heard on R4 this week and the interview had to ask it to be believed as it was so incredible, only 3% of people pay tax in India and that is not just because they are so poor. It is just an ethos of not paying. I suspect Greece is pretty bad too. Most of us do pay in the UK but it's a huge amount of the year we work just to fund the state and always gets worse and worse, never better and better.

Heigh I agree with you on the limits to efficient state spending but I also think wild seesawing between spending binges and cuts is the least efficient approach of all. Unfortunately our political system seems to foster your approach.

Can't play econ bingo for fear of outing

when Lawson brought upper rate tax down to 40% (we had had up to 99% in the UK in the 70s) tax take went up

Another of those "inconvenient truths" perhaps?

The top tax rate in the UK was around 90% throughout the 1950s and 1960s, still 83% when Mrs Thatcher was elected in 1979.
She reduced it in stages to 40% by 1988 and it stayed that level until ConLib brought in the 50% rate temporarily, in 2010.

I suspect the Laffer curve is now affected by tax rates in other countries, since the wealthiest 5% are so much more mobile than say 40 years ago.

One reason why tax take may drop is if higher rate payers move to somewhere with lower rates AND can take their capital assets with them.
It's not that they will always work less, just go elsewhere and keep more, if there is an elsewhere.

Even if tax rates are unchanged, the tax take should trend upwards, as GDP increases.
Useful graphic wrt GDP and total tax revenue:

I don't have an econ degree either binky . So while I've got some course work and some impressions, and even some opinions, I realise I can get out of my depth on this pretty quickly...but then it's fun and it's how learn!

Howabout your comment about wild swings between feast and famine really makes sense. Perhaps it's a political problem creating an economic one. It looks very difficult, if not impossible for politicians to make long term commitments.

BigChoc, do you think the changes to the nonDom rules will help with "tax tourism?" I do wonder why the govt doesn't crack down on all the foreign property ownership in London. It looks pretty speculative. I haven't been able to find any solid facts about how much it is affecting the housing market in the Southeast. I'd really like to know.

Then 12% stamp duty has reduced sales of houses over £1m in London by volume by 19% in the last year I think I read. People will instead by lots of smaller places. Non doms only buy expensive properties. The usual properties people who buy in London are not really affected by non doms in the main. Private Eye have a chart of which properties are owned by off shore companies - put your post code into here:

www.private-eye.co.uk/registry

On what happens when taxes get too high and less tax is then gathered it's because:-

1. People work less.
2. People particularly now are very mobile. I earn quite a bit £360 an hour when I'm working for a client. I need an internet connection. I don't need much more. I can and will do that anywhere. My children leave school soon. I'd prefer to stay here but if tax got higher or a mansion tax or asset tax came in I might well leave.
3. Probably should be number 1 people use legal ways to reduce their tax bill that otherwise they might not bother with eg I have never formed a company but if personal tax were too high I might. Some husbands of mumsnetters put tax into the wife's name to pay less tax. etc etc.

In response to the original OP- I think you are both being unreasonable. She could have been more tactful. YABU for thinking she should pay more tax.

I pay higher rate tax, which is fine. I accept it as the price for supporting essential services and civil society. I would not be happy to pay more than I do now. I think I pay a reasonable amount in tax.

As to whether higher rate tax payers got where they are on "pure luck" or through their own hardwork/talent I think the answer is probably somewhere in-between for most, with some people much more to one end or the other.

Personally, I was lucky to be born into a family who value education and encouraged me and I was born with reasonable intelligence. I suppose you could say I am lucky to have my health.

However, through my own hardwork at school and university I have gained qualifications and skills which allowed me to enter a profession. Through on-going handwork I have risen through the ranks of my profession. Very lucky in some ways, mostly a lot of hardwork and application to make the most of my talents. All the luck in the world would not have been enough without the application and hard work I have put in from school onwards. I am well paid because of my skills and knowledge, the hours and responsibility and so on.

The reasons people are struggling are probably also on a scale between "unlucky" and "own fault". I don't believe the only difference between the high and low earners is luck.

HeighHigh I agree with Grazia that nondoms are the absolute top end of the market - I read about one Knightsbridge mansion quoted at £280 Million ! - and I don't know if there is any effect at all trickling down to ordinary London buyers.
Also, some nondoms may disengage after Osbourne's taxation measures against them.

More significant for social mobility and housing market / building space may be all the property and sheer volume of land that some families have owned for generations.
Those families are permanent fixtures, who pass down their wealth to further generations, who also did not earn it.

The OP's high-earning friend should understand that her high income tax is needed to pay for pensions, benefits, NHS, education, police etc, because the vast majority of people in the UK pay less tax than the cost of services + benefits they receive.
So, a comparatively small % of high earners subsidise the rest of the population. That's society.

It must be difficult for the OP and her friends, maybe all old school chums, but now with such different incomes, careers, lifestyles and prospects.
The different outcomes are probably due to a mixture of greater luck, talent and hardwork, in whatever proportions.

I am curious whether the OP means her friend should continue to pay tax at this current rate.
Or does she want the top rate of tax increased, either because she wants more herself or to help others in greater need, e.g. those who are homeless, or reliant on foodbanks ?
OP ?

Been following this thread with interest. Just want to say something about this comment

I would like a surgeon who is in it for the caring not the money. IF they were in 5 days a week for 4 hours a day then that would also be perfect. They wouldn't be tired from working 60 hours the previous week.

A surgeon working 4 hours a day 5 days a week will never happen. Surgeons must spend hours and hours perfecting their skills, receiving continued training, attending conferences/courses, seeing patients in clinic, on the ward and operating. If a surgeon doesn't fulfil enough regular hours in an operating theatre they are not deemed to be safe. Surgical skill isn't something that improves with rest, it improves with practice. That isn't to say surgeons don't need ANY rest, but to think they could work a 20 hour week is completely misguided

My children share my income because in part they make it possible for me to work.
So I could fritter money away on sweets etc but save it up in an account to give them later is a no then?

Strikes me as jealousy a lot of this thread.

Largely academic success is down to genetic influences, generally those people do well, their children also.,

Did any of you watch the jungle program last year in which a group of men are left to fend for themselves. Interesting representation of society.

In my extended family of over thirty, there are only two full time workers. Imagine us in a small island. It would be impossible for us to provide enough.

Yes, we all know the phrase the harder we work the luckier we get. As jacks says above it is a mixture of hard work and luck for most of us who earn a lot. Most women aren't prepared to work as I do and most of them earn less.
Even basic things like I graduated a teetotal virgin - the consequence of that was I was not a teenage mother so I could finish my education. Now all women could do that as it's free of charge unless they were raped or abused. I am not saying that is the one route to making your own good luck but a combination of factors like that - working as a teenager when all your friends are out drinking etc builds up to make some people do better than others.

Someone just above raised saving money for your children. I am the one who would be happy if inheritance tax went (and by the way most people don't pay it as they don't have enough when they die - even the well off these days like my father may well use all their savings (as he did) to pay for dementia care at home or in a home). Many good lower income parents on mumsnet will buy their child a book or save up for the child over its life to help it out later. i call that love (favouring your own child) rather than a moral wrong breach of socialist principles.

It's the principle for me. Man on a train asks the girl next to him to sleep with him for a million pounds. Yes she said. How about a fiver then? No she said what sort of a girl do you think I am. Oh he said I've established that, we are just haggling over the price!
For me any inheritance tax is wrong. You either take it all or none.

I annoy stay at home mothers when I say this but those who marry well and live off men engage in exactly that though don't they, particluarly those with a cleaner, au pair, gardener etc? Women have two ways to earn a fortune in the UK - through their work and through marrying well and then providing themselves, their beauty, their breasts, their sexual skills and their production of children in return for their keep. Is the latter any worse than an inheritance from a rich daddy or mummy?

Jassy I've explained, civilly, a number of times what led me to draw the conclusions I did (not a correlation between disability and academic ability by the way - you may wish to re-read) based on you quoting one poster's examples of disadvantage and then you appearing to paraphrase it with your own. I don't think I've misquoted (I'm generally quite careful if directly quoting another poster), though I may have misinterpreted your reason for posting in response to another poster. My motive for posting all along has been to figure out whether I have done the latter.

Given that you don't seem willing to engage in civil discussion, how about we leave it there. I've already apologised if I got the wrong end of the stick, and frankly what read like rants from you about my posting style and your (creative) view of my character and motivations don't feel like a very good use of either of our time.

Jassy I am not going to let you away with bullying me. I have consistently said:

(1) I have genuinely no idea what your extremely wordy waffle is actually saying. Theres so much of it - do you actually think people have time to devote to reading through that?

(2) but, you have consistenly and vaguely accused me of something.

(3) you have continually made up stories about what you think I have meant to say and extrapolated a bunch of waffly nonsense from it. "paraphrasing" - really?

(4) You don't get to control what other posters post. Repeat this to yourself if you have trouble understanding it.

(5) your previous comments on a link between disability and academic achievement are some of the most offensive, stupid and idiotic things I have ever read on here. I have no idea which poster you have got confused with whom in your waffle, but I don't want to be associated with such nonsense. Your imagination is clearly working overtime.

(6) I am perfectly capable of "engaging in civil discussion" but not with someone whose moral capacity leads them to make up stories to win arguments. If you think people cannot see through that, then your time will be well employed to go and have another think.