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?

Welp, I may be one of the few here who thinks that if you earn more, you contribute more to society. And yes, I am one of those people who earns enough to do just that. The was I see it, the economy is a grass-roots system, just like the food-chain. Everything is fundamentally stacked so that if you hurt the bottom layer, everyone else suffers as an inevitable end result. For instance, a family on a total income of £20,000 per annum will probably spend every penny of that and more, and in doing so, contribute everything they have back into the economy. This in turn pays for jobs, taxes, infrastructure, etc.. And there are a lot of families living at this end of the wage-scale. It's not like the money is going into a bin somewhere. Even benefits will are extremely likely to get paid back 100% into the economy. Moreover, all of us rely on low-paid workers - they clean schools, pave streets, drive taxis, cook food, make products, and after working just as hard as someone on a fancy salary, they go home too and spend time with their kids. But give a million pounds to a banker, and will that all go back into the economy? Maybe. But it might end up going overseas, or into Swiss bank accounts, or just sit on their mantelpiece as some sort of trophy. None of these things help the economy. Get rid of banker's bonuses and a couple of Breitling outlets might have to scale back. Resent giving anything to the poor to the point that you won't help them, and you'll see businesses closing up and down the country by the tens of thousands, putting many more out of work, etc. etc. etc..

Second thing: Norway pays one of the highest rates of taxes in the world. It's also consistently rated the happiest country in the world. Go have a look at what their taxes pay for and you'll soon see why. Resenting tax because it takes money from you is as ridiculously short-sighted as resenting medicine because it tastes bad, or resenting speeding laws because you got a ticket, or, heaven forfend, resenting parking wardens because they won't let you park your shit wherever the hell you like.

Final thing: the great majority of people who end up in well-paying jobs (just like the great majority of people who end up as prime minister) come from a background that fundamentally steers them in that direction, silently opens doors, and gives them all the route-maps, keys, and passwords they need to get through the maze. Not all. I actually came from a distinctly working class background and made good in the face of countless obstacles, not least parents who thought university was for tossers, but that doesn't change all the above.

If you earn more, you already do contribute more in taxes - even if you're not paying a higher percentage.

Yes, but bumbley, this fails to take into account the distinction between the income you need and the income, on top of that, that you want. Draw those lines where you like but most households are going to need an income of something like £30-£40k, and even then, if they're in London, they may still be one pay-day away from financial disaster and living hand-to-mouth. So let's say everyone gives exactly 25% of what they have, regardless of how much or how little that is. A single parent earning £20,000 is going to be crippled by losing £5,000. That will have a material effect on life necessities - food, heating, sanitation, even life expectancy. A household bringing in £200,000 can survive on £150,000, and very nicely too, because everything above that £30-£40k threshold is all just more icing on an even nicer cake - a newer car, a nicer house, a preppier school, fancier food, more shiny shit. The tax at that level isn't cutting into money you need. It's cutting into money you want. Short version: I will gladly forego a little more want money if it means that other families can actually afford to eat decent meals, clothe their children, warm their houses, and drive in safer vehicles.

FTSOF - I did say I agreed with a higher tax free allowance so I'm not talking about 25% of 20k

Only the Green Party has suggested a universal payment. State pension is about 7500 a year per person so that's about just over one minimum wage per couple. It would certainly please stay at home parent. Also as it's university someone like I am who earns quite a lot would have it too but it would be cheap to police as everyone who exists who is 18 or over would be paid it.

bumbley, a higher tax-free allowance is a welcome start, but it means less money going to the treasury and that either means cuts to something - nurses? teachers? soldiers? sanitation? public transport? the justice system? - or the loss has to be recouped by taxing something else a little bit more. So who gets to pay that little bit more? Ironically, it usually comes back round to the poorest when taxes on things that everyone pays for, like VAT, petrol, council tax, utilities (if you believe the utilities companies) and so on, rise above the rate of inflation, combined with pay-raises that are below the rate of inflation.

(Of course, if large corporations and wealthy tax avoiders paid their fair share, this would be a moot point, but they don't, so here we are.)

The Tories are right that it is pointless to give the average tax credit recipient £2k and take £1500 from them in tax.

On the universal payment it doesn't sound ilke we can afdford much and £3744 a year would not go too far even in 2 adult households:
"The Green party would spend billions to give every adult – in and out of work – a citizen’s income worth more than £72.40 a week, the current value of the jobseeker’s allowance."

The one that's being brought in FTSOF - I was originally posting to unreasonable Betty who didn't agree with there being a higher tax free allowance.

I am very confused. Never mind.

I am one of those who doesn't approve of raising the PA so far, especially when it is not fully transferable between couples. I do think people become disinvested in democracy if they don't see themselves as part of the tax system and there is certainly evidence of resentment at the other end if others feel not everyone is contributing.

I actually liked the concept of the poll tax but where it fell down was that it depends on income redistribution being done through the tax and benefits system first.

That's what I wrestle with. I can see that it's fairly pointless to tax someone and then give it all back in tax credits as it is expensivce to give the money and get it back. However if people pay nothing then they don't really feel bought into the system. It's one reason fathers with no money have to pay £5 from their benefits per child or whatever it is even though that will hardly keep the child in potatoes - at least it acknowledges the responsibility.

Higher personal tax allowance is arguably fairer than tax credits. It means people like my son who has not chosen so far to have chidlren or someone who has an expensive horse or elderly parent to keep or 10 dogs is treated the same as someone who has chosen to have children they cannot afford. IT is a purer more fiscally neutral things to do - the higher allowance and does not affect those of us who earn too much to get any tax allowance at all - something people forget has happened to we higher earners - every last 1p is taxed sadly in this high tax country of 2015.

Back to earning to pay tax for me on a Sunday.

Resenting tax because it takes money from you is as ridiculously short-sighted as resenting medicine because it tastes bad, or resenting speeding laws because you got a ticket, or, heaven forfend, resenting parking wardens because they won't let you park your shit wherever the hell you like.*

My mother's family are from Trondheim. I also believe you are confusing it with Denmark in the happiness stakes (although the Danes have the second highest rate of anti-depressant taking in the world). The Norwegians do lead it on suicide rates though, I'll give you that.

The happiness survey is an interesting one. It was based on researchers asking a number of people in a certain country how they rated themselves on a scale of happiness of 1 - 10. Small socialist countries which have arguably outmoded individualism and angst to a greater or lesser degree consistently rated themselves higher than other countries.

Looking at what the tax pays for is useful I agree. North of Trondheim, the roads are pathetic. No dual carriageways and mostly twisty and turny for the northern 2/3 of the country. No railways north of Moi e Rana, and that is only there because it was built by Russian prisoners of war in WW2 and is part maintained by the Swedes. Lots of tunnels and bridges to provide jobs to the male dominated construction industry but the tunnels are generally too narrow and badly lit compared to what is considered the best model nowadays. Even the new ones. Lots of toll roads (two to drive into provincial, cold and damp Trondheim, just south of the Arctic Circle, but don't worry, you can wait hours in the rain for the bus). Make an appointment for your A&E visit, or go to Sweden for treatment that needs an expensive machine, such as and MRI. Oh, and Jantelov to stop anyone getting above themselves.

Don't fall into the trap of believing something is true because someone trots out the line like an automaton.

Resenting tax because it is excessive and badly and efficiently spent is quite logical actually, particularly when it results in bad governments being voted out of power.

Do remember the British tend to grumble and we don't go on like Americans and perhaps Norwegians about how happy we are. So might internally be happier than anyone but we don't go shouting it from the rooftops. Happiness is a hard thing to measure.

Yes tax resentment leads to lower tax receipts and less money for the poor. When people feel tax is fair they pay it. I had lunch with a lawyer from I think it was Estonia. His childcare bill full time was a year what in London he and his wife were about to pay a month!! Their tax rates were about 60%. Now when our tax was 40% may be that would be fine. Now that he will be paying 47% income tax/NI in the UK and 12% stamp duty I am not sure the UK looks such a cheap tax country given you pay £30k a year for 3 children in full time childcare in London with very very little state help except at the margins. So we now have fairly high rates of tax in England but without the social benefits you get in Scandinavia - lose lose for the British.

Total aside: With 3 kids, he'd generally be better off getting a nanny - much cheaper (and if he's found nursery care for £10k a year full time, sign me up!) Obv cheaper once funding kicks in, and the £2k per child in tax relief that kicks in from 2017 will make a big difference for most working parents.

Even cheaper if there's room in that £1.5 million+ house for the nanny to live in - and of course the 12% only applies to the portion of the price that's over the £1.5 million threshold.

Indeed. We had three chidlren under 3 (and no spare bed room) and a daily nanny was the cheaper option, cheaper than 3 full time outer London nursery places. I haven't spoken to him for a while so not sure what he did in the end in terms of childcare. They were probably used to nurseries in the homeland.

grazia you said "Also I don't see why inheriting money is any different from inheriting a sunny personality or my good looks (joke) or good health or IQ. Children inherit all kinds of things."

I think this is the fallacy of thinking if we can't level all aspects of the playing field then we shouldn't level any.

We COULD give everyone a fairer start in life by averaging the wealth of one generation across the whole of the next. We CAN'T give everyone the same IQ or good looks etc.

So on what basis would you actually argue that the wealth of one generation should be spread equally over the children of the next?

I'd be interested to hear if any research has been done into how much tax would be levied if inheritance tax were set at 100%. (I'd allow a small legacy of up to £5000 or £10000 or similar).

Also on the negative effects of inheritance tax being the way that it is. Everyone seems oh so keen to demonise hard working individuals who earn high salaries for not paying more tax than they already but there is little mention of those who hang around waiting for an inheritance. Or who do inherit, buy their home outright on the proceeds and promptly give up work. I might be unusual I admit, and its purely anecdotal, but I know several people who have not really used their qualifications and ability to get even averagely paid jobs but instead who have waited around for an inheritance they knew was coming.

I don't know anyone who waited around for an inheritance. But I do think a high tax could help with something I see a lot, which is the amazing self confidence of people who have rich parents, and are so sure that they will be helped out if things go wrong that they are not afraid to fail. They know they will inherit a house and money in the end, whatever they do now. They are therefore happy to take on higher risks, and are rewarded when things turn out well for them.

I'm not even talking Richard Branson type risk taking, though entrepreneurship is much less scary when you have a cushion. I mean just going for that lower paid job/internship in an industry you are really interested in, rather than knowing you have to pay the bills as soon as you leave home so you need to take what will pay right now. And actually just that confidence that makes people think you are The Next Big Thing, where someone who is really brighter and more interesting is just much less good at advertising themselves, because they have The Fear.

And yes, I have been dogged by The Fear my whole life! Probably makes me bitter and twisted, but it does so annoy me, and annoys me even more now it's my DC who I need to try and get to act as if they have no fear. But they're already well aware of the way life can suddenly take the floor from under your feet, and no one's going to help

I don't think there are amny at all getting inheritances. Hardly anyone pays inheritance tax for a start although some who don't will have had money well before parents died. "Approximately 3.1% of all deaths in 2012 -13 led to an IHT charge. "

Have often think I earn a lot as I am prepared to take risks other women don't and when things go badly wrong can pick myself up (because of innate self belief rather than money - I have no savings and my parents are dead and my father died just as he spent his last penny on dull time dementia care at home which cost him £130k in his last year!!)

I don't personally know anyone who has waited around for an inheritance. I know people who inherited rather young, and put the money to good use starting businesses and making investments that have put them out in front of their peers. A lot of "inheritance" isn't actually inheritance. It is given out before death as school fees, deposits on homes, etc.

I agree with Finger that risk is rewarded and some people have the benefit of a safety net. It's not fair, but I think you just have to accept it.

Finger I think there is a counter argument to saying those with family wealth are willing to take more risk. Certainly from my own experience if you have nothing to lose you are less fearful of risk. Also if you have experience of living on very little it gives confidence in your ability to cope.

I actually think the most disadvantaged may be the children of strivers who have more baggage connected with "success" and "failure".

Small aside Jassy I don't think the new childcare tax scheme is open to households with a higher rate taxpayer and so for them and people with older DC it is much less generous than the voucher scheme it replaces. This is one of the reasons it's implementation was delayed.

Small aside Jassy I don't think the new childcare tax scheme is open to households with a higher rate taxpayer and so for them and people with older DC it is much less generous than the voucher scheme it replaces. This is one of the reasons it's implementation was delayed.

Yes it is - it only cuts out for those where one parent earns over £150k. For most people with more than one child it's a lot more generous (though of course it depends on what you're saving 20% of, so if two kids are in relatively inexpensive after school care it may not be such a good deal. But in that case, parents who are already in a voucher scheme can stay in it - if the employer offers them in which case vouchers are still available if your employer offers them). Households where both parents don't work aren't eligible. The new scheme is available to a lot more people. And in the example of a nanny, with more than one kid it would definitely be cheaper than vouchers.

Higher rate taxpayers who started getting vouchers after April 2011 (I just missed the cut off, sigh) are also more likely to be better off.

The delay was due to legal action brought by voucher providers to try to protect their interests as the new scheme will be delivered solely through NS&I. The case brought was entirely around whether the right procurement process was followed, but it was dismissed by the Supreme Court. The delay has meant big costs to a lot of parents...

So...your friend ranted to you about a friend who had been ranting at her about high-earners. & as a high earner herself you feel she has no right to say anything in response to that. At all. So...your low earner friend gets rudeness rights by "virtue" of her status in earning less money.

OK then

You are much better versed in the detail than me Jassy, but I think you are agreeing that it might be a case of swings and roundabouts for anyone who is already in the voucher scheme and of course the new scheme only covers dc up to age 12 rather than 16.

Grazia was quoting a 47% tax rate so I think her particular example is earning £150k. I can definitely see where she is coming from with regard to withdrawal of entitlements coupled with higher tax rates at this level. I still don't think those in receipt of tax credits should be the ones to be penalised to redress this.