AIBU to think that people with low income generally contribute more to economy than they take

[MagnificentDelurker]

Hi there
l mostly lurk as most of the time what I want to say is said much more eloquently by others. However every once in a while when the question of tax or benefits comes up someone comments as self evident truth that if you pay little or no tax then you are a burden. Some poster a while back went as far as saying unless you are high earner then you are a burden. While these views are challenged, they are not challenged enough.
Today a poster speculated that children of a particular family were likely to become adults on minimum wage and hence a burden. Do we really think that we can have a society full of bankers and lawyers?
Maybe if robots take over but seriously where do people think goods and services come from?

We will never be without the lowest paid in society. Care workers for example do not need qualifications or experience. They get paid less as there is always a big supply.

Financially of course they don't and are often a drain on the economy. They pay very little tax, claim benefits, use free services, and have a low disposable income so don't spend much purchasing goods or services. However a low paid nurse contributes more to society than a banker, but in the same vein a wealthy surgeon contributes more to society than a low paid cashier. Depends on how you look at it.

“One extreme example ( for making my point and not an argument) : If I had bunch of slaves who worked on my field, kitchen and house and I moaned about how costly their up keep is. After all I have to feed them and clothe them and from time to time look after their health.”

I once went to a talk by boris Johnson where he complained about EXACTLY THIS

Jay

I agree but people have taken financial contributions which are an artificial construct to an extreme. So much so that low income people have been told that they don’t have enough aspirations and should not have more than 2 kids as that would be a burden. Would it be better if only MC reproduced?

I do think paying lower paid workers more would boost the economy.

We are both low earners (less than 30k a year joint income) we dont get housing benefits or tax credits, we both pay tax.

We are skint all the time, we rarely buy clothes, go on holiday etc. Even our essentials like food shopping are stripped back to minimum. If we were paid a living wage for our work, we still wouldn't receive benefits, we'd still use services but we would also be able to spend more.

Nurses aren’t that lowly paid 😳 how insulting to bring them up when we’re talking about financial drains on society

Of course low earners who do essential jobs should be valued as much as those earning a high income. As already started they contribute in a different way.

The issue is those who make a point of working as few hours as can to maximise benefits when they could work more hours. Human nature to contribute as little as necessary to capitalise as much benefits but that is certainly not helping the economy.

YAbu - those on low incomes quite literally contribute less in taxes while using the same services. Which i’m Fine about BTW.
We have a high 6 figure household income and pay loads in tax, which is how it should be. We claim less from services as aren’t illegible for any help, tax credits, child support etc - fine cos we do t need it. You have to be seriously rich ( and immoral IMHO) rongo doen the tax dodging route.

I have never heard it being described in terms of a “burden”. It’s a fact that unless you earn a certain amount (I’m sure I’ve seen that if you have 2 kids in school and you use nhs it’s £100k income for a family of 4 to be net contributors) then you cost tha state more than you put in and are subsisidised. That’s fine because we’ve decided that’s how we want to run our country, so that lower paid workers aren’t also having to fund their own healthcare etc. You could argue we’re sending a message that those roles are so valued we are financially supporting them as a society.

Two people earning £17.5k are contributing more in tax than they get in benefits

I don’t think that’s correct. They’d only be paying £2.2K in tax and NI each, and the article puts the estimate of benefit per household at 11K.

Attached shows sources of tax income U.K. although income tax is the highest single contrubuter you can see that national insurance paid by all workers is close behind as is VAT, together contributing almost 40% of tax income. Whilst low earners may purchase fewer VAT able goods and contribute less NI in ££, these taxes are still disproportionally affecting their wallet

YANBU. People on low incomes contribute far more to the economy in their labour than high earners. Where do people think the money to pay high salaries comes from?
In much the same way, the unpaid caring work that generally falls to women saves the family and the government.

YANBU. That comment gave me the rage too.
Low earners contribute to the value of the useful work they do (which is often not compensated fairly)

Low earners benefit the economy by spending a greater proportion of their money, thereby keeping it circulating around the economy to benefit others.

The higher earnings of ohers are made possible by low paid work. This is especially true of parents who would not be able to work at all if their kids were not being looked after by childminders, nannies, nursery assistants, teachers, playworkers, foorball coaches....etc..

Anyone who crows about not recieveing tax credits has nothing to feel righteous about if their childminder has to. They are benefitting from those tax credits just as much as if they were recieving them themsleves as their childcare would be impossible without it.

tenorladybeaker putting up minimum wages would not necessarily cost the state so much as you imagine.

A lot of people on NMW are in receipt of benefits to support their income. If those people were paid more they would receive less benefit. Where those people are state employees that cost moves from one department to another.

Where NMW employees are privately employed that cost moves to the employer. Large employers eg supermarkets depend on low paid workers essentially subsidised by the state.

There would be a lot of knock on effects of forcing employers to pay a higher wage. They would be forced to become more efficient. Currently some are able to be quite inefficient, throwing bodies at problems rather than sorting root cause.

Sowhat.. how can you earn so much and be so ignorant. You don’t have the capacity to understand what the OP and several PPs are explaining. And I think another “wealthy” poster was similarly blind to this. How can economy be separate from society? They are essential to each other, utterly codependent.

Of course people can be contributing more than just money. Many people choose careers knowing they aren’t highly paid but they doing it for a greater good, they are sacrificing their financial gain to take on a role crucial to running the country/society and therefore economy. Even massive businesses are dependent on public spending. Tesco etc is subsidised through the benefit system. They also screw farmers who have to be subsidised themselves. And businesses are only really growing the economy if we get money from outside the system - exports. Not just sloshing cash round a closed system.

My best friend has never earned more than 18K a year - she’s now 57. No children and worked constantly since she was 15.
She’ll have paid in a lot more and taken out a lot less than some out there due to having no kids.

So she may be a net contributor in simple terms of tax in - benefits/services out, or indeed she may ultimitely not if she requires a lot of care in later years. That doesn't make her a greater asset to society than parents who are net beneficiaries. Society needs kids - they are our future workforce and taxpayers.

People on low incomes contribute far more to the economy in their labour than high earners.

Sorry, I still don’t get it. So a waitress that works 20 hours a week and claims tax credits is contributing more than say a doctor that saves lives, pays student loan, high tax rates and sends children to a private school? Please explain how that works.

YANBU

"Hospital cleaners create £10 for every £1 they earn"

[https://www.theguardian.com/business/2009/dec/14/new-economics-foundation-social-value]

I earn 13k. I don't claim benefits. I put every penny of that back into the economy. I spend it in the UK, not abroad. I feel like I am working for nothing, no pay rise for 16 years, just the constant threat of becoming unemployed.

I've never understood the argument that rich people pay more tax, therefore they contribute more. They still get to keep a huge pile of cash every month. Rich people take more of the pie. Even if they have to give some of it back in taxes, they still get a lot more.

We need a fairer society where people are paid properly for the work they do. What we have right now just isn't working for half the country.

OP never said low income workers contribute more than high income workers, so that's a battle that doesn't need fighting. She said they contribute more than they take. No need for higher earners to be defensive. If you pay higher rate tax you almost certainly contribute a lot more than I do in net terms (I've never earned much over £30k and currently earn a fair bit less), but that doesn't mean you're subsidising me. I no longer get child benefit etc as my DC are grown and three of them are currently paying a decent whack of tax themselves.

With the examples given above like healthcare workers, carers, bin men etc you can argue they provide societal rather than monetary value - well, than direct monetary value anyway; keeping the nation clean and healthy has an important knock-on effect on the economy as well as quality of life in general. But what about, say, manufacturers? The people paid least must, logically, earn more than they are paid. The excess value of their labour has to cover their own wages, running costs, distribution costs, salaries of professional staff above them in the chain, and shareholders' dividends. If it didn't there would be no company and no-one would be earning anything. The entrepreneur makes it happen, and more power to his/her elbow, the sales team turn the goods into income, the accountants keep it legal and profitable, and so on, but without basic labour it wouldn't happen either. Without the excess created on the shop floor the professional staff, accountants, sales people, directors, wouldn't have that decent income to pay their high taxes which are then snaffled by government to, among other things, pay tax credits to their own shop floor workers. Go figure. Tax also goes to create the infrastructure that makes manufacturing viable, educate the next generation of workers, keep everyone healthy enough to work... it's a big churn of resources and everyone in that scenario is putting in their bit. Some are paying more taxes whilst others may be paying no taxes at all, but between them they're turning a profit for the company, and by extension the economy, as a whole.

Pay differentials should reflect the relative skill and responsibility of the role but seem to have got massively out of hand in recent years. We don't all need or deserve a mansion or a fleet of Ferraris, but something is wrong if you work full time doing a useful job yet still can't afford a roof over your head without the government chipping in. That's why the minimum wage is a necessity and housing costs really should be controlled some way or another. I blame the reduction in social housing provision at least in part, but admit I'm no expert.

www.theguardian.com/business/2009/dec/14/new-economics-foundation-social-value

ShastaBeast and Anniegotyourgun- excellent posts!

I understand what you are saying OP.

I don't pay tax. I work in childcare. On one hand I don't contribute to the economy through tax payments obviously. On the other hand though a significant amount of the children I look after have high earner parents who couldn't do their jobs if people like me weren't doing ours.

It's more complex than which tax band you are in.

That's why the minimum wage is a necessity.....

That's a whole other debate. I think the theory of NMW sounds great but I do wonder if in practice it has been detrimental. NMW may actually have reduced incomes for a lot of unskilled and semi-skilled workers as it has become the standard rather than the absolute minimum for large sectors of the workforce. Yes, it sets a bottom limit but has it also reduced wages competition?

YANBU
The shear number of people who earn a low enough wage for tax to be deducted at source is massive. This is what enables the economy.
I remember years ago somone I know who earns minimum wage as a hairdresser ( as many do.) was sent a letter by HMRC to say that their tax would be increased to make up for any tax payable on tips they may receive in their industry. There is no tax avoidance industry based around people on basic incomes and so they pay the most, per capita and in vast numbers. To say that low earners are a drain is ludicrous. Also if all earners paid their full contributions without being able to avoid any tax we would all be in a vastly better position re public services.