Trickle down: To ask higher income earners...??

[venusandmars]

Following on from the budget announcements today which disproportionately benefit higher earners (particularly anyone earning over £150,000 pa), if you have a higher income and will therefore benefit from the tax changes, how will this really impact on your spending?

Will you actually spend more on local services (more coffees out in a locally owned cafe)? Will you increase what you pay your window cleaner? Will you donate more to local charities or spend more time volunteering? Will you make voluntary contributions to HMRC? What WILL you do with the extra money?

OK, I know IABU asking people to account for their choices, none of us know the financial pressures that higher earners might be under, but it seems to me that the whole 'trickle down' economic theory is completely flawed. So little of that additional money is going to be seen by lower earners - and almost none to those who cannot work.

I'm not in the +£150K bracket but I have enough when I know others are really struggling. I have increased what I pay my window cleaner. Over the next 4 months I will use my 100% of my energy payment to donate to local foodbanks. It's small stuff, nothing heroic.

I am despairing about the tax announcements today.

I had decided I wanted to work in this industry before I did my a-levels

I chose my subjects, degree and university based on what the career path would expect, and carried on doing what was expected of me (long hours, mostly! Also having a very thick skin for criticism)

There is an element of luck insofar as my natural way of working/personality type suits the work and culture but I have played the game for this career path, and been promoted accordingly

I did a pretty nondescript undergrad degree - I'm sure some people would have classed it as useless - and then earned a Masters degree in a different field. Worked freelance in my field for a few years to get experience, then took permanent roles and have gone upward with every employer change.

Im not an additional rate tax payer but I’ve worked out that we will be £20 per week better off. I’m going to spend it on SLT for my 2 year old as the local Trust is inept and the waiting list 3 years long! I expect many people like would rather have decent public services so that we don’t have to pay for stuff like SLT. At this rate DC will not have seen a SLT before he starts school! I fear for all the families that cannot afford speech therapy with DC who need it as they will end up start school with poor communication skills and overburdened teachers will be left to pick up the slack yet again…

To answer the OP: discretionary spending will remain the same, or may rise with inflation. We’ve already increased the wages of our cleaner and gardener, but may do so again. Will increase charity donations, and will probably save as well.

@Chattycathydoll I would say persistence and consistency helps and often moving sideways and roundabouts - but same industry- one by one they all leave/die off and leave you in demand and in top dog position with long term industry knowledge. Either that or you are just great at being very focussed even when youngish , great at passing exams (even if relatively useless in real life) and go into something highly paid from the start banking, politics, legal, management consultancy etc

@Capri3 fair point, but does the inequality gap widening even more not bother you? It really bothers me, and DH and I earn around £60k combined, so we are really fortunate. The gap bothers me massively and we do what we can (donate to food banks etc), but I do think it is now going to widen.

Isn’t the whole point of it to encourage higher rate tax payers to actually STAY paying tax in the uk, rather than fucking off elsewhere to register in a lower tax country? Or to encourage those who currently don’t pay tax in the uk to come back to the uk and actually pay some?
I thought that was the reasoning behind it.
although I suspect those who currently don’t pay any tax here aren’t going to suddenly say ‘oh it’s 5% less, let’s start paying tax’, because surely they’ve already making excellent use of all the tax loopholes that allow them to avoid paying any in the first place!

They'll just buy an additional holiday home in North Norfolk to Air bnb.

me and hubby earn good salaries. We live comfortably but I’m from Yorkshire!!! 😂So like to be careful with our money. We luckily locked down our energy bills so this hasn’t affected us yet! We have a cleaner/dog Walker and holiday many times a year but I always hunt out bargains to make our money go further. I would be happy to pay more tax like other European countries do to ensure there is a full nhs service available to all. That women continue to get maternity benefits and childcare is available so they have a choice if they want to return to work. The government are totally bonkers and I would never support them.

I'm a Band 5 medical professional, single parent, with 1 in uni, 1 in college and 1 in junior school. I don't even know anymore. 😕

I looked at a calculator, I'll be about £1800 better off a year (although I'm not in the 45% bracket). To be honest, it'll probably just go on a holiday... Although I do have a cleaner, and have had some big renovations done recently using local builders, local suppliers etc. There's still more to do so maybe it'll go towards that.

I'd rather they sorted out the 62% marginal tax rate that kicks in far below the £150k mark, as that is ridiculous

I believe we will benefit by around 3k a year. To begin with it will go into savings as we have only been a high earning household for 18 months and have moved house in that time. We are currently building savings up from scratch. Once we have at least 3 months salary in savings we will start to improve our house employing local builders, plumbers, electricians and garden landscapers. No plan to eat out more etc as we already eat out more than we would like.

Everyone who is annoyed can opt to pay more tax. You can voluntarily pay more tax by doing a bank transfer to HMRC!

Will anyone be doing that? If not, your shock and horror on this thread means nothing

Trickle down does not work, it has been tried before.
In the same way "levelling up" does not work, because, if you think about it, gravity causes things to level at the lowest possible height, which is usually down rather than up.
The various social engineering experiments that have been tried over the past 25 years have not resulted in a more robust economy, better-qualified workforce, better infrastructure or better health and social care.
On the contrary, everything is over-stretched to the point of collapse.
I do not know what the answer is, but would suggest that ensuring the population of a country is as self-sufficient as possible in terms of food and energy might be the way to go.
On the trickle down front, I would love to employ a cleaner and a gardener, never mind getting people in to do work on the house. Can I find anyone?
Snowball's chance!

Genuine question
Is that a better option than donating more to charities supporting people who are struggling due to poverty?

Actually no, any “overpayment” is just kept on account and deducted from your next tax bill

I'm also one of the lucky few who will be better off, by approx £1K a year.

I'll be using it to throw more money into overpaying my mortgage to reduce the capital as much as I can before my fixed rate is up in 2 years and I get hit with huge interest rates. I would expect a lot of others will be doing the same.

Made yourself look a bit silly there didn't you carmenitapink

I would much rather give the money direct to charities supporting struggling families than to the government.

I think that they don't think they'll be I power much longer and are making decisions to ensure that they, and their rich mates, are better off.

The Tory has has always been about making the rich richer and the poor poorer. The do not give a about "the average family" but k ow that they have to hoodwink them into voting for them so that they can make life better for the rich.

I was absolutely disgusted when I heard the mini budget.

What puffylovett said. It's to provide a favourable environment to attract people to or to stay in the UK.

The budget will make no difference to our discretionary spending at all. We don't need a fuel cap, we don't have a mortgage, we won't eat out more. There are so many absurdities at present, it's bizarre. Not least free prescriptions because we are over 60 when people with asthma/diabetes don't get them.

I suppose we may just save the extra which might inadvertently help keep the banks liquid.

We are wealthy. The previous tax levels didn’t make us leave. The tax cuts won’t make us stay. We’re actively looking into which other countries we could move to because the infrastructure in the uk is just collapsing.

Having cash in the bank does not help me if I need an ambulance, want the police to investigate a burglary, etc etc.

The Tories have 2 yrs to convince enough voters that it will work, the changes will obviously help the high earners and will “trickle down” to the mid earners who will be more likely to vote Tory.
There isn’t enough time before the next election to help the low earners, what state the economy is going to be in by then I don’t know, because economic recovery in that short time is very hard to believe.

We have too. We are looking into it for the past year, and unless you are looking at Switzerland or Australia/NZ then things could be even worse elsewhere.
Good friends of ours moved to NY, and are trying to manage their way back now due to the obscene levels of drug addicts, homeless people, violence and robberies and so many social issues. Her teens are too scared to go out.
Ditto with a Milan relocation.
My friends are utterly miserable in Paris with the rats, rubbish and violent gangs of immigrants.
Almost everyone has now left HK.
I am not sure there are many ‘better’ options out there with excellent schooling, without significant downsides for us and/or the children.
We are looking at Bermuda and Sydney atm. Where are you considering?

@Kissingfrogs25 - yeah we’ve heard the same about New York, we know several people who’ve moved their families out. Same for LA and San Francisco sadly. But we can go to most places in America if we decide to, doesn’t need to be a major city for work. We have one autistic child so tbh finding the right school for the kids will be the biggest consideration.