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.

So what is your point in relation to this thread?

@tenbob you told the op you didn’t believe her “It seems… implausible”, you said. I’m telling you I do believe her. I’ve met quite a few HNW individuals who are very maxed out.

I’ve made all my points on the subject as a whole upthread - my household has a relatively high income. Don’t believe in the cuts. Think they are wrong. Don’t believe in trickledown. Very few HNW people will spend these tax savings in a way that will benefit the economy.

You might know people who are maxed out

I will bet my house you don’t know a single person or family who are are
about to commit to spending on a new cleaner, new car and a ‘buy local’ ethos all entirely financed by a tax rebate and all totally off the table until this budget was announced

There is no one who has such ‘maxed out’ finances at that income level who would suddenly divert that spending to the exact mythical trickle down examples and nothing more or less

Its absolute bollocks

@Tenbob

‘And we are supposed to believe that their are enough families up and down the country on £250k incomes who DONT have cleaners (but really want cleaners) for the government to have written an entire budget designed to give them a little bit of extra cash which will instantly make them go out and employ someone on £15/hr to clean their bathrooms’

I don’t know if there are very many of us, but I am in this situation. Due to a combination of unexpected unwanted circs I’ve found myself with a high wage (for now) but massive outgoings and very little spare cash. I have been without a cleaner because I didn’t want to commit to one and then have to lay her off. Round here cleaners are £22+ an hour and they like to do 3-4 hours a visit min, so it adds up. The tax break was very unexpected but it has made me think, maybe I could/should do it. Similarly I thought I couldn’t afford a tutor for DS who is struggling with maths because it’s £40-50 an hour - now I am wondering if I could.

The only thing is, I am not sure how much good it will really do for the economy because round here, nobody is short of work - it’s hard to find odd job men or tutors at £50 an hour or cleaners at £22 or £23 an hour, even if you have the money to pay them. All it does is drive up the price of everything.

On the other hand - and I haven’t seen this written about much - I know a lot of people who were thinking about going part time because the marginal benefit of working full time wasn’t worth the hassle, after tax, NI and commuting etc. I suspect a few people will be deferring this now, at least as long as this tax break lasts. That is a good thing because it means more productive capacity and more tax overall for the Treasury.

I’ll visit my Dad overseas more.and stress less about money but British Gas (and electric) sent me an estimated annual bill of £10k based on 1 October rates so I think any tax savings will be negligible against overall rises. So we possibly net out ?

Horrific budget. I couldn’t bring myself to vote for Boris last time around despite Corbyn’s policies. I’d rather have paid significantly more tax than voted for Boris. . Such an excuse for a man, not a standard in the world he could dignify.

Rishi Sunak at least appeared to understand that the pandemic years would have to be paid for. I don’t understand the Liz Truss vote but stupid is as stupid does!

To answer your question. I’ll spend more money locally but to echo previous posters I am aghast at this budget. It will cost all of us and our children so much more in the long run. It’s nice for everyone to have more money in their back pocket but when real lower incomes have barely risen in 2 decades this is farcical.

Haven’t RTFT. I’m pleased about the news but it won’t materially affect our lives too much. But after years of a Conservative government seeming a bit socialist, I’m delighted they’re giving those that pay the most a break.

Apt username.

I’m a higher earner and I for one think the cut was a good move. We didn’t have a cleaner before but now we probably will, and will very likely spend more on activities for the children, clothes general shopping, going out, etc. So trickle-down economics right there.

More importantly, it’s going to attract more businesses and high earners to the UK. Anyone who knows anything about economics knows that there is an optimal top income tax rate, above which the tax-take actually goes DOWN (just like it went UP when the rate dropped from 50% to 45%). That optimal top tax rate is about 38%.

I am therefore in full support of the approach Truss is taking.

I am in this position. I am a higher rate tax payer but once mortgage, bills and school fees are paid, there’s not so much money left swilling around that we wouldn’t think twice before paying £90 per week on a cleaner.

Now I will be saving a significant amount in tax I very likely will get a cleaner.

Dh is in the top 1% of earners. Even though we don’t have to worry about price increases we won’t pay over the odds for stuff. Less restaurant visits, no ££££ holiday at Christmas. We’ll over pay our huge mortgage.
no trickle down here, he would absolutely pay more tax. Give it to those that need it.

Unless the pound recovers for most people on this thread the tax cut will be soaked up by higher prices . Fuel in particular is traded in dollars so gas now become one third more expensive overnight .

Plus a lot of people oh high incomes have large mortgages so will be very exposed to interest rate rises

😂

This is just such patent bollocks. No one with any actual understanding of economics believes this. It’s purely the realm of GCSE students into to supply and demand

If this budget this result in increased investment, it’s only because the pound has been obliterated

Take a quick glance at the FT or any specialist newsletter or paper for the city and investing and they are all full of investment experts saying it’s an absolute disaster

FT article- “Kwarteng has shaken investor confidence in the UK. It’s hard to overstate how poorly Kwarteng’s so-caller “fiscal event” has been received by financial markets.

Citywire article - “‘Trussmoronics’ reaction to the mini-budget. Wealth managers were sceptical of the mini-budget, with financial planners and professional investors unsure how the bill will be footed in the longer term”

But please do tell me how you know more about economics than everyone on every trading desk and investment fund, who are almost universally calling this a total clusterfuck

School fees and huge mortgages aren't compulsory though- they are a choice - although I admit it's hard in the south east and London to get away without huge mortgages or huge rent for anything suitable for a family these days

@Crikeyalmighty they are definitely a choice. People are aspirational and it’s common to spend right up to their salary. There is then no give.

Letting rich people keep more of their money in the hope they'll then give more of it to poorer people is as ludicrous as it sounds. It's why no-one who advocates trickle-down likes it being called that, because the name sums it up.

@sparechange I suspect that the poster is the exact kind of person that Truss was hoping to keep happy, the unquestioning "I'm alright jack" type that will keep voting for this crap as the country collapses around them.
Not realising that wider market confidence, infrastructure and investment in society are needed in the long term to maintain their comfortable little bubble.

A bit more of the article i mentioned in my earlier post for the benefit of @Skidaramink and other drunk-the-kool-aid posters who don’t know the first thing about economics, beyond the 3 line supply-and-demand summary they learned from the Daily Mail…

‘Trussmoronics’
Philip Dragoumis, Chartered wealth manager at Thera Wealth Management

This Budget is fiscally reckless. It’s Trussmoronics not Trussonomics. There has been no independent assessment or costing from the Office of Budget Responsibility.

If you cut taxes while at the same time spending billions on energy subsidies, and just put the bill onto government borrowing, people will not spend their extra money because they know that the bill is coming further down the line.

Extra government borrowing and higher bond yields crowd out growth. Markets will lose confidence in UK assets, bond yields will continue to rise and Sterling will continue to fall. Also, how will less stamp duty help first-time buyers when mortgage affordability is decreasing as interest rates go up?

Wow, Kwarteng has done a U turn!

Oh no all the people on 200k a year on this thread will be sacking their cleaners as promised 😔

Lol yeah all those cleaners, gardeners and butlers will be gutted...

Britannia Unhinged.