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.

If you are a pensioner who can't heat their home, having a banked earn a 2 million quid bonus probably won't help. A well funded NHS might though.

The courses might be free, but nothing else is.

I dropped out of retraining because I couldn’t pay my bills and temping in admin could. I had invested to get to that point. I desperately wanted to keep studying. But I would be evicted if I didn’t leave the course- UC doesn’t top up at the same rate if you’re not in the jobseekers or working groups. I was getting £80 UC when studying, and £750 when in work, even though my income was the same, just different sources (bursaries vs employment).

They will pay £840,000 in tax and NI on that bonus. How is that not going to help?

@Hoppinggreen

Thank you. That's exactly it, why buy a new car and when our current one is reliable.

@UsernameHistories

I'm not sure where you got the implication that we can't. I started the sentence with 'we buy everything we want'

Just what @ImNotHungry said. I work in a lower end accounts role. I see adverts for retraining etc and I would love to do it. However, while the course may be free, living is not and I still have bills to pay. Plus if I were to leave my job then UC would only sanction me. That is why I, personally, am unable to retrain. In anything.

@onthefencesitter interesting post . Having just done 20 months in Denmark, it's a different mentality there too. High tax but high wages and high services, no NI, no council tax, good pensions and cheap childcare meaning it's common for both parents to work full time but 4pm finishes are common.. Tons of good quality social housing (if you are Danish) allocated in your 20's.

We have this arse about face in the UK- 'trickle down ' my arse- well off people just save more or go on holiday more - this rarely 'trickles down'

I do partly agree also with @Kissingfrogs25 though- that there is a lack of ambition amongst many to 'get on' or retrain but a resentment of those that do. I'm pro a reduction in higher rate tax, but I'm also pro much higher levels at which 40% should kick in - I also think there needs to be rent caps and incentives for pension funds to build rental property at under market rates.

Even if those top 3% happened to do this it won't compensate for the loss of 97% of the country having to cut back on spending or stop it completely.

The trickle down theory has been extensively tested, especially in the US. It doesn't work, and it only serves to further the gap between the very rich and the very poor. It's simply an excuse to lower the taxes and avoid investing in public welfare.

Middle income families might splurge a little more on luxuries such as coffee, restaurant meals, local produce, household services (paid cleaning and baby sitting, for example) and the like - but mostly the tax benefits are spend on long term investments designed to increase personal wealth by the very wealthy.

I will benefit from today's announcements and as a direct result will keep on my cleaner, dog walker and window cleaner. Yes, extra money into the pension pot and with a bit more disposable income we may have a few more coffees or dinners/takeaways. We were getting ready to let go of all of them post christmas because of the energy price increase and general expenses going up. make of that what you will.

Same. Any increase in our take home pay will go towards paying down the mortgage. Sooner that's gone the sooner we can think about winding down for semi retirement.

That said we've had small bits of work done on our house lately that have needed an electrician, plumber, joiner, plasterer, decorator, tree surgeon, gardener, as well has having our cleaners once a week and the window cleaner every 4. That sort of spending would be the stuff we cut back on had energy bills gone up as they we're supposed to.

I’m so sorry you had to drop out! People trot out that Cambridge and Oxford colleges are super rich and will help any of their students struggling but I guess that’s not the case 😞

We’re in that higher tax band, and we’re cutting back and shoring up - there’ll be no ‘trickle down’ from us. To be honest, I’m appalled. Public services are on their knees after a decade of underinvestment - there’s no point in having a large bank balance if the infrastructure is crumbling around you.

Same views as pretty much everyone on the thread. Ridiculous that my taxes are coming down instead of going up. I won’t change my spending habits, already go out for meals/ coffee/ buy way too much stuff. If anything I’ll put more in my pension or mortgage.

playing Devil’s advocate - isn’t the question better aimed at people from abroad who might consider relocating or opening an office in U.K. due to the income tax and bonus cap changes?

So, while the govt might gain less from current 45% rate payers, they are hoping more who would be in this tax band come to live in U.K.??? Thus creating jobs for their cleaners, gardeners, kids teachers.

it is a huge risk though - and don’t really think it will pay off… I mean, maybe they planned for this news to cause the pound to slide so U.K. exports can get boosted?!?!

The only chink of light from this absolutely immoral piece of fiscal bullshit is that they must know they're going to lose the next election. They wouldn't be throwing everything at helping their mates while they can like this if they didn't. That's only to be celebrated, but the country might have no economy left by the time they actually call the next election.

Amazing how quickly Johnson and his Cabinet of Cunts have been made to look like a political colossus and band of merry geniuses.

In all honesty, I’m disgusted. I’m a SAHM with adopted children, they needed me at home for the first few years. Then covid happened, I’m currently at college retraining into a career that fits in with my kids. my new career won’t earn nearly as much as I used to because I have to accept compromises for my kids needs…but I’m 43, many people don’t even have the opportunity to retrain. My husband paid over £60k in income tax last year - and that’s without NI contributions or council tax. I am well aware we are privileged, 10 years ago I didn’t have a penny to my name, I lived under threat of bailiffs and had £5 a week to spend on food.

I don’t think my husband should pay anymore tax than what he did last year, but I don’t think he should pay any less either. We have just spent a lot on home improvements. Any cash we get now will go into savings, we won’t spend anymore into the local economy, because we already spend what we need to. Today’s announcement was bonkers, we will up our contribution to relevant charities.

Yep, it is very transparent.

I’m a high earner, husband is a super high earner. We will save £26.5k a year. I’m utterly horrified. Was having a chat with colleagues at lunch and we all agreed that could have increased the high earner + national insurance contributions by 3% whilst scrapping it for lower earners and none of us would notice. It’s just bonkers. What will we do with the money? I suspect all the services we use (dog sitter and gardener) will go up in price and we’ll increase our nanny’s pay. Beyond that it will go into savings accounts for the children. I’m just very sad.

There are no additional nights of the week to go to the pub or order a takeaway No more rooms to clean, we have all the cars we need. Those of us who are already well off literally cannot spend any more in a way that supposedly benefits those
in the wider economy. We will save, buy investment property, or give to our children. Trickle down just does not happen

Live poll in the Times - 'was Kwarteng right to scrap the top rate of 45% tax' .....71% of Times readers have voted No

Here

Honestly I don’t think it will make any difference at all to our spending, the tax cut will just end up in the pot so to speak. We will likely help out more where we can but definitely not as a result of the tax break, if people want to ‘trickle down’ their wealth they will do it regardless of the tax. Just seems like it will be bonus money to us really, definitely don’t understand the logic behind it (assuming there is any). I really don’t feel that anybody who’s paying 45% tax will need this extra in their pay packet in the slightest and would prefer not to see it every month to be honest.

It’s complicated. They do help, where they can, where they have policies to. However, the policies are not made by people who have been in these exceptional circumstances so the support doesn’t actually meet the need.

Not to mention the wealthier colleges have more applicants & are less likely to take a punt on an outlying candidate. So the poorer colleges tend to be the ones to take a chance and have less money to give in grants.

I could have applied for a hardship fund, but it has to be for a concrete unexpected cost- ‘everything is now very expensive and I don’t know when I will stop needing help’ does not count.

Well done you. It's actually quite heart warming to see a few high earners on this thread thinking how unfair and horrible this budget is to our whole country men and women.
If lots of you tell Truss how you feel, she might do a little U-Turn. I know it's probably wishful thinking but it's worth trying.
I know we're really going to struggle on my end, and we're not even the worse off.
I always think about the children in those situations. Adults will suffer from these decisions, but the children will ten fold. How can we be happy living in such an unfair and cruel society which doesn't care for its children?

It’s a really difficult one. We will be around 11k a year better off!!! Which is just so ridiculous. We don’t need it! And I don’t for a second believe that it won’t be reversed in short order so it’s not like you can reliably build it in to your expenditure.
Kind of don’t think it will happen tbh, I can’t see her surviving to April.
If it does we will probably go on another weekend away a year, probably increase charity contributions and put more into the kids savings.