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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To wonder where all the money is going to come from to increase wages?

285 replies

girlfriend44 · 01/02/2023 15:05

Genuine question. Re people who are striking for more money.

Where do they think the extra money is going to come from to increase all their wages and how will this keep inflation down?
Can the government really afford to pay everyone more?

OP posts:
Thebestwaytoscareatory · 01/02/2023 20:55

LiquoriceAllsort2 · 01/02/2023 20:21

Person B who is getting paid this way would probably own the company so would have paid corporation tax on the 40000 figure so that would take the outcome much closer

People don't pay corporation tax, corporations/businesses do. Sure, some of those using the above loophole may be company owners responsible for paying tax on the profit of their company, but even then they're still paying less than someone on PAYE. Equally, some who use the loophole will be the top 1%-10% whose only income is from investments (and you can be 100% sure those types will make use of every other trick in the book to avoid paying tax, while making use of all the benefits of a developed society).

Let's not pretend that there's not lots of other little loopholes available to a business owner that allows them to reduce their tax liabilities that the average Joe doesn't get access too.

Also, what does corporation tax max out at? 25%. What does income tax top out at? 45%. As with all things tory, the richer you are the more you benefit from the system.

MasterBeth · 01/02/2023 21:01

LiquoriceAllsort2 · 01/02/2023 20:44

Person B owns a ltd company, they take a small wage and decides to take the rest in dividends.

The dividends are drawn from post tax profits so have had corporation tax off.

Overall how much tax would person B have paid on the 50000 he had in his Ltd company.

I know that since the dividend tax was put at 7.5% the perk of being paid via dividends is minimal and certainly not as the example shown

Yes, I understand how it works.

You are not being charged corporation tax, the business is. I might as well say that my salary would be higher if my employer didn’t have to pay corporation tax.

JemimaTiggywinkles · 01/02/2023 21:05

Person B who is getting paid this way would probably own the company so would have paid corporation tax on the 40000 figure so that would take the outcome much closer

The company person A works for will also have paid corporation tax.

Springisspringingagain · 01/02/2023 21:08

It is always argued it seems by the Tories that public sector workers should put up with low pay that doesn’t keep pace with inflation and gets devalued for the sake if the economy. Why is it that these workers have to sacrifice basic living standards to keep the economy going rather than the wealthy? Why is it that MPs always award themselves pay rises and mock those who can’t manage on way less?

I actually feel heartened that union membership is massively rising and so many us of the silent majority are getting pretty angry with the massive unjust gap between the haves and have nots in our society. Even if you are lucky enough to be comfortably off, it is miserable to be part of such an uncaring selfish society. We have the ability as one if the wealthier nations to create a society that includes fairness and a decent level of health, education and care for all.

EffortlessDesmond · 01/02/2023 21:10

@Thebestwaytoscareatory but most of the economy is SMEs, which employ about 60% of the workforce, and most are similar to my DHs, and have NOTHING in common with Amazon or Google. We are an 8 person engineering business in SW UK. We don't deal with retail customers, at all. We work in power generation, marine and industrial heat transfer. We don't have a marketing department, there's one admin person who does bills, purchasing and payroll, and six engineers. That's the entire business. We started it, we run it, we pay well, and if business is quiet for a bit (which happens) WE stop getting paid. We take all the risk of investment.

What do you do ToryScarer? How many people are on your payroll?

LiquoriceAllsort2 · 01/02/2023 21:10

Thebestwaytoscareatory · 01/02/2023 20:55

People don't pay corporation tax, corporations/businesses do. Sure, some of those using the above loophole may be company owners responsible for paying tax on the profit of their company, but even then they're still paying less than someone on PAYE. Equally, some who use the loophole will be the top 1%-10% whose only income is from investments (and you can be 100% sure those types will make use of every other trick in the book to avoid paying tax, while making use of all the benefits of a developed society).

Let's not pretend that there's not lots of other little loopholes available to a business owner that allows them to reduce their tax liabilities that the average Joe doesn't get access too.

Also, what does corporation tax max out at? 25%. What does income tax top out at? 45%. As with all things tory, the richer you are the more you benefit from the system.

Don't worry I agree with most of the things you put forward that the rich can get away with. There is no reason why the tax system is so complicated. What's up with one rate that is charged to everyone above the tax free allowance.

Someone mentioned above about builders doing cash in hand, I would make it tax evasion to also offer cash with the sole purpose of getting the job cheaper knowing that the tradesman is doing evasion.

EffortlessDesmond · 01/02/2023 21:14

@Thebestwaytoscareatory I look forward to your response here, because I am calling you out for all the rubbish you post about business and enterprise greed. How many people do you have on YOUR payroll? When you answer that I might take your opinion seriously.

Eleganz · 01/02/2023 21:27

Stackss · 01/02/2023 20:47

There is no bottomless pit of money. Inflation would also go through the roof of the unions got their way. The government have offered a 5% increase, with more for the lowest paid, which was affordable and reasonable.

I would personally have offered 7.5% to those who worked through the pandemic like nurses and firefighters, with a 4% offer for those who were at home like teachers and civil servants.

Labour have been very clear that they could not fund the pay rises demanded. Inflation is on the way down so I would now be saying to the unions, r “you’ve had your chance, pay freeze it is.”

And you would have a general strike.

You do realise that civil servants have been offered just 2%? That's after a pay freeze the year before and 1% or pay freezes for most of the decade before that.

Turnover in many of the public sector professions is horrendous, in the civil service it is at over 13% of the total workforce. The government spent 3 years and over £100,000 trying to recruit a chief of digital because the pay was so far below the market rate that potential candidates we literally laughing at their search consultancy and that is for a very senior role.

Teachers and nurses have been offered more but their pay has decline in real terms very badly too. My view is that they get a bit more because they have pay review bodies and are more in the public eye. Civil and public servants though, they can just go fuck themselves.

As for the pandemic, I am absolutely fucking furious with liars like you claiming that public sector workers were sat at home doing fuck all. It was private sector workers sat at home on 80% tax funded pay twiddling their thumbs.

Whammyyammy · 01/02/2023 21:31

Increase in public sector wages comes from:

  1. Increase in taxes
And/or
  1. Decrease in other public services

Not difficult

EffortlessDesmond · 01/02/2023 21:44

Still waiting for your response @Thebestwaytoscareatory . How many families are depending on your decision-making to keep a roof over their heads and food on the table? The 8 families depending on our business to keep paying their wages are not at foodbanks, or claiming UC. Because contrary to your malevolent spin, we do take our responsibilities as employers very seriously. Yes, we make a profit. And all our taxes are paid. You could go through it with a forensic accountant and there's nothing to find. Your anti-commerce attitude does a lot of damage.

EffortlessDesmond · 01/02/2023 22:06

40 minutes and no reply from @Thebestwaytoscareatory .

EffortlessDesmond · 01/02/2023 22:07

Sorry 20 minutes...

PartyHelp · 01/02/2023 22:16

popopop · 01/02/2023 19:16

@PartyHelp have you ever worked in a school?

Why are you only allowed comment if you work in a school?
No I haven't worked in a school but I know how a school works.

PartyHelp · 01/02/2023 22:23

JassyRadlett · 01/02/2023 19:20

Nothing about school funding etc.

I'm not in the education system but even I know that the 'fully funded' bit of a fully funded pay rise is all about school funding.

A pay rise that's not fully funded means schools have to fund it from existing budgets. Which means cuts to other things.

On top of existing cuts and pay erosion for 2010, where do you think the money will come from for pay rises if it's not cutting non-teaching staff and other things that schools need to pay for?

But that's not what I said is it.
I said it is only about payrises for the teachers and not other funding for schools!
Clearly any agreed pay rise will increase funding to a school but only to be paid directly to teachers so will have no impact on other funding for schools.
I'm sick of reading on here and elsewhere about all these saintly teachers who are really just striking to benefit our kids and how we should we grateful (even though they will likely miss several days of school because of the strikes).
They are striking to increase their pay, nothing else. As I already said good luck to them but I don't want to hear how they are doing us all a favour.

PartyHelp · 01/02/2023 22:26

Also, what does corporation tax max out at? 25%. What does income tax top out at? 45%. As with all things tory, the richer you are the more you benefit from the system

Yep they should definitely increase the CT rate and then we can all watch the economy for completely!

popopop · 01/02/2023 22:38

@PartyHelp did I say that?

I was intrigued by your notion that schools are well resourced. Absolutely not the case.

Also, if you read up on how the previous pay rise has been funded, you will soon learn that it comes directly from the school budget, therefore impacting drastically on other areas within the school. The gov have not funded these pay rises hence the ' fully funded' demand.

Thebestwaytoscareatory · 01/02/2023 22:42

Sorry @EffortlessDesmond I do do other things with my time than sit on here waiting for randoms to reply.

I'm not actually sure what your point is to be honest? That because you employ a few people you're entitled to something extra?

You're actually a very good example of why we find ourselves in this situation. You're a small fish (not meaning that in a derogatory way), but you'll fight tooth and nail to protect the big fish because you mistakenly think that I, as a monstrous socialist, want to take more from you to give to the "feckless".

I don't by the way, I want the gap to between top and bottom to close, I want the 1% that own 25% of all wealth to, well not own 25% of all wealth. There can still be rich and poor, just in my ideal world the rich won't be obscenely rich and the poor will be able to afford a nice life with warm homes, full bellys and comfortable retirements regardless of career choice.
The fact you get so defensive about things suggests to me you see alot of yourself in what I post about and don't like being confronted by it.

And to answer your question I'm employed in a sustainability consultancy role now, so no-one directly depends on me. However, we've saved our clients millions in O&M expenses and work with them to implement measures, policies, strategies, etc, that aim to improve their employee's satisfaction, retention, development, health and wellbeing as part of our core services. Prior to that I ran our family business (nessessity rather than desire), which employed 5 others. That's now being run by one of those 5 and they're all still chugging along nicely AFAIK.

Thebestwaytoscareatory · 01/02/2023 22:49

PartyHelp · 01/02/2023 22:26

Also, what does corporation tax max out at? 25%. What does income tax top out at? 45%. As with all things tory, the richer you are the more you benefit from the system

Yep they should definitely increase the CT rate and then we can all watch the economy for completely!

Please don't part quote me in an attempt to put words in my mouth.

That bit you've quoted was from a longer post and was in response to someone who said that because business pay corporation tax, business owners pay much the same as someone on PAYE. At no point did I suggest raising corporation tax.

Thebestwaytoscareatory · 01/02/2023 22:50

Oh and @EffortlessDesmond as I now know I've to keep you posted of my whereabouts, I'm going away to do something else for a bit and might not be back on tonight.

PartyHelp · 01/02/2023 22:53

popopop · 01/02/2023 22:38

@PartyHelp did I say that?

I was intrigued by your notion that schools are well resourced. Absolutely not the case.

Also, if you read up on how the previous pay rise has been funded, you will soon learn that it comes directly from the school budget, therefore impacting drastically on other areas within the school. The gov have not funded these pay rises hence the ' fully funded' demand.

But my point is still the same - they are only looking for funded payrises not funding for anything else.

In terms of the education provided and what people have to pay directly for (not through tax) the UK has a far better system to ireland for example where the vast majority of schools expect a monthly donation so much do there is a voluntary and non-voluntary portion and that has been the case for many years. All books are paid for by parents.
So again I think parents in this country don't know how lucky they are.

PartyHelp · 01/02/2023 22:57

@Thebestwaytoscareatory I'll quote what I like thanks.
CT is not comparable to IT because the business owner does not just have access to the profits unless they take it out in the form of a salary or dividends, both of which are taxable. So comparing the rate of CT with IT as if to say business owners pay tax at a lower rate is nonsensical.

007DoubleOSeven · 01/02/2023 23:00

@girlfriend44

Not read full thread but You might find this interesting

Thebestwaytoscareatory · 01/02/2023 23:42

PartyHelp · 01/02/2023 22:57

@Thebestwaytoscareatory I'll quote what I like thanks.
CT is not comparable to IT because the business owner does not just have access to the profits unless they take it out in the form of a salary or dividends, both of which are taxable. So comparing the rate of CT with IT as if to say business owners pay tax at a lower rate is nonsensical.

I wasn't comparing the two though, I didnt even mention CT in my first post, another poster brought that into it because, apparently, we now have to include the tax our employers pay in CT when discussing IT loopholes, or is that only allowed if you're a business owner (which I also didn't mention in that first post btw)?

The fact is there are loopholes that are exploited by certain sections of society that means they can avoid paying tax in a way not open to the average person. Apparently that's a very touchy subject for some on here.

And I obviously can't stop you misquoting me but it's disingenuous, weakens your own arguements and by doing so it exposes you as a manipulative person.

JassyRadlett · 01/02/2023 23:55

PartyHelp · 01/02/2023 22:23

But that's not what I said is it.
I said it is only about payrises for the teachers and not other funding for schools!
Clearly any agreed pay rise will increase funding to a school but only to be paid directly to teachers so will have no impact on other funding for schools.
I'm sick of reading on here and elsewhere about all these saintly teachers who are really just striking to benefit our kids and how we should we grateful (even though they will likely miss several days of school because of the strikes).
They are striking to increase their pay, nothing else. As I already said good luck to them but I don't want to hear how they are doing us all a favour.

But that's exactly what they're striking over.

You say that 'clearly' any pay rise will increase funding to a school. Which is, unfortunately, not the case.

The current pay settlement from the government isn't fully funded. So the increase to teachers has to come out of existing budgets.

So by calling for a fully funded increase, teachers are very much looking at overall school budgets, not just their own pay. Because the current offer would see teacher pay increase at the cost of the rest of the school budget.

So if they achieve a fully funded pay rise, they would restore to school budgets a de facto school funding cut that is implicit in the current pay offer.

LiquoriceAllsort2 · 02/02/2023 05:09

Thebestwaytoscareatory · 01/02/2023 23:42

I wasn't comparing the two though, I didnt even mention CT in my first post, another poster brought that into it because, apparently, we now have to include the tax our employers pay in CT when discussing IT loopholes, or is that only allowed if you're a business owner (which I also didn't mention in that first post btw)?

The fact is there are loopholes that are exploited by certain sections of society that means they can avoid paying tax in a way not open to the average person. Apparently that's a very touchy subject for some on here.

And I obviously can't stop you misquoting me but it's disingenuous, weakens your own arguements and by doing so it exposes you as a manipulative person.

I brought up the corporation tax as you quoted some figures that I feel were disingenuous about the taxes paid.

Ltd companies are available to all sections of society. You could set one up in half an hour.

It's like the evil gas and electric shareholders debate that is used to suggest some people are raking it in from the poor, but what is always missed out that most workers with a company pension are one of the evil shareholders.

Most of the people vilified for evading taxes are just normal business owners going about their daily business.

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