To think the 'Net Contributors' argument is just wrong?

[Yetmorebeanstocount]

Just been reading about "Net Contributors" of tax and how it supposedly is a bad thing that we don't have enough in this country.
i.e. - that most people receive more, in cash benefits, social care, NHS, police, education, roads, bin collections etc. etc. than they will ever pay for via their taxes, so they are 'net recipients' of the system rather than 'net contributors'.

My reaction is - well yes of course. That is how it should be!

Take a very-over-simplified example to illustrate the maths:

Say there are 100 people who earn £1k, and one person who earns £200k. Say the 100 pay no taxes, and the one person pays tax at 50% of £100k.

That tax gets re-distributed to the 100 people in the form of services and benefits and pensions, so that the 100 now have the equivalent of £2k each and the one person still has £100k.
What is supposed to be wrong with this? It is just basic re-distribution of income, which is something that every civilised society should do.

Of course in real life people earn all sorts of amounts and receive different things, so it is not so simple, but the principle is the same - a few at the top are 'net contributors' and the rest are 'net recipients'.

And of course, those at the top still get something back as they drive on roads and have their bins collected, and have the benefit of living in a civilised society which is policed and (mostly) does not have people dying on the streets.

I agree ramifications of any tax need to be considered

Here's one of the more prominent recent proposals for a land tax. In fact a land value tax. (Though I don't think this current version of the Labour Party is proposing it, though who can tell. I can't keep up.)

https://labour.org.uk/wp-content/uploads/2019/06/1208119-Land-for-the-Many.pdf

I'm already out, having read the parts about compulsory land purchase and right to roam - Labour can't help themselves but go after the benefits & assets from other people's hard work.

While I agree existing ancient footpaths should be kept, do they not remember what happened during covid? Whole areas overrun and polluted by idiots on a day out. Also, I'm reluctant to give any groups like just stop oil or XR any wiggle room to take areas over for protest and disrupt peoples wellbeing.

It was mad during Covid wasn't it? Our mountain rescue was so busy.

You’re not. You’ve been told this multiple times as can be seen by your posting history and you either don’t listen or don’t understand marginal tax rates. I have absolutely no intention of spending my Saturday talking to a brick wall.

@falanka That report seems to have a publication date of June 2018, so not the Starmer version of Labour.

@Blossomtoes you're ok to keep talking. You have a place here. These angry people don't have any rights over you.

And the RNLI! It was bonkers!

Too many Labour policies are well-meaning but lack an understanding about how the general public behave, and how that behaviour has deteriorated in the last couple of decades. Shitting in the street, teens looting shops, even inner-city squatting has changed - its not students or nice hippy neighbours any more, it's weed farms & crack dens with open defecation that literally destroys the interior of the building.

Which takes us back to the net contributor argument - I know so many folks who are traditional working class (as am I) but defected to the Tories some time ago. They feel they've had to work so hard for the little they have, taxed to their eyeballs, yet they still have to live next to people who let the taxpayer pay for everything & don't look after what they're given. They're impacted by antisocial behaviour every night of the week, but told if they want more police they should pay even more tax.

You're being incredibly rude.

No I am not. The poster has had it explained to her literally hundreds of times. Every, single last thread. They always ask the same posters. What their intention is - I have no idea.

My intention is that I genuinely want to know. I’m not interested in a slanging match or exchange of insults. These threads always seem to go that way and it’s really tedious.

Okay, @BlossomToes, I will bite. There are pinch points in the tax code thresholds which mean that modest compared to inflation 4-5% pay rises (going from £49k to £51k is the real killer for most) as you transfer from standard to higher rate tax means the loss of benefits, like child benefit. Two adults earning £49k each don't lose it, but one on £53k does.

Somewhere around the £100k mark you lose all £12,500 personal allowance, so you hand back everything in your increase to HMRC, because your personal allowance is clawed back.

In technical terms, it's part of the mechanicsm called fiscal drag, and it is being applied very hard to all levels of income, until 2028.

In 2024-25, basic rate pensioners will be at risk of being taxed on the state pension if they have enough savings to generate £1000 in interest in a year.

The edit above was to avoid repetition.

And it will only cost the pensioners who benefit from interest on their savings 30% of what they would have received, above £1000... so that's fine, because they have savings... so they can pay for their own care homes.

Sorry, not sorry, Theresa May lost an election on the back of her very fair minded suggestion that nobody paid for their care, but the cost of it was clawed back, where it was available, from the deceased's estate. That went down well.

Thank you @Papyrophile. Isn’t the personal allowance withdrawal incremental? Ie you lose £1 of it for every extra £2 you earn? None of that adds up to 100% tax.

The child benefit cut off is bonkers and grossly unfair to single parents.

You also lose childcare funding at 100k. You will lose about 10k per child if you earn £1 over £100k. It takes until £150k to have the same money as you did at £99k. Over 100% loss. If you don’t have children in childcare it’s about 70% tax with the loss of personal allowance. This poster knows this and has been told hundred of times.

So we’re talking about the relatively small number of people who earn over £100k and have children under five losing a benefit. Is that right? And because of that it’s a time limited problem which ceases to exist when those people no longer have children under school age. Personal allowance is lost entirely at £125k.

Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above.

None of this equates to 100% taxation. I’m very grateful to have that cleared up once and for all. Hopefully some posters will stop spreading misinformation.

It is 100% marginal tax. I know it, everyone knows it. I have no intention of acting out Groundhog Day with you. It’s boring. You’ve cleared nothing up. Just proven you don’t understand what you link to. As ever. Have a wonderful Sunday hating everyone on 100k+. I’ll always remember you for posting on that thread where a single parent was suicidal with the amount of money she was losing. I’ll even let you tag me and I won’t engage so you can have the last word. 👍

I think it's common to talk about those kinds of cliff edges as effective marginal tax rates. Certainly the free school meals cliff edge is commonly called an effective marginal tax rate.

https://committees.parliament.uk/oralevidence/13064/pdf/

Oh dear.

There's no way to progress past this personal fight these posters are having, so I will leave them to it.

Perhaps next time you three could make your own thread and just fight with each other on that. Bye!

I’d prefer a “relatively small number “ of doctors and dentists to be incentivised to work extra shifts or extra days to clear backlogs and maybe provide a few people with nhs dentistry. Those stupidly high marginal tax/loss of benefit thresholds actively discourage such people from working more and actively encourage them to reduce their working hours!

Don’t be silly. The most important thing is ideological purity, not practical results.

If it was just doctors and dentists that would be a valid point. It’s not though, is it? They’re an even smaller component of that already relatively small number. And there are other ways of incentivising them than via the tax system. As it is we actively encourage them to emigrate by writing off their student loans if they leave the country. We could reverse that and only write off their loans if they stay here and work in the NHS. Win/win.

@BIossomtoes I’m lost for words. You seem bitter, incapable of comprehension of something not directly effecting yourself, and unable to see the consequences of these taxes that have been explained.

student loans are not written off when you emigrate - you’re still supposed to pay them back- whether individuals can find a way out of it is another issue.

anyway, good look finding your ideological paradise to move to whilst the rest of us continue on with reality 🤦🏻‍♀️

The cliff edge points are correct- of course it is to an extent gradual so I suppose sloping edge as it were..... and the cliff edge for those in benefits going into work was very hard for Iain Duncan Smith who wanted to make work pay to handle too.

Those of us who earn quite a bit pay a vast amount of tax, so much people are working less which is one reason we have low productivity and the less well off therefore suffer.

If tax were less tax receipts might be higher some studies show.

Despite being a high earner unless the last few years I got child benefit because the system is not some pay in and some take out; it is supposed to be that we are all in it together, paying in and taking out. By removing universal child benefit we damage our welfar state system. By removing all single person allowance and all childcare help other than 15 free hours in term time for 3 or 4 year olds we again divide us up making those who pay most in feel even more resentful of a welfare state which is supposed to be there for us all.

If we don't keep the goose that lays the golden egg - high earners, the hand the feeds, a bit happier the goose will stop laying and everyone will suffer. The goose will go on strike or do less work.