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Original poster

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

380 replies

Yetmorebeanstocount · 04/12/2023 22:22

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.

OP posts:
Thread gallery
11
mantyzer · 05/12/2023 00:13

When you look at household income you realise the average person is much poorer than you would think from MN.

Statementdress · 05/12/2023 00:29

AndWordsWhen · 05/12/2023 00:08

Does anybody know the salary level where somebody becomes a net contributor?

It’s 41k

but as a PP pointed out the mean ( most common) household income is £32k

Most people are not net contributors.

but that doesn’t mean the high earners are subsidising the poorer ones- a lots of taxes come from big business.

mantyzer · 05/12/2023 00:32

It is an average though. If you are single and use very few public services it will be at a much lower level of income.

roarrfeckingroar · 05/12/2023 00:49

@Yetmorebeanstocount well sure, but a single parent with a salary of £40k in the south east, with childcare bills, is going to struggle in a way a single person with a salary of £26k in the north east will not.

In London £40k isn't much. I earn £70k - so a higher rate tax payer (not highest) which sounds great but that's about £4000 after tax and pension contributions. My childcare bill is £2200 just so I can work. My mortgage is £800, utilities another £300, council tax £150... I'm left with a few hundred per month for food, my car, life. It's all relative. But if I were to quit my job I would probably have more each month through UC and exemptions from CT etc. Long term it would be shit and I love my career, so I won't, but financially I'm not sure I benefit right now and I'm a net contributor supporting others who can't / don't work.

Cattenberg · 05/12/2023 02:12

I’m trying to imagine a present day General Strike. Let’s say that all the “net takers” stopped working for a few days.

People with young children or elderly relatives would have to care for them themselves 24/7. There would be no care workers or nursery nurses to help. Needless to say, many people wouldn’t be able to work during the strike.

Supermarkets would have to close. Owners of small family-owned stores might be able to open, but they would soon run out of perishable goods.

Crops would rot in the fields.

You could order items online, but you wouldn’t receive them.

Rubbish would start to pile up in the streets, causing a health hazard. Public toilets would soon be in a grim state.

Thousands of medical appointments would have to be cancelled.

Primary schools might have to close. Those that stayed open would have to forget their lesson plans and focus on basic childcare and crowd control.

If you had an urgent issue and needed to speak to a Customer Services department, then tough luck - no one would take your call.

jesterdourt · 05/12/2023 06:18

The 2022 median household UK income was £32,300. Single people earning £40k barely count as 'the middle'.

I realise this is skewed by housing - you have more chance of earning £40k in a higher-housing-cost area. But if you are a couple on £100k and think of yourselves as 'the middle' you are sadly mistaken.

Its massively skewed by housing & age that’s the problem.

mateysmum · 05/12/2023 07:01

Yetmorebeanstocount · 04/12/2023 23:29

But if you tax dividends at the same rate as income, why would anybody invest in shares, and provide investment to business? Why take the risk?

Because you would still likely get more than stashing it in a bank savings account.

There is an argument that if one small cottage is sitting on an acre, that is not good use of land, and is a luxury for which the occupant should pay. If they can't afford it, they can move out and several homes can be built on the land instead. Better to do that than develop housing on green fields.

Show quote history

But not all land is suitable or desirable for building on. Housing is not the only good use of land. "They can move out" - if the argument comes to that then that is effectively theft through taxation and what if you build those new houses? Each of those won't pay any or much land tax in the future so it is a once and done tax. I'm guessing you don't live in a rural area.

Also you frequently do not earn more from shares than interest from a savings account. I have some shares that are currently 40% down on what I paid. History is full of businesses that failed, leaving their shareholders with nothing.

110APiccadilly · 05/12/2023 07:07

The thing is, you can only get so much out of the very rich. By nature of being very rich, they have options (like emigration, working less).

If you run a society with a few rich people being the only net contributers, that society is immensely vulnerable.

Also, in the UK, the phrase is often used to indicate that we aren't bringing in as much money via tax as we spend on government spending. Long term, this is not good for any country.

ItAintGonnaGoDownEasyIfItAintCheezy · 05/12/2023 07:17

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.

Woweee! I'm sure there's plenty of people lining up to line the pockets of others through their hard work.

We were net contributors, we left the UK. Our money we earn should be ours, we work for it.

cakeorwine · 05/12/2023 07:18

"They are hardworking people in a variety of necessary and important jobs ( nursing, teaching). If you earn less than 41k you cost more than you earn. They are also junior members of staff ( young graduates) who will potentially become net contributors in the future, but in the meantime, businesses take advantage of their skills to make a fortune"

This is a ridiculous comment - unless you are just using money as the definition. Are you measuring the actual contribution people make, because without these people, other people could not make their money and society could not function.

People's contribution to society is just measured financially by some people.

SerendipityJane · 05/12/2023 07:33

I'd forgotten about companies. They pay taxes too.

Hi Kwasi. Better luck this time, eh ?

Pomonas · 05/12/2023 07:40

Do you work and are a high earner or just like making plans with other people salaries?

IheartNiles · 05/12/2023 07:44

I think the LSE proposed one off wealth tax (on individual assets above 500,000, not inc mortgages and other caveats) seems proportional and would raise £260 billion. There are too many people avoiding taxes through hiding income.

Pomonas · 05/12/2023 07:45

We were net contributors, we left the UK. Our money we earn should be ours, we work for it.

This I am not a charity and cash cow machine. A reasonable amount of tax should be paid but no the tune of 45-50 percent on income. Then you go to buy something and the VAT is twenty percent. The government makes tones of money also with stamp duty. They should have more than enough to cover everything.

jemenfous37 · 05/12/2023 07:52

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

Road tax is different to income tax, so person is not getting 'something back', they are paying again
Ditto the bins, they are covered by council tax
The benefit of living in a 'civilised' society is open to all, but notxappreciated by many

Back to the drawing board, Kwasi...

Grumpsy · 05/12/2023 08:04

Someone said a lot of tax revenue comes from big business, it’s probably not as much as you think - picture from the IFS website, and a link if anyone is interested:

https://ifs.org.uk/taxlab/taxlab-key-questions/where-does-government-get-its-money

To think the 'Net Contributors' argument is just wrong?
123ZYX · 05/12/2023 08:04

I think the issue is that the tax burden on the high earning employees (I.e generally not the super wealthy) is effectively contributing to the earnings of the super wealthy (I.e investors in businesses who employ hundreds of staff at a low wage where top ups through universal credit are needed).

Viviennemary · 05/12/2023 08:08

The point is this country is overpopulated. Even more people is the last thing we need. There are less than 5m people in NZ a country of a similar size to the UK. Their immigration rules are very strict.

ItAintGonnaGoDownEasyIfItAintCheezy · 05/12/2023 08:09

Pomonas · 05/12/2023 07:45

We were net contributors, we left the UK. Our money we earn should be ours, we work for it.

This I am not a charity and cash cow machine. A reasonable amount of tax should be paid but no the tune of 45-50 percent on income. Then you go to buy something and the VAT is twenty percent. The government makes tones of money also with stamp duty. They should have more than enough to cover everything.

Edited

Don't forget inheritance tax, and tax on savings too 🙄

Camerasforinthehouse · 05/12/2023 08:18

The real problem with tax is that we are not taxing wealth/assets well enough. Those with the most wealth buy assets which then make them more money, so they buy more assets and so on.

The money made on these assets is often held in a company and often clever off shore accounts - specifically to avoid paying tax.

This creates massive problems for us all. Fewer houses to buy, pushing up prices, making it impossible for lots of people to ever buy, stuck in overpriced rentals unable to save and so on. It means that the rich asset holders donate to and lobby the government to protect their assets (e.g. shares in oil, sugar etc industries that are bad for us, giving us poorer health and making it harder to climb out of poverty). I’ve simplified here but this is a serious problem.

So the public pot could be a lot bigger if we had a policy to sort this out. We don’t tax wealth and assets properly and we have a system where the wealthy are in a fabulous position of being able to accumulate more and more. The poorest have ever decreasing opportunity to pull themselves up.

Not even Labour are planning to sort this out.

bombastix · 05/12/2023 08:23

The Labour Party are going to be absolutely silent on asset tax but let's face facts there is a lot of money tied up in property in the UK, held mostly by older people who have been well insulated from declining incomes dependent on salaries. Income tax is hopeless given the relative productivity crisis we have thanks to the tax system.

Asset tax for boomers; CGT will change.

Fieldofbrokenpromises · 05/12/2023 08:24

We were net contributors, we left the UK. Our money we earn should be ours, we work for it.
Excellent - where did you move to?

Benibidibici · 05/12/2023 08:27

The problem is people engage more with government etc when they are putting in.
Benefit subsidies also distort the system, you end up where people make choices that aren't ideal e.g. choosing to work part time or not at all, because they will get enough in top ups.

Also what it really means is the government subsidising employers to pay poverty wages that aren't enough to live on. This is the biggest issue. When employers pay rock bottom wages for labour, there's no incentive for them to value and invest in their staff to increase productivity - staff become perceived as low value & expendable.

Fieldofbrokenpromises · 05/12/2023 08:27

Asset tax for boomers; CGT will change.
oh goody another “blame the boomers”
The Tories love this.

bombastix · 05/12/2023 08:30

Fieldofbrokenpromises · 05/12/2023 08:27

Asset tax for boomers; CGT will change.
oh goody another “blame the boomers”
The Tories love this.

The Labour Party will be totally silent on this. My point is that it is, if you need income, an easy thing to do. And these people dominantly voted Conservative. This is my guess.