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.

It’s a stupid idea that will never fly, but great inter-generational hate, well done.

The tax for an acre of land per annum would be the same whether it had one house on it or four. The four houses would pay for 1/4 acre each.
It would be an ongoing annual tax, not once-and-done.
Different types of land would be taxed at different rates, e.g. fields, woods, moorland etc. would pay less (or zero) than land with planning permission.

If you earn nothing on your shares you wouldn't pay tax on them. The suggestion is that people who don't have to work but live off their investments as income should pay the same rate of tax as those who have to work for their income. The personal allowance would apply to dividend income and earned income combined.

Are you suggesting that because you have childcare costs, pay into a pension and have a high mortgage that you should pay less tax on your high income?

There is a case to be made for tax allowances for childcare, or it could be state-provided for free.

Note also that even if income tax on dividends was equalised, employment taxes include National Insurance which you don’t pay on dividends.

@Yetmorebeanstocount you do realise that most people with acres of land don’t have planning permission on said acres, if they get planning they usually sell it.

I actually think some of our tax rates for higher rate payers are too much. the whole point of a percentage rate is the more you earn the more you pay so we dont need ever increasing rates as well.

But i also think some higher rate tax payers undervalue the benefit they get from a functioning society. I actually think wealthier people get more benefit out of the judiciary, police force etc than poor people for instance. There is such a huge amount of law relating to protecting property. Health is a public issue too not just an individual one.

This is economic reality. If this is an awkward conversation to have for people who have assets, then it would be silly to overlook what has happened in the UK. I appreciate that older posters may feel sensitive, but that does not mean it shouldn't be looked at. The Labour Party is just as aware of the productivity crisis in the working age population as the Conservatives. Saying that assets, which can be taxed, are generally held by older people is reflective of the UK as it is.

If a few thousand millionaires / billionaires emigrate I won't lose sleep over it.

Yes society is very vulnerable if it depends on the few very rich. A better system would have almost no mega-super-rich and a large number of 'ordinarily very wealthy' on a few 100k's max. I imagine about 20-30% of the population would be 'net contributors' if there were less inequality, though I haven't done a mathematical model.

Almost no modern country brings in more in tax than they spend. That is why we have an annual deficit, government borrowing, and a national debt. That is just Business-as-Usual.

Saying that assets, which can be taxed, are generally held by older people is reflective of the UK as it is.
and it’s the “generally” that makes it faulty. I will admit I have an axe to grind. I am a boomer, net contributor according to the stupid definition, still working paying tax and NI and still paying a mortgage. I am lucky enough to live in a house which I may own eventually. So you think I need taxing on the value of it? I respectfully suggest you are looking in the wrong place. I’d have to sell, no doubt there would be a price crash. Careful what you wish for.

The 'net contributor' argument includes all taxes, including road tax, council tax VAT, etc. It is just easier to think in terms of income tax.

@Fieldofbrokenpromises / do you not think you have extrapolated somewhat? I have indicated that asset tax ie CGT might be looked at. You have extended that to you being asked to sell your house. I think that is quite a leap.

If a few thousand millionaires / billionaires emigrate I won't lose sleep over it.
Nor will I - chasing after fiscal nomads with no real desire to live here is a fool’s errand as some race to the bottom shithole will always outbid us - good riddance to greedy filth who don’t want to contribute.

I think lockdown showed who the real contributors to society are, and its not about what they are paid for it.

Why? Then people are paying tax on stuff they've already paid tax on.

Yes of course.
I imagine there might be several low rates of tax on types of agricultural land, and no tax on wild / natural / 'environmentally beneficial' land owned by charities or the nation.

I am more interested in the 'net contributor' argument that the fine details of a land tax policy. But the principle remains - land should be taxed (at various rates).

As a mechanism for re-distribution.
Capital accumulates, so the government is needed to re-distribute it or you just end up with a more and more unequal society.

Taxing agricultural land would have the potential to decimate the farming industry in this country, which we need.

a lot of farmers in this country are asset or land rich, but cash poor.

YANBU OP. Didn't read all replies but kjust a couple of points.

The "No representation w/o taxation" brought up by a pp. You scoff but unequal representation determined by (male) income was indeed the case in many, many countries before the victory of universal suffrage. 19th century Prussia had a 3-tier voting system. My great-great-grandfather ran a construction business that went bankrupt, aa a consequence seeing him demoted one tier and turning him into a lifelong socialist. I think we can all agree nobody wants a return of this but it's the logical consequence of the populists' argument.

Two. The maniacal focus on direct taxation overlooks the fact that modern states tend to raise more revenue through indirect rather than direct taxation. That means value added tax/all manner of sales taxes. The point about indirect taxes is that different from income tax, they're typically socially regressive in that lower earners pay proportionally more of them. That's because they spend a much higher proportion of their income on consumption - unlike the rich, they don't have much left over to save, let alone invest. Reduced VAT rates on certain items siften some of the impact of this, but indirect taxes still skew regressive. Argument about the burdens of taxation needs to take that into account but still waiting on the Daily Mail....

I too used to come out with similar sound bites about wanting the greedy filth to fuck off to Singapore if they didn’t want contribute.

A ‘millionaire’ is a £100k earning individual with a property or two, one of them being a London four bed. An absolute plum position to be in- but from some of the comments on here you’d think they were squillionaire per year earners owning private jets and massive property empires and they should just ‘FUCK OFF’!.

Some of these millionaires could be anything from hospital consultants or high paid employees with niche skills that need to be kept. And as someone up thread has noticed, we are haemorrhaging them only behind India and china.

And not all of them are ‘fiscal nomads’ evil Elon Musk wannabe bond villains hopping around- it could be a doctor choosing to take a contract in Australia for double the pay and the or favourable taxation. It could be a high earning family who sees that their schools are shit, they can’t even get their children in at an NHS dentist when that was something they’d ’get back’ and life is expensive- so they go elsewhere.

I’ve been a Labour Party member since 11 years old. I want a fully functioning state that offers care, a safety net and support for those who need it. Without these ‘greedy filth’, you can’t offer free healthcare to your near 70 million population and all of the other comforts that we expect.

It should be worrying you. Capital is completely mobile. Travel is easy. The world just seems smaller. There is reason why other countries are absolutely trying to do cash grabs by attracting these people with slightly lesser income tax than they’d get from their home country.

And as an aside note- don’t get me started on the well documented phenomenon of what happens when high earners with options leave the public systems- be it schools or healthcare or transport- it gets shitter for everyone else else.

Yeah but how do we fund them? How
do we pay our NHS heroes?

claps?

if you want skilled and responsive public services that are well compensated, someone needs to foot the bill.

And as an aside note- don’t get me started on the well documented phenomenon of what happens when high earners with options leave the public systems- be it schools or healthcare or transport- it gets shitter for everyone else else.
but according to you we have bribe them to stay - how will that improve public systems?
Thankfully for all but the greediest it’s about more than just saving a bit of tax - I am happy to bid goodbye to to the ones who are only here for as long as there is a tax reason to stay.

Reduced VAT rates on certain items siften some of the impact of this, but indirect taxes still skew regressive. Argument about the burdens of taxation needs to take that into account but still waiting on the Daily Mail....-
Excellent point - from Thatcher onwards we have been shifting tax away from the rich onto the poor.

You’re the one extrapolating and over simplifying - and you mentioned boomers as if they alone should be a source of extra tax.

@Fieldofbrokenpromises / if you are a sole home owner you are not in the realm of CGT. You know that? It is only if you have other property and assets that you might be. This is why I said generally because it's true! Older generations who can be called boomers have benefitted; nobody is suggesting a sole home owner is going to be compelled to sell up. But income tax is NBG; Labour will have to look at it.

My DH and I both choose to work part time and stay under the £100k bracket by putting extra in pensions. We get 30 free hours for our children as well. I wont give away our £26k each in extra tax if I dont have too. Once we move above those amounts quite comfortably, I won't mind going back full time.

Tax is too high for people who actually pay tax.