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 know multi millionaires with property portfolios and shares in this that and the other and they want more equality. They aren’t using tax dodging methods but know people that do. I think lots of the very wealthy would be ok with paying their fair share. Some will go but if they don’t want to contribute fairly - well goodbye. I don’t think we should hang on to systems that unfairly benefit the wealthy and give ordinary folk no chance to improve their status just because we risk losing some wealthy people. Many won’t want to uproot families. Many will want to stay in a civilised society that looks after the most vulnerable. At the moment if you are born poor you will likely die poor. That’s so unevolved and we are back to feudal times almost. I work with families and it’s a desperate situation.

I'm not at all saying you're incorrect, but what basis are you using for the 41k cut off whereby if you earn less than that you cost more than you earn? I earn less than that, but I would disagree that I cost more than I pay in PAYE and NI. Sure - my rubbish is collected - I pay council tax for that. I drive a car - which I paid for, and I pay tax on every year, and that, combined with the council tax, pays for the roads I drive on. I also pay tax on fuel. I don't have a child in free school, I have never been able to use the NHS (absolutely impossible to register with either our local doctor or dentist), so I try not to get sick, and pay the dentist myself. Where are my costs to society? What am I missing?

Yes, some will pay. I haven’t disputed that. There is, however, a net outflow of the wealthy from the UK. A high one, with the UK being only behind China and India in this in regards to the rate at which this is occurring.

There aren’t enough higher rate tax payers in the UK, or coming to the UK, to cover these losses. Like I said, this increases the burden on those with less, who don’t have the means to shoulder it. Eventually there’s an inevitable collapse, and in the name of sticking it to the rich everyone left behind ends up significantly worse off. I’m not sure the sense of satisfaction for having done so compensates for that.

You have to deal with the world you have, as opposed to the world you would like it to be.

@Camerasforinthehouse

I want the very very wealthy taxed properly. Those with assets that create wealth without them lifting a finger.

You mean "unearned" income. Well Labour tried to get tax from them in the 70s which led to a massive exodus of authors, artists, actors, etc., who didn't need to be in the UK to operate and could operate from anywhere in the World. That worked well!! People with unearned/passive income can move anywhere and continue to earn it!

@LardyCakeAgain
Here's an idea - how about everyone contributes according to what services they use?

Are you including people with disabilities? People who happen to get cancer or dementia? Children with severe SEND?

"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."

But living off investment income does not mean you are rich. Many people have to fund their retirements via investment income and this return is on money that was already taxed as income before it was invested. Tax on savings interest over a tiny amount is already the same as income tax. There is little incentive to save any money and this is not a good situation for families or the country to be in.

@notlucreziaborgia

There’s very little point in increasing taxes on the wealthy when it leads to a loss of revenue.

I fundamentally disagree. The purpose of taxation should be re-distribution.

In my example, say the one person earning £200k cuts their hours and now earns only £100k, and now pays 20k tax and keeps 80k for themselves. The 20k raised is redistributed to the 100 low earners, so they are still better off.

Obviously this is vastly oversimplified, as the government now only has 20k in tax instead of 100k, but presumably the employer then takes on someone else to do the work the high earner was doing, so the tax-take ends up being similar.

Regardless of how rubbish my example is, the principle remains - taxation is about re-distribution, not just maximizing govt revenue.

@mateysmum

Tax on savings interest over a tiny amount is already the same as income tax.

The main rate, yes, but don't forget the personal savings allowance which means if you're income comprises interest only, you can earn up to £18.5k of tax free interest. So someone with £18.5k of interest pays less (in fact no tax) compared with someone earning £18.5k of wages who'll be paying tax and NIC.

Hence why we need to tackle the inherent anomalies in the tax system. Someone with unearned/passive income shouldn't be paying less tax on that than someone earning the same through working!

Yes - because the vast majority of people with disabilities work and pay tax. Most people with cancer work and have paid tax. That's not the gotcha you think it is.

But what about the ones who can't work and need a lot of services? Your sweeping statement suggests that they should receive nothing?

If there aren't enough "net contributors" then I want to know why?

Something about the way this country has been run has created this situation.

Are wages too low? Is the health system under-funded? Is there enough social housing to avoid the state having to pay market rate rents in housing benefit?

It is a nonsense way to frame it though.

It's not that there are too few people paying in, it's that the system is set up to let some of them pay too little in.

One question would definitely ask is who isn't contributing via the tax system who should be?

For instance, I think the owners of our newspapers and companies who trade here should also pay tax here.

I would also slightly raise the threshold of inheritance tax but take steps to ensure that the richest 1% start paying it.

They're actually few and far between, and the system at the moment doesn't actually help people back to work. I'm disabled myself and so is my colleague, we both work full time but our conditions would easily tick the boxes needed not to have to. Even so, I don't see why everyone shouldn't pay in, it doesnt have to be PAYE - even if that is taken from an insurance payout, inheritance tax once a parent passes, or other avenues. Elder care is paid for by selling a property once it is no longer needed to live in, I don't see the difference.

I have worked in a care home for adults with the most severe learning disabilities. There is no way on this earth that most of them would ever, ever be able to hold down a job, of any sort. Most were non-verbal and incontinent. Many also had physical disabilities.
The will never contribute. Should they be put out on the streets or put to sleep?

You over-exaggerated - own it.

So you've taken my initial post about how men leaving women and children up shit creek with too little income, and not paying for their own kids, and applied it to a tiny percentage of people in the country who are severely disabled? Got it.

Pay you receive via paye for work is subject to National Insurance as well as tax.

Yes, I know, I regard NIC as a tax which it is.

how about everyone contributes according to what services they use?

How are you going to administer and police that without incurring massive costs?

Do people who have children get a rebate for producing new workers or get charged extra for the cost of educating them?

Do people who don't have children get a rebate or billed for the immigrants who will have to be imported instead?

Do you use Trident much? How much?

Do you use your MP much? How much?

Do you use roads? How much? How are you going to prove it?

Do you use the armed forces? How much?

All that would happen with a pay for what you use system is that it would cost a fortune to run and people who use roads a lot because they don't have a helicopter would pay more in than a billionaire who does have a helicopter.

The top 1% in the UK already pay 30% of taxes
I assume this figure that is trotted out is based on income tax?

And how much is it as a percentage of their wealth?

The current system costs a fortune to administer too, and it's obviously not working very well. It's time for a rethink about how to do things and rewarding people's effort and skill, rather than pandering to envy about who has what. People want new technology, tools, and progress, but want to tax the tits off entrepreneurs and inventors who risked their own money and stability to be the first to produce something.

The obvious solution is universal income. A basic guarantee of a basic income.

Yes, I was originally against, but now slowly coming around to thinking it's the only way out of this mess.

Trouble is setting the "right" level and how it is paid for.

The moment that you start paying "some" people more, i.e. based on age, disability, housing costs, etc., you just come back to having the same problems with the existing system. It has to be set at the right level so that there is no need for any other form of "benefit" regardless of circumstances, which is going to be pretty high. That will fuel inflation (like tax credits did), so you're soon back to the same position. If it's high enough for people to be able to afford not to work, then what is the incentive for working as the tax on wages would have to be high to pay for it!

@LardyCakeAgain The issue is not tax with entrepreneurs. The issue is most firms do not invest in new technology and the government does nothing to encourage it.
Allied with the reality that for investors, housing has been the best source of income. The government should have disincentivised that a long time ago and instead incentivised investment in technology and boosting productivity. Instead the government hasn't given a shit about manufacturing for example that is high productivity. In many cities firms struggle even to find suitable premises. I know where I live firms have been tossed out of old warehouses as the owners can make more money converting it into apartments.
Most people do not understand how shit the governments handling of the economy has been. It is why wages have fallen in real terms year on year.

@user1497207191 there is evidence that most people do work. But it raises employers game as they can't get away with treating people like shit.
I will have to work till state retirement, but I know lots of people who early retired and have gone back to work part time or who volunteer. Volunteering contributes to the economy and is often ignored and undervalued.
It also enables people to provide more care for elderly and disabled relatives. Not talking about people who need toileting, but people who need help with housework, shopping, fetching drinks.
Most people left to their own devices are not lazy. Most lottery winners holiday and take it easy for a year to 18 months, and then find they have to find something else to do like buy a business or volunteer.

I agree, for the past three decades, successive governments have been obsessed with the "service" economy, financial services, etc., and have completely ignored manufacturing etc. That fact that the UK is still a relatively major manufacturing country is despite of governmental policy, not because of it. Many other countries have continued to invest and support their manufacturing centre. Similar with agriculture - we pay farmers to keep fields bare, whilst importing ever increasing amounts of food from abroad. It has to stop. Not everyone is capable of performing "high tech" jobs or "complicated" mental work, so we need industries that need "manually" skilled workers such as factory production lines etc. Yes, it may be cheaper to use ultra cheap Chinese labourers to produce our tat, but by doing so, UK PLC has to pay our unemployed unskilled workers to sit on their arses!