Not an ordinary working person if you earn over 45k

[TesChique]

Disincentivising anyone to strive to earn over 45k a year is a bizarre strategy for growth i feel

Aibu?

Can we just accept that work ethic should be respected irrespective of job.

Majority of those on 45k wouldn't be effected if they have opted in to a workplace pension and put even a couple of percent in as it comes off pre-tax so reduces salary.
It's the people on about 47k upwards it would start to effect but they can just do the same or use other elements like cycle to work schemes etc.

I am surprised though that they haven't fully reviewed the Scottish govt figures of what they expected to what they get as a result.

I'm one of many that chooses the pension route and I don't feel bad as I'm still a net contributor. I just refuse to be a cash cow to SNP financial ineptness including money up the wall for white papers whilst refusing to roll out funded places for childcare before 3 unless on benefits (then it's 2).

Do you have a link to this please? I’ve tried to find it but can only find articles about a petition to raise the personal allowance to £45k!

Will they increase the definition of working person as the value of £45K diminishes each year due to inflation?

Or will the real-terms amount you are deemed able to earn to be considered a worker decrease invisibly over time?

As the uk median salary is just under £39K, it's fair to say that those earning £45k are doing ok

A two-adult household both earning that? Sure. A one-adult household supporting children, not so much. That's a monthly take-home of around 2,993.

Now assume that person is in the south east, and renting a 3-bed semi or terrace, more than half of that will go on rent. Then they need to pay for a car or commuting costs, utilities, council tax, water, insurances, phone, groceries for themselves and children, clothing for the children.... do you think that person feels like they're "doing okay", or do you think they're exhausted, struggling at the end of the month and would probably be better off packing in having a work ethic and sitting on benefits?

Low earners can claim benefits to top up their salary. People on 45K+ are the ones paying for those benefits. But we should just continue to work full time to pay more and more money in tax to support people who don't work or only work part time? Sorry, no! That's completely batshit.

That single person if they have
two kids
earn £45k
rent @£1600 ( you said more than half take home )
would receive monthly
UC of £649
(the sum which includes cb of £187)

So their take home amounts to
£2993 + £649 = £3642 /mth

of note tax paid = £541/mth
ni paid = £216/mth

So the current reality is they pay
£108/mth in tax and ni combined

This is the one I saw:

https://www.msn.com/en-gb/money/other/rachel-reeves-is-about-to-ruin-christmas-for-45k-earners-the-mask-is-off-kelvin-mackenzie/ar-AA1PIde0

Fair enough. Bit silly of me to get into a "pissing comp" about "look we earn so much money". We do have property and investment and rental incomes from abroad. Have to pay tax there and then get a tax credit here.

A donation does something. If a large group donated then they'd get extra revenue.

If you really wanted to make a difference you can donate to charity and/or directly. Taxes are high enough as it is, why disincentivise hard work. People have a right to enjoy their money and the fruits of their labour

Charity is voluntary. Taxation is forced.

Thank you. I hope he’s wrong, but I wouldn’t be surprised if there isn’t some truth in it.

I do work PT. But do not receive any government hand outs as a family unit. We didn't even get child benefits as DH earned too much.

So the 2% increase reminds me of a discussion earlier in the year of Reeves dropping 2% on National insurance and raising income tax by the same
This would mean the self employed for example pay more in.

Is this tax increase then an offset I wonder

That’s an interesting thought. The NI rate above the upper earnings limit for employees is 2%; I doubt she’d reduce the UEL to £45k but she might increase tax by 2% for earners over £45k and scrap NI over the UEL. This would catch higher income pensioners as well, so might be worth it.

But it will probably just be a tax rise.

There you go then - not exactly rich if you're eligible for UC.

Why can't they just go after "millionaires and billionaires"? Or just billionaires. Because they structure their tax system too well and/or would leave

They should go after the "hundreds of thousandaires" too. But leave "ordinary working people" alone.

An interesting FT article today, can't share token, but AI summary and a few extracts:
City bosses warn on pay as minimum wage closes in on graduate salaries

• UK minimum wage approaches graduate starting salaries in professional services

• Chancellor Reeves expected to announce 4 per cent increase in minimum wage - while the rising minimum wage was “a social achievement”, the jobs market was now “rewarding non-skilled labour over university-educated and indebted labour”.

• City executives warn of impact on recruitment for white-collar jobs - “Why would young people take on £45,000 of student debt if they can earn the same stacking shelves?” asked one. “It would actually be damaging for social mobility because only the people who can afford to pay their way through university will be immediately incentivised to do so.”

• Concerns raised about social mobility and incentives for university education - in areas such as audit, accounting and mid-tier consulting, pressure to raise pay to keep pace with the minimum wage was likely to accelerate automation and offshoring to cut costs as profit margins tighten. That, he added, would lead to “fewer opportunities overall”.

So what Labor are doing is that they killing middle classes from both directions, via direct taxation and reducing job opportunities. I wonder what's their idea long term after it's only ordinary workers and benefit claimants left.

It would actually be damaging for social mobility

Well that is Exactly what the Labour Party want to happen. It’s already started of course.

I wonder what's their idea long term after it's only ordinary workers and benefit claimants left.

Rejoice that they've achieved their socialist utopia?

Well, as PP said, it's what Russia did in 1917 but over longer time and without revolution. We all know how it ended up.
So - just why?

Why don't the companies pay more for degree educated and skilled workers? It doesn't seem that complicated to me.

A lot do, but those who don’t can’t afford to because Labour has hiked up the cost of employing someone so much.

I mean, yeah pretty silly to do that regardless of who you’re talking to. Seems you really do think you’re a cut above others because your husband earns a good salary - very retro.

Yes, if enough people ‘donate’ it can make a difference. It’s called taxation. I think the issue on the thread is that many pp’s would have been happy to carry on with austerity and the decline of public service so long as their taxes remained low. But now we’re all seeing the impact of that, on education, on health, on infrastructure, and those who’ve had the comfiest ride don’t want to give up even a fraction of their comfort. The government are not great, but it’s foolish to pretend they’re responsible for the current mess, which has been decades in the making. Starting with selling off utilities with zero safeguards on reinvestment.

This is partly because many employers are no longer willing to pay a premium for someone with a degree. Virtually everyone has a degree, so they don’t need to. Also, there’s often a mismatch between what students are learning, and skills that employers want. Often, a candidate who has spent the equivalent time learning on the job is better than a graduate.

Would you mind sharing your level of education? Life and economics seem to be very simple in your world.

Let me try - there is a limited payroll budget and no business can spend more. To pay more they either have to increase prices (inflation is already much higher than before election) or cut costs. Cost cutting are regular exercises in private sector (you know, that sector which generates all taxes which pay for public services) so businesses cut headcount, automate/AI and offshore.

If you budgeted overall 2% annual pay increase and you're forced to increase NMW to pay 4%, then automatically those above NMW will get 0.5-1% instead of 2%. When you add employer NIC and some Workers Rights Bill the effect becomes even more profound.

Of course NMW should be increased, but in line with average earnings increase. Most important - with NMW for a couple now being a living wage, the UC must be reduced drastically and not paid until claimant is working full time. Exception is for severe diagnosed health conditions only. Then this would allow to reduce taxes to stimulate growth, but Labor can't comprehend this.