To think the UK unfairly taxes families?

[OwnGravityField]

I have just found out that the UK is an outlier, in that it completely stops collecting a form of social tax (NI in the UK) once someone gets to pension age.

In every other country, pensioners’ contributtion as a proportion of income is much more similar to working households.

Example of disparity in the UK:

A working person earning 25k pays:

• Income tax: £2,486
• NI: £1,002
• total = £3488

A pensioner with an income of 25k pays only:

• Income tax: £2,486
• no NI
• total = £2486

So, a UK worker on 25k pays 40% MORE total tax than the pensioner (the difference between 2486 and 3488).

Let’s compare with a beloved utopia of fairness, such as Sweden: worker on similar salary pays 9% more tax than a pensioner.

Yes, other countries have slightly larger differences, but none except France come anywhere close to the UK difference in tax treatment between workers and pensioners.

In the interests of balanced sharing of info: France is tax and spend basket case. France taxes workers roughly twice as hard as pensioners. It’s obscene and the country is practically bankrupt.

Most other European countries narrow the gap by keeping small health or social contributions on pension income.

You might be thinking most UK pensioners don’t have 25k coming in? Nope. 3 million have individual incomes of 25k or more.

Anyway, I think it’s shocking that people at the most expensive time of their lives (kids, mortgage, food) are taxed so much more heavily. AIBU?

What are you talking about? Do you seriously think that conditions, including favourable tax treatment and tripled locked pensions will still be around in 10 years, never mind 50 years when today's 20 year olds, if not already dead, might hope to finally retire?!

Why? Older people aren't a specially protected species. There is always plenty on here and in the rest of the media criticising the young, those on benefits, the disabled, public sector workers. It's constant.
In this instance, the discussion is about pensioners paying a lot less tax than those younger than them, That's unfair. The tax system needs reform. That much is clear.

Who has suggested that? Are you able to quote anyone who has suggested that on here?

Exactly this. The current working population have 0% chance of benefitting in this way. And as a parent to two kids, I accept that for benefit of the next generation it has to be that way.
But I am resentful of paying for those that don’t need the pension and are sat on inherited and independent wealth (let’s be honest - mainly linked to house price inflation). I would add I don’t resent a penny to someone that does need it.

You do know tax revenue doesn't work in the neat little accounts - all of it goes into to a big pot and the Gov decide how to spend it. No one is suggesting we defund anything - you misunderstand (willfully maybe) - when the NI is abolished the tax take will be moved to income tax and then everyone with an income will pay the same tax (well it'll be a start to making things fairer - there's much more work that needs to be done)

We'll retire in 10 years, we've always assumed we won't get a state pension, we've always assumed it will be means tested - the country just cannot afford to continue supporting wealthy pensioners - (of course we need to continue to support the less well off pensioners). The younger generation are being crippled with taxes - it just can't continue.

I’m not buying “crippled with taxes”. When I started work the basic rate of income tax was 33% with 9% NI on top. Contrast that with 20% with 8% NI. Essentially basic rate tax payers then paid the same percentage as higher rate tax payers do now.

What year was that?

1971

Then I think @BritHoward has made her point!

Please explain.

You know who’s unfairly taxed? Single adult households.

Council tax by household, with the measly 25% reduction for SAHs, but tax personal allowance is by person - so households with a couple both earning get two, whilst a single parent (or other single adult) gets one. And similarly with the threshold for higher rate tax.

Child benefit? Oh we’ll do that one on per person too, so couples can each earn just under the threshold and receive it - but a single person, nope you can only earn up to the threshold once and receive it.

Seems unfair that household next door has almost twice your income with 2 x personal allowance and tax thresholds in the mix to give them more take home as a family, and they receive CB? Tough.

(Edit - I know about the. CB taper and that it’s not a cliff edge benefit but it’s still unfair that it isn’t household income)

It’s not just income tax though is it? No VAT in 1971, no student loans in 1971, stamp duty was significantly lower too.

I think we all agree the tax system is not fair and it needs to be reformed- will Labour have the courage to- I doubt it.

Barely anyone went to university in 1971. Inflation was running at 10%. And stamp duty is really scraping the barrel - it’s hardly every day expenditure. Surely you can do better than that?

1971 was nearly 55 years ago! Things have changed considerably since then. I'm sure you are smart enough to realise this.
Perhaps it's not precise or even accurate to say 'crippled by taxes' because many earners pay less income tax now, although some other taxes are higher. The main, blatantly obvious differences though are the huge increases in the cost of living, particularly housing, the stagnant wages in the last 20 years and the huge escalation in private deb.

I agree with both your points.

Your arguments are ridiculous. Everyone should be charged the same rate on their INCOME. So if a SAHM has no income what are you taxing?

Of course I’m smart enough to realise that but it’s complete bollocks to say people are crippled with taxes when they’re currently lower than they’ve been for over 50 years. The cost of living was a massive issue in the 70s, by the way, inflation was in double digits for the entire decade, it reached 25% at one point.

The only people who see the past as some kind of economic idyll are too young to remember it.

Hesitate to jump into a conversation that involves people calling each other ridiculous- but I think their point is that SAHMs can get their NI paid for them, in a way that others who are out of paid work can’t.

So a govt could decide not to do that.

well said.

the whining of the present generation and their spiteful delusions about how “easy” previous generations had it has become so tiresome.

Single childfree earners are the cash cows of most systems. It’s so unfair.

I think they could reasonably change council tax so that it’s per adult (or give SAHs a 50% reduction which still leaves the three or more income houses better off).

The one that really needs changing is CB - with couples each on £59,000 getting the full amount - so just under £120,000 household income. Where as a single parent on 60,000 begins to lose CB, and over £80.000 gets nothing at all.

Now you could say a person earning £80,000 doesn’t need it but that has to cut both ways - so a couple earning the same amount (and remembering their two personal allowances) wouldn’t need it any more than the single parent. And I think we know that a single parent is usually more in need than a couple, including being likely to have additional childcare expenses in order to work, as no one to share childcare with.

I thought if you were claiming out of work benefits you got your NI paid too.

Maybe true!

I think the best we can do is to make sure being single isn’t in itself penalised - regardless of whether childfree or a parent.