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?

The home ownership obsession has to stop. It is only a very brief post-war blip in the history of humankind. And comfortable, spacious, well-appointed suburban homes are an even briefer blip.

People are going to have to find some other measure of "success" and "security" than property ownership, on a planet teeming with 8+ billion people and ever-dwindling resources. It's just not sustainable. Especially the everyone-must-have-their-own-bedroom-with-ensuite mentality.

We trekked to Bristol recently to see where my grandfather, born 1902, lived (we never knew him except vague memories as small kids.)

The house where he was born was two rooms off some sort of mews or alley; most people today wouldn't kennel their dog there. It's basically a storage shack now.

The next one, where they lived from 1905 to about 1915, is per Righmove 712 square feet. At the time gramp was a toddler it was a two-bedroom with a lounge and a kitchen, and an outhouse out back. Part of a 10-house terrace. They had SEVEN children and two parents in that house.

At some point they upgraded to a nearby three bedroom, which housed the nine children and two parents. Gramp served in WWI from age 14, then worked as a steward on a merchant ship; the lovely people at the Bristol Archives helped us find all of this info and more.

His family all worked from a very young age; per the census records his sister was a "tin foiler" age 15 at the Fry's chocolate factory. Others had jobs on the docks, as "carters"or whatnot, or bricklaying like their dad. As teens. His mother died in childbirth age 40 with the 10th kid. We tried to find her grave at Avonview Cemetery but they had been too poor to afford a marker.

Oh and all of the above dwellings were rented. "Young families" back then couldn't afford to buy, either.

The halcyon days everyone harks back to "when you could support a family and buy a home on one income" were an anomaly, and I daresay most of the complainers would NOT want to live the frugal lifestyle that even comfortable people did in the 50s-80s.

Wasn't that the poll tax which was so unpopular?

My point was that today's pensioners have paid way less tax over their lifetime than young workers will today

Have they? Student loans don’t count because it’s repayment of debt, not tax. They don’t start work until they’re 21/22, their grandparents started work at 16. The basic rate of income tax was 33% with 9% NI when they started work - the equivalent of higher rate tax. And the repayment of WW2 debt didn’t finish until 2006. Today’s pensioners with occupational pensions will have racked up the best part of 70 years of paying tax if they achieve average life expectancy.

I'm certainly with you on the fairness principle and pleased to see that you agree that there should be no special, lower rate for pensioners.
Why do you think CSA payments should be taxed twice though? That seems unfair. When you say dividends, are you also including the sale of shares, property and other investments? I do agree that CGT is too low compared to income tax but the counter argument is always that it would deter investment which is needed and that it would only be fair if adjusted for inflation. I wonder if a graded CGT could be invented, accounting for inflation with lower rates for those who invest for, say 2 years+ and higher rates for those who place multiple trades. That would encourage the longer term investors. Just initial thoughts from someone who is far from being a tax expert!

Why do you think CSA payments should be taxed twice though? That seems unfair.

Most money is taxed several times, why should child support be any different? It certainly shouldn’t be ignored for benefits purposes as it currently is.

Talk about missing the entire point of the thread!

But that's exactly my point.

I am paying back into the system, (and paying more than the average UK income, in fact).

And I hope the OP's DC will also pay back into the system, to cover their education & healthcare.

The OP is suggesting that somehow, pensioners haven't paid into the system, and are now expecting a free ride. Which - as you point out - is ridiculous.

And as a childless woman, I am paying far more than most other women, but I suppose it's convenient to overlook that & just call me selfish for expecting that I can call on some aspects of social care in my old age.

But my general point still stands - the OP misunderstands the concept of mutual support, and indeed "society."

I thought that CSA payments were payments from the 'non resident' parents to the one providing the majority of the care. They aren't benefits are they?

I didn’t say they were. Read what I wrote.

The halcyon days everyone harks back to "when you could support a family and buy a home on one income" were an anomaly, and I daresay most of the complainers would NOT want to live the frugal lifestyle that even comfortable people did in the 50s-80s.

Absolutely @No5ChalksRoad My first house (in the mid-80s) had no central heating & a boiler over the shower for hot water, plus an outside loo. It's what I could afford. I had a lodger & worked 3 jobs to raise the money to do the renovations to get hot water & an indoor loo. And during that period, interest rates on my mortgage went to over 13%

What a horrible post.
I guess Maggie Thatcher and her 'no such thing as society' did the trick on you. Will you be telling the people who wipe your backside when you have dementia how you paid for their education too? Will you be telling the surgeon who saves your life? Not everything is about money you know? We are all cogs in the wheel.

I did read that. Why should money earned by a parent and taxed at source be taxed again before it can be spent on the child? That makes no sense at all. Why should single parents, whose ex partners do nothing for their DCs also have to pay additional tax? Yes, certain other income is taxed more than once but those are very different situations.

Will you be telling the people who wipe your backside when you have dementia how you paid for their education too? Will you be telling the surgeon who saves your life? Not everything is about money you know? We are all cogs in the wheel.

That is exactly my point. I was paid for, I am now paying for @OwnGravityField 's DC, and when I finally do retire (probably when I'm around 75), I hope her DC will be productive enough to support me.

It's a generational thing, and it's the OP who misunderstands this.

Because it is impossible to compare an ever changing basket of taxes over time, economists tend to use total tax take as a % of GDP to measure how high or low taxes are. So that adds in everything such as income tax, NI, fuel duty, VAT, etc.
Tax as a % of GDP is currently at a peacetime high and is only going higher as taxes increase and growth stagnates.

Oh dear. The Four Yorkshiremen contest has started!

Why should money earned by a parent and taxed at source be taxed again before it can be spent on the child?

You know that workers pay from their taxed income towards pensions (beyond the minimum State pension, that is)? Then that pension is liable for tax if the pensioner has income over the taxable threshold. And it's not as if an 80 year old woman can just go out & get a job ...

'The OP is suggesting that somehow, pensioners haven't paid into the system, and are now expecting a free ride. Which - as you point out - is ridiculous.'

Where does the OP say that 'pensioners haven't paid into the system and are now expecting a free ride'. Can you point this out please because I can't see it anywhere. Alternatively, stop making things up.

Yes I guess @rainingsnoring when you run out of arguments, you can just mock other posters telling you their experience of what it was like buying their first home in the 1980s.

What a ridiculous comparison! How are you even attempting to compare millions of random pensioners being paid a state benefit with a child being supported by their own parent?
Are you suggesting that pensioners should receive even more favourable tax treatment than they already receive?

You do know that not all pensioners are very elderly and incapable right? Many are far younger and leading extremely active lives.

I have plenty of arguments, don't worry. The chief one is for fairness.

I will certainly mock competitive moaners who seem to think everything is about them.

I'm far from an expert too.
I'm not adverse to pensioners paying the same rate as younger people - but I do think it should be across the board.
Why should a pensioner pay on income over £12570 but those on full UC often getting more be exempt.

By 2067 ( depending on retirement age) all working people retiring will have had the benefit of employer contributions to pensions
( self emp excluded)

Perhaps retiring people will have a better income purely on the basis of that employer paid sum. Anyone retiring before that won’t have had that all their working lives

Agree

Eventually that money coming from somewhere it will run out

The only long term solution is everyone working full time which will reduce UC
Then a reduction in PIP as the white paper recommended

Plus raising some taxes which are lower than income taxes
eg cgtax

And who is it that is sitting on local council planning committees, preventing any and all housebuilding? What a surprise: pensioners.