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?

Luckily we live in a country where sexism is against the law and no Government would ever do this

That is an interesting point though. Should council taxes be based on

• amounts of services used
• amount of people in a property on basis that more adults means higher earning ability
• size of the property
• size of income

All options are fairer to some and less fair to others.

You are arguing that pensioners should pay less as using less services?

Thank you to @CandidLurker for that explanation, I can see how in that situation poll tax was unfair.

Living in a 4 bed house doesn't always mean wealthy. Our next door neighbour is a 97 year old lady living on her own. She has lost her sight but manages because she knows her house well. It's hugely in need of repair but she can't afford to do it. My husband and other neighbours do small jobs for her, get her shopping etc, check on her, visit her. Her children all live abroad. She has 1 nephew who visits occasionally.
Moving would be incredibly challenging both physically and emotionally, she can't view properties as blind, she would struggle to get around a new property, she may not be able to create the same neighbourly support network. The council would have to fund carers for her which would be costly. Her council tax bill is around 2.5 k per year with single person discount, leaving her no money for maintenance etc.
The 3 adult children can all work, pay rent etc. They have much higher earning capacity than the single pensioner. My MIL lives next to a house with at least 4 working adults in it, who all have top of the range SUV's (often parked on her drive!). 2 of the adults are drs. They are choosing to live together to get support with their children, not due to poverty. Ot can also be cultural - living together until can afford to buy without a mortgage - which is at least 500k in the area they live. They should definitely be paying much more than my widowed MIL who survives on state pension plus a tiny teachers pension- she couldn't afford to pay into it much so opted out.

This is obviously true and some people would lose out whatever tax change was made but surely it would be an incentive for people to live in properties that are the correct size for the household? Obviously at 97 a move would be hard but if that tax had been there already maybe she would have moved i to a 2 bed at age 65? Freeing up the big house for a large family?
Surely if you have 6 adults (for example) living in a 3 bed home they are living in a kind of housing poverty. Why should they be taxed more than someone living alone in a big house - who could, if they chose, downsize? Having a lot of space to live in is a luxury that a lot of people can't afford. For example we are a family of 4 and living in a 3 bed plus boxroom (because we have a loft conversion) and it feels like a huge luxury to us. We're used to living in a 2 bed. Only moved a year ago. I think a lot of people just dont appreciate this at all.

I would argue two pensioners are likely using he same level of council services, or even more actually, that a family of 2 adults and 2 kids. There's a much higher chance the pensioners are needing care and they almost certainly use healthcare more.

Central to this argument really is if people can afford more space to live in does it necessarily mean they individually automatically cost the council more

We should be asking “ what increases council costs “ and working back from there

Although children are being educated
Parents use the nhs more
In one’s lifetime we use services more when we are young and again when we are old

It's going to be tricky when we change to a new system for property tax. A cash poor old person in a large house could well be sitting on hundreds of thousands of pounds of capital gains, a system where upon sale you pay the back years of increased property taxes would seem fair.

I agree. Put a charge on the house which has to be paid back when it's sold when they pass away or move into a nursing home, but don't tax an elderly disabled person to the point where they can't afford to repair their broken windows or put on their heating, that's just cruel. And counterproductive. They end up in hospital costing much more than any tax raises.

You are arguing that pensioners should pay less as using less services?

No, it was an example. Any couple of whatever age without school age children costs considerably less in local services.

‘When we change to a new system of property tax’

These ideas are just proposals and speculation like so many hundreds of other flaunted all the time by successive Governments and so far site house sale stagnation as a serious fault ( amongst others )
so

Its more a case of IF we ever change to a new system of property tax

We are 70, and we are both still employed by the company that we created 35 years ago. It would be lovely to retire, but we still have a payroll to meet. Several families depend on working for us to have money in the bank for their food and mortgages. We have spent thousands of hours training promising people to fill our shoes but none has yet actually taken on the responsibility. Politicians do not help. Both Labour and Conservative parties absolutely hate small businesses, which is catastrophic for the economy, because sme's employ about 60% of the population. Civil servants regulate SMEs as if they were much bigger, and the overhead burden just crushes the life out of the business.

My DH is really clever at making money in a small business. The deals are fairly small individually, but there are lots to be done. Our clients are delighted to find us, because we are efficient and deliver exactly what they want and we do it FAST.

@Bushmillsbabe , that line of thinking takes you straight back to the poll tax. I thought then and think now that it is a fairer route, but it resulted in riots.

Be careful what you wish for. Very careful indeed. You may just become the first OAP’s to continue to pay NI. Hopefully I’ll still be around to hear you all howling about the unfairness of it all and my how I’ll laugh at your stupidity.

No sane government would ever do that. It would be electoral suicide, particularly given that older people turn out to vote in greater numbers.

I'm rather expecting the rules to change so that income tax and national insurance get rolled up in one. From now on, I only expect the rules to change to hit the boomer generation. Quite seriously, I have my fingers crossed that we have saved enough.

It’s not going to happen. No government is that mad.

But, as @BIossomtoes says, I will be out to vote every single time an election is called.

Given that governments nearly always do the opposite of what is fair and right and act based on what they think looks politically good and what is in their own, personal interests, you are v likely right!
Of course it is fair for pensions to pay the same tax rate as everyone else, especially given that they are now the wealthiest of generations and that younger people are struggling to afford even the basics, such as housing.
I have said several times on other threads in the past that difficult decisions will v likely only happen when a financial crisis hits and governments are forced to make them.

Rubbish. I'm in my 70s and needed to work. My mother worked when we were children. One of my grandmothers worked.

Some families could afford to only have one parent working, some families still can.

A lot less nowadays compared to a generation or two ago. Not many families manage long term on one income now. One income was common place for middle class women now in their 70s/80s.

On the other hand back then a neighbour on one side of my house was a widow in her 80s living alone, on the other side two working parents with three adult working children. Poll tax seemed fairer.

I don't really get your point about two pensioners paying the same as a working couple, surely it would mean them paying the same just like when they paid council tax.

This might come as a shock but many, maybe most, of us weren't middle class.

Of course that's not a shock. I know that women often worked in less well off families. I'm comparing like for like. You seem to be ignoring the fact that far more women work now, work far more hours, and in far more demanding professional jobs. This is born out by the stats.

Stats only go so far. As a child the mothers working all round me were probably not counted in the stats as they were working cash in hand in a variety of part time jobs, usually badly paid jobs with no protection or benefits but keeping the family afloat.

So comparing like with like means when people say only one parent needed to work they actually mean middle class families only needed one person to work?