How much do you need to earn to put more in than you take out of the system?

[TolpuddleFarterOATB]

I've been pondering on this question.

As a UK taxpayer, roughly how much do you have to earn to put more into the tax system than you take out? (If you have average use of hospitals, roads etc.) And, how much does a household have to earn if they have two children to do this (though I suppose this doesn't take into account that those children are future taxpayers.)

The reason I am considering this is because in the past I did consider myself left-wing, and used to support the idea of a "Robin Hood Tax". As I've grown-up got older, I'm starting to come to the conclusion that it perhaps isn't fair to expect people who have worked hard to become a higher taxpayer to pay even more into the system (like Labour propose to do if they win the next election.)

Thoughts?

I think you have to determine your terms more precisely.

Do you include VAT and other indirect taxes, and if so how do you account for different spending patterns?

When it comes contributions to society, how do you account for people doing low paid jobs that provide direct value to society? Take the example of a couple working as (say) a paramedic and care worker. They won't be higher rate tax payers, they may get tax credits, they are probably "takers" with respect to the tax-benefits equation. But that fails to take into account the value they provide to society that isn't reflected in their remuneration or the taxes they pay. Are they takers or givers?

My dh never claimed benefits, his mum didn’t give birth to him in the UK, and all healthcare treatment he’s had has been private (even though he qualifies for the nhs). He also earns over 100k. He’s in a field where he helps to build key public infrastructure and so his overall net contribution goes far and away above what he receives. He isn’t eligible to claim benefits for any of his kids and we send them to private school.

I on the other hand was born in the UK at an NHS hospital. Mum claimed child benefits on me. I worked from 16 but for 5-10 years was earning below 20k and so had a benefit from low personal taxable allowances. I earn a lot more now though and have not used NHS facilities in the past 10 years.

When we go through our free IVF cycle we will still pay more into the system than we take out.

this Telegraph article gives a break down net contributors and net beneficiaries by household income. It's a few years out of date though.

I once got called a "Tory moron" on here for pointing out that there were such things as net contributors and beneficiaries. That stung a bit...

It's not unusual for someone to be lefty until such times as they become a higher earner and then they start to feel like they therefore work harder than people "below" them and resent paying so much in tax.

I wasn't framing the question in terms of what people give in terms of vocational work. It was a simple question about money, and trying to understand the fairness of a Robin Hood Tax. (If we were to take into consideration contribution other than income tax though, the higher-rate taxpayer who runs their own business and employs members of staff is contributing in several ways.)

I also wasn't suggesting that taxation is a bad thing either.

The Telegraph article is actually quite interesting - the salary that you need to earn (£35k+) to put more in than you get out is actually lower than I expected. The article also covers VAT and disposable income and takes that into consideration.

There is also the angle of women "costing" the NHS more over their lives due to pregnancy and childbirth, and the resulting complications. Should those costs all be assigned to the woman, or should the father be responsible for half? Otherwise men will mostly be in surplus, and women in deficit (even more so as men earn more for the same jobs).

I think the crux of it is that if you are a net contributor you don't have to happy about the level of tax you pay any more than a disabled net beneficiary should be happy with what has happened to eg pip over the last few years. You have to accept it as we live in a democratic society but you are entitled to not like it.

A net contributor will pay far and away more tax, even proportionally. Larger houses = more council tax, higher stamp duty, more disposable income = more vat; more income tax at a higher rate than lower earners.

It's fine to feel squeezed and unhappy about
the level of tax paid. It's not fine to not pay it.

I support a flat rate of tax with a decent personal allowance before which no tax is payable. This would enable businesses to take on more staff too as paye costs to small businesses are crippling. People should be able to live on a fair income without quasi benefit tax credit top ups. All of these things are a minefield to administer. People working full time on minimum wage should have no tax to pay.

I would imagine that you need to be a higher rate tax payer to be a net contributor these days - fiscally anyhow. Obviously there are social reasons why those less affluent are valuable!

I worry enormously for my children due to rising property prices and the level of stealth tax. It's no good for society if no one can reach their aspirations.

babybarrister
The figures take into account the average amount of VAT which would be paid out of the disposable income of the various income brackets.

Obviously it is very average, so there will be outlyers who spend most of their money on drink and fags and gambling, and those who only buy zero-rated food items

And it is obviously taking average medical and education costs for an average sized family, so that will create further outlyers

But it is a useful exercise to see where the tipping point for beneficiary to contributor lies, and I suspect it is by far more luck than judgement that it roughly aligns with the point at which people become higher rate tax payers

Interesting article. Much lower threshold than I expected but shocking that the highest 1% pay so much as a proportion especially as it's already increased.

It's not unusual for someone to be lefty until such times as they become a higher earner and then they start to feel like they therefore work harder than people "below" them and resent paying so much in tax.

I've had many clients in that position, usually teachers, who suddenly changed their political spots when they are faced with higher rate tax bills!