British public wrongly believe rich pay most in tax

balky12 said:
You love the words percentage and proportion. Yes you are right. But in absolute terms the richer people still spend more money than poorer people. Thus paying more tax when it comes to consumer taxes.
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Yes in total rich people spend more money, but as percentage of income rich people spend less of their money so that is why vat considered regressive. This is exactly what the authors of the article did not understand as well. ie rich people could afford a 50% sales tax while poor people could not. This is because the rich have more disposable income due to being rich.

What we want is for council tax to be increased for rich people and reduced for low and middle earners.
 
D.P. said:
The UK has a top tax rate of 45% + 10% NI = 55% (and in certain tax bands like 100-115K that jump to 60-Income tax + NI). UK VAT is only 20% and doesn't apply to groceries, medicine or necessities.
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NI actually goes down to 2% at a certain level of income - think it's about £50k. That's why the chancellor can't just merge Income Tax with NI - he'd be screwing over high earners.

D.P. said:
For all those detesting the regressive nature of VAT and proclaiming Scandinavia as an ideal role model, how do you reconcile these figures?


perhaps the UK VAT rate needs to increase to 25% and have less exclusions if we want the social mobility of Scandinavia?
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Interesting question, personally I think the lower rate for groceries is the key fact there - what counts as a "grocery?" I'm guessing alcohol, which is notoriously expensive in Nordic countries isn't classed as a grocery.
 
I think it's important that some facts are quoted, over linking reports from the Guardian newspaper. HM Revnue and Customs show that the top 50% of tax payers pay over 90% of income tax here in the UK, and this percentage has been rising over recent years.

Check the official statistics: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306831/Table_2.4.pdf

It will come as a shock to Guardian readers, but the Coalition has actually taxed the rich more.
 
scorza said:
NI actually goes down to 2% at a certain level of income - think it's about £50k. That's why the chancellor can't just merge Income Tax with NI - he'd be screwing over high earners.



Interesting question, personally I think the lower rate for groceries is the key fact there - what counts as a "grocery?" I'm guessing alcohol, which is notoriously expensive in Nordic countries isn't classed as a grocery.
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Alcohol isn't classed as a grocery in the UK either, it is taxed heavily with an alcohol duty and then VAT paid on top of the value + duty.
The total tax on alcohol in the UK is higher than most countries, e.g. Germany, France that have a better social mobility.

I would imagine that alcohol taxation is actually highly regressive. Poor people will spend a much higher percentage of their income on alcohol than the richer (well at the high end things get very noisy when the super rich pay 10K for a bottle of bubbly). Increasing alcohol taxation probably affects the poor much more.

The fact is, Scandinavia have a more regressive VAT and general consumption is more more heavily taxed. the fact that you can get taxed 12-25% on yourweekly food or medicine is quite different to the UK where for the most part you can avoid VAT. If you buy fresh meat, vegetables and fruit then you pay very little VAT at all in a weekly shop (things like toilette paper, cleaning products, shower gel etc will have VAT and I would be happy for VAT to be dropped on these).



The Scandinavian lifestyle is derived from a a much more complex process than simply heavy taxation. In fact, the heavy taxation is likely detrimental to it. The Swiss have a very envious lifestyle and a very low taxation system.


EDIT: Alcohol duty is higher in Scandinavia and one might naively think that this prices heavy drink consumption out of the question for the low income earns but I doubt that is the case. Scandinavians are very heavy drinkers AFAIK. That undoubtedly generates significant revenue but in a highly regressive way.
 
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AGD said:
But how do you build good parents?

How good a parent you are is related to how good a start in life you had, which corresponds in part to how well off you were. There are exceptions yes (and I've met some too), but that's what they are, exceptions.
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What utter rubbish. It's attitude. Plenty of people with rubbish start in life who are good parents and plenty of rich people who are rubbish parents.
 
anything I don't mind said:
Sorry what do you mean basically falls off? do you mean it becomes relatively insignificant?
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Yes. A monthly paid employee will fall from 12% to 2% when they're just over the 40% band. I.e. marginal cash income will incur a tax rate of approximately 42%. The bands aren't the same between NI and Income Tax but they're broadly there. The Government want to merge both but people still believe NI funds the NHS and will cry if they made it simpler.

The nice thing is, if you get a Christmas bonus of say £2,500 and you normally earn £30,000 a year then a good percentage of your bonus would be charged at 2% because NI only looks at the time frame you are paid rather than earnings over the whole tax year.
 
{T5K}TT said:
I think it's important that some facts are quoted, over linking reports from the Guardian newspaper. HM Revnue and Customs show that the top 50% of tax payers pay over 90% of income tax here in the UK, and this percentage has been rising over recent years.

Check the official statistics: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306831/Table_2.4.pdf

It will come as a shock to Guardian readers, but the Coalition has actually taxed the rich more.
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Surely that's just because the top earners have been increasing their incomes while low and middle earning incomes have stagnated. It's hard to see how the 5% cut in income tax could have resulted in anything other than a drop in tax payable for those affected by the 50% rate.
 
D.P. said:
The Scandinavian lifestyle is derived from a a much more complex process than simply heavy taxation. In fact, the heavy taxation is likely detrimental to it. The Swiss have a very envious lifestyle and a very low taxation system.
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The only thing I'm aware of that the Swiss have in common with the Nordics is strong anti-immigration policies. Food for thought, but perhaps best left to another thread ;)
 
scorza said:
The only thing I'm aware of that the Swiss have in common with the Nordics is strong anti-immigration policies. Food for thought, but perhaps best left to another thread ;)
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Except Switzerland has a far higher immigration rate than Nordic countries.
37.2% OF of the Swiss population were 1st or 2nd generation immigrants.
In some cantons 50-60% of the population is classed as a non-Swiss citizen.

24% are first generation immigrants. Compare that to the UK where only 11% of the population are immigrants!

14.3% of of the Swedish population are immigrants,
14.1% of Norwegians are immigrants,
10.4% of the Danish population are immigrants.
Finland is at only 2.7% immigration.

So the data doesn't support your hypothesis. Most Scandinavian countries have equal or higher immigration than the UK, Switzerland has even higher immigration rates.

If we want the UK's happiness rating to match Scandinavia or Switzerland ,assuming we believe your ideas that their happiness is linked to tax and immigration, then immigration should be increased to 15-23% of the population and VAT increased to 25% and added to groceries?



You see the data is very different to your ideologies. The truth behind happiness in Scandinavia and Switzerland are far more complex and have little to do with tax or immigration. Having a significantly higher GDP per capita helps Norway and Switzerland (30-40% higher), although does little to explain Finland or Denmark.
 
It isn't just a question of generating more tax revenue, it's also about how you use the money you raise.

For real social mobility youngsters need:

1. Aspirations - they have to want to improve their lot
2. Enterprise and/or intelligence and/or work ethic - they need the tools to make it happen
3. Education system - to help those who have any combination of the above and not allow lazy dropouts to hold others back
4. Framework - jobs, vocational training, entrepreneurial help

Too many kids coast through school without ever being told, or realising, how important secondary school is in deciding their future.

FYI Switzerland has private healthcare and a great education system. Almost all the kids take their studies very seriously.
 
scorza said:
The only thing I'm aware of that the Swiss have in common with the Nordics is strong anti-immigration policies. Food for thought, but perhaps best left to another thread ;)
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its very funny how all the things you claim we need to do to be progressive and turn out like Scandinavia they don't do and in fact are more regressive than us.

but you ignore all them fo9r a comment on immigration lol
 
Found this infographic i was looking for. Is higher social mobility in Finland a result of higher tax or better education system?

3420131500195.jpg
 
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scorza said:
Higher income earners tend to save a greater proportion of their income whereas lower income earners spend more. Look up Marginal Propensity to Consume/Save on wikipedia. This is why consumption taxes like VAT are considered extremely regressive.

Also, VAT is not a tax on wealth it is a tax on consumption.
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What is wrong with a tax on consumption?
I don't understand your entire argument, if Mr Low Paid wants to drink and smoke, and wants to do lots of it, then let him spend his money that way, and earn via VAT.


What are you suggesting as an alternative? No indirect taxes? No property taxes, no council tax, just a single pure individual rate at which we pay income tax? Even for all? Or weighted against the rich?
What are you suggesting? (bar a strange % manipulation of statistics, that doesn't actually related to cold hard figures or gross amounts)
 
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