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The top 5% pay over half the taxes?


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I've heard this, or similar, stats quoted often in the defense of not over taxing the rich.

I don't dispute the figure but my thoughts have been that the whole concept is skewed to keep us forever thankful for this selfless benevolence.

Is it not more correct to focus on how low wages facilitate an economy that allows vast profits?

Yes, from those vast profits tax is paid and from those payments social benefits are doled out.

Surely higher wages would lead to a lower welfare bill and thus lower taxes?

Please help me form this into a coherent argument or convince me it's bollocks.

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Its not just the extra stree and hours that promotions occurs. Once you work out how much etxra you take home it tends to be - Fuck it. I keep repeating this example but its pretty good and

Guitars Shmitars.   

Having lived through the latest bout of marxism I have come to the conclusion that they don't give a shit about wealth at all and only care about levelling everything so long as they are in control.

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13 minutes ago, One percent said:

What’s the evidence for this assertion?  It doesn’t feel correct but who knows. We need to see the data. My guess would be that the lump in the middle pays the most. At least proportionately. 

No evidence but from a hard cash perspective it makes sense.

I've heard it a few time and it feels correc.

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A few years back the top 1% of earners apparently paid 28% of income tax. 

https://www.dailymail.co.uk/news/article-2451686/Top-1-earners-pay-THIRD-income-tax-year.html

Of course income-based taxes are easier to analyse. Things like VAT and council tax would require surveys and estimating. I reckon the headline writers often use "tax" to mean "income tax".

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21 minutes ago, Lightly Toasted said:

A few years back the top 1% of earners apparently paid 28% of income tax. 

https://www.dailymail.co.uk/news/article-2451686/Top-1-earners-pay-THIRD-income-tax-year.html

Of course income-based taxes are easier to analyse. Things like VAT and council tax would require surveys and estimating. I reckon the headline writers often use "tax" to mean "income tax".

These stories about how much tax the rich pay get a run out periodically. As you rightly say the “tax“ in question is always income tax which accounts for about a third of U.K. taxes. The articles always ignore the other 60-70% of taxes largely paid by the rest of us. About half of all U.K. government income comes from sources that are not directly income related. In fact the figure should be turned on its head. Why is income distribution so poor that so many people don’t earn enough to pay income tax ?

Edited by Virgil Caine
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22 minutes ago, Lightly Toasted said:

A few years back the top 1% of earners apparently paid 28% of income tax. 

https://www.dailymail.co.uk/news/article-2451686/Top-1-earners-pay-THIRD-income-tax-year.html

Of course income-based taxes are easier to analyse. Things like VAT and council tax would require surveys and estimating. I reckon the headline writers often use "tax" to mean "income tax".

Some total tax (not just income tax) figures for Canada. I expect the UK is pretty similar:

Families in the top 5 percent of earners pay 28.8 percent of all taxes and earn 22.8 percent of total income. Families in the top 10 percent pay 39.6 percentof all taxes and earn 33.1 percent of total income.”

 

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17 minutes ago, TheBlueCat said:

Some total tax (not just income tax) figures for Canada. I expect the UK is pretty similar:

Families in the top 5 percent of earners pay 28.8 percent of all taxes and earn 22.8 percent of total income. Families in the top 10 percent pay 39.6 percentof all taxes and earn 33.1 percent of total income.”

 

How are property and inheritance  taxes calculated in Canada ?

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1 minute ago, Virgil Caine said:

How are property and inheritance  taxes calculated in Canada ?

Depends which components. Purchase taxes on property vary a lot depending where you are but go up to 3 or 4% in total (a lot more if you’re an overseas buyer in Ontario or BC). The equivalent of council tax is a percentage based annual charge - high end is more than the UK for sure. There is no inheritance tax at the moment but, at the point you croak, your assets are marked to market and, principle residence aside, your estate pays capital gains tax on it all. The same applies if you make gifts whilst you’re still alive.

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18 minutes ago, DurhamBorn said:

The worst stat is people earning £12.5k pay 20%+12%+13.8% employers.So a nice 46% tax on the low paid to fund all the tax credit and PIP brigade and the state sector pensions.If you add council tax on top its even worse.Shocking.

There’s a 12.5k tax free band for the employee so how do you get 46%? 
 

And a bit of digging says that employers NI on a 12.5K salary is less than 10% in total. 

Edited by TheBlueCat
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14 minutes ago, DurhamBorn said:

The worst stat is people earning £12.5k pay 20%+12%+13.8% employers.So a nice 46% tax on the low paid to fund all the tax credit and PIP brigade and the state sector pensions.If you add council tax on top its even worse.Shocking.

TC , UC and pensions are funded by borrowing 👍

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21 minutes ago, DurhamBorn said:

The worst stat is people earning £12.5k pay 20%+12%+13.8% employers.So a nice 46% tax on the low paid to fund all the tax credit and PIP brigade and the state sector pensions.If you add council tax on top its even worse.Shocking.

That is why I mentioned property taxes. Working people on modest incomes pay eye watering amounts of taxes in the UK yet those holding large amounts of wealth in non income generating assets pay very little tax at all. Band H Council Tax in Kensington and Chelsea on multi million pound houses is a mere £2473 a year  in 2020/21 that compares to £2049 on a Band D property in Middlesborough worth less than £200,000.

https://www.kfh.co.uk/west-london/kensington-and-chelsea-london-borough/council-tax

https://www.middlesbrough.gov.uk/benefits-and-council-tax/council-tax/council-tax-charges

 How the fuck is that justifiable.

Edited by Virgil Caine
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30 minutes ago, TheBlueCat said:

There’s a 12.5k tax free band for the employee so how do you get 46%? 
 

And a bit of digging says that employers NI on a 12.5K salary is less than 10% in total. 

A Band D Council Tax Dweller In Middlesbrough   earning £25000 in the U.K. an individual would pay 

Income Tax - £2498.20 + Employees NIC £1860 + Council Tax £2049 = Total £6407.20

That is 25% of income gone before even counting indirect taxes such as VAT on purchases, Alcohol Duty, Insurance Taxes, Fuel Duty etc which have been estimated to cost the average worker another £3000 per annum so I would estimate that a working individual on average salary easily pays 40% of it back in tax.

 

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23 minutes ago, SpectrumFX said:

That's easy. People end up with wildly different definitions, but they mostly get there by the same method.

If you've got more money than me then your rich.

xD

In income terms the key factor is how much surplus can you generate after paying out for basic living expenses. If you can accumulate capital you are under less pressure to borrow and pay interest on debt which needless to say is another largely invisible “tax” on earnings. That debt tax payable to lenders never gets mentioned but it as real a levy on many people as income tax.

Edited by Virgil Caine
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10 minutes ago, Virgil Caine said:

A Band D Council Tax Dweller In Middlesbrough   earning £25000 in the U.K. an individual would pay 

Income Tax - £2498.20 + Employees NIC £1860 + Council Tax £2049 = Total £6407.20

That is 25% of income gone before even counting indirect taxes such as VAT on purchases, Alcohol Duty, Insurance Taxes, Fuel Duty etc which have been estimated to cost the average worker another £3000 per annum so I would estimate that a working individual on average salary easily pays 40% of it back in tax.

 

That’s an entirely different calculation to the 46% income tax + NI that was being claimed. The HMRC site says someone on 25K without other income pays 4358 in tax + employee NI. Check here:

https://www.tax.service.gov.uk/estimate-paye-take-home-pay/your-results
 

That’s 17.5%. A band D house in Middlesborough has 2049 council tax as you say, but someone on 25K with a family to support would almost certainly be able to get a reduction (not to mention working  tax credits) and a single person living alone would automatically get 25% off. So maybe 30% of income maximum for a single person but not close to 40 let alone 46. Oh, and housing benefit of some amount if renting as a family.

And it seems very unlikely someone on 25K is spending the near 15K a year you’d have to spend on non-zero VAT rated stuff and fuel to get to another 3K of tax out of that.

 

 

 

 

 

 

 

 

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