Was surprised at this

iolanthe07

Average income figures are always misleading because a few very rich people skew the result. Much better would be to know what the median pensioner income is - a lot less than £22K after tax I would guess.

steadysaver

An interesting take on taxes by a university professor

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.
So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20." Drinks for the ten now cost just £80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the £20 windfall so that everyone would get his 'fair share'?
They realized that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same percent, and he proceeded to work out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid £2 instead of £3 (33%savings).
The seventh now pay £5 instead of £7 (28%savings).
The eighth now paid £9 instead of £12 (25% savings).
The n inth now paid £14 instead of £18 (22% savings).
The tenth now paid £49 instead of £59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a pound out of the £20,"declared the sixth man. He pointed to the tenth man," but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound, too. It's unfair that he got TEN times more than I!"

"That's true!!" shouted the seventh man. "Why should he get £10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.


The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. B ut when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

dopester

And from the article:

On top of that, according to the study for insurer Scottish Widows, a younger generation leaving it late to buy a home are creating a financial timebomb for their own retirement.

If older generations hadn't forced up the prices to mental levels with easy cheap credit and selling houses to one another at ever more increasing prices, and by becoming property magnates with BTL, and running an economy on MEW..... then maybe this generation that has been locked out of the market would have had an opportunity to by at realistic prices.

As it is, thanks for the concern, but with prices on average English property falling £900 per week in June, the timebomb seems to be a dud.

Dithering_Dad

mystic_trev wrote: »

I can see the State Pension being 'means tested' within the next ten years. With millions of 'boomers' retiring it just won't be affordable anymore.

All the evidence points to the opposite of this. We're currently in a position where the Pension Credit benefit is means tested and does act as a disincentive for people to save small amounts in a pension. People have found that they're not allowed the state top-up because they have pension savings.

To prevent this occuring, the government have reduced the number of years you need to pay NI to qualify for a state pension down from 44 years to 30 years. This means that most people, even women who have had time off work to raise children, will be eligible for a full state pension. This will do away with Pension Credit for most people. To pay for this, we now have to work longer and cannot get our state pensions until age 66/67/68 (phased in).

In a couple of years time, no one will be allowed to 'opt out' of the state second pension, so this will mean that more people will have an increased state pension.

People over retirement age also get a much larger tax free allowance, over 10k (though this tapers down if you have a large private pension income).

Essentially, most people will be eligible for a basic state pension, they will not pay tax on this state pension or on their personal pensions under a certain limit.

By the way, the UK has more private pension provision than the whole of Europe added together.

dopester

steadysaver wrote: »

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

If you wind back the clock 40 years, most people could today be retiring as liquid millionaires if they'd just saved the price of a couple of pints every day and spread it in to a basket of investments.

Pobby

Dopester, I warmly agree with you regarding buy to letters. However, I didn`t ask or want cheap credit. Always knew that, for many, it`s a disaster waiting to happen. I, apart from mortgages hate any form of credit. Guess it`s my age.

I don`t think that we, the baby boomers are all to blame for the rise in house prices. I havn`t mewed and I guessmany others in my position get goose bumps just thinking of it.

I stood amazed at the way house prices spiralled out of control and knew that it was all some crazy ponzi scheme.

A guy said to me once that his mothers house was worth £300k and she only owed £150k on it. At the time, I guess it was about 2004, had his mother bought the house in say 1998 the £150k mortgage might well have represented a 100% ltv.

Go figure how crazy that is!

dopester

steadysaver wrote: »

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

I like it.

moanymoany

dopester wrote: »

If you wind back the clock 40 years, most people could today be retiring as liquid millionaires if they'd just saved the price of a couple of pints every day and spread it in to a basket of investments.

In the book 'The Millionnaire Next Door' they give an example similar to this but with fags. A man said his parents had been unable to save anything because they were very poor. The economist chap saw him next day and gave him this examples.

If the couple had saved the cost of fags and then bought shares with the money in the tobacco company - kept investing the cost as the years went by - kept all dividends and additional bonuses - after 38 years they would have been worth $2,000,000.

Look after the pennies ay!

mewbie_2

steadysaver wrote: »

A story about men and beer

At first glance the story makes a lot of sense. To a Daily Mail reader. I haven't got the energy to write a similar story meaning something quite different but it would be along the lines of..

The poor men don't get any beer.
The middle men drink a little beer.
The richer men drink more beer and begrudge every penny they pay to support single parent families, disabled claimants, pensioners, etc.
The richest men don't drink beer, and they don't pay tax. They drink champagne. And they p1ss on the poor men.

mystic_trev

For your well explained arguements against my comments re 'Means tested' State Pensions. I haven't completely changed my mind, but it's what makes these Forums so interesting - and helps reformulate? ones views!