MSE News: Mega rich tax bill 'under 10%', while millions pay 22%

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

"Six percent of £10 million-plus earners paid less than 10% in tax, Treasury figures reveal"

Read the full story:
Mega rich tax bill 'under 10%', while millions pay 22%

danothy

It says the figures, released for the first time, underline the need for action to prevent the super-rich exploiting the system of reliefs to reduce their tax bill below that of low-paid workers.

This implies that they pay less tax than low-paid workers

The Treasury's figures show 6% of £10 million-plus earners pay less than 10%

So if they're paying even as little as 5% then their tax bill will be £500,000 while:

someone earning the national average of £25,000 a year in employed income has to give up nearly 22% of their total income in both tax and national insurance, with the bill coming to £5,468.

Which is clearly still a larger tax bill than low-paid workers. Don't get me wrong I don't think this is right:

A Treasury spokeswoman says: "There are currently millionaires paying a lower tax rate than ordinary taxpayers."

But the press association report and headline are extremely disingenuous and just reproducing it like this has really undermined my confidence in this site's attention to detail.

Paul_Herring

The Treasury's figures show 6% of £10 million-plus earners pay less than 10% in tax and a further 3% come in below the basic 20% rate. Fewer than three quarters pay more than 40%.

On the other hand, someone earning the national average of £25,000 a year in employed income has to give up nearly 22% of their total income in both tax and national insurance, with the bill coming to £5,468.

So, some of the rich pay ~£1,000,000, ~£2,000,000 and some others pay £4,000,000 a year.

And someone not so rich pays ~£5,500.

The solution is not for the 'rich' to pay even more, but for the government to stop spending so much.

For example, why are we paying China to plant trees?

Why are we giving money to India when they have a nuclear program and a space programme?

Why was an offshoot of the government spending nearly £.5 million on lobbying - yes- another part of the government on a consultation that hadn't even started?

The list goes on.

P.S. This press release from HMRC goes on about "Income" and "Income Tax" only - not all income is subject to income tax. In their numbers they appear to be conveniently/willfully ignoring things such as Capital Gains tax and taxes on dividends which are not "income tax" (for these figures) but are a tax on income. For example:

To take an obvious example, an entrepreneur who cashes out of the company they have built over the years. They haul in £100 million (just as an example, no particular person in mind) having sold the company. What’s their income tax bill on this?

£0.

In fact, it’s:

£0.00

Nothing, zip, nada. For the very good and obvious reason that they’ve just paid 28% capital gains tax on this money. So comparing their total income to their income tax bill is just nonsense.

Googlewhacker

Just another example of MSE behaving like a red top newspaper....

6% is a low % of people who earn over £10 million paying less than 10% of tax.

Also as pointed out, they will still be pay 100 times plus what we 'normal' people pay

corbyboy

All these articles about the mega rich paying low rates of tax are very much implying that they get to keep their non-taxed income.

But the truth is they pay less tax because they are doing other things with their money like putting it into a pension or donating it to charity.

Just because they are paying a 10% tax rate doesn't mean they get to pocket the other 90%. I think it's important to get that distinction out there.

N1AK

It is also absolutely absurd to refer to, 12 I believe (source BBC), such a small number of people as a %. The only reason to do this is to imply the number if bigger and/or more statistically sound.

If those 12 people moved out of the UK we'd lose anything up to £10,000,000 in income tax (assuming the max of 10% paid each). That's equivalent to the income tax raised from over 3,000 people on the average wage.

I think the fact that the majority are paying what appears to be their fair share is actually a very positive sign. Finally, it also doesn't explain how much of the tax was diverted into charitable giving. If it turned out that these low tax payers were in fact giving millions of pounds to cancer research, special schools and medical care it would be a very different story than if they are effectively keeping it by tax avoidance.

Reaper

I agree the article by itself does not hold water. To give an example Bill Gates (yes I know he is American, it's just an example) is currently giving away his fortune to charities. If he was in the UK he would be be included in those stats. Not only that but the new government plans to limit tax relief on gifts to charity would be an incentive to either stop him giving so much or move abroad to a country with less daft tax rules.

Froggitt

The Treasury's figures show 6% of £10 million-plus earners pay less than 10% in tax

So, people earning £10m pay only £1m in tax. How do they do that then? If theyre giving away £8m to charity, fair enough....I dont think anyone should stop them. Otherwise, how do they do that?

Paul_Herring

Froggitt wrote: »

So, people earning £10m pay only £1m in tax. How do they do that then?

By having income that (legitimately) isn't subject to income tax? The figures given only relate to income tax. They don't include things like capital gains tax, or dividend tax, or national insurance or....

MobileSaver

danothy wrote: »

So if they're paying even as little as 5% then their tax bill will be £500,000 while:

Yes, so most if not all of these "super rich" are paying more tax in ONE YEAR than the average person pays in their life time... seems like the rich are paying more than their fair share to me!

danothy wrote: »

this has really undermined my confidence in this site's attention to detail.

Googlewhacker wrote: »

Just another example of MSE behaving like a red top newspaper....

I agree and have mentioned before that MSE's impartiality seems to be in terminal decline in recent times.

Froggitt

Paul_Herring wrote: »

By having income that (legitimately) isn't subject to income tax? The figures given only relate to income tax. They don't include things like capital gains tax, or dividend tax, or national insurance or....

But surely they must still pay the relevant tax on those other sources of income.