Income Inequality Falling under the Tories

[Deleted User]

looks like a race to the bottom

grizzly1911

antrobus wrote: »

So inequality has fallen again?

This time last year the IFS were reporting;

Income inequality in the UK fell sharply in 2010–11. The widely-used Gini coefficient fell from 0.36 to 0.34. This is the largest one-year fall since at least 1962, returning the Gini coefficient to below its level in 1997–98.

http://www.ifs.org.uk/comms/comm124.pdf

Statistics eh.

Official figures show that the least well off households have been coughing up 36.6% of their income to the Treasury.
But the wealthiest have been paying less – 35.5%.
The Office for National Statistics, which released the report, partly blamed the tax scandal on millionaire Mr Osborne’s controversial decision to raise VAT to 20% in January 2011.


http://www.mirror.co.uk/news/uk-news/poor-officially-pay-higher-tax-2043852

antrobus

grizzly1911 wrote: »

Statistics eh.

Official figures show that the least well off households have been coughing up 36.6% of their income to the Treasury.
But the wealthiest have been paying less – 35.5%.
The Office for National Statistics, which released the report, partly blamed the tax scandal on millionaire Mr Osborne’s controversial decision to raise VAT to 20% in January 2011.


http://www.mirror.co.uk/news/uk-news/poor-officially-pay-higher-tax-2043852

Particularly if you take them from the Daily Mirror.:)

The actual statistics from the ONS show the "least well off households" i.e the bottom quintile, with an 'original income' of £5,436 and 'final income' (after tax and benefits) of £15,823. Which would imply an effective tax rate of almost minus 200%.

Masomnia

woodbine wrote: »

looks like a race to the bottom

Even inequality isn't safe from Tory cuts!

Generali

It seems that the changes were mostly driven by increases in VAT in 2011.

That gives the lie to the idea that VAT is a regressive tax: in the UK about half of purchases are of zero rated items which means that poor people pay very little VAT as they spend disproportionately on things like food. IIRC, the increase in VAT in 2011 was attacked by left wing media organisations as a tax on the poor. The reality, as shown by this article, is that it is nothing of the sort.

The comments section of the Guardian piece on this is interesting:

http://www.guardian.co.uk/uk-news/2013/jul/10/income-gap-narrowest-margin-25-years

Lots of people who either refuse to believe the stats or decide that because this metric shows that the Tories' taxation policy has reduced income inequality, another measure is required!

the_flying_pig

its' certainly true that benefits [and minimum wage] have kept pace with inflation whilst pay has not.

but it's be absurd to paint this as a triumph for tory policy - allowing these to continue to rise in line with inflation: (1) is just a continuation of policies that have been around for aeons; and (2) is something that the tories would dearly love to do away with if they thought they could get away with it.

Generali

the_flying_pig wrote: »

its' certainly true that benefits [and minimum wage] have kept pace with inflation whilst pay has not.

but it's be absurd to paint this as a triumph for tory policy - allowing these to continue to rise in line with inflation: (1) is just a continuation of policies that have been around for aeons; and (2) is something that the tories would dearly love to do away with if they thought they could get away with it.

Nonsense.

The Tory policies of increasing pay and benefits for the poor while increasing taxes on the rich have redistributed income. I'm not sure why that's such a bitter pill for you. I would have thought it would be exactly the sort of policies you'd like Labour to follow so what makes them wrong when the Conservatives do the same?

the_flying_pig

Generali wrote: »

Nonsense.

The Tory policies of increasing pay and benefits for the poor while increasing taxes on the rich have redistributed income. I'm not sure why that's such a bitter pill for you. I would have thought it would be exactly the sort of policies you'd like Labour to follow so what makes them wrong when the Conservatives do the same?

i'm not following you.

(1) when did the minimum wage & benefits ever not increase in line with inflation? when did the tories make a change to ensure that this happened?

(2) when did the tories "taxes on the rich"? in terms of income tax Labour increased the top rate & it took the tories a little less than two years to reverse half of the increase.

or am i missing something?

angrypirate

the_flying_pig wrote: »

its' certainly true that benefits [and minimum wage] have kept pace with inflation whilst pay has not.

but it's be absurd to paint this as a triumph for tory policy - allowing these to continue to rise in line with inflation: (1) is just a continuation of policies that have been around for aeons; and (2) is something that the tories would dearly love to do away with if they thought they could get away with it.

Continuation of Policies that have been around for aeons? Like increasing VAT to 20% (which typically means the rich pays more than the poor)?
Child tax credit changes for high earners?
Capping the salary increases for higher paid public sector workers?

I believe non of these policies have been around for ages and would have all contributed

the_flying_pig

angrypirate wrote: »

Continuation of Policies that have been around for aeons? Like increasing VAT to 20% (which typically means the rich pays more than the poor)?
Child tax credit changes for high earners?
Capping the salary increases for higher paid public sector workers?

I believe non of these policies have been around for ages and would have all contributed

OK, right.

you make three suggestions here, they're all a bit different.

(1) increasing VAT to 20% - there's no very clear evidence as to whether VAT increases are progressive or regressive. it was always popularly supposed that VAT is regressive, but, well, who knows. what i think we can agree though is that VAT increases are more regressive [tho more lucrative] than some of the alternatives, most obviously top rate income tax increases.

(2) cutting benefits for high earners - fair enough, that had an impact, but these are almost entirely libdem policies that wouldn't have had a prayer of coming in under a pure tory government.

(3) capping salary increases for high paid PS workers - yeah, maybe but...


the Tory mantra about the relationship between their policies and equality, to the very dubious extent that you coudl find a tory who believes that equality is important, would be something along the lines of, oh, i can't begin to imagine, something like 'if you give the poor no help at all, but tell them that if they can somehow defy the odds & become rich, then they'll hardly get taxed at all, then this will incentivise them to work very hard and become more equal'.

of course we're a very, very long way from anything that's at all like this happening.

what we have seen instead is the very short term impact of some very obviously labour & libdem policies... and as i said earlier, the climbdown on the 50% tax rate will almost certainly mean that the 12/13 numbers will show a move back towards being less equal.

another obvious point is that the tories blocked a mansion tax.