Budget 2015 - A budget of no consequence.

Loughton_Monkey

michaels wrote: »

I just don't get this.

I earn probably top 15% of incomes and feel I have paid 'more than my share' with the loss of child benefit, the increase in VAT (which hits the better off more as we spend a lower proportion of our income on zero rated food and low rated energy) and the fact that the 40% tax threshold has been adjusted so that I didn't benefit from the increase in the personal allowance.

.......

It is a staggering thought that one third of all Income Tax is paid by a mere 1%. Also, apparently, a mere 3,000 people in UK pay more tax than the bottom 9 million taxpayers.

The $64,000 question, of course, is at what rate(s) of tax do we maximise total revenue? Irrespective of politics, this surely should be the objective of Miliband as well?

With such a huge proportion paid by the few 'rich', they are well equipped to find ways of managing their tax down (using legitimate methods). My understanding is that we are currently benefiting from quite a large contingent of uber-rich French who can domicile themselves wherever they want at the stroke of a pen.

My own guess is that the 'optimum' tax regime would be a little bit 'South' of where we are now. So putting rates back 'North' will actually reduce tax revenue. The bulk of voters would not understand (or believe) this.

padington

michaels wrote: »

I just don't get this.

I earn probably top 15% of incomes and feel I have paid 'more than my share' with the loss of child benefit, the increase in VAT (which hits the better off more as we spend a lower proportion of our income on zero rated food and low rated energy) and the fact that the 40% tax threshold has been adjusted so that I didn't benefit from the increase in the personal allowance.

Had I been on minimum wage I would have gained a lot from the increase in the personal allowance, the vat increase would have impacted a much smaller proportion of my income as most of it would be spent on energy, food and kids clothes, I would still be getting child benefit and full tax credits, housing benefit and council tax benefit (unless I was already receiving more than 26k which is more than my take-home after housing and council tax).

Surely the figures on falling child poverty and reduced income inequality show that over this govt it has been higher income 'typical tory supporters' who have done worse?

Not when you factor in house price rises and rent increases. Generation rent has got fairly shafted. Social mobility is far worse then it was from where I'm standing.

The effort needed to get a landlord off your back if you start with nothing in London is now heniously hard.

BobQ

michaels wrote: »

I just don't get this.

I earn probably top 15% of incomes and feel I have paid 'more than my share' with the loss of child benefit, the increase in VAT (which hits the better off more as we spend a lower proportion of our income on zero rated food and low rated energy) and the fact that the 40% tax threshold has been adjusted so that I didn't benefit from the increase in the personal allowance.................


Surely the figures on falling child poverty and reduced income inequality show that over this govt it has been higher income 'typical tory supporters' who have done worse?

The IFS has stated

The coalition government has implemented a set of tax changes which, broadly speaking, have left middle income households better off and have hit high income households. Accompanying benefit changes have reduced the incomes of poorer working age households and reduced the incomes of most families with children.

Taking these tax and benefit changes as a whole, they have reduced the incomes of low-income households with children and the very richest households by the most as a percentage of income. By contrast, middle to higher income working age households have escaped remarkably unscathed on average; those without children have actually gained from the changes.

These are two of the main results from a new IFS Election Briefing Note on the impact of tax and benefit changes on household incomes being published today with funding from the Nuffield Foundation.

http://election2015.ifs.org.uk/uploads/publications/pr/ebn_pr_distributional.pdf

I guess it depends on what you regard as high and low. I think everyone is worse off to a degree although well paid people without children and mortgage free have done much better than those with both.

In austerity most people will suffer to some degree, but those benefiting are generally those with higher incomes (top 5%). The low paid are particularly disadvantaged since they rely more on the very public services that Osborne believes we can no longer afford.

jamesd

The IFS publication also says that the richest tenth of households have lost out the most in both cash terms and as a proportion of their income if the Budget changes announced just before the last election are included. Just using the May 2010 to May 2015 changes the drop is a bit over 4.5% for the highest 10% of incomes, a loss of around £2,300 in cash. The highest other drop overall is about 1.1% in the second decile, around £525.

This is from a publication in January 2015 so it doesn't include any changes in today's Budget.

BobQ

michaels wrote: »

Surely the figures on falling child poverty and reduced income inequality show that over this govt it has been higher income 'typical tory supporters' who have done worse?

What child poverty figures are these? There has been an artificial reduction as a result of falling incomes. Hardly a credible claim, but no doubt one that Osborne is willing to spread.

http://www.bbc.co.uk/news/uk-18436795

FOI Request: Rates of UK Child Poverty


http://www.ons.gov.uk/ons/rel/household-income/household-disposable-income-and-inequality/2013-2014/index.html


Request

Under the Freedom of Information Act, please could I have:

1) The rates of UK child poverty each year from 2004-2014 in relative terms (expressed as percentages of the child population of the UK if possible)
2) The rates of UK child poverty each year from 2004-2014 in absolute terms (expressed as percentages of the child population of the UK if possible)

Thanks for any help you can give.

Response

Thank you for your request. Following a search of our paper and electronic records I can confirm that the Office for National Statistics does not hold the information you have requested. The Department for Work and Pensions produces HBAI (Households Below Average Income) statistics which may be able to assist you further. The statistics can be found here:

https://www.gov.uk/government/statistics/households-below-average-income-hbai-199495-to-201213

As to income inequality I was taken with this on the ONS website:

In this release


This release has been cancelled.

ONS had hoped, in the light of user demand, to produce estimates of median household income and inequality for 2013-14 on a quicker timetable than the annual "Effects of Taxes and Benefits on Household Income" article, which is normally published in the early summer, and provisionally announced a date for March 2015. However, the need to resolve issues with the source data mean that this cannot now be achieved. Instead the data will appear as usual in the taxes and benefits article, which has been preannounced with a provisional date of June 2015.

These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority

michaels

A quick google suggests that the personal allowance has gone up by 3525 since 10/11 but the 20% band has fallen by 5545 so on 60k income tax payable has fallen by £303 but of course NI has risen by 1% on all income over about 42k so £180 more NI) so a total gain of only 120. Then with 3 kids I have lost 2500pa of child benefit so a total loss of £2380 on a take home of (tax plus benefits) £44,708 or 5.4% which puts me in percentage terms worse off than any of the IFS report deciles and in money terms as badly off as the top decile. And this is before considering the effect of the 2.5% increase in VAT. Suppose I spend 20k pa on VAT rated goods that increases the reduction by another £500 or 1% of post tax income

Grand total loss is 2880 on 44708 = 6.4% and of course that is just in nominal terms.

BobQ

jamesd wrote: »

The IFS publication also says that the richest tenth of households have lost out the most in both cash terms and as a proportion of their income if the Budget changes announced just before the last election are included. Just using the May 2010 to May 2015 changes the drop is a bit over 4.5% for the highest 10% of incomes, a loss of around £2,300 in cash. The highest other drop overall is about 1.1% in the second decile, around £525.

This is from a publication in January 2015 so it doesn't include any changes in today's Budget.

James, you are right. 90th percentile is about £80-85K I think. I wonder if the same impact on the top 10% would be seen if you looked at the 95th+ percentiles?

Thrugelmir

BobQ wrote: »

The low paid are particularly disadvantaged since they rely more on the very public services that Osborne believes we can no longer afford.

There's something wrong when people require monetary support just to survive. Rebalancing the economy is a far bigger task than just reducing reliance on the financial services industry and increasing exports. Welfare support should only be given to those who truly need it.

Generali

BobQ wrote: »

The IFS has stated



http://election2015.ifs.org.uk/uploads/publications/pr/ebn_pr_distributional.pdf

I guess it depends on what you regard as high and low. I think everyone is worse off to a degree although well paid people without children and mortgage free have done much better than those with both.

In austerity most people will suffer to some degree, but those benefiting are generally those with higher incomes (top 5%). The low paid are particularly disadvantaged since they rely more on the very public services that Osborne believes we can no longer afford.

Isn't this moving the goalposts though? Since 1997 we've been bombarded with a measure of poverty that is effectively a measure of inequality. Then a Tory Government gets in and addresses inequality and all of a sudden we're back to absolute changes again.

Clearly the IFS isn't some dodgy single agenda leftist group but this does all rather seem like they're trying to paint the Government in particular colours, perhaps unfairly.

My take on Government spending is that the poor do best of all from a better economy: the poorest in the UK do much better than those in the middle in most countries of the world. For example, the bottom 10% in the UK earn about £8,600. That's more than double the median income in China for example.

jamesd

BobQ wrote: »

James, you are right. 90th percentile is about £80-85K I think. I wonder if the same impact on the top 10% would be seen if you looked at the 95th+ percentiles?

I posted a list and a link to a single percentage point at a time HMRC spreadsheet earlier today. You're way out based on that data, with 80-85k being in the 96th percentile and the 90th percentile being £49.2k.

This covers tax payers only, for 2012/13, so it's not perfect, and it's also by tax payer, not household, so it is below the household income levels. You're pretty well informed but there are lots of things to surprise people when they look at the real data and I've also been surprised at times.