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cells

kinger101 wrote: »

Last year, HMRC collected £515B.

I think the £37k figure sounds realistic for each individual not each household. So if your household has two adults in it then it needs to be earning 2 lots of £37k to be break even.


Ok £515B. Assuming 65 milion people and 85 year life expectancy gives ~£8k per capita or ~£675k per lifetime. 45 year working life gives ~£15k needs to be paid in taxes per working year to be a break even citizen.

An income of £53k would do it but most people also pay VAT council tax and other taxes so realistically less than that.

BobQ

Mistermeaner wrote: »

does anyone have data on the tax paid by whom; e.g. how many people are paying no tax, low rate, high rate, even higher rate etc

I'm sure I saw something somewhere about 5% odd of the population paying something like 90% of the taxes

http://www.theguardian.com/news/datablog/2014/jan/27/how-many-pay-top-rate-of-income-tax-uk

kinger101

N1AK wrote: »

I think it pretty obviously isn't, and isn't even close. You need to pay nearly £12,000 in tax per person per year to pay your proportion of tax (this ignores the fact that many people including the heavily disabled can't earn enough to pay there's thus everyone else needs to pay more).

If you can be expected to live to 80 on average, and pay very little tax before 20 then you'd need to pay ~£16,000 in tax each year per person including in retirement. Assume you don't both go straight into high paid jobs, and that you aren't going to be pulling a £40k pa pension in retirement and you need to reach a peak income of at least £45k EACH to have much chance of getting near to paying your share.

People massively underestimate just how much you need to earn, and just how much tax you need to pay in order to be a net contributor. There's no way a couple on an income below £40k pa are coming close to paying enough tax to be cost neutral.

I think you missed the point about indirect taxes, CGT, IHT and corporation tax entirely.

Income Tax and Employee's NI brought in about 40% of the total collected by HMRC.

In addition the the Telegraph article I posted, there's another one here done by someone else (CPS) that would support the £37K-ish household figure I produced;

http://www.thisismoney.co.uk/money/news/article-2215070/Are-contributor-burden-nations-finances--Squeezed-middle-increasingly-dependent-state.html

We can talk about the early years before we started work, but we were part of our parents household then. As for the last 20 years, many still pay tax on deferred income at that point.

N1AK

kinger101 wrote: »

In addition the the Telegraph article I posted, there's another one here done by someone else (CPS) that would support the £37K-ish household figure I produced;

We can talk about the early years before we started work, but we were part of our parents household then. As for the last 20 years, many still pay tax on deferred income at that point.

If you don't count your own 'early years' then you have to count your children's early years and the end result is effectively the same.

In short the reason why your £37k figure is wrong, and why your sources don't support it is that they look at a single year not a lifetime. You need to average that household income over your entire lifetime, including the period before work and in retirement. It also ignores the need for people capable of working to contribute more to cover for those unable to contribute due to severe disability or illness.

If you live to 90 years old you need to pay the equivalent of £1.05 million in tax over your lifetime to cover your individual share of government spending (based on the current rate). This would be doubled for a couple, and I don't find it remotely believable that a couple who reach a peak income of around £37k come anywhere near to paying £2.1 million in tax.

westernpromise

N1AK wrote: »

If you live to 90 years old you need to pay the equivalent of £1.05 million in tax over your lifetime to cover your individual share of government spending (based on the current rate). This would be doubled for a couple, and I don't find it remotely believable that a couple who reach a peak income of around £37k come anywhere near to paying £2.1 million in tax.

That would be around £23k per year of a working life of 45 years. So you'd need to be earning £74k a year to contribute this through PAYE alone.

If you took the figure of £37k above, the state rakeoff falls to £9k, leaving you with £28k to spend. If you assume a quarter of that goes on housing and the rest is all spent on things that attract VAT, fuel duty or other taxes at a rate of say 30% (probably easily reached if you drink, drive or pay stamp duty), that's another £6500 that goes on tax.

So that's £15k a year versus your cost of £23k.

The £8k difference is made up by me.

N1AK

westernpromise wrote: »

If you took the figure of £37k above, the state rakeoff falls to £9k, leaving you with £28k to spend. If you assume a quarter of that goes on housing and the rest is all spent on things that attract VAT, fuel duty or other taxes at a rate of say 30% (probably easily reached if you drink, drive or pay stamp duty), that's another £6500 that goes on tax.

So that's £15k a year versus your cost of £23k.

It's very unlikely that you get near 30% average taxation/duty on average spending, even if your a drunkard chimney but fundamentally you're figures are vastly closer to reality than the £37k household income is neutral claim others are making.

Factor in that you're assuming the highest tax case of one £37k income not two lower incomes, that you're assuming no out of work periods due to unemployment, parental leave, illness, holiday etc, that you get tax relief on pension contributions and the already considerable gap you calculate gets larger and larger.

N1AK

kinger101 wrote: »

As for the last 20 years, many still pay tax on deferred income at that point.

To raise this as a separate point: If your private pension is good enough that you're paying a notable amount of tax in retirement then your household income almost certainly peaked considerably above £37k during your working life. For people earning £37k or smaller household incomes pensions actually make the example even worse because they will be getting considerably more relief on income going into a pension than they will be paying on the money coming out.

Finally to re-emphasise at this point my point isn't that the vast majority of people are parasites, as I don't believe you can measure someone by tax contribution alone. It's that far too many people think of themselves as 'hardworking tax payers' who are covering for lower earners who don't pay there way, when in fact they themselves are a net taker.

In short if you earn an average income then don't look down on low earners for being parasites when you're living in a glass house (that someone else is paying for).

westernpromise

N1AK wrote: »

It's very unlikely that you get near 30% average taxation/duty on average spending, even if your a drunkard chimney

Are you sure about that? There's 20% VAT on basically everything, including even the non-food element of food (so you are charged VAT on the preparation element of a ready meal, for instance). There is further duty on booze besides the VAT and the tax on petrol is about 150%. There has been tax at your marginal rate on interest income since the year dot and CGT as well. Apart from insurance premiums and home utilities I struggle to think of anything on which the tax rate is elft than 20% but there are lots on which it is more. If people move house every 7 years and pay stamp duty then that, distributed across the intervening years each time, adds still more.

Factor in that you're assuming the highest tax case of one £37k income not two lower incomes, that you're assuming no out of work periods due to unemployment, parental leave, illness, holiday etc, that you get tax relief on pension contributions and the already considerable gap you calculate gets larger and larger.

That's why I took 45 years - from 16 to 65 is 49 years so I assumed 10% off that. But yes, even on that optimistic basis it's a lot of lolly.

N1AK

westernpromise wrote: »

Are you sure about that? There's 20% VAT on basically everything, including even the non-food element of food (so you are charged VAT on the preparation element of a ready meal, for instance). There is further duty on booze besides the VAT and the tax on petrol is about 150%. There has been tax at your marginal rate on interest income since the year dot and CGT as well. Apart from insurance premiums and home utilities I struggle to think of anything on which the tax rate is elft than 20% but there are lots on which it is more. If people move house every 7 years and pay stamp duty then that, distributed across the intervening years each time, adds still more.

I think I've probably allowed my own bias towards VAT exempt grocery shopping, reasonably modest alcohol consumption, and not smoking unduly influence my perspective.

I'm not sure I'm persuaded that 30% is normal but the figure is certainly more believable than I initially thought