...And if I may: I'm not against people being rich. I don't like rich people not paying their proportionate share on the money people earn that is available personally for them to spend, regardless of source. And overall, the rich need to demonstrate that they pay their proportionate share.
But the rich do pay their fair share and then some! This is adequately demonstrated in the tax data where the top 1% pay 22% of income tax and the top ten % pay 62% of all income taxes and 85% of all CGT.
Those big gross numbers are impressive. But again, what percentage do they pay as a proportion of the money they take home each year? (again, not just salaried income).
Those numbers don’t really exist because taxation of assets is lumpy and increases in asset value is not ‘income’. The income taxes stats include all taxable income like dividends and not only salaries.
Yes, but rich people seem to be able to keep more of the money they take home than poor, even if they pay a higher salary tax. If we're talking other taxes, we can look at total effective tax rates. The poorest 10% pay an effective 48% tax rate; the richest? 39%. equalitytrust.org.uk/news/press-r...
For people with very low incomes it’s basically dominated by council tax which is actually regressive. But it’s a v hard group to measure since (1) people in the bottom 10% are not static and that group has huge churn year on year (2) quite a few of the people in that group are homeowners.
Indeed. Rich people may pay more income tax on salaries, but as you say their tax picture is complicated. As it is for poor people. This is why I think it is hard to justify saying that inequality is a 'brainworm' without considering the tax burden as a proportion of (all) income, not just salary.
Taxable income includes all income from investments. There are some edge cases but you are imagining (I think) that business income and dividends etc aren’t counted but they are.
They pay a much higher proportion of the taxes than they take in income share. The UK tax system really is effectively taxing the rich and really is among the most progressive tax systems in Europe.
No argument from me there. If we are talking about salaried income.
It includes all taxable income subject to income taxes: eg dividends etc. what is not included is increases in wealth caused by asset values increasing (which is subject to CGT).
Subject to tax…….
Hmm... As I understand things, as you get richer, more of your wealth and income comes from investments and capital gains. 24% CGT is less than 45% top rate or the tax on a salary above £50k. You end up paying less tax than on comparable salaried income. Not a tax expert, so happy to be corrected.
The thing is that assets and income are not the same thing. It’s like comparing house prices to income. 1% of your house price annually can be a very large fraction of your income! Asset growth is the same.
Indeed. And at some point, you turn that asset growth into cash. And pay only 24% on it.
Sure. But that isn’t a tax on income so it’s hard to compare. And usually what you do when you are rich is buy other assets that produce cash and pay yet more tax. As I mentioned earlier there is a strong case for reducing CGT because we actually want more business investment.