A must read - really interesting statistics about income/tax distribution between rich and poor that no-one seems to be talking about. The fall in income since 2007/8 has been largest for the richest fifth of households (5.2%). In contrast, after accounting for inflation and household composition, the average income for the poorest fifth, after tax and benefits, has GROWN over this period (3.5%). Yes, I accept, that during this Parliament asset values have gone up so net wealth has increased at the top but in actual income terms the poorest fifth have, due to government intervention using taxpayers money, done better than the richest fifth. Currently fifty-two per cent of households received more in benefits (including in-kind benefits such as education) than they paid in taxes in 2012/13. This is equivalent to 13.8 million households. That means HALF of all households in the UK are subsidised by taxes paid by the other half. Before taxes and benefits the richest fifth of households had an average income of £81,300 in 2012/13, almost 15 times greater than the poorest fifth who had an average income of £5,500 HOWEVER after all taxes and benefits are taken into account the ratio between the average incomes of the top and the bottom fifth of households (£59,900 and £15,600 per year respectively) is reduced to four-to-one. SO the government IS redistributing income from the top to the bottom in a very substantial manner. In this global market there is a fine balance required to maximise the tax return. There comes a point where if you increase tax too much you end up taking less money overall because the wealthy reach the point where they move their money overseas, or just emigrate. Osborne has done a good job of optimising that take. Labour and the LibDems risk having politically correct high tax rates (which might win them more votes) but actually ending up with less money overall in tax, alongside which the economy would be damaged by the wealthy (who actually stimulate wealth creation as well as pay tax and buy lots of things) leaving the UK. If the top 3,000 earners left the UK due to high taxation (quite conceivable), recovering the lost tax income would be the equivalent of having to double the total taxation on the bottom 9 million earners. If the state drives taxes up too high in the end it is the ordinary people who end up paying not the rich. The trouble is once you start the high taxation game, which results in less tax being taken (because the top people leave) it quickly spirals with even higher tax rates being imposed to maintain the overall tax take which means that more people leave (or people stop seeing it as worth making the effort to earn more) tax rates then have to be increased again, etc. etc. etc. You just wait, were Labour to get in in 2015, the Mansion Tax limit over the course of that Parliament would almost certainly come down from £2M to £1M, and the top rates of tax creep up alongside bands coming down harming everyone and the economy as a whole, while the rich sail off on their yachts. Just look at France (or UK in the 1970s) for an example of what socialist policies can do in terms of damaging a major economy. YES it is right that the richest pay the most tax, and currently THEY DO. BUT it is unacceptable for the politicians to take, and spend as they please, nearly half of ALL the value created in this country ! ons.gov.uk/ons/dcp171778_367431.pdf
Posted on: Mon, 08 Dec 2014 10:49:35 +0000
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