After 12 years of Labour, the poor pay more tax than the rich

David

Yes, but everytime someone suggests the rich should pay more, you have a go at them complaining it's the politics of envy and drives out wealth producers.

Publius

I wonder what you mean by "socially progressive". What, for example, is the end point of "social progress"?

Is VAT scheduled to go up to 20%. Did I miss that?

bill

I wrote to the then Tory Chancellor objecting to the proposed rise in VAT back in the early 90s. I pointed out it was a regressive thing to do with a recession looming. I got no reply so wrote again. Some Treasury civil servant replied that indirect taxes encouraged investment and there was no sign of a recession.

pregethwr

More importantly the figures also ignore the effects of benefits, tax credits etc

Labour Matters

//After 12 years of Labour, the poor pay more tax than the rich// if you discount benefits and tax credits and they drink and smoke heavily.

Tory 'solution'? Have them pay more by paying 20%+ VAT.

(Nice one James Forsyth; in trying to create a false premise you've inadvertently highlighted another reason why Cameron & co are bad news.)

C Powell

I don't suppose the abolition of the 10p tax rate has helped either. And the fact that someone on the minimum wage pays tax is an absurdity. Surely the aim must be to raise the level at which tax is paid at all and have a lower starting rate? As for "sin taxes", there are easily avoided so I don't agree that they are socially regressive. A tax you can avoid (no-one has to smoke or drink) is far better than an income tax rate of 20% on a low income, especially when coupled with the withdrawal of benefits, the marginal tax rate is far far higher.

luke

Has james just given away more than he meant to about the tory plans on vat?

seb2

Really puts all the nonesense about 50% marginal tax rates on the rich into perspective, doesnt it..

Once you factor in tax credits I think this will look much better at the bottom end as well

simon hb

It's awful, yes - but it twas ever thus, at least since the introduction of the purchase tax. The poorer you are, the greater your marginal propensity to consume - you spend more of your income on things - and thus you wind up incurring a larger proportion of purchase taxes. I'm not sure why basic economics is being run as news, though?

R King

A flat tax of say 10 to 15% is surely the fairest system.
The more you earn the more you pay. All tax dodges removed!

Boom Boom

Is it because Brown is the first intellectual Prime Minister since Gladstone and Palmerston?

I stopped reading this nextleft post at this point - the guy must have been 'stoned' when he wrote this.

Penfold

Any chance of having these figures include MP's pay and allowances?
It's always been the way that the poor pay more than the wealthy.
Yet after 13 years of NuLieBour, all the social re-engineering, all the spending, the torrents of promises, they have done nothing, apart from bringing in the 50p tax rate and hiking N.I. contributions for all.
No one seems to have courage to do a top down restructure on how taxes and allowances need to be reformed in this country.
It was an absolute outrage that the Blairs were allowed to claim child benefit whilst at No 10 given the joint incomes.

Peter from Maidstone

What do you mean by sin-taxes? Do you mean that the poor choose to waste the smaller amount of money they have on cigarettes, drink and gambling? If so then surely that is their own choice. What proportion of income is taken as tax for a poorer person who chooses not to waste it on smoking, drinking and gambling? Poor people have choices, just like the middle class trying to keep their heads above water without any benefits and having to pay children through university. Everyone has choices and the middle classes have to cut things out of their budgets they can't afford, why not the poorer folk as well?

Publius

@Labour Matters
I think you miss the point in Mr Forsyth's final sentence. Taxes have pretty much reached their upper limit. Expenditure needs to be reduced.

Andy Leeds

One is hardly surprised. It is about time we had a root and branch reform of the tax and benefits system. It is absurd. I agree that we should cut the middle class benefit train, but a way of doing this is to simplify Income Tax and bump up the personal allowance. I agree with C. Powell that it is absurd for some one on minimum wage or very low earning to pay any tax. A friend lives in Greece. He pays no tax until he has earned over 12000 euros.

And all this Tax credit nonsense, devised by Gordon the Moron are a product of a Byzantine mind. It is a stupid and basically unworkable system. Much like everything else Labour invent, including themselves.

Colin

In the UK, the poor don't pay more tax than the rich. Unless, of course, you're are seriously suggesting that all rich people, break the law and evade tax.

The fact is, everyone in the UK pays too much tax, for very little relative value in return. The tories should explore the move to a universal, low, flat tax rate, for everything.

JM G

The 20% VAT is actually inferred as a scheduled Labour increase.

Kyle Harrison

We should stop middle class tax credits and the like, it is totally pathetic that people with money still get more taxpayer money. We should scrap it and then lift the income tax threshold so the poor simply don't pay tax.

Fony Blair

Pathetic figures. You have to take account of benefits and tax credits when considering marginal tax rates.

It feels as though middle England is being clobbered by tax (with no return via benefits)

Rex Burr

In the future, the very near future, energy or carbon taxes will be looked upon as ‘sin tax’. Wicked people who put CO2 into the atmosphere must be chastened.
They will have a choice.
Pay the tax and continue as before, as those who can afford to will do.
Reduce energy consumption, as those who can currently afford to consume more energy than they really need, will do.
Go cold or broke, as the poor will do.

Kevyn Bodman

C Powell and Andy Leeds are right.

Why can't any politician in power, or potentially in power, say the same?

maringa

Without wishing to get into the rights and wrongs of a so-called " progressive" taxation system, the headline is incorrect when it says that the poor pay more tax. A smaller percentage of a higher number may be (and in this situation probably is) more not less.

Why accept the false premise that the rich do not pay more tax than the poor? I suspect the vast majority of the so-called rich each pay considerably more money into the Exchequer than each of the so-called poor.

Perhaps I am being unrealistic in expecting commentators not to use inaccurate headlines.

Roger

If earning 60% of average wages classifies one as poor, then why should such a person pay any income tax?

Bocephus

This is nonsense. Especially if the "poor" have children. The poorest people pay virtually no net tax. They live off benefits/tax credits. Any tax they pay on purchases is off set against the benefit they receive. Therefor if they are given £10k in benefits/tax credits and pay £4k in "sin" taxes they have still received a net £6k in benefits, paid for from the taxes of the wealthy.

Fergus Pickering

Who are these nerds who suppose that money spent on fags and booze is money wasted? I don't regret any of it - except the iniquitous taxes slapped on these marvellous commodities by various governments. Maringa, what do you mean by the so-called rich. The people we are talking about are rich. And how do they get rich? By stealing from the poor, my friend, that's how. Observe Fred Goodwin and his ilk. Thieves, the lot of them. Abolish all purchase taxes. Income tax nil on less than £15,000. Then 20, 30, 40, 50, 60% The richer you are, the more you pay. Encourage the bastards to work harder. Oh, and a big tax on every child after the third. Or maybe the second. I haven't decided. Oh and men pay a 5% surcharge for being men.

Mark M

The top 20% pay less than 25% gross in income tax? That's quite impressive seeing as they have a 40% rate. If there was ever an argument for a flat tax there it is. Just how much of their income do the rich take in 'capital gains' to pay it at 18%? I certainly would if I was them.

Nick

Aren't we missing something? Council Tax. The highest band H covers all houses worth over £320k in 1991, covering anything from a 4-bed family house to a £10m mansion (in the same local authority area - and richer areas tend to be cheaper). Band H is fixed at twice the "average" band D rate, and only 3 times band A (which doesn't cover a bedsit in outer London). People on low incomes are hit disproportionately hard.
Throw in 40% tax relief on pension contributions for high earners (why didn't Darling scrap this?) and the ability to pay expensive accountants to find tax-avoidance loopholes, and it's not surprising that bankers boast of paying less tax than their cleaners.

Dirty Euro

So we should increase taxes on the rich then.

Andy Leeds

Actually I think the report is correct. When Gordon the Moron abolished the 10p tax rate this impacted far more on the poor because it doubled their tax rate. He is so stupid he couldn't see this.

I agree about Council Tax. Labour have used this to soak the middle classes. I think it is time we abolished this unjust tax and brought in a local income tax which properly reflected what local councils spend. It would make for much better accountability.

But I still want a root and branch reform of the tax and benefit systems. It is morally wrong to tax someone so heavily that they are then given their own money back as a benefit. Labour loves this (client state crap) but it is demeaning and humiliating for people to be placed in such a position.

Andy Leeds

Actually I think the report is correct. When Gordon the Moron abolished the 10p tax rate this impacted far more on the poor because it doubled their tax rate. He is so stupid he couldn't see this.

I agree about Council Tax. Labour have used this to soak the middle classes. I think it is time we abolished this unjust tax and brought in a local income tax which properly reflected what local councils spend. It would make for much better accountability.

But I still want a root and branch reform of the tax and benefit systems. It is morally wrong to tax someone so heavily that they are then given their own money back as a benefit. Labour loves this (client state crap) but it is demeaning and humiliating for people to be placed in such a position.

Giles Wilkes

This is pretty old news, and has been the case fairly continuously, because of consumption taxes, probably going back to Pitt's day. In fact, because excise and customs taxes have hit consumption fairly evenly throughout history, it was only when Labour was in power in the 1970s that this effect was ever close to being countered by the income tax system.

You can get all the figures here:
http://www.statistics.gov.uk/statbase/product.asp?vlnk=10336 (use the Excel sheets)

Missing out the effect of benefits really distorts the point. The bottom decile gets £4518 in 'original income', grossed up to £7664 once benefits etc come in, and ends up paying taxes of £3185. Do you do £3185/£4518, or £3185/£7664 ?

And what exactly is JF calling for?

Lawrence

Are you mad? Where do you get these figures from?
The top fifth pay 24.9% in tax!!!!
Ludicrous. The real figure is close to 62.5% .
That is what top earners pay who earn salaries.

David Mitchell

I am a retired teacher and pensioner with total pretax pension income of £16000 per year. A short while ago I worked out that, including council tax, income tax, VAT, excise duty and other 'hidden' taxes I paid about 40% - not far off the above statistic!

k Chan

I am also a pensioner. My pension comes from Hong Kong. I get what David Mitchell would AFTER paying tax because I don't pay tax with that amount of income. The Hong Kong Government normally runs a surplus. The UK government normally runs a deficit. Where has that 40% gone?

Rachel Dawson

I noticed some comments about benefits etc not being taken into account...and also one mentioning the 'poor' using their money on gambling, drink and smoking.

Firstly I earn approx £16,000, am a part time student and am actually disgusted by how much tax I have to pay on what really is not a generous wage, and I work full time.

I AM NOT claiming any kind of benefit as I earn too much to do so apparently, so trust me, I consider that the rate of tax I am currently paying is leaning towards opressive.

Whilst some are getting help via benefits, there are a number of people who earn slightly too much to do so, who now pay more tax and it seems are frankly forgotten by this government and penalised for working at all.

Matt Davies

All taxation is thieving at the end of the day. That's a fact.

Bly

The top rate of income tax is 40% and NI adds a further 12%. Anyone earning over £38k pa without children pays around 40% in direct taxation.

Leaving aside council tax, inheritance tax, capital gains tax, etc., which the lowest earners typically do not pay, it's nonsense to suggest that the lowest earners pay more tax.

Leaving aside the benefits of tax credits, which reduce the net amount paid in direct taxation by low earners, it should be apparent that 24.8% of £10K pa is a darn sight less than 24.8% of £40K pa.