Sorry Boris, but the poor carry the greatest tax burden

The least well off households pay 36.6 per cent of their income in tax compared to 35.5 per cent paid by the wealthiest.

Boris Johnson has a piece in today’s Telegraph in which he claims that we should be ‘humbly thanking the super-rich, not bashing them’.

“the latest data suggest that we should be offering them humble and hearty thanks. It is through their ]the rich’s] relentless concupiscent energy and sheer wealth-creating dynamism that we pay for an ever-growing proportion of public services.”

In other words, the rich are heroes and should be treated as such because they pay a vast amount of tax. The top 0.1 per cent pay an “amazing 14.1 per cent of all taxes”, according to Boris.

The rich do pay a high percentage of the treasury’s total tax share. The problem with Boris’ logic, however, is that it ignores one important fact: the poor pay a higher tax rate than the rich.

According to recent analysis by the Office for National Statistics, the least well off households pay 36.6 per cent of their income in tax compared to 35.5 per cent paid by the wealthiest.

This is partly down to the fact that VAT – which George Osborne put up in 2010 from 17.5 per cent to 20 per cent – hits the poor disproportionately compared to the rich. Low income families spend around 12 per cent of their disposable income on VAT, compared with 7.6 per cent for average households and 5.9 per cent for highest earners.

So while the rich may pay a lot of money in tax, as a proportion of their income it’s actually less than that paid by the poor.

25 Responses to “Sorry Boris, but the poor carry the greatest tax burden”

  1. Jonkarra

    Never let a fact get in the way of dogma!

  2. swatnan

    Johnson never did get that O Level in Logic. What with the disproportionate fraction of their income getting swallowed up in VAT and petrol and convenience food, the poor are also hit with the National Lottery and Bingo and Gambling taxes. Its not a fair world.

  3. Cosimo Montagu

    Lets not forget that if there was a more even distribution of wealth, many of the services the mega rich so generously “pay for” wouldn’t be needed!

  4. Gregory

    “So while the rich may pay a lot of money in tax, as a proportion of their income it’s actually less than that paid by the poor.”

    I think you’re missing the point here. Whilst the very poor pay a higher proportion of their income in tax, which I’m sure we all agree is awful, the tax they do pay does little for the government coffers. It is indisputable that the poor are huge net takers from government (i.e. they pay in less than they use), and the rich are net contributors. Nothing wrong with that, but it does make Boris’ logic quite sound.

  5. Sparky

    This is incomplete analysis.

    People low down the income scale are not being taxed unfairly by VAT. In fact, VAT is conspicuously weighted in favour of zero rate on subsistence items.

    Food -zero rated

    Domestic rent -exempt

    Water to households -zero rated

    Domestic gas and electricity -5% not 20%

    Childrens clothes -zero rated

    Prescriptions -zero rated

    Physical education and sports -zero rated

    Public postal services -zero rated

    Books, magazines, newspapers -zero rated

    I could go on and on with this list of everyday items that have no VAT. In fact, it’s the rich where VAT hits hardest. If I go out a buy a powerboat, the VAT on that boat alone, paid entirely by me, exceeds what a hundred poor people pay in a year of VAT.

  6. Sparky

    Like what?

  7. Sparky

    National Lottery, Bingo and betting and gaming are all exempt for VAT. And as purchases, they are all discretionary items. Convenience food is also a discretionary item. So the poor aren’t being ‘hit’ with these at all.

  8. GO

    This whole line of argument is absurd. A thought experiment:

    Imagine a mini-society made up of 100 bosses on £1 million a year and 100,000 workers on £10,000 a year. Suppose the tax burden is 35% across the board.

    The 100 bosses (roughly the top 0.1%) pay £35 million in tax – about 9% of a total £385 million.

    Suppose the national income of this country then rises from £1.1 billion to £1.2 billion.

    Scenario 1: the bosses double their own pay to £2 million while the workers’ wages are frozen. The bosses now pay £70 million in tax – about 17% of a total £420 million.

    Scenario 2: the bosses freeze their own pay and workers’ wages increase by 10% to £11,000. The bosses continue to pay £35 million in tax, but this is now about 8% of the £420 million total.

    Boris Johnson, like a lot of right-wingers, asks us to admire the bosses in Scenario 1 for generously taking more of the tax burden on their own shoulders, and berate the bosses in Scenario 2 for selfishly shifting that burden on to the shoulders of their workers.

    As I say: absurd.

  9. Huw Jones

    Boris’ analysis is flawed. The proportion of taxpayers and the proportion of the tax they pay are two different measure that should not be compared. It an analysis straight from ‘How to lie with statistics’.

    We can say with certainty that 1% of taxpayers receive 1% of tax bills. This is true across the income range, its true for the richest 1% and its also true that the richest 0.1% of taxpayers account for 0.1% of tax bills. We’re told that the 0.1% richest pay 14% of tax as though its unfair. What we’re not told is the proportion of national income they enjoy. If the 0.1% richest enjoy 15% (or more) of income then they are unfairly under taxed.

    Please Boris, tell us how much the 0.1% richest ‘earn’. Then tell us whether its fair… or not

    https://www.facebook.com/secambslabour/posts/317837421688969

  10. Bob Allison

    Concupiscence:
    Insubordination of man’s desires to the dictates of reason, and the propensity of human nature to sin as a result of original sin. More commonly, it refers to the spontaneous movement of the sensitive appetites toward whatever the imagination portrays as pleasant and away from whatever it portrays as painful. However, concupiscence also includes the unruly desires of the will, such as pride, ambition, and envy. (Etym. Latin con-, thoroughly + cupere, to desire: concupiscentia, desire, greed, cupidity.)

  11. Bob Allison

    Concupiscence:
    Insubordination of man’s desires to the dictates of reason, and the propensity of human nature to sin as a result of original sin. More commonly, it refers to the spontaneous movement of the sensitive appetites toward whatever the imagination portrays as pleasant and away from whatever it portrays as painful. However, concupiscence also includes the unruly desires of the will, such as pride, ambition, and envy. (Etym. Latin con-, thoroughly + cupere, to desire: concupiscentia, desire, greed, cupidity.)

  12. Chris Kitcher

    But the issue is not getting back or taking goods/services to the value of what you pay in its about paying for the society that you want to live in. This idea of getting back what you pay in was the greatest stupidity of the wicked witch.

  13. johnfwoods

    The so called rich get far more out of tax in the UK than the poor, irrespective of the amount of tax they pay. What else can explain the numbers of rich people who are buying up our housing stock in London, if not to escape the poor services and civil unrest in their home countries, the result of less tax paid by them. Russia is the most obvious example, but the Greeks are catching up fast and will soon overtake the Saudis.

  14. TM

    Whether the poor pay more or the rich pay more, the one fact seems to escape everyone that if you are very wealthy whatever tax you pay sees you still wealthy and privileged and probably have a far bigger income and a stable career than many poor people do. Paying 45% tax may seem harsh but if you are earning £500,000 a year that still leaves you with about £275,000 a year. Can’t see anyone enduring hardship on that, and that’s not taking into account the fact that many rich and privileged people seem to be very adept at dodging tax like our comedian friend Jimmy Carr was found out to be doing, paying 1% tax through a loophole. He got caught and paid up; just how many other rich people dodge it as a matter of course? Many of us poor folk would be grateful to just have the opportunity to pay 45% tax, but for most of us that is just a dream in this economic climate.
    Then of course Boris represents the affluent privileged London set, the people who always seem to be wealthy and get very good careers and positions in society no matter what real talents or accomplishments they may or not have, connections and private educations and ancestry mattering far more in the rarefied and rather sniffy air of the uber privileged classes. It’s easy for someone like Boris who has sailed through life on a raft of wealth and privilege and eased through it all via connections to big the rich up. He would say that wouldn’t he?! We should be humbly thanking the super-rich?! What exactly for Boris? Making us pay over the odds for gas, electricity, train travel, water rates, the ever rising price of groceries and the fall year on year of ordinary’s people’s wages? Wow thanks a million!!! How grateful we all are for the prosperity of the rich whilst we get poorer!!! And how grateful must all those pensioners be dreading a cold winter this year who might die of hypothermia because they can’t afford to heat their homes. Thanks for selling off these necessities to foreign owned companies who owe us no allegiance whatsoever. Thanks for the Tory party for attacking disabled people and making them pick up the tab somehow for the mistakes of the rich. Thanks for the growing divide between the affluent Middle class and the very wealthy, and the rest of the people at the bottom enduring austerity and uncertainty.
    When will we begin to challenge this privilege that a few have to lord it over the rest of us, to hold us in contempt or patronise us. We are still lions led by donkeys. That is the real problem and until people begin to challenge it, we will remain a 3rd rate nation stuck in a timewarp.

  15. TM

    Yes, the much vaunted ‘charitable work’ of the rich; i.e. give £50,000 to charity and advertise it to the hilt, whilst avoiding millions and millions in tax through loopholes. If those people were made to just pay the taxes due to them there would be less problems all around.

  16. GO

    Consider a relatively unequal society in which the top 10% of workers earn five times as much, on average, as the bottom 10% (say, £60,000 vs. £12,000) and a similarly wealthy but more equal society in which they only earn three times as much (say, £54,000 vs. £18,000).

    Sticking to the obvious stuff: which of those societies is going to have to spend more on benefits designed to top up low incomes? On subsidised housing? On subsidised childcare? On pensioner benefits designed to make up for inadequate private pensions? On free prescriptions, dental care, school meals etc. for low-income households?

    Less obviously (at least if you’re unfamiliar with the evidence on inequality and social and public health problems): which of those societies is going to have higher costs associated with keeping people in prison? Higher healthcare costs associated with mental illness, drug and alcohol abuse, obesity etc.?

  17. Tseug

    The post did not say they had VAT on them just that they were an example of another pseudo tax on the poor.
    Don’t give me that shit that alcohol, smoking, gambling, junk food are discretionary. People are bombarded by adverts (modern propaganda) and every other shop has one of the above in it. They are being hit and targeted by huge multinationals who know exactly how to target poor consumers.

  18. Cosimo Montagu

    Spot on

  19. Sparky

    Let’s summarise what you’ve said.

    “Alcohol, tobacco, junk food and gambling are heavily advertised and sold in most shops. Because of this, consumers are compelled to alcohol, smoke, gamble and eat fast food.”

    That is what you’ve said, isn’t it?

  20. cole

    How fascinating. Real economists agree that VAT is at best mildly regressive. Who gives a toss about your laundry list?

  21. suchan104

    “Attacking disabled people”?

    Labour’s 2010 Manifesto: “More people with disabilities and health conditions will be helped to move into work from Incapacity Benefit and Employment Support Allowance, as we extend our tough-but-fair work capability test. This will help reduce the Incapacity Benefit claims of 1.5 million people by 2014, as we move those able to work back into jobs.”

    Translate: If the Tories do it then we’ll complain bitterly about their assault on the disabled, but if we do it then of course we’ll claim that we’re doing in a “tough-but-fair” manner. Of course, we had chance to do this for 13 years but failed miserably because we were busy taking away the 10% tax rate and getting people hooked into the client state by setting up a tax credit system byzantine in its complexity.

  22. suchan104

    2008 Institute for Fiscal Studies Report demonstrated quite clearly that while incomes for the richest were “racing ahead”, thanks to increases in National Insurance, Council Tax and a plethora of “stealth” taxes including the Green taxes on energy, the fuel tax escalator, rises in tobacco and alcohol duty, as well as the abolition of the 10% tax rate (partially ameliorated by more tax credits and the employment of more public sector workers to administer them), left the poorest and middle classes with a real reduction in their household incomes. I’ll also just remind the Left of how Labour used to tax Private Equity billions at 18%, lower than the basic rate for the poorest.

    So for the Left to preach about Tories favouring the rich has a large stench of hypocrisy about it.

  23. Tseug

    Tell me why these companies spend billions on advertising. For fun?

  24. TM

    Good point. Taking away the 10% tax rate was a disaster that alienated the poor and low waged: erm, aren’t the Labour Party supposed to be fighting for the ordinary folk at the bottom???
    You engaged on one point though; did you disagree with everything I said?
    Boris represents the wealthy, the privileged and the connected. He is a jolly uber Right wing kind of guy because that’s the world he inhabits and the world he comes from, the world that is alien to most of us and one which most of us are kept out of one way or the other. Yet, somehow, these people are voted in by people who for the most part probably don’t even share in that privilege in any way. I may add that Boris represents London and the South East and to be frank that is all that matters to them. Power, wealth, politics, and many of the jobs that seem to exist in London and the South East need moving to other parts of the country. When we as ordinary people start demanding more fairness and start questioning and challenging the divine right many of these privileged people seem to hold about themselves to rule, to control and to always have unquestioned wealth and privilege, we may slowly begin to move forward and actually become a democracy in more than name only. Which side are you on?

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