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”
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.?
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.
Cosimo Montagu
Spot on
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?
cole
How fascinating. Real economists agree that VAT is at best mildly regressive. Who gives a toss about your laundry list?