Richest are paying lower proportion of income tax than poorest, says ONS

Cuts to tax credits will make things even worse for the poorest households


New data from the Office for National Statistics (ONS) has confirmed that the richest people in the UK are contributing a lower share of income tax than the poorest.

In its latest statistical bulletin looking into the effects of taxes and benefits on household income (for the financial year ending 2014), the ONS finds that the richest and poorest fifth pay 34.8 per cent and 37.8 per cent of their gross income respectively.

The richest fifth of households paid £29,200 in taxes (direct and indirect) compared with £4,900 for the poorest fifth.

This is despite the fact that, before taxes and benefits, the richest fifth of households had an average income 15 times greater than that of the poorest fifth.

After taxes and benefits are taken into account, the ratio between top and bottom was reduced to four-to-one, leading the ONS to note the importance of benefits and tax credits in rebalancing the top and bottom sections:

“The overall impact of taxes and benefits are that they lead to income being shared more equally between households…

“The distribution of cash benefits between richer and poorer households has the effect of reducing inequality of income.

“After cash benefits were taken into account, the richest fifth had an average income that was roughly six and a half times the poorest fifth (gross incomes of £83,800 per year compared with £12,900, respectively).”

The Tories’ planned cuts to tax credits could make up as much as £5bn of the planned £12bn cut to welfare. As well as helping to reduce inequality, tax credits have been hailed as a driving force in reducing child poverty.

Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter

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82 Responses to “Richest are paying lower proportion of income tax than poorest, says ONS”

  1. Fergus Mason

    “because that was the luck of your draw.”

    Luck had nothing to do with it. I worked for my qualifications at school and I’ve worked for additional qualifications since.

  2. Fergus Mason

    “They’re not luxuries”

    They’re luxuries. They’re not necessary. The state should give people what they NEED. It’s up to them to earn the things they WANT. If they can’t do that, why should I be forced to buy them for them? I have other things I’d rather spend the money on and it is, after all, MY money.

  3. Matt Booth

    And what kind of background did you come from? Did your parents earn a lot of money? Did you have food to eat at school? Clean uniform? money for trips and societies? Were your mum and dad around when you got home? Did you get any financial help going to further education?

    I too worked hard to get myself qualifications, both college and university, and I got help every step of the way. My mother was a single parent who worked full time to support us. I’m the only one in my family to go to University and get a degree, and I’ve managed all that because of public money (benefits paid to my single parent mother, money paid to me in grants and bursaries to get me through education). Now I earn enough to be in the 40% tax bracket and I’m happy to pay for others.

  4. Matt Booth

    It’s not really your money, it’s public money 🙂 Your money is what is left after taxes. The taxes belong to the state.

  5. Fergus Mason

    “It’s not really your money, it’s public money”

    It’s my money. I earned it. The state then takes a share. Taxation is necessary, but should be kept to a minimum and not used for frivolous purposes like buying consumer electronics.

  6. Matt Booth

    It should be use for duck ponds and high speed rail that only a quintile of the population should use, of course. The £1.2bn we pay every year to the jobless “idle twats” is a drop in the ocean compared.

    And it’s not yours. Like I said, your money is what is left after tax.

    So, you didn’t contest the notion that you think everyone getting some of the £30bn paid in tax credits are idle twats?

  7. chrissnowdon

    Because not all tax is income tax. In terms of income tax, they pay £19,696 compared to £1,253 – more than 15 times as much.

  8. Fergus Mason

    “And it’s not yours.”

    I earned it. It’s mine. If it wasn’t for me it would still be in some bank in California. Do I mind paying tax for essential services like education, defence or reasonable benefits? No. Do I mind paying for White Dee’s fags and iPhone, or halal meals for some Somali criminal? Fuck yes, I certainly do.

  9. Fergus Mason

    “Anyone on benefits is and idle twat!”

    Except I didn’t say that, did I? Ladies and gentlemen, the left wing – dishonest as ever.

  10. Matt Booth

    So why are you so ingratiatingly oblivious to the massive difference between some layout who refuses to work, and someone who is in work and needs earnings top ups?

    We can all agree that the workshy and feckless need to contribute to society and earn their own keep, but all the same, there are MILLIONS of people on benefits who work hard as nails and still cannot earn enough to get by.

  11. Matt Booth

    You’ve been arguing the toss with me about benefits and ignoring my comparisons to people on tax credits who work but still need benefits! Not being dishonest at all, I was asking if you were agreeing to that statement, since I suggested it and you didn’t contest!

  12. Fergus Mason

    “there are MILLIONS of people on benefits who work hard as nails and still cannot earn enough to get by.”

    That’s a fact of life. What you earn is, generally speaking, a function of what skills you have. If you don’t have valuable skills you’re not going to earn very much, which means you can’t expect to have all the things that people who DO have valuable skills can afford.

  13. Matt Booth

    Yeah, so millions of people should sit in the dark and not be able to drain a modicum of enjoyment out of life because you want to be a cunt.

    Of course, everyone can afford a day off work to go to the local college and look at courses to better themselves. Everyone can afford a day off work to go to the job centre and look for better paid work….

    Unless they had a laptop and the internet, then they can do that at 3am in their underpants on a saturday night.

  14. Fergus Mason

    “so millions of people should sit in the dark”

    Making shit up again, I see. Where did I say that? Oh, that would be nowhere.

    “and not be able to drain a modicum of enjoyment out of life”

    They can have as much enjoyment as they like. There are plenty of ways to enjoy yourself that don’t involve spending someone else’s money. The library, for example. Go for a walk in a park. Make a model of Notre Dame from crispy pancake boxes. So why should people demand the right to forms of enjoyment that they can’t afford? If you want a TV earn enough to pay for it.

  15. Matt Booth

    You have no idea how unbelievable you sound. You’re old fashioned and stuck in your ways. Think yourself lucky you’ll be dead by the time my generation comes to power 🙂

    By the way, libraries aren’t free any more. Tory cut backs. And those crispy pancakes will have been paid for by money ripped from your very breast. Oh the fucking horror of it all.

    Why are you content with ignoring the fact that people on benefits cannot simply work harder to become “not poor any more”? Time and time over you’ve ignored this. People on tax credits can’t just unpoor themselves through the magic of working more.

    One of TWO things needs to happen!

    1) Tax credits
    2) The government needs to stop letting businesses off with relying on the government paying tax credits to top up peoples earnings in line with inflation and the cost of living.

  16. Fergus Mason

    Don’t pretend that tax credits are an essential part of society. They’re a recent innovation and get splashed about with wild abandon. I qualified for them when I was a Sergeant in the Army, earning well over 30k a year. I certainly didn’t need an income top-up to survive and I suspect the same is true for a lot of the people who’re eligible for them.

  17. Fergus Mason

    “By the way, libraries aren’t free any more. Tory cut backs.”

    Well, not quite. Councils had a choice: Start charging for previously free services, or stop hiring so many useless parasites, cut the salaries of their chief executives and eliminate pointless overseas junkets.

    “Why are you content with ignoring the fact that people on benefits cannot simply work harder to become “not poor any more”?”

    If they don’t have any marketable skills then, I agree, they probably can’t. That’s the price you pay for not having any marketable skills. In general people get paid what their labour is worth, and sometimes that just isn’t very much.

  18. Matt Booth

    Yeah I can agree there. You won’t have needed them at £30k at all. Good on you for not taking them. I also qualified when I started on £23k, but realistically, I didn’t need them, so I never took them.

    But a single parent on £12k a year, renting accommodation, needs them. They can’t work to unpoor themselves. They have kids to feed. The new generation. It’s in societies interest that these kids grow up with food in their stomachs and don’t live in poverty. If that means they get electronics for their birthday and Christmas’, on the backs of the tax payer, so fucking be it. Those kids are more likely to grow up, get a good education and become a top tax bracket payer themselves *hint hint*.

    Tax credits ARE an essential part of society. But they shouldn’t be. Like I said, either tax credits, or businesses are required to pay a proper wage to people. They already cop off with tax loopholes, so they can afford to pay their staff. In fact, some businesses are signing on to pay people a living wage 😉

  19. Matt Booth

    But people aren’t paid what their labour is worth, obviously, because they aren’t paid enough to live, while those who they work for rake it in.

  20. Fergus Mason

    “But people aren’t paid what their labour is worth, obviously, because they aren’t paid enough to live”

    The two are not mutually exclusive. I’ve hired people whose labour turned out to be worth nothing at all. Sadly I still had to pay the bastards, because I had a contract, but I got shot of them as fast as I possibly could. Really they should have been paying me for the time I had to spend sorting out the crap they turned in.

    More seriously, tax credits enable inadequate wages. Abolish them and companies will find that people aren’t willing to work for what they’re offering. Ending the inflow of immigrants willing to work for very low wages would help, too. I’m baffled by people who simultaneously argue that we need immigrants to boost the workforce and that there aren’t jobs for the unemployed. Scarcity pushes up prices, and a wage is a price.

  21. Matt Booth

    You can’t just abolish tax credits and let the ecosystem sort itself out. Simple as that. People will die.

    If you hired some idiots then you didn’t do a good job at screening them.

    It’s right, though, tax credits enable inadequate wages, and that’s something the government should sort out, by forcing businesses to pay higher wages (I.E, via the minimum wage, which should be about £7.60, and rise slightly more than inflation.)

    But we still keep Tax Credits, just don’t adjust for the increase in minimum wage. This should push a lot of people out of needing them, whilst retaining the security for those that still would.

  22. Fergus Mason

    “If you hired some idiots then you didn’t do a good job at screening them.”

    No, I didn’t. They were freelancers (as am I) and they were misrepresenting themselves with portfolio pieces that, it’s now apparent, they hadn’t written themselves. I don’t subcontract very often and when I do I now stick with a small pool of people I know and trust. They don’t actually need the money, whereas the idiots I hired before probably did, but that’s not relevant.

    A national minimum wage makes no sense; it should be set regionally to reflect accommodation costs based on realistic expectations (nobody on minimum wage should expect to live in Kensington, no matter how much they want to). You also need to be wary of setting it too high, or it will rise above what some people’s labour is worth and they’ll end up unemployed.

    I would also cap household benefits at 90% of the minimum wage, so there’s always an incentive to be in work. The current situation, where it’s capped at more than a nurse earns, is absurd.

  23. Mike Stallard

    So that’s an answer?

  24. Matt Booth

    To avoiding a flat tax system? Yeah. The richer people of society wouldn’t pay anything near their fair share if it was a flat rate of 13%.

    The richer people in society stood to lose out more in the financial crash than anyone else.

  25. AdamHLargent

    22222Ultra Income source by leftfootforward. . Find Here

  26. Selohesra

    The poor in this country are hardly poor on the world scheme of poverty – if you truly believe in redistribution of wealth from rich to poor shouldn’t you be arguing for all our wealth to be transferred to third world to even things up a bit. Or do the left only want redistribution when it benefits them?

  27. Mike Stallard

    This, apparently, is not the case. The rich people do not like wasting time which they can spend grinding the faces of the poor. they do not like paying a lot of money for accountants either. a simple system pleases everyone.

  28. Matt Booth

    No, instead they donate money to the Conservative party, who grind the faces of the poor for them.

    A “simple” tax system would not please the poorest in society, who vastly outnumber the richest.

    The problem with tax is that it doesn’t scale properly.

    For instance when there was a 50p tax rate if you were earning £140k, you’d be at 40% and get £84k after tax (roughly). Then your boss gives you a pay rise (because you apparently deserve it) and now you get £155k, you’d end up with £77.5k after tax. A pay rise of $15k loses you about £7k annually.

    This promotes those at the top to either stay below a threshold, or to seek rises well above the threshold to balance it out.

    Whereas scaling properly, £140k is 93-94% of £150k, so it would be fairer and make more sense to tax someone on £140k at 46.5% (since that is 93% of 50).

    Scale this down and everyone is paying a fair amount that scales linearly. The poorer in society would pay slightly more too (someone earning £28k would pay more than they would now, but only marginally) but it would lessen the sting of going up a tax bracket (since they’re not really exist) and encourage people to earn more.

  29. steroflex

    If you keep it simple, then immediately everyone knows where they are. They also know that everyone is equally fleeced.
    In Singapore, the income tax is just 15% across the board. This offers a Welfare system that seems to me to be pretty good, and it allows people to work hard and get rich.
    To pay for the poor and PRC immigrants, however, there is imposed a swingeing purchase tax. Buying cars is virtually impossible, but the buses and trains are a dream.

  30. MariaRRoy

    22222Ultra Income source by leftfootforward. < Find Here

  31. Keith M

    The rich have always found ways round not paying their fair share and always will.

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