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