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”
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?
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.
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.
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.
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.