It’s easy to fall into the trap of thinking that the poor pay for everything simply because there are so many more of them than rich people. The truth is rather different. Below are the latest HMRC figures showing the percentages for the total tax revenue raised based on rate of earnings.
For example, those who earn over £2 million a year account for less than 0.01% of the tax paying population in the UK, yet they pay over 4.5% of the total tax revenue generated. Compare that to the lowest 1% of earners, who’s contribution to total tax revenue was only 0.3%. The disparity rises rapidly with the top 1% of earners accounting for 13.7% of tax revenue. And it goes on;
the bottom 1% only 0.3% vs top at 13.7%
The bottom 5% only 1.6% vs top at 25.6%
The bottom 10% only 3.4% vs top at 34.8%
The bottom 25% only 9.7% vs top at 54.2%
The bottom 50% only 24.2% vs top at 75.8%!
Far from being the exploited masses they are in fact being heavily subsidised by the lucky (and hard working) few.
Ok, what about the companies then, they’re always getting away with not paying tax!
Yes and no, while corporation tax accounts for just 7.4% of total government revenue receipts, compared to 26% in income tax and 17.9 % national insurance you must remember that corporation tax is just the tax paid on profits, AFTER they’ve paid all the employees salaries and National Insurance, essentially bank rolling the income tax and NI streams as well. The profits they keep either get reinvested to grow the business or paid out to share holders, who then pay more tax back to the government on their dividends.
Sure, companies will always try to minimise their tax liabilities, who wouldn’t? Nobody wants to pay tax after all! Apart from the criminal tax frauds, most will only seek to minimise tax based on the Governments own rules. It’s not a case of “here’s the rules but pay more if you have a higher moral purpose”. I don’t see politicians queuing up to pay extra tax on the value of their expenses or the profits on their housing flips, so why should we?
The biggest issue facing the poor in relation to tax burdens are government waste and tax on goods and services. VAT accounts for 17.2% of government revenue, fuel duty 4.6% plus VAT!
High fuel duties cause far more impact on the low paid as the cost of fuel represents such a greater proportion of their relative income.
Its the same with the cost of public transport, a bus journey of a few miles now costs more than running a car for a whole day, more so when you have to take more than one person. But if you can’t afford the initial outlay for the car, its road tax, its insurance, the tax and vat on the insurance etc then you’re forced to pay much more on a day to day level. Effectively preventing you from moving forward and killing off aspiration.
The amount of government waste and overspend, not to mention EU contributions is staggering, if this was put in order first, levels of secondary taxation could be vastly reduced or even abolished, like fuel duty, VAT, stamp duty, inheritance tax to name a few. This would have a much more significant benefit to the poor and lower income families than trying to screw ever more from the top. This inevitably disappears into the states financial black holes and bureaucratic largess long before it can benefit the poor anyway. All punitive taxation achieves is to cause companies to cut costs or take their business elsewhere, effecting the jobs and incomes of the very people the tax hike was meant to help! The rich or just better off tighten their belts, stop spending as much, so effecting consumer spending and hurting retail jobs and service industries, again adversely effecting the people you wanted to help.
Envy politics is an easy and misguided weapon in the socialist arsenal, its so much easier to point and say “look how much they have! They must be oppressing you to get all that” than it is to look at the bigger picture and realise that success breeds success in this world. The real answer is to make the economic soil as fertile as possible so that there is opportunity for all. Then it just comes down to how hard a person is prepared to dig!
“If you pay people to be poor then you’ll never run out of poor people”
“The trouble with socialist is, they always run out of other people’s money”