Those in the top 1% of the income distribution had an average income of £155,000, while the top 0.1% of taxpayers had an average income of £780,000
The rich also pay more tax than the rest of the population, although even those at the very top pay income tax at a rate of 35%, compared to 21% for the top 10% and 17.8% for all taxpayers.
I am confident they have a higher percentage of their own income as disposable but cannot find any figures
mefty you forgot the "pension holidays" many of the companies took when times were good - several years with no employer contributions in some cases.
As the question was formulated to make me say something I didn't want to I didn't answer it. The article pretends to be balanced and fails to either provide balance or be convincing. When they present comparisons of tax burden in relation to income I'll start to take an interest. The tax burden on the poor is enormous and on the rich derisory.
Add up what you pay as a proportion of your gross income (ignoring wealth for the moment) and you'll very quickly get beyond 50%. Everything you do is taxed and heavily because everything you spend your money on is taxed and even the rare things that aren't have a resulted in a mass of tax being paid before you got to them.
Now consider where a rich man's money goes and how much tax there is to pay. Art, forestry, property, trusts, gifts, inheritance (carefully invested in the previous to avoid tax) and you'll find as many exemptions as privilaged lords to benefit from them.
I don't think taking a pension holiday actually makes that much of a difference because the corollary of taking a holiday is that you have to make up the deficit when times are bad. It is just a question of which entity has the money when and the valuation method. Whether it turns out to be a good thing or not depends upon the relative returns on capital of the company and the pension fund. That said if a company goes bust in the interim it is clearly a problem.
My point was more that private companies have closed final salary schemes because pension provision has become more expensive because of the removal of tax relief and because of the volatility to their published financial position.
Mefty - have a look into it. Some of the companies deficits are less than the money they did not put in as the "holiday" and they did not make it up again. I am certain it is a part of the reason.
>I don't think taking a pension holiday actually makes that much of a difference because the corollary of taking a holiday is that you have to make up the deficit when times are bad.
Or they could just close the pension scheme as per my employer.
Edukator - when I read the article i didn't think the author had a particular axe to grind but was actually raising questions about how we react to statistics. As you read so much more into it, I have reread it and my conclusion has not changed. Junkyard's statistics above seem to suggest that the richest have a higher tax burden than the poor so I suggest you have a look at them.
So the top 1.1% declare 13.1% of income. Think about that, think about what they didn't declare. Just as an example, there are so many deductions on income from property that people only declare a fraction of the real income. On forestry none. Capital gains are only taxed when realised and with careful investment can be avoided completely. Investment income is taxed at a lower rate than earned income and no national insurance has to be paid on it - if you don't consider national insurance an incopme tax think again.
TJ - I am not sufficiently confident to say that they have had no effect. I think most of them were taken under the old valuation method so unless one was able to see what their position today under that method it is difficult to judge. I am not up-to-date on the rules on what a company is required to do when faced with a deficit and over what time period it is required to make it up.
allthepies - can they just close it or have they closed it to new contributions or new entrants, I am still pretty sure that they are still required to make the shortfall attributable to liabilities that accrued in the past when they would have taken any holiday.
I admit to having an axe to grind on pensions. In my view the availability of final salary schemes in the public sector and the increasing unavailability in the private sector will or indeed is creating a tension that is not healthy for society as a whole. Further, I believe that Gordon Brown's abolition of the tax credit was cynical politics at its worst because it was a way of raising taxes without the general population fully appreciating it until it was too late. It also had the effect of making debt much more attractive to the corporate sector as a form of capital compared to equity, the effects of which we have only too readily seen over the last two years. Sorry for digressing.
If anyone can come up with a figure for "wealth held by top 1% Great Britain" good luck to you . The most recent I can find relates to a period when the wealth held by the richest was at historic lows in the 70s, about 25%. This report asks and answers a lot of questions but fails to adress the most basic one "who's got what?".
When you consider assetts not in the home or pensions the holding (and revenue from) it concerns a very small part of the population. Even in the US where share holding is more widespread around 50% of liquid assets and the incomes derived from them are held by the richest 1% of the population.
Edukator - Junkyard's statistics were a red herring as they relate to income tax as well, I thought they related to total tax take. The question to ask about the top 1% is who are they? I am sure that you will find that the top 1% of families today are very different to the top 1% of families 30 years ago. In the same way that the top 30 companies in the UK are very different to the top 30 companies 30 years ago. Obviously some will be common to both lists but fewer than you would think. Is that a good thing?
I don't mind who is in the top 1% so long as their income is taxed at at least the same rate as a middle income earner pays in income tax and NI combined and that no form of investment income is exonerated. Anyone living in the UK more than 183 days a year should be liable for British tax on the totality of their income even that paid into trusts and other such avoidance schemes. Exonerations from death duties and capital gains will of course end when I am dictator.
I prefer the US system of chasing the tax wherever you are
Your proposals will still mean that the super rich avoid UK tax because they can afford to base themselves in multiple countries so avoid the 183 days - it is pretty difficult to get the perfect system. Capital gains is another example. The Tories introduced an allowance for inflation because they thought it was unfair for inflationary gains to be taxed (more of an issue when they came to power), any gain in excess of inflation was eventually taxed at income tax rates, then we have taper relief which exempted a gain depending upon how long you held the assets and now we have a low flat rate. Which is the best system, which achieves the best balance between encouraging investment and thus more employment whilst still taxing the gains fairly?
It is very easy to grandstand on these issues, much more difficult to achieve a fair system in practice.
Capital flight is and always will be an issue. The 60s 95% super tax that inspired George Harrison's Tax Man was perhaps taking things a bit too far but there will always be scum like Bono to deprive the needy of their homeland to live in a tax haven. How much it would take to get me to live in Switzerland and pay a negociated tax based on my property value I'm not sure. As I don't do the lottery I'll never know. If the rich can't cope with 50% income tax they choose to be taxed elsewhere once they've renounced their British nationality. While they still hold a British passport any unearned income can be taxed in the UK. I'll accept reciprocal agreements with other EU member states.
You can tax property with no risk of capital flight. A green super tax on more than 40m2 per person would raise some cash.
You can tax the motor vehicle with impunity (between elections). Again a heavy tax on any vehicle used for private use (even 1km) with a CO2 rating over 150 and a super tax over 200 would raise lots of cash.
The problem is that the poor think they are rich and don't understand that stopping tax evasion by the richest 1% would mean they would hardly have any tax to pay at all. The poor on here (everybody) should rejoice in any increase in tax on unearned income as it will inevitably reduce their total tax bill, but they'll get taken in by the BBC and Tlegraph and think their share dividends getting taxed the same as their wages is a bad thing.
Most wealth is in the value of companies, not in cars and property. You seem to be stuck in a world where wealth is held by the landed gentry Taxing investment income higher merely encourages people to keep the money in the company where it will pay a lower rate, plus they can move their capital easily.
The alternative is taxing work more through higher employer NI, pension contributions and saleries demanded by workers to pay higher income tax - which is an even greater incentive for a company to delocalise production/service provision. Taxing investment income more has very little impact on anything other than P/E ratios. The market finds a new price at which risk : reward is satisfactory to the investor; shares are lower priced, returns the same.
It has been a Labour government that has raised the taxes on employment through NI. What is wrong with a consumption tax such as VAT why should those who save to buy a nice house be penalised compared to those who spend their money their money on flash cars and designer clothes? Likewise why should those that save be so penalised? What is better for society?
Your analysis of investment income of p/e ratios and investment is just wrong, p/e ratios are price over earnings before dividends. Money goes where the return is so a business has to make profit, there used to be an incentive for British taxpayers and pension funds to invest in UK based companies with UK based earnings, it was called the tax credit. Brown abolished it to raise taxes.
According to several sources, Social Mobility is at it's lowest since Victoria was monarch.
This, under a Labour government? The b*st*rds have royally let us all down.
I dislike the odious Tories intensely, but I detest this Labour government more. The Liberals just seem to be offering up little in the way of policy that isn't cherry picked from the other two parties, different wrapper but same filling.
I believe Marilyn Manson summed it up thus:
"Elections are like being offered your choice of several t*rds and being asked to pick the one you find the least offensive". How apt.
May I point out that I did not complain about the tags aiming insults at me - tho they have been removed?
Your analysis of investment income of p/e ratios and investment is just wrong, p/e ratios are price over earnings before dividends
I know what p/es are and my analysis isn't wrong. An investor has a large range of choices of where to invest with various performances and targets. For any particular type of investment a risk/reward assessment means the investor will want a particular return after tax. If the after tax return is lower the price the investor is prepared to pay for the product will fall.
The tax system should penalise things that don't benefit society as a whole and encourage those that do. A bonus malus system that encourages investment in renewable energy and discourages heavy drinking or smoking for (obvious) example. People who spend on a flash car rather than an solar hot water heater and insulated home should be penalised.
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