How rich are you?
Written by Mark Pack on 13th July 2007 – 11:55 amThe new Liberal Democrat tax plans (which benefit the environment and the vast majority of families, at the expense of those households with incomes over around £68,000) has resulted in the usual predictable burst of comments from people saying, “ooh, but being on £68,000 isn’t being rich”.
Here’s a handy way of putting that into perspective: www.globalrichlist.com (though of course you need to turn that household figure into a per person figure).
Posted in News
13th July 2007 at 1:58 pm
Interesting as globalrichlist.com is and very useful for making people understand the context of international development debates, I struggle to see how it is relevant here.
The criticism being raised is that we have said that the tax increases are only for the very rich, and then said they would be for households over £68,000. Some people will naturally question whether, in the context of the UK tax system, 68k constitutes ’super-rich’. A fair question, I would say.
I don’t see how changing the context to the global rich list does anything to help get perspective on this issue. If anything I think it is a little disingenuous.
13th July 2007 at 2:13 pm
Surely the point is that an income of £68k+ puts you in the top 10% in the UK? That might not make you super-rich, but it does make you richer than nine-tenths of the rest of the country…
13th July 2007 at 4:56 pm
To be pednatic it puts you in the highest income decile. Many people who are richer than you (own more) will have a lower income (realy rich people don’t work, and organise their assets in such a way that they pay little in income tax.
But it isn’t a zero sum game: the move reduces marginal tax rates for low earners and thus improves incentives to work. This is good for everyone.
13th July 2007 at 8:39 pm
Rather than use the global rich list, we can use the IFS “Where do you fit in” calculator.
A single person with no kids on £68k is in the top 1%
A two-equal-earner couple with no kids on £68k is in the top 4%
A two-equal-earner couple 2 kids on 68k in in the top 16%
A one-earner couple with 3 teenage kids on 68k is in the top 32%
You can find out more from http://www.ifs.org.uk/wheredoyoufitin/
It is unlikely that the package will have any significant incentive effects either way. The main tax that gets abolished in council tax, which has no strong work incentive effects.
The obvious new incentive effect is on house prices. We would expect them to increase (by around 8x the level of council tax, so around £15k), as happened when rates were replaced by the poll tax.
13th July 2007 at 10:44 pm
I’m in the richest 0.86%, and my partner is in the richest 0.74%… yet even together we cannot afford to buy a home!!!
13th July 2007 at 11:18 pm
If the Lib Dems think that £68k is super rich it just shows how out of touch they are,surely they realise by now that a ’soak the rich’ tax policy belongs to another century?
14th July 2007 at 3:05 am
Stuart, as Tim points out, you’ll be even less likely to be able to afford to buy a home when the reduction in national level income tax is eaten up mostly by the Local Income Tax AND house prices rise by at least another half salary multiple.
Axe the Tax,
Ditch the LIT,
LVT can be a hit!