WARNING: Amateur economist possibly making rash comments about things he doesn’t know enough about.
With Labour making waves promoting Universal Basic Income, and threatening to raise taxes for the ‘rich’, I’d thought I’d do a bit of investigating to see how much tax we actually pay into the coffers each year.
Using some handy dandy stats from statista.com on UK population and earnings, and some genius coding by yours truly, I created some fairly rudimentary graphs like this, which shows the number of people per ‘salary band’ in the UK during 2018:
The first thing that struck me was just how many people are in the £20 – £30k salary bracket. I’m not sure what I was expecting, and it probably shouldn’t have come as much of a surprise, but there you go.
Then I broke the various salary bands down in the to current tax brackets to work out how much tax we paid last year – a healthy £116,867,500,000 (give or take a few pence), as it goes.
The obvious thing that sticks out is, even with the current tax regime, just how much more tax those earning over £50k pay. That got me thinking, how much would we have earned if Labour were in charge and had bought in their revised 45% for the £85k+ bracket, and 50% for over £123k.
That would have bought in £120,876,600,000, a good 4 billion extra. Healthy, if not somewhat annoying for the higher earners, who already feel they are shouldering a disproportionate amount of the tax burden.
But what if then, I wondered, should the recent article in the Times have come to pass and 1 in 10 of the higher earners (over £150k) had cleared off and got their salary paid in another country?
In that case you undo all the hard work of changing the tax system, and bring in just £117,080,680,000. That’s an improvement of a mere £213,880,000, which in the grand scheme of things, and with upsetting a lot of people to boot, hardly seems worth the effort.
Tomorrow: UBI, how will it work?1