Net contributor

[knk]

How much does one have to earn in order to be a net contributor, financially, to the nation?
Assume a single person, earning a salary and paying tax PAYE, ignore VAT and indirect taxation.

[z4RRSchris]

top 40% put in more than they get out.

loads of studies on it.

[cml24]

Presumably you are only after an average?

I suspect it will vary considerably.

For the first part of your life you become more and more of a burden, as the country pays for healthcare, school, etc.

I presume at some point the most people become a net contributor and remain so until they retire/get ill from old age where lots will flip the other way again, and half won't.

[Gecko1978]

cml24 said:

Presumably you are only after an average?

I suspect it will vary considerably.

For the first part of your life you become more and more of a burden, as the country pays for healthcare, school, etc.

I presume at some point the most people become a net contributor and remain so until they retire/get ill from old age where lots will flip the other way again, and half won't.

Nope you have to be a higher rate tax payer on average of your life which most never are.

[otolith]

It's easy to work out based on total individual taxation and average per capita spending, but that's pretty simplistic. The amount of tax you pay and the demand you place on services will vary throughout your life. How much you cost over a lifetime will have a lot to do with how long you live and how much of that life is spent in ill health. You will be very expensive if you die just after completing your education or if you live a long time in retirement with lots of medical and social care needs. Also, "contribute" - if I run a business with low paid but highly profitable workers, they won't pay much tax, but I will, and so will my company. Who is "contributing" there?

[sugerbear]

915 billion (total tax receipts) divided by 32 million (working population) = 28,500 each.

Income tax is 225b, NI is 161b, VAT is 143b and Corp tax is 68b.

[oyster]

sugerbear said:

915 billion (total tax receipts) divided by 32 million (working population) = 28,500 each.

Income tax is 225b, NI is 161b, VAT is 143b and Corp tax is 68b.

That's nonsense.
A proportion of that £915bn in tax receipts will come from the other 36m non-working population.

[Rivenink]

If one is thinking about the value they get from the taxes they pay, they need to look further than the direct benefit they get.

One also needs to consider the indirect return from taxes... being able to work in or run a business in a stable, secure country with uninterupted power, water, with a (relatively) healthy, educated workforce who earn enough disposable income to consume.

How many could honestly say that they'd make as much money and live as well if they were born in a developing nation somewhere, where paved roads are a novelty, utilities unreliable, corruption and crime rife, and most people living in or near poverty, but taxes low and optional?

[Gecko1978]

oyster said:

sugerbear said:

915 billion (total tax receipts) divided by 32 million (working population) = 28,500 each.

Income tax is 225b, NI is 161b, VAT is 143b and Corp tax is 68b.

That's nonsense.
A proportion of that £915bn in tax receipts will come from the other 36m non-working population.

Yes as even children buy things with VAT added to them.

Best way as was mentioned is to look at tax spend per head v tax you paid (or if you have a company what it paid). Its not perfect and life time contributions is hard to define so annual is a good proxy

[Electro1980]

sugerbear said:

915 billion (total tax receipts) divided by 32 million (working population) = 28,500 each.

Income tax is 225b, NI is 161b, VAT is 143b and Corp tax is 68b.

Which is not at all useful as how do you apportion things like corporation tax? Which is one of the things that make the whole “net contributor” thing a nonsense.

[ZedLeg]

Electro1980 said:

Which is one of the things that make the whole “net contributor” thing a nonsense.

It's one of those things that people who are by most measures doing alright for themselves bring up to try and make them seem persecuted.

[InitialDave]

"Net contributor" always seems like a bit of a dog whistle from people whose only value to society is the taxes they pay.

A teacher or a nurse probably wouldn't meet their metric, but are likely of much greater benefit to society as a whole.

[otolith]

ZedLeg said:

It's one of those things that people who are by most measures doing alright for themselves bring up to try and make them seem persecuted.

I agree with the criticisms and made the same points myself, but I don't think that the concept is completely worthless - people should understand how the amount of tax they pay personally relates to the amount of tax we need to collect. It's just not the same as a person's "contribution" to society.

[SteveStrange]

ZedLeg said:

Electro1980 said:

Which is one of the things that make the whole “net contributor” thing a nonsense.

It's one of those things that people who are by most measures doing alright for themselves bring up to try and make them seem persecuted.

And one of the things that the people who generally take take take try and minimise/trivialise to make themselves feel better.

[GroundEffect]

InitialDave said:

"Net contributor" always seems like a bit of a dog whistle from people whose only value to society is the taxes they pay.

A teacher or a nurse probably wouldn't meet their metric, but are likely of much greater benefit to society as a whole.

Or a stay at home mother that brings up a child. That child is an asset to the economy.

It's a total nonsense.

[Gecko1978]

InitialDave said:

"Net contributor" always seems like a bit of a dog whistle from people whose only value to society is the taxes they pay.

A teacher or a nurse probably wouldn't meet their metric, but are likely of much greater benefit to society as a whole.

Very true indeed if you measured a teachers worth based on the minds they shape. However we are able to put a value on most peoples contributions to society as a whole via their salary. The problem is you then value a banker more highly than a teacher etc. But it would be good to know how much of your tax goes where etc but if you had a contribution figuer then it would just breed resentment as I said earlier 3 groups in society all play a role.

[otolith]

GroundEffect said:

Or a stay at home mother that brings up a child. That child is an asset to the economy.

They probably will be, at some point in the future, they're typically a liability for somewhere between 18 and 24 years.

[sugerbear]

Gecko1978 said:

oyster said:

sugerbear said:

915 billion (total tax receipts) divided by 32 million (working population) = 28,500 each.

Income tax is 225b, NI is 161b, VAT is 143b and Corp tax is 68b.

That's nonsense.
A proportion of that £915bn in tax receipts will come from the other 36m non-working population.

Yes as even children buy things with VAT added to them.

Best way as was mentioned is to look at tax spend per head v tax you paid (or if you have a company what it paid). Its not perfect and life time contributions is hard to define so annual is a good proxy

I know it's a compete nonsense way of doing it. But it's a start.

The majority of children also don't have an income, that is down to their parents to provide, they aren't contributing to the economy and neither are pensioners. So you can effectively rule them out.

Assuming that the majority of pensions are living off state pensions then they will mostly be taxed or NI'd given how much tax free they now receive individually. They certainly wont be paying NI.

[Electro1980]

Gecko1978 said:

Very true indeed if you measured a teachers worth based on the minds they shape. However we are able to put a value on most peoples contributions to society as a whole via their salary. The problem is you then value a banker more highly than a teacher etc. But it would be good to know how much of your tax goes where etc but if you had a contribution figuer then it would just breed resentment as I said earlier 3 groups in society all play a role.

That doesn’t make sense though. Is someone who gets paid a small amount but generates a large amount for a company putting less in to the economy than someone who gets paid a large amount but generates little value coughbankerscough?

Does a sales person, who makes £10million of sales, take more responsibility for the tax the company pays on that than the person who processes the sale? Or the person who later fixes a warrantee issue that costs the company money? Or does all tax paid by a company get attributed only to the owners, even though they are not responsible for most of the value generating activity? If a researcher creates a new material, is paid £60k, but that material goes on to create a multi million pound industry, how do you assign the value there?

Its far to complicate to assign value to people in that way.

[otolith]

Electro1980 said:

That doesn’t make sense though. Is someone who gets paid a small amount but generates a large amount for a company putting less in to the economy than someone who gets paid a large amount but generates little value coughbankerscough?

Does someone who designs a mechanism to borrow from the capital markets (coughbankercough) in order to fund the loans which enable cars to be sold to the public put in less than someone who designs an engine or a body press?