Taxation and Wealth Distribution in the UK
There was a rather angry man on BBC Question Time on Thursday night who was somewhat upset over the tax proposals set out in the Labour Party manifesto. Labour intend to increase the higher rate of tax from 40% to 45% if they are elected. The person in question by their own admission earns £80,000 plus a year and he didn’t believe he was in the top 8% of UK earners. He therefore objected to the fact that under a Labour Government he would face a tax increase. Unfortunately this individual was mistaken. According to figures from HMRC, he is clearly one of 4.3 million people in the higher tax category. Perhaps what he found incongruous was the fact that he falls into a demographic that includes people on his salary all the way to multimillionaires. However, at a salary of over £80,000 a year, he is earning way above the UK average. I think this is what flummoxes people so much. There is an assumption that wealth is evenly distributed throughout the working age UK population and that any graph showing salaries is a gentle curve. Sadly, this is not the case as a little research will show.
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