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  • Tax

    70K a year: Are you rich should you more tax?

    I did not write this but I must say I agree with Graham Rowan

    Get ready for a taxing election

    Last week Labour's shadow chancellor, John McDonnell, defined those earning "above £70,000 to £80,000 a year" as rich.  His party, he said, would shift the tax burden to these Fat Cats. Chances are, if you're reading this, you are one of the targets in Mr McDonnel's grasping sights. 

    But before I step up onto my soapbox for a good old rant, let’s take a look at the facts. Could someone earning £70,000 a year really be rich? A quick calculation shows that under the current tax regime, even before Labour's planned increases, you'd be relieved of £17,000. Add on your National Insurance Contributions which come in at around £5,000 and payments into your pension pot of let's say another £5,000 (that's just £416 per month) and you're left with just £43,000 in your pocket. That doesn't sound very rich to me but let's continue. You'll need somewhere to live. Nothing fancy, just an average 3 bedroomed semi here in London for you and your growing family. According to the property marketplace Zoopla, that will set you back around £700,000. Take off your 20% deposit and you're left with a mortgage of £560,000 which works out at roughly £2,900 per month. Add on house, life, car and health insurance, then your council tax and household bills, and you will easily be
    pushing £3,500 per month. What was that take home figure again? Oh yes - £43,000 per year or £3,583 per month. So that’s £83 per month to pay for food, your commute, childcare costs, having the odd holiday or even just a pub lunch.

    If this is being rich then we're all screwed.

    A quick scout on the Guardian jobs board for openings offering £70,000 pay packets include ads for Senior Underwriters, Project Managers, Care Managers, Software Architects and Heads of IT. They’re hardly "cream of the crop" jobs and so yes, I am justified in stepping up on to my soapbox and saying "John McDonnell – you're wrong. This is not a tax on the wealthy. It’s a tax on middle class, middle management jobs".

    Increasing the tax burden on middle income earners is a false economy. The reality is that if these people have money, they’re far more likely to spend it. People who earn more spend more and that means they create more jobs and put more back into the economy. More jobs equals less people on benefits and reduced public spending. It's a win-win. What’s more, give the middle-income earners a little extra to spend and they'll be more inclined to use small, niche, local businesses rather than the likes of Poundland or Asda. More middle income spend means more support for local businesses, more investment in the local area and consequently more support for local communities.  That in turn reduces crime rates.

    John McDonnell and Labour's pledge to increase tax is nothing more than a cheap shot aimed at getting more votes. He and Labour are either so incompetent and short-sighted that they cannot see the bigger picture, or they're deliberately choosing to ignore the negative consequences of this policy. Whichever way you look at it, the message isn't a positive one.  This is a war against wealth and their message to the people of Great Britain seems to be - "If you dare to do well, prepare to pay for it through your taxes".
     
    Instead of milking the cash cow of the hard-working middle class why not spend a little more than two minutes to come up with a policy which actually adds value to the whole of the population of Britain? One which makes more people want to get back into work, makes more people aspire to be achieve something great and makes more people believe they can be wealthy if they're prepared to try. If the Labour party can achieve that, then they won’t have to raise taxes ever again.

    Mind you, what's really scary is that the Tories are also quietly plotting tax hikes. Philip Hammond has refused to confirm if the 2015 Manifesto pledge to freeze all the major taxes like income tax and VAT will be repeated this time around. He may still be smarting from his embarrassing climb down on higher taxes for the self-employed, but the direction of travel is clear. Whoever wins on June 8th is going to squeeze us until our pips are squeaking like a rusty gate.

    Until next time,

    Graham

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    Learn Change and Adapt ?????

    S24 will magically create income that will mean many mortgaged sole trader LL will be earning £70000 even though they actually aren't.

    My interest 'income' is is considerable.

    Had I 10 properties such S24 'income' would put me into the allegedly rich territory!!!

    So as well as S24 taxes for having the temerity to have mortgages in my name I would be considered rich and be taxed even further!!

    My contempt for this Labour Party and any fool who votes for them knows no bounds.

    I loathe and detest everything that the Labour Party espouses.

    I sincerely hope they are wiped out in the current GE.

    They are simply not fit for purpose.

    The only way Labour will ever stand a chance of becoming a Govt is for it to become New, New Labour!!

    With the current leadership that will NEVER happen

    Labour need to move well to the right to stand a chance of election.

    In the meantime we WILL be having tax increases when the new Tory Govt occurs

    This is why S24 will not be stopped.

    Govt has already spent that money.

    So I'm afraid LL that if you can't cope with S24 you will have to accept bankruptcy or leave the PRS

    If bankruptcy is the only choice you need to start divesting yourself of assets to prevent the OR getting hold of them.

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    Is someone earning £70k a year rich?

    Using the usual definition of someone earning significantly more than me - of course Smile

    Using the definition of someone earning significantly more than average - yes. John McDonnell seems to be using a variation of that, saying that the top 5% of earners are rich.

    Is someone who can come up with a 20% deposit for a £700k house rich - I suspect most people would say yes (except perhaps in parts of London and Cheshire).

    Is £70k more than a middle class income? According to the Great British Class Survey

    • As of 2011 the established middle class had an average household income of £47,000 a year and owned a home worth an average of £177,000 with average savings of £26,000.
    • The technical middle class is relatively well to do, with an average household incomes of £38,000, average savings of £66,000 and houses worth an average of £163,000.

    • Average household income of elite households in 2011 was £89,000; average house price was £325,000.

    So £70 is nearer to the wealthy elite than the middle classes, but below average for them.


    My income for 2015/16 was above the median for all employees, but below that for full time employees, so by income I am pretty average and not rich. On the other hand my total assets put me in to top 2% so by that measure I am rich.


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