From the TUC

Why the richest are paying their biggest share of income tax

05 Dec 2012, by in Economics

George Osborne made much of the fact the the richest are paying a high share of income tax.

But that’s because the richest have got richer.

Here’s a great chart from Declan Gaffney showing (after housing cost) income over the last five decades using data from the IFS. (See Declan’s post for a bigger version). It’s easy to see how the the richest 5% have been climbing away from the rest since the mid to late 70s.

If the rich are getting richer at a faster rate than everyone else – even if you change no tax rates or allowances – they will pay more tax. That’s arithmetic, not economics.

UK distribution of income graph, 1961 to 2011

4 Responses to Why the richest are paying their biggest share of income tax

  1. Ben
    Dec 5th 2012, 3:36 pm

    Really? I’d say that chart makes it clear that disposable income has dropped dramatically more quickly for the richest than for the poorest since the Coalition came to power, and lays bare the fact that income inequality increased significantly when Labour were in power.

  2. Nigel Stanley

    Nigel Stanley
    Dec 5th 2012, 4:19 pm

    I was looking over a slightly longer time frame than the kink at the end of the chart as it’s the long term change that struck me.

    And while I don’t defend the last Labour government’s record the increase was as much before 97. Inequality under Labour stooped growing as fast as it had under previous governments.

    I suspect the figures in the chart predate the abolition of the 50p rate. We will have to see how they develop over time.

  3. soiniciulacht
    Dec 5th 2012, 4:44 pm

    The Council Tax Benefit changes in April mean that those on benefits and the low paid will very probably be seeing a CASH TERMS cut in income.

  4. John
    Dec 6th 2012, 12:52 am

    An appreciated article Mr Nigel Stanley. Thankyou.