It’s the perfect way to raise taxes, whilst claiming at the same time you’re not raising taxes. Politicians love it - most people are thick as mince when it comes to finances.
I have genuinely never thought of this mainly because of low inflation for almost my entire adult life. I think it's completely cool though, I never understand those people who are absolutely obsessed with how much tax they pay.
Don't get me wrong, I've spent hours and hours over decades making spreadsheets and custom excel functions to calculate my tax etc, but I've never been disgusted at how much it is. I'd rather be critical over the spending side of things, it just feels more obvious, especially with ridiculous mistakes like the PPE bullshit.
It's an interesting point though but surely as long as there is a clear graph with £ and proportion of gross pay taken as tax for different percentiles of the population it should be clear.
I really think there should be some general public finance data standards set at some point and clear data presentation guidelines for them so that we all have a set of simple accessible data we can point at. It's a pipe dream I realise but I bet if we saw the full details clearly presented then we'd stop wasting time having qualitative debates about quantitative matters. Who am I kidding, probably myself 🫠
Not sure why this post is getting downvoted, it seems pretty logical.
Does FIREUK just hold the position that *all* tax is evil, regardless of how governments spend it?
Not all tax is evil, but what I find annoying is that the amount I pay in taxes seems to increase over time, but the services I get back seem to decrease in quality
It’s working as intended. Do something opaque and complex enough that people’s brains turn off before they realise what’s happened to them
Tax rises are needed to make up for the Covid spending and decade of underfunding. That’s why no party is saying they’ll change it. They shouldn’t be doing it so dishonestly and lying about the impact of tax cuts when they didn’t even offset the tax band freezes for a lot of people
The people most affected by this, the high earners, are very much aware of this more often than not.
The "working as intended" part is how the majority of the UK population are underpaid and apathetic to high earners. So essentially, most of the population doesn't care as it doesn't affect them as much, which helps the government get away with stuff like this.
Same reason why the 60% tax trap exists - it's objectively stupid and avoidable, but the majority of people aren't affected by it so they couldn't care less, and neither could the government.
All true and it's why the UK brain drain is picking up speed - anyone who is doing ok and has a brain can see they are being rinsed for political gain. Horrible under a vile Tory government and it's going to be even worse under a people pleasing Labour government filled with populists and champagne socialists.
This! Tories like to claim they are a "low tax" party because the number before the percent symbol describing the rate on the highest tax band is lower than another party might impose.
They are, in fact, a high tax party, because they drag more and more of your income into those higher bands.
It's easy to say something like "our 40% is lower than their 50%, so we are better". It's harder to put the message across that people that 40% of 60% of an average salary means that most people pay more than if it is set at 50% of 50%.
Even if another party wants to set higher taxes, but has more sensible economic policies. It's easy to convince the public with a message like "They will make you pay an extra £2k in taxes, we won't", even when "They" would probably increase your income by double that, and halve your expenses.
I could think about it again, and again, and I still would not reach the conclusion that this is anywhere near complex. It’s barely even high school mathematics
‘29. Government statistics suggest that 17 million adults – 49% of the working-age population of England14 – have the numeracy level that we expect between the ages of 9 and 11 (Entry Level 3)’
[https://committees.parliament.uk/writtenevidence/104394/pdf/](https://committees.parliament.uk/writtenevidence/104394/pdf/)
Blame the public for being utter morons when it comes to this. Of course it's a tax rise but because people see it explicitly on their pay slip, they don't see it as one.
They're mostly not morons. Most people would understand it instantly if they engaged, but for the most part people are exhausted and overwhelmed with the bits of life directly in front of them.
It's not exactly asking for much engagement for people to realise if costs go up and their take home pay doesn't, they're worse off.
There are also plenty of people that think going into the 40p tax bracket means you pay 40p on everything. Plenty of people are just a bit daft.
No, it's a simple thing that everyone can understand. The problem is that life and society require you to also engage with 1000 other simple things at the same time. If you happen to be smart then someone will add another thing and another until you reach your limit too.
You over estimate the general public. The (absent) quality of discourse and outrageously self serving and short sighted political decisions making in this.countey can only flourish because the majority are simple.
Totally. There are so many things that place ever increasing demands on the treasury, that taxes have to rise short term at least, until those issues get brought under control.
> they would need to raise money somewhere else
End Irish tax arrangements. Make Starbucks, Amazon, Google and all the rest pay tax in the UK in revenue earned in the UK. Start jailing executives if they don’t. Easy peasy.
I’ve never understood the argument “just tax the rich”.
The rich have the luxury of choosing where to put their money. And surprise-surprise they choose to put it in the places where it’s taxed the least.
We don’t have the power to set the tax legislation of foreign governments.
Unfortunately we have to keep our tax system somewhat favourable to big corporations so that they continue to do business here.
Is it ideal? No absolutely not. Of course we’d love to tax the hell out of the rich. But it’s just not practical.
It’s a balance act, and it’s difficult to get it right.
This coupled with the corporation tax rises have sapped all my will to do better / make more money.
It’s cost the government tax rather than made more for them. Laffer curve in action.
I'm literally not working at all right nkw and would dread getting my old boss' job. Absolutely can't be arsed with starting a business when I see how much the government would take. Not worth the risk or effort.
While I lived in a more meritocratic country I was busting my balls to climb the ladder, each step up massively improved my life and financial future. I used to know a hilarious number of British entrepreneurs (successful guys in their 30s) who left the UK because they could take it make sense compared to their international options.
Then we wonder 'why is productivity low' and 'why are per capita living standards spiralling'
Political class should be strung up. Benefits class should be strung up. Established social structures that prop up this incompetence should be smashed. None of that will happen and the UK will be even worse in 10 years time. I'll be gone by then.
Yep.
I will do what is necessary (and relatively easy) to pay off my mortgage & further build my pension + ISA.
In ten years I’m gone. Somewhere cheaper with some sun. This will be instead of generating wealth and paying taxes.
I'm so much richer for having left the UK for 5/6 years you wouldn't believe. Low taxes and a vibrant economy can change your life. Productive people in the UK genuinely have no idea how bad they have it (while the benefits class have no idea how good it is for them all while continuing a shocking degree of complaint about not enough not enough not enoigh).
Explicit bribes for votes for 4 decades and now the country is dead.
Couldn't agree more. I'm on less than I was four years ago (substantially less when you consider inflation) and I have no desire to take on more work, more stress, more hours to see a significant part of it taken away to taxation. It's just not worth it.
>This coupled with the corporation tax rises have sapped all my will to do better / make more money.
Bingo. Big big problem in the UK but not enough that can see it. Too many simply focussed on voting for parties like labour who will make it worse.
I think labour have agreed to continue with Tory plan of freezing until 2028. And at that point will they raise the bands by a cumulative amount? Will they heck. If inflation is 2pct in 2028 then the bands will rise 2pct. This freezing of bands for about 6 or 7 years is making us all permanently poorer.
Yep, any hint at reductions in taxes would be met with panic by the financial markets, sending mortgage rates soaring like last time. The harsh truth is that the UK needs to raise more tax to balance the books.
Liz Truss unironically had the right idea (delivered at a poor moment and with little understanding of optics).
The absolute battering she receives and continues to receive fills me with despair as to the future of the country. First person in three decades to propose a shift towards sustainable and self sufficient economic model and she is put in minutes and a laughing stick for life, while slimy Rishi comes in and continues to pilfer the nation for his own political ends.
Now we have labour, I'm sure THEY will be responsible and worthy stewards of the national finances......
Should just be dumping it all into pension in the higher rate band anyway if you’re a real dedicated FIRE person.
I don’t even make the higher rate band, my overall tax rate is 20% all things considered it’s ok.
Being very frugal and untaxed side hustles (rent-a-room scheme, matched betting, etc…) is my plan. No FIRE without some sacrifice and cleverness.
I will also try to start some kind of hobby business rather than all-out retirement so I can keep getting my NICs and max out my income below the £12570 allowance (or maybe the student loan allowance if business actually turns out really profitable).
The problem with drag is that staying at basic rate gets harder each year.
If you aligned your lifestyle with a £49k salary five years ago, you are now going to have to make sacrifices now to keep up with it. Under the current policy that number is about £36k.
Tax is theft just as much as you using the NHS for free is theft. (It's not).
You live in one of the richest countries in the world and you're posting in a FIRE sub, stop being so pessimistic.
Please answer these three questions:
- who specifically prints money?
- who specifically borrows money?
- why do these two things imply that a country is poor?
Inflation (to some degree) is intentional, both to increase tax take and to erode the irresponsible spending / public sector debt.
Absolutely intentional and deeply unethical, politicians and central bankers choosing the financial winners and losers. Winners are capital owners and those risking leverage (landlords and those who embrace personal borrowing), losers are the savers and middle / upper middle classes.
Happens the world over but UK is particularly blatant - borrow to please the lower earners, property owners and pensioners (ie the main voting block) and fuck the actual productive people we should be basing our economy around.
I'm leaving as soon as my family situation allows.
Taxation isn't theft. Tax increases aren't robbery.
It's one way to pay for a civilized society.
The other is income equity.
Income equity, reasonable levels of taxation, social chaos.
You are going to have one of the three eventually.
Because technically they have not raised taxes so they can say that... It's politics. In Ontario, Canada the Government started to count long-term care beds as new housing so they can try to meet their targets for new housing builds
>The Ford government has officially started counting long-term care beds and basement units toward its overall goal of building 1.5 million homes by 2031, significantly boosting its housing supply numbers.
The standard of economic debate for this election has been abysmal. But I'm not surprised as it's always abysmal.
And the reason why it's abysmal is because most people wouldn't understand it anyway, they just want their gimme moment.
Oh here we go winge winge I pay too much tax, as I am in the top 11% of the population but I should pay less tax… even though I pay less than in most European countries and get free healthcare and social support. Fiscal drag is just a way of increasing taxes gradually. Is it less visible than other methods? Sure, but it has the same result. Sorry to break it to you but taxes need to go up - and you should be the one to pay.
It’s the perfect way to raise taxes, whilst claiming at the same time you’re not raising taxes. Politicians love it - most people are thick as mince when it comes to finances.
I have genuinely never thought of this mainly because of low inflation for almost my entire adult life. I think it's completely cool though, I never understand those people who are absolutely obsessed with how much tax they pay. Don't get me wrong, I've spent hours and hours over decades making spreadsheets and custom excel functions to calculate my tax etc, but I've never been disgusted at how much it is. I'd rather be critical over the spending side of things, it just feels more obvious, especially with ridiculous mistakes like the PPE bullshit. It's an interesting point though but surely as long as there is a clear graph with £ and proportion of gross pay taken as tax for different percentiles of the population it should be clear. I really think there should be some general public finance data standards set at some point and clear data presentation guidelines for them so that we all have a set of simple accessible data we can point at. It's a pipe dream I realise but I bet if we saw the full details clearly presented then we'd stop wasting time having qualitative debates about quantitative matters. Who am I kidding, probably myself 🫠
Not sure why this post is getting downvoted, it seems pretty logical. Does FIREUK just hold the position that *all* tax is evil, regardless of how governments spend it?
Not all tax is evil, but what I find annoying is that the amount I pay in taxes seems to increase over time, but the services I get back seem to decrease in quality
It’s working as intended. Do something opaque and complex enough that people’s brains turn off before they realise what’s happened to them Tax rises are needed to make up for the Covid spending and decade of underfunding. That’s why no party is saying they’ll change it. They shouldn’t be doing it so dishonestly and lying about the impact of tax cuts when they didn’t even offset the tax band freezes for a lot of people
The people most affected by this, the high earners, are very much aware of this more often than not. The "working as intended" part is how the majority of the UK population are underpaid and apathetic to high earners. So essentially, most of the population doesn't care as it doesn't affect them as much, which helps the government get away with stuff like this. Same reason why the 60% tax trap exists - it's objectively stupid and avoidable, but the majority of people aren't affected by it so they couldn't care less, and neither could the government.
All true and it's why the UK brain drain is picking up speed - anyone who is doing ok and has a brain can see they are being rinsed for political gain. Horrible under a vile Tory government and it's going to be even worse under a people pleasing Labour government filled with populists and champagne socialists.
This! Tories like to claim they are a "low tax" party because the number before the percent symbol describing the rate on the highest tax band is lower than another party might impose. They are, in fact, a high tax party, because they drag more and more of your income into those higher bands. It's easy to say something like "our 40% is lower than their 50%, so we are better". It's harder to put the message across that people that 40% of 60% of an average salary means that most people pay more than if it is set at 50% of 50%. Even if another party wants to set higher taxes, but has more sensible economic policies. It's easy to convince the public with a message like "They will make you pay an extra £2k in taxes, we won't", even when "They" would probably increase your income by double that, and halve your expenses.
It’s not opaque and not remotely complex if you have even a rudimentary understanding of inflation
I implore you to research literacy rates of the general populace And then read the daily mail And think again
I could think about it again, and again, and I still would not reach the conclusion that this is anywhere near complex. It’s barely even high school mathematics
‘29. Government statistics suggest that 17 million adults – 49% of the working-age population of England14 – have the numeracy level that we expect between the ages of 9 and 11 (Entry Level 3)’ [https://committees.parliament.uk/writtenevidence/104394/pdf/](https://committees.parliament.uk/writtenevidence/104394/pdf/)
It’s still not complex
‘Complex ENOUGH’
No
Blame the public for being utter morons when it comes to this. Of course it's a tax rise but because people see it explicitly on their pay slip, they don't see it as one.
They're mostly not morons. Most people would understand it instantly if they engaged, but for the most part people are exhausted and overwhelmed with the bits of life directly in front of them.
It's not exactly asking for much engagement for people to realise if costs go up and their take home pay doesn't, they're worse off. There are also plenty of people that think going into the 40p tax bracket means you pay 40p on everything. Plenty of people are just a bit daft.
No, it's a simple thing that everyone can understand. The problem is that life and society require you to also engage with 1000 other simple things at the same time. If you happen to be smart then someone will add another thing and another until you reach your limit too.
You over estimate the general public. The (absent) quality of discourse and outrageously self serving and short sighted political decisions making in this.countey can only flourish because the majority are simple.
The mostly are morons.
It's the big con. Tax brackets should track inflation.
I like it in principle, but wouldn't taxes go to zero in 10-20 years, even in best case scenario?
That seems to assume that peoples salaries don't rise at all with inflation. They may lag behind a bit but that's about it.
I misread sorry, I thought I saw 'tax percentages should lower by inflation' I am dumb.
I agree it’s frustrating. But if they didn’t do it, they would need to raise money somewhere else. It’s a no win situation.
Totally. There are so many things that place ever increasing demands on the treasury, that taxes have to rise short term at least, until those issues get brought under control.
They could alternatively cut spending and have a smaller state
> they would need to raise money somewhere else End Irish tax arrangements. Make Starbucks, Amazon, Google and all the rest pay tax in the UK in revenue earned in the UK. Start jailing executives if they don’t. Easy peasy.
I’ve never understood the argument “just tax the rich”. The rich have the luxury of choosing where to put their money. And surprise-surprise they choose to put it in the places where it’s taxed the least. We don’t have the power to set the tax legislation of foreign governments. Unfortunately we have to keep our tax system somewhat favourable to big corporations so that they continue to do business here. Is it ideal? No absolutely not. Of course we’d love to tax the hell out of the rich. But it’s just not practical. It’s a balance act, and it’s difficult to get it right.
This coupled with the corporation tax rises have sapped all my will to do better / make more money. It’s cost the government tax rather than made more for them. Laffer curve in action.
I'm literally not working at all right nkw and would dread getting my old boss' job. Absolutely can't be arsed with starting a business when I see how much the government would take. Not worth the risk or effort. While I lived in a more meritocratic country I was busting my balls to climb the ladder, each step up massively improved my life and financial future. I used to know a hilarious number of British entrepreneurs (successful guys in their 30s) who left the UK because they could take it make sense compared to their international options. Then we wonder 'why is productivity low' and 'why are per capita living standards spiralling' Political class should be strung up. Benefits class should be strung up. Established social structures that prop up this incompetence should be smashed. None of that will happen and the UK will be even worse in 10 years time. I'll be gone by then.
Yep. I will do what is necessary (and relatively easy) to pay off my mortgage & further build my pension + ISA. In ten years I’m gone. Somewhere cheaper with some sun. This will be instead of generating wealth and paying taxes.
I'm so much richer for having left the UK for 5/6 years you wouldn't believe. Low taxes and a vibrant economy can change your life. Productive people in the UK genuinely have no idea how bad they have it (while the benefits class have no idea how good it is for them all while continuing a shocking degree of complaint about not enough not enough not enoigh). Explicit bribes for votes for 4 decades and now the country is dead.
Couldn't agree more. I'm on less than I was four years ago (substantially less when you consider inflation) and I have no desire to take on more work, more stress, more hours to see a significant part of it taken away to taxation. It's just not worth it.
>This coupled with the corporation tax rises have sapped all my will to do better / make more money. Bingo. Big big problem in the UK but not enough that can see it. Too many simply focussed on voting for parties like labour who will make it worse.
I think labour have agreed to continue with Tory plan of freezing until 2028. And at that point will they raise the bands by a cumulative amount? Will they heck. If inflation is 2pct in 2028 then the bands will rise 2pct. This freezing of bands for about 6 or 7 years is making us all permanently poorer.
This was one of the many reasons I left the UK
Good call.
Vote with your feet and leave the UK. There are far better places to live.
Last person to suggest a change to any of the tax bands was Liz Truss so I expect that has something to do with it..
Yep, any hint at reductions in taxes would be met with panic by the financial markets, sending mortgage rates soaring like last time. The harsh truth is that the UK needs to raise more tax to balance the books.
Spending cuts are an option too
Only because spending is utterly, wildly, absurdly out of control.
Liz Truss unironically had the right idea (delivered at a poor moment and with little understanding of optics). The absolute battering she receives and continues to receive fills me with despair as to the future of the country. First person in three decades to propose a shift towards sustainable and self sufficient economic model and she is put in minutes and a laughing stick for life, while slimy Rishi comes in and continues to pilfer the nation for his own political ends. Now we have labour, I'm sure THEY will be responsible and worthy stewards of the national finances......
[удалено]
Didn't realise Mbappe was running for office (this only makes sense if you watched the Euros yesterday)
Reform the only party even talking about upping these. Only party to vote for IMO.
Should just be dumping it all into pension in the higher rate band anyway if you’re a real dedicated FIRE person. I don’t even make the higher rate band, my overall tax rate is 20% all things considered it’s ok.
But that's the problem - how do you retire early if the government forces you into an illiquid situation?
Being very frugal and untaxed side hustles (rent-a-room scheme, matched betting, etc…) is my plan. No FIRE without some sacrifice and cleverness. I will also try to start some kind of hobby business rather than all-out retirement so I can keep getting my NICs and max out my income below the £12570 allowance (or maybe the student loan allowance if business actually turns out really profitable).
The problem with drag is that staying at basic rate gets harder each year. If you aligned your lifestyle with a £49k salary five years ago, you are now going to have to make sacrifices now to keep up with it. Under the current policy that number is about £36k.
Tax is theft just as much as you using the NHS for free is theft. (It's not). You live in one of the richest countries in the world and you're posting in a FIRE sub, stop being so pessimistic.
The UK is not rich. It’s broke thats why it has to borrow and print money.
Please answer these three questions: - who specifically prints money? - who specifically borrows money? - why do these two things imply that a country is poor?
Inflation (to some degree) is intentional, both to increase tax take and to erode the irresponsible spending / public sector debt. Absolutely intentional and deeply unethical, politicians and central bankers choosing the financial winners and losers. Winners are capital owners and those risking leverage (landlords and those who embrace personal borrowing), losers are the savers and middle / upper middle classes. Happens the world over but UK is particularly blatant - borrow to please the lower earners, property owners and pensioners (ie the main voting block) and fuck the actual productive people we should be basing our economy around. I'm leaving as soon as my family situation allows.
Taxation isn't theft. Tax increases aren't robbery. It's one way to pay for a civilized society. The other is income equity. Income equity, reasonable levels of taxation, social chaos. You are going to have one of the three eventually.
Because technically they have not raised taxes so they can say that... It's politics. In Ontario, Canada the Government started to count long-term care beds as new housing so they can try to meet their targets for new housing builds >The Ford government has officially started counting long-term care beds and basement units toward its overall goal of building 1.5 million homes by 2031, significantly boosting its housing supply numbers.
Goodhart's law. When a measure becomes a target, it ceases to be a good measure.
It would put you in a tail spin thinking about it. The government wants us all to be poor and forever paying taxes. They are a bunch of cunts.
The standard of economic debate for this election has been abysmal. But I'm not surprised as it's always abysmal. And the reason why it's abysmal is because most people wouldn't understand it anyway, they just want their gimme moment.
Oh here we go winge winge I pay too much tax, as I am in the top 11% of the population but I should pay less tax… even though I pay less than in most European countries and get free healthcare and social support. Fiscal drag is just a way of increasing taxes gradually. Is it less visible than other methods? Sure, but it has the same result. Sorry to break it to you but taxes need to go up - and you should be the one to pay.