TAX: good or bad

 TAX: GOOD OR BAD FOR THE AVERAGE TAXPAYER?

Of course taxes lower our take-home pay; no question. But, equally obviously, taxes fund the many services that central government provides.  Are taxes, then, a good thing or a bad thing? And why did all the candidates for the post of Tory party leader promise to degrade further our public services?

The better-off pay more tax than the less-well-off, and, because of the 'progressive' tax system in the UK, the tax-rate is higher for the rich than for the poor. 

There must be an annual salary above which the paying of due taxes will render a citizen poorer (in that the benefits he enjoys cost less than the tax he pays), while below that annual salary the due taxes will amount to less than the benefits (roads, education, police, health).  What is that pivotal annual salary? And why do so many people think they are net contributors, when at least half the population are likely to be net beneficiaries?

Imagine a see-saw pivoted at the 'median' annual income, with the rich to the right side and the poor to the left side. It will balance, as that is the definition of the median (There are as many individuals earning more than the median as there are earning less.)

Now let them sit on the see-saw with their money; it will clearly tip to the right, because the rich have more money than the poor. In fact, if the incomes alone are weighed, the see-saw will balance at the ‘arithmetic mean’ income.

 (See Figure 1; data from ONS, Average household gross income, UK: financial year ending 2021. The “equivalised median” is said to be £37,900; the “equivalised mean” £48,700)  

Some of those people earning more than £48,700 per annum gross (or £37,000 after tax) might rationally think they would benefit from lower taxes (not-withstanding the consequently deteriorating services: congested bumpy roads, decaying infrastructure, sick population, etc..)

But I cannot think why anyone whose gross annual income is less than £48,700. would vote for lower taxes.  We should logically vote for increased taxes and improved services.

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 “The ‘equivalised’ disposable income is calculated in three steps: all monetary incomes received from any source by each member of a household are added up; these include income from work, investment and social benefits, plus any other household income; taxes and social contributions that have been paid, are deducted from this sum; in order to reflect differences in a household's size and composition, the total (net) household income is divided by the number of 'equivalent adults’, using a standard (equivalence) scale: the modified OECD scale; this scale gives a weight to all members of the household (and then adds these up to arrive at the equivalised household size): 1.0 to the first adult; 0.5 to the second and each subsequent person aged 14 and over; 0.3 to each child aged under 14. Finally, the resulting figure is called the equivalised disposable income and is attributed equally to each member of the household.”

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