I know I'm not meant to be blogging, but this letter from two people I like and admire and with whom I have co-authored was in the Guardian this morning and too good not to share:
In deciding who are the middle class (Letters, 18 December), one crucial source of information is the Office for National Statistics data on household incomes. This shows that in 2011-12, the top 10th of households with the highest incomes received 27% of all income both gross and after tax. (The UK has for households what amounts to a flat tax system other than for the poorest tenth of households who pay a higher proportion of their income in tax than any other decile.) This was far more than the next 10th down, who received about 16% of all gross and net income. The decile below that, the eighth highest, received about 13% of gross and net income. From the lowest 10th to the ninth decile, the difference in income levels rises in a smooth line, but between the ninth and 10th deciles incomes rise by nearly 70%. It is precisely these very much higher incomes, post-tax as well as pre-tax, which fund most private education in the UK, the main route by which the privileged pass on privileges to their offspring.
So if we think about household incomes, then we have an upper class of plutocrats who do not really appear in the relevant data set and who by the way pay very little tax because of their systematic use of the tax avoidance industry, a middle class of those in the top decile of households we know about, although they also often legally avoid tax, and the rest of us below them.
This is very much a return to the way in which the 19th century thought about a middle class, not as a statistical average but as a group between the great owners of property and the rest of the population. These days the middle class understood as the 10th of households with the highest incomes we know about contains those who assist the plutocracy by managing the rest of us on lower pay and conditions in work, and pensions and benefits when out of work, across the whole of the public and private sectors.
Professor David Byrne Durham University
Dr Sally Ruane De Montfort University
I have a strong suspicion that this analysis correctly explains behaviour and as such resonates.
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That is a brilliant, simple letter showing the blatant unfairness.
Cue indignant harrumphing from the usual apologists…
This is a devastating and important finding. So important in fact that I started checking it in case it was also actually true.
So I started with the first fact “in 2011-12, the top 10th of households with the highest incomes received 27% of all income both gross and after tax”. I checked it with HMRC, taking care to use use the very source that Richard himself used earlier this month(1).
The Richard/HMRC check does not confirm that the top 10th receive 27%. Rather, it tells us that they ‘earn’ 34% and pay 53% of all income tax.
It is a tedious task to fact check something of such low quality. He is devastatingly, importantly, resonantly wrong.
BTW, anyone who wants more facts on the top 1% and whether they pay tax are invited to review the excellent and independent ‘fullfact’ funded in part by Joseph Rowntree Charitable Trust. http://fullfact.org/factchecks/income_tax_are_the_top_1_really_paying_more-29302
(1) http://www.hmrc.gov.uk/statistics/tax-statistics/liabilities.pdf
Did you deliberately choose the wrong stats
Note the source they used
Then are not the same data for a great many reasons
But why worry yourself with statistical facts?
Jesus wept man – look at what they are saying. 27% both before and after tax?!!! Really?!
The next sentence of their article expands the point “The UK has for households what amounts to a flat tax system other than for the poorest tenth of households who pay a higher proportion of their income in tax than any other decile.”
Flat tax – they are seriously telling us we have a de facto flat tax system to explain the numbers. This is innumerate rubbish. This is the stuff that gives sociology a bad name.
Richard you know fine well we do not have a flat tax system. You know that the top 10% don’t make 27% before tax – you shared the correct data earlier this month. And you dont need to defend it to the death – it’s not your analysis.
Gary
Firstly, you really should not take the name of our saviour in vain.It is particularly unedifying for someone with your violently unchristian opinions.
Secondly, you seem to have deliberately confused the numbers. The point being made was the TOTAL tax take. That is nothing to do with the higher tax-rate. It includes VAT/NIC & IDS’s nasty & brutal bedroom-tax.
Thirdly, I suspect you work in the financial industries. If you do, you know just as well as I do that wealthy people don’t pay top-rate tax. They should, but they don’t!
In Excelsis Gloria
OK William, I will take that on the chin about taking the lords name in vain. I apologise. The moral high ground is yours to keep.
As for the second point, how boringly, predictably wrong. How very typical of the faux-outrage moralists to make wild assertions that are refuted in minutes. But consider this a health warning: real data has the potential to influence adult minds:
http://www.ons.gov.uk/ons/search/index.html?newquery=household+income+by+decile&newoffset=0&pageSize=50&sortBy=&sortDirection=DESCENDING&applyFilters=true
Why are you persistently ignoring what you’re being told?
Why not engage with the argument, not your own straw man?
“Ignore”? I am the only poster on this thread who has offered checkable facts. I have no argument; what I do have is access to facts which refute the assertions of the original guardian letter writers.
Not 1 single person has been able to reciprocate.
Except you haven’t
You have done no such thing
Richard. I looked for ONS data and found the following. It says that “Overall, taxes and benefits lead to income being shared more equally between households. After all taxes and benefits are taken into account, the ratio between the average incomes of the top and the bottom fifth of households (£57,300 per year and £15,800 respectively) is reduced to four-to-one.”
Does this not change the picture? And do you have the figures to illustrate the value of the systematic tax avoidance? All the stuff on avoidance seems to be to do with big business.
http://www.ons.gov.uk/ons/rel/household-income/the-effects-of-taxes-and-benefits-on-household-income/2011-2012/etb-stats-bulletin-2011-12.html
You are still using the wromg data
This is quintile not decile data
The findings are naturally less granular at quintile level
Re systematic Dax avoidance – see The Missing Billions
Christmas? What? What next?
I’ve read your blog with interest since 2009. I was referred to it by a reference in an article on the public/private pension debacle by Jean Shaoul (An ex-local government accounting lecturer at the MMU) via the wsws.org. I’ve never found an analysis or statistical result on your blog that is untruthful. However, I don’t generally agree with with your reformist policy suggestions, because I don’t think that capitalism’s stability or future has a hope in hell in either a semi-feudal court or in an anti-imperialist tribunal – but I do remember well your blog regarding the decile by decile flat tax system in the UK.
Anything else is/was simply ignorant, and this system’s destruction can only be actively opposed by those against the welfare of those who are victims of the revival of the neo-Victorian victimization of the poor.
May I give my congratulations on your work, I hope that your analysis becomes more politically intense.
Good Luck and have a Happy New Year.
Richard,
Hope you had as good a family Christmas as we did.
Before the turkey I found a link to this article on the Barry Ritholtz blog
http://blogs.wsj.com/moneybeat/2013/12/19/how-real-income-stacks-up-around-the-world/
Don’t bother to put this comment up, but I thought I thought you might find the article interesting. It shows rather clearly up to 2011 the stunning success of Conservative economic policy, successfully leading the UK from 7% above median income to 3% below.
The trouble is that it is difficult to deal with a class or section on its own. Have you seen Eric Joyce in his own blog of 18 December on the subject of working class M.P.’s, notably about the issues of defining class where upward and downward mobility etc. occur. It is an interesting read. Having sweated so many Census returns of 1841 to 1911 and other material, I have rather different ideas of class in that period than others.
William 1:
“…TOTAL tax take. That is nothing to do with the higher tax-rate. It includes VAT/NIC & IDS’s nasty & brutal bedroom-tax.”
Really! You’ve found a statistical analysis that include ‘The Bedroom TaxK in the total tax take have you?
As you well know such data could not be collected as yet
Richard, as a tax expert, when do you expect the bedroom tax to show up in the numbers?
William has more than adequately responded
Yes indeed, I do well know. I also well know that if I value my credibility I won’t go around calling it a tax and suggesting that any serious analysis will ever include a ‘Bedroom Tax’.
Naming something for what it is always induces the Schopenhauer effect
First they ignore you
Then they abuse you
Then they agree you were right all along
You’re clearly at the abuse stage
Ironman
Nice to see you’ve stripped off that ludicrous ‘front’ as an innocent abroad that merely wanted to know the truth to reveal yourself as one of the many neo-libertarian trolls (or perhaps I should say crypto-libertarians) on this site.
I’ve previously said to Richard that he shouldn’t delete antagonistic messages because, i.d.c, we’ll get round to answering them, but I can understand why he gets cheesed off with you guys. Don’t you have MessageBoards to go to ?
Ironman
Named presumably after the Black Sabbath song?
Anyway, as you well know, the “bedroom tax” is a reduction in Housing Benefit so its impact, statistically, won’t be reflected in greater Govt income but in a reduction in Govt expenditure.
Actually, of course, it won’t be reflected in either, because keeping people out on the streets is not cheap or cost-effective. It does, however, give the Daily Mail/Telegraph readers a massive boost to know they’ve put poor people out in the cold, where they belong.
What’s a crypto-libertarian?
Someone who submits comments they do not meet this sites comment policy
Why does one never mention crypto-socialists, crypto-communists, neo-socialists or neo-communists?
Maybe that lot is still stuck in the original paleo phase…..
Gary
the difference between “total tax take” which includes not only tax & NIC but VAT & Duty on items one has to buy (cigarettes, petrol etc) & the rate of Income Tax take is pretty obvious.
I appreciate that one of us is being v stupid &, being a liberal Roman, I’m prepared to accept it may be me, but I totally can’t see what you are getting at when you go on about higher rates of Income Tax. I really can’t see where you’re getting this stuff from !
Ironman and Gary have, I should add, offered further contributions that added nothing to comments already made, were abusive, and claimed to refer to data but was utterly ambiguous as to its nature
For that reason these comments failed moderation and have been deleted
The letter in the Guardian is nonsense when it says we have a flat tax for everyone except the bottom 10%.
Richard, you rightly say quintiles are not as accurate as deciles but continually ignore the further accuracy of acctual single percents.
Fact is 99% of us pay roughly the same in tax, 33-36%. The top 1% pay a lot more.
If you know anything about tax you know it to be true but continually deny it instead peddling unsupported allegations such as “[the wealthy] who by the way pay very little tax because of their systematic use of the tax avoidance industry.” as in the article.
If that allegation was true, how come the richest 1% earn around 11% of all income and pay 27% of all income tax? Doesn’t sound to me as if their tax advisors are doing much of the job it’s claimed that they are doing.
But, carry on peddling untruths about tax. It’s the flavour of the moment.
Carry on campaigning for a high tax, high spend, big public sector economy. Why not use what’s happening in France at the moment as a model?
You are ignoring the fact that it is all taxes referred to, and not just income tax
You are therefore the one peddling the untruths