Should the wealthy pay more for everything?

Should the wealthy pay more for everything?

Once the energy price cap expires in April, the Chancellor is apparently planning to levy ‘social tariffs’ on the energy bills of the better off – a pleasantly elastic category, since most of us are better off than anyone else. ‘a. Charging more affluent customers for their energy could help reduce social security recipients’ bills. The same kilowatt-hour would cost more to the “rich” (ie marginally solvent people) than to socially dependent people.

“We can’t afford a heated discussion.”

To support our beloved justice, could this new pricing system be extended to all UK goods and services? After all, for higher-rate taxpayers (assuming that after obeying HMRC they have something left), rushing for a £7.95 fillet of beef from the supermarket is a relatively sweet experience. Yet for a buyer dependent on Universal Credit, the same madness must be heartbreaking. Is it right? So why not price food according to consumer tax brackets?

So, for benefit claimants, that steak could be down to a few pounds; better still, the clerk could give the buyer £2 to “buy” the beef. Basic assessors could pay £7.95 directly. According to the logic of the tax system, the highest assessors should pay twice as much for the same meat, i.e. £15.90. Obviously, those obnoxious extra reviewers should be bored. Think how anxiety-inducing buying that net was for anyone surviving on meager state subsidies. Well, that’s how outcasts earning over £125,000 a year should feel when buying their dinner too. A 200g steak for £100!

The British tax structure is not so much progressive as deeply socialist

Admittedly, fitting all these different prices onto a small package could present geometric difficulties. Perhaps we could all be given magnifying glasses at store entrances to discern the tiny footprint. Meanwhile, our loyalty cards could be chipped with our latest tax return to prevent the rich rich from scoffing at this net for just eight pounds. Once we extend this system across the board, the ‘better off’ charged £1,000 for a cinema ticket would finally share the set-and-home dream of their low-income peers.

If that proposition sounds fanciful, it’s no more than charging affluent customers more than the skint for the same energy. In truth, the whole ‘progressive’ tax system is a mirror image of that -£2/£7.95/£15.90/£100 steak. We’re all buying the same product – a rather crummy product, more like ground meat past its sell-by date than a premium cut – at very different prices.

But then, Britain’s tax structure is not so much progressive as it is on the edge of the cliff. The Treasury doubles the personal income tax rate with staggeringly low earnings of £50,000 a year, on which Londoners can barely afford brand name mustard. Crossing this threshold is less like stepping over a doorway than pitching over a precipice. Emotionally, qualifying as a higher rate taxpayer is decidedly punitive. The bill swells; the “reliefs” are cut.

Classically, the state imposes fines on citizens who have done something wrong. Caught speeding we are snubbed £100 – from which we infer that the state wishes to discourage us from going over the speed limit. Given the severity of the fine, the income also effectively has a speed limit, which the state clearly wants to discourage us from exceeding. Implicitly, no one should be paid more than £50,000 a year. Pigs that insist on hoarding more have been bad and should be penalized. Macroeconomically, I would hesitantly argue that such a clap of the hands at this income level is ruinous.

The British take this profoundly socialist tax structure for granted. Yet when I tell my fellow Americans that the British are starting to confiscate about half of your income above $59,000 – less than the average American personal annual income of $66,755, currently taxed federally at 22% – their jaws collapsed. The American brackets are much more graduated (10, 12, 22, 24, 32, 35 and 37%), and this higher bracket only comes into play with an income of more than half a million dollars, or around £450,000. Now hold back the urge; federal income tax does not include state and local taxes (between zero and 16%) or property, social security, and health insurance taxes. Yet in the UK we also pile on National Insurance, Council Tax, Stamp Duty, a 20% sales tax and the world’s highest Air Passage Charge. So whenever six-figure salaries are quoted with indignation in the British press, I instinctively cut the number in half.

Until now, most base-rate taxpayers haven’t been bothered by this cliff edge, because confiscatory taxes are still attractive when they don’t apply to you. Now that Jeremy Hunt has frozen the thresholds, current higher-rate taxpayers could be forgiven for hailing the millions of Britons who will soon be dragged into the 40 per cent bracket with a bitter: “Yeah, see how you I like this.’

Low and frozen thresholds are inherently inflationary. Any pay rise above £50,000 must be almost double the desired net improvement in a worker’s standard of living, a cost passed on to higher prices. Meanwhile, the state is profiting from high inflation, so citizens are fucked up and down. Not only does a rubbish sandwich now cost ten pounds, but with wages failing to keep up with a falling pound, workers are being pushed over the precipice of the tax threshold like so many lemmings. With regard to the Treasury, fab. When last month’s inflation rate hit 11.1%, Hunt had to do a little dance.

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Do not mistake yourself. My sympathies do not extend only to the “better off”. On the contrary, I’m sorry for Everybody. The average British annual income is just £32,000, of which £6,500 goes towards income tax and national insurance before a single telecom bill is paid. With energy bills, rents, mortgage payments, food costs and now soaring taxes, I can’t understand how Brits survive on such meager incomes.

Oh, and please don’t tell Jeremy about my tax price at the supermarket. He might like the idea.

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