Does £80k put you in the top 5% of earners?

Estimated reading time: 2 minute(s)

In case you’ve not seen it, a man on Question Time last night disputed whether he was in the 5% of earners when his salary was £80k, claiming he wasn’t even in the top 50%.

Now, this prompted some laughter from some quarters, given that £80k would actually put you in the top 3% of UK earners according to 2017 data. He was also wrong on the average salaries of doctors, accountants and lawyers. But to me, this prompted another question. Why was he so adamant that his salary, which in comparison to others would be higher than 97% of the country, did not make him well off? This can be explained by the “Me? I’m not Rich” syndrome, where the point at which people feel they could consider themselves “rich” is always a higher level of income than they currently earn.

But could there also be another reason? I don’t know his circumstances, and £80k is still a large amount of income by most standards, but it’s also quite possible for people to be earning way above average salaries, and still find themselves just one month away from homelessness. One immediate example that comes to mind is comparing the level of disposable income between a privately renting family of 4, and another family of 4 who were able (perhaps from parents who helped with the deposit) to get a mortgage. These two families on a £75k household income would both be in the top 5% of UK income (2017 figures), but they would have different feelings on how well off they are.

What I’m saying is that while I am in favour of higher earners paying more tax as a general approach, income is not necessarily a measure of wealth; assets are, and that’s where our tax system needs reform. Note that I’m not saying that the property you live in is an asset, that’s your home, an important distinction in my eyes. However, owning multiple properties or land with multiple properties on it? That’s definitely wealth. What we need is a fairer way to ensure that those who are wealthy are paying their fair share, and not using – the currently legal – tax tricks to turn it into assets with lower forms of taxation.

This is the point where I was going to demonstrate how The Green Party and Labour differ on policy, and how the Greens have a more radical and fairer approach to taxation. But I’ll let Green Party councillor, Martin Farley, take up the explanation, given that he’d already tweeted this breakdown before I had the chance to look at the numbers myself:

So “Mr 5%” throws up an interesting example of how @TheGreenParty
and @UKLabour are very different. If he earns £90k per year he will take home £1k less under Labour, but £1.4k more under the Green proposals. Here’s why…

While @UKLabour are seeking to increase taxes on higher earning workers, @TheGreenParty are promising to increase the tax take from asset owners, landowners, polluters and tax avoiders.

Tax rates will mostly stay as they are. Coupled with our Universal Basic Income #UBI policy, this will mean all workers will see their take home pay increase.

Plus… Along with VAT reductions, tax rebates for small businesses and Land Value Tax #lvt , this would means a significant boost for the productive economy, with the increased tax revenue all coming from unproductive asset holders (or those currently avoiding/evading tax) This would boost the economy (especially at a local level) in a way that reduced pollution and gave workers and productive businesses a greater share of the reward.

@martin_farley on twitter

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