Monday, October 26, 2009

Who Pays Our Taxes?

Following our post on whacking the middle class, we've refreshed our memory on who actually pays our taxes.

We can get some idea from the latest ONS analysis of taxes paid directly by households. They account for around three-quarters of total taxes, the remainder mainly being paid by businesses of one kind or another.

In 2007 (the latest data available), of the government's £500bn total tax revenue, £360bn was paid directly by households (including income tax, national insurance, VAT, duties, and council tax).

And of that £360bn, getting on for a quarter (£81bn) was paid by the richest 10% of households (meaning household incomes over about £60 grand pa). Which just goes to prove once again how very grateful we should be to the rich.

In contrast, the poorest 40% of households paid "only" £54bn between them.

Which means that the 50% of households in the middle - the people who probably think of themselves as middle class - ended up paying 63% of all the taxes paid by households.

PS I know what you're thinking. You're thinking that companies don't actually end up paying taxes at all because companies are just legal constructs. Any taxes they pay are passed onto their customers in the form of higher prices, or passed onto their shareholders in the form of lower earnings. So really we need to attribute the £140bn taxes they paid back to their customers and their owners. And you're quite right. Unfortunately we don't have the information to do it.

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