This week’s column on weird politics of wage compression - Britain’s big squeeze: middle-class and minimum-wage www.economist.com/britain/2024... - ThreadSky

duncanrobinson.bsky.social • 137 days ago

This week’s column on weird politics of wage compression - Britain’s big squeeze: middle-class and minimum-wage
https://www.economist.com/britain/2024/11/13/britains-big-squeeze-middle-class-and-minimum-wage

Comments

flowingben.bsky.social•137 days ago

Could someone explain the marginal tax rate of at least 37% please?

drboothroyd.bsky.social•137 days ago

The normal tax someone on that salary pays on every extra pound earned, plus 9% repayment on top.

flowingben.bsky.social•137 days ago

Ok thanks. For anyone confused like I was, the breakdown of the 37% should then be 20% (minimum, basic rate) + 8% national insurance+ 9% student loan

larsnielsen.bsky.social•136 days ago

But the 20% income tax is on earnings above about £13k, NI is above £3k, and loan repayment is on earnings above £25k. So someone on £30k doesn't pay 37%, they pay 21% of their earnings as tax/loan repayment. Someone without a student loan will pay 20%.

flowingben.bsky.social•136 days ago

If I understand correctly, by definition, the marginal tax rate is based on the "most taxed pound" that you earn. You are computing a "global" tax rate (surely there is an official name for it, which I don't know)

larsnielsen.bsky.social•136 days ago

Yes you're right, I just wanted to make the point that for most people the impact isn't as great as it might seem from the headline numbers.

se13ed.bsky.social•137 days ago

far be it for me to say but we need to write off all student debt and reframe it as a graduate tax that will mainly hit higher earners

antonywalker.bsky.social•136 days ago

Handy though if your parents can pay your way through Uni.

sneapster.bsky.social•137 days ago

HAAAAAAA as an Ecologist, I highly appreciate this article 😂 I like that you chose that sector to demonstrate wage compression cus MY GOD, WHY. They’ll all be begging for us though once climate breakdown gets really spicy. Too late by then, I’ll be at Tesco. In the booze aisle I hope.

benansell.bsky.social•137 days ago

Can't believe I clipped this para myself without bothering to check whether you might have done that already. Anyways, fact of the year stuff here

jackkessler.bsky.social•137 days ago

You finish each other's... sandwiches.

stjohn75.bsky.social•137 days ago

I’m interested in the “history” being alluded to here? 1930s? 1960s? 1848?

rhysneedham.bsky.social•134 days ago

1930s' Romania, if you like gory horror.

Likely those other time periods, too.

stjohn75.bsky.social•134 days ago

What happened?

rhysneedham.bsky.social•134 days ago

A lot of assassinations. The fascists and Nazis there were probably even more brutal than the likes of SS. Even pre-World War 2. They also won over pretty much most of the students and intellectuals of the type that might have swung towards conventional socialism or communism anywhere else.

stjohn75.bsky.social•134 days ago

I assume being planted directly between the USSR undergoing Stalinist purges and famine and the revanchist German Empire under the Nazis would do that. Not to mention Romania’s cultural ties to Italy.

rhysneedham.bsky.social•134 days ago

Certainly. A lot to do with a dark domestic history and the general instability and violence of the interwar period in most places, really.

scottishphil83.bsky.social•137 days ago

The wage squish is really challenging

But so is the 70% tax rate for earnings between 120-150k

andytomlinson.bsky.social•137 days ago

I hadn't clocked that cross-over point before. Crikey. Makes you wonder what the threshold should actually be. 50k? As in, when you've actually benefited from your degree?

buzzocular.bsky.social•136 days ago

Problem is hardly anybody in the UK earns that amount

andytomlinson.bsky.social•136 days ago

Very good point. Median wage is 37k. Start there?

buzzocular.bsky.social•136 days ago

Would certainly be more moral than the current regime! But I imagine the treasury wouldn't be happy about what is effectively the most politically convenient income tax being effectively taken away.

The whole system is madness.

andytomlinson.bsky.social•136 days ago

It has got very out of hand. I think the idea that the person who benefits should bear at least some cost is reasonable. But people do have to actually benefit for that to hold up.

buzzocular.bsky.social•136 days ago

Totally agree. But given the labour market has changed quite significantly since 2010 for the lower paid, non-graduates (eroding much of the incentive for going to uni) I do wonder if this discussion should be reopened.

wyliehorn.bsky.social•137 days ago

📌

paulframe85.bsky.social•136 days ago

Is Deano impacted?

hier-komt-alex.bsky.social•134 days ago

📌

twoev.bsky.social•137 days ago

I think the cure for this will eventually just be a few waves of wage inflation. Can easily imagine e.g experienced teachers (not heads) being on £100k within 5-10 years. Then the politics will get even weirder because retirees will still view that as a CEO salary, but it’s just a normal graduate

richardbaum.bsky.social•137 days ago

That tax rate is outrageous, and obviously not sustainable in the long term. Student finance is grossly unfair. We cannot have a society where the rich avoid this tax, and where half the population pay income tax at the level.

oldtrotter.bsky.social•137 days ago

Reinforces my firmly held, politically naive, view that tax reform should be high on the agenda of any government seeking to raise the underlying rate of growth. Removing these anomalies, shifting from taxing work to taxing wealth and taxing negative externalities would do wonders for incentives

jackkessler.bsky.social•137 days ago

What a stat.

mickeyhynes.bsky.social•137 days ago

We need to reboot and reform income tax into a single progressive rate. Personally, I don't think there is a student finance solution that is better than just funding it all from slightly higher rates of general taxation + expanded use of the apprenticeship levy.

cassiarowland.bsky.social•137 days ago

It's also effectively a tax that those with the wealthiest parents can avoid, if they pay tuition fees outright rather than taking student loans.

hemnow.bsky.social•136 days ago

how can you be middle class on a min wage...

jtatlife.bsky.social•136 days ago

In England you can be upper class on no wage at all.
The money is supposed to be a *consequence* of being middle class, it's not what makes you middle class.

hemnow.bsky.social•132 days ago

so, what makes you middle class?

jtatlife.bsky.social•132 days ago

Having middle class parents and going to university are probably the big two markers

hemnow.bsky.social•132 days ago

😅 this makes no sense. this is as deep as the definition goes?

jtatlife.bsky.social•132 days ago

They kind of work together, education can get you a one-class promotion, especially if your parents do have some money. So if your parents are working class but well-off and you go to a nice uni and you get a white collar job, then you are definitely middle class.

robertwoolley.bsky.social•137 days ago

The £25k limit is Plan 5 isn't it?

duvzo.bsky.social•137 days ago

25-26
Plan 1 26065
Plan 2 28470
Plan 4 31395 TBC
Plan 5 will not pay via PAYE until 26-27 at the earliest but 25000 will be the threshold unless things change.
All at 9% of earnings above the threshold.
PostGrad Plan 21000 and 6%

barijohn.bsky.social•137 days ago

I'd suggest most minimum paid jobs aren't at 8 hour shifts and more like 7.5 hours. Which does bring it under threshold. Though any OT will take it over. Still seems a very low threshold 😱

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