Overall taxation of low paid workers

So I did a little research and found this table: “TABLE 14: Average incomes, taxes and benefits by decile groups of ALL households, 2011/12” from the ONS.

© Roland Tanglao

© Roland Tanglao

It says a worker earning at the second decile / first quintile earns (including benefits) £15,456. 80% of the population earn more than he does, so he is safely labelled as “poor” even if he is not starving.

That worker pays £1,387 in direct taxes, and £3,602 in indirect taxes meaning he’s clobbered for 32% of his total income. Snowdon made it 37% of disposable income, very much higher, but if you take benefits out and compare earned income to total-tax then the figure is a whopping 71%.

Of course, if you add in estimates for his NHS medical care and free school meals, that sort of thing, on top of his benefits his net income is 260% of what he originally earned – a mere 7k. In fact, it is only the top four deciles that actually pay into the system.

I enclose my workings out. The numbers seem implausible even to me so corrections in the comments please.


  1. Some low paid workers do not get benefits – I never have (not as security guard and not when working for Wicksteed Park). I would not even know how to apply.

    It is like the expense form the Council reminds me about every month (I am a local councillor) – I do not fill these things in, I do not claim.

    I am not as unusual as people might think.

    A lot of people are poor because we can not stand forms (and this is a form dominated world)- therefore benefits are of no use for such people (because we are not going to fill in the forms – we are not illiterate, we just hate forms and crawling at interviews and so on). Former soldiers starving on the street spring to mind – what use has the vast Welfare State proved to be for them?

    On the other hand private (and very wealthy) companies and individuals who run welfare and “training” schemes for the government (various scams) make a fortune from the welfare budget.

    As for “free education” – I was taught to read by Mrs Williams at a nearby village (and it was not free), the government schools I went to taught me nothing (other than about pain – gangs used to attack me, although they also attacked others).

    Free medical care?

    My inhalers an so on are not free.

    Nor is dentistry – indeed NHS dentistry is largely mythical (try finding it), I pay per month for a private dental plan (and I am dirt poor).

    If this “free medical care” exists may I have the right nodal blockage in my heart fixed please?

    No? Well there we go then.



    1. For you personally Paul, I would look up the literature on Rand’s claiming of welfare later in her life. Some people think this was hypocritical, she believed it was the only moral way to claim benefits – as restitution while condemning the institution.



      1. As you say, Simon, Miss Rand’s acceptance of (previously extorted) “government” (no such thing!) money are a big source of contention among Objectivists (not so much the followers of the Prophet Peikoff, who uses her argument) and fellow-travellers such as Yrs Trly. The “Rand-Boo-Hiss” crowd, of course, take it as read that she was hypocritical. Nonsense. Her argument is valid and strong.

        My counter-argument to her position is that if the Black Hand comes along and appropriates your wallet and its contents at gunpoint, that does NOT give you the right to go pick the pocket of some stranger in the park to make up for it.

        But I do accept Social Security and Medicare. Income tax is charged on Social Security, and ***** the money you use to pay the income tax is itself taxable (unless it was received as an insurance payment). ****** And in any case, save your SS checks and use those first, to pay your income tax. THAT money was already stolen. Using it to help pay the taxes on it isn’t any form of cheating.

        Now consider the sum of your yearly “income” from SS and the required minimum withdrawal from your IRA, if you are 70 or over. Add those up and there’s a good chance part of the sum is taxed in the higher brackets. It’s entirely possible that your annual SS payments go entirely to pay income tax.

        The other taxpayers are being fleeced, yes indeedy. I don’t feel any guilt at all for taking a bit of the money from those who’ve voted for the fleecing, which I did not, nor did my Honey, nor did my folks. In fact both SS and Medicare, like Health Fraud, were not popular at the time; lies and machinations within the Political Class were necessary to get them passed.

        And if one had not been forced to pay the taxes that supposedly support Medicare, one could easily have put they same money into a health-insurance policy that would cover much more than the current one does. In fact despite having serious lung diseases, my Blue Cross DID cover my medical expenses, after not-too-huge deductibles.


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