Rachel Reeves: People On £60K Income 'are Not Rich'

[Ash4781]

Her party pushed council tax up at 3x the rate of earings growth,petrol tax at 2x the rate of earnings growth hitting people on around £13k hardest who worked.

When she says they wouldn't increase tax on someone on £60k she means we wont increase income tax but we will freeze the tax free bracket,we will let councils rack up council tax again and we will find a way to tax more on fuel.

Looking at the policy details they are letting out today it doesn't look like the front bench have any ideas at all.They have simply picked a couple of areas they think might have a few votes.

National insurance?

Ed Balls. No comment.

[Biggus]

Hear hear. Whenever people in the UK whinge 'we're nearly as poor as India!' I just want to vomit.

The UK is a stunningly rich country. To put the context, by global standards, Romania is a rich country (61st/180). People here have no idea how good we have it.

People who tell me it is OK for children to go hungry because 'the starving Biafrans are poorer' make me want to vomit.

[Biggus]

That depends on what percentage of your income you spend on bread and fuel.

The portion of income being spent on food and keeping warm is increasing. That means people are getting poorer.

'A jump of 8 per cent would push British Gas bills up to a record of almost £1,450, when paying by cash or cheque.'

What's that, £30 per week? How munch money do people on minimum wage have left after rent, council tax and the cost of getting to work these days? I don't imagine it's very much.

[little fish]

Wonder what Labour supporter's on JSA of £70 a week or £56 for under 25's think of her statement?

[zugzwang]

The portion of income being spent on food and keeping warm is increasing. That means people are getting poorer.

'A jump of 8 per cent would push British Gas bills up to a record of almost £1,450, when paying by cash or cheque.'

What's that, £30 per week? How munch money do people on minimum wage have left after rent, council tax and the cost of getting to work these days? I don't imagine it's very much.

Unless house prices are allowed to fall they'll find themselves progressively poorer with every passing year. Correcting the imbalance between asset prices and current prices is what financial repression is intended to achieve. If asset prices are kept up by govt subsidy then current prices will keep on rising to meet them. Osborne's dangerous game.

[Executive Sadman]

Shocker as liebour MP thinks only people who are richer than her are 'rich'.

statistically speaking she's in the top 2 or 3% of earners...

http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#Post_tax_household_income

I'm not easily offended, but one thing I actually do find offensive is people I know who get these kind of incomes (i'm on NMW at the moment) and whine to me about how hard it is.

Obviously they have a new car every 3 or so years, gym membership they use once in a blue moon, full sky package that never gets watched, whenever apple releases new tat, they buy that etc etc.

[wherebee]

Shocker as liebour MP thinks only people who are richer than her are 'rich'.

statistically speaking she's in the top 2 or 3% of earners...

http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#Post_tax_household_income

I'm not easily offended, but one thing I actually do find offensive is people I know who get these kind of incomes (i'm on NMW at the moment) and whine to me about how hard it is.

Obviously they have a new car every 3 or so years, gym membership they use once in a blue moon, full sky package that never gets watched, whenever apple releases new tat, they buy that etc etc.

Not saying it's hard - and not saying that compared to many people such earners are not much much better off.

What we are saying is that earning 60k or more does not, in the UK, mean that your money worries are all gone. It just means, often, that you are keeping your head above water, and to actually accumulate any savings is increasingly hard. Don't forget, if you are earning 60k+, often you have to spend to keep that income stream coming in - clothes, apperance, education that all has to be paid for.

[Executive Sadman]

She's right. Someone earning £60k pays£18,236 in combined tax and NI, so left with £41,763 which is only a few thousand more than you can get if you live in London on benefits top-ups if you work part-time for less than £15k. In London it will just be enough to live on renting a two bed flat in an average area. Don't forget council tax and no child benefit anymore.

All parties should be looking to tax unearned wealth, such as the gains on the price of a property or rent seekers. They should not be taxing people who have worked hard, managed to get a good career and climbed it.

So just to confirm, NO £60k does not make you rich, not by a long shot!

She is part of a party that is part of the problem. So they take 1/3rd of her income to pay for things she advocates. Plus 7.5% minus productivity in inflation via the deficit. Given there aren't many earning over her, there's no much scope for higher tax revenues on incomes.

Agree with taxing (increases in) unearned wealth, but other than primary residences, its already all taxed. Tax prime residences, prices fall (a good thing) because there is no longer any tax advantage in holding wealth in property and it probably wouldnt collect much tax at all.

The obvious answer is the state is too big and/or too inefficient/poor value. But she wants to have cake and eat it.

[doomed]

I take it you haven't seen much of the 3rd world. So many people in the UK have absolutely no idea of what real, abject poverty looks like.

True. I am quite confident that many will be finding out within the next 10 years though.

[Si1]

Rachel Reeves is MP for Leeds West. She was previously an economist for HBOS (frightening but true)

As I understand it she lives in our near Horsforth, a posh Leeds suburb. It looks likely, on an already high salary in the bubble mortgage industry in the noughties, she took out a large mortgage to live on an aspirational part of town. Just a guess. Now house prices in such parts of Leeds have not fallen a lot yet (inner city parts have tho) then maybe she's getting the squeeze and so are her well heeled neighbours in the posh parts of town.

[The Ayatollah Buggeri]

Well with fuel/food/energy etc at current prices even living alone I seriously struggle to keep my outgoings below 3k/month and 60K is only 3.5K take home.

Below 50K I cant see how anyone can survive without benefits/tax credits.

When I got my first post-PhD academic job in 2001 I was on £25k a year, which gradually rose to £43k by the time I emigrated to the US earlier this year. Adding consultancy income, publication royalties etc., I made between £30-50k gross in most of those years, and saved at around half of it over the entire 12 years. My wife, who I met in 2010, probably saved around half what I did over a similar timescale (although she earns over double what I did/do, she also, like most medical doctors in the US, started her career with $250k in student debt). With our combined savings, we have just bought a house outright. Not a very big one and not in a upscale area (though it is a perfectly safe one), but it's ours, and we got this far through a bit of good luck and a lot of common sense. In my case it was renting a very small, studio flat, driving older cars I maintained myself, and generally not spending stupid amounts of money if I didn't have to. The good luck was having a relatively well-paying job in a relatively cheap part of the country to live (Yorkshire); but even so, I don't believe that any single-person household needs an income of £50k to survive, even in London. I know people who live and work in London whose households on a lot less than that, and they seem to be surviving OK.

When she says they wouldn't increase tax on someone on £60k she means we wont increase income tax but we will freeze the tax free bracket,we will let councils rack up council tax again and we will find a way to tax more on fuel.

And we will increase the benefits which, thanks to Gordon Brown, have become the principal political method by which Labour shields its core voter base from the real cost of living.

Edited September 21, 2013 by The Ayatollah Buggeri

[alexw]

When I got my first post-PhD academic job in 2001 I was on £25k a year, which gradually rose to £43k by the time I emigrated to the US earlier this year. Adding consultancy income, publication royalties etc., I made between £30-50k gross in most of those years, and saved at around half of it over the entire 12 years. My wife, who I met in 2010, probably saved around half what I did over a similar timescale (although she earns over double what I did/do, she also, like most medical doctors in the US, started her career with $250k in student debt). With our combined savings, we have just bought a house outright. Not a very big one and not in a upscale area (though it is a perfectly safe one), but it's ours, and we got this far through a bit of good luck and a lot of common sense. In my case it was renting a very small, studio flat, driving older cars I maintained myself, and generally not spending stupid amounts of money if I didn't have to. The good luck was having a relatively well-paying job in a relatively cheap part of the country to live (Yorkshire); but even so, I don't believe that any single-person household needs an income of £50k to survive, even in London. I know people who live and work in London whose households on a lot less than that, and they seem to be surviving OK.

And we will increase the benefits which, thanks to Gordon Brown, have become the principal political method by which Labour shields its core voter base from the real cost of living.

You mean pensioners?

I doubt benefits will be increasing much for any other group....

[South Lorne]

http://www.itv.com/news/story/2013-09-20/labour-conference-ed-miliband-2013/

Interesting. So I guess all parties will say no tax rises, and then either back track after the election or let it fall on further spending cuts pushed out into the future. The recovery will always be around the corner. I suppose eventually it will all catch up with us.

edit: removed

...politicians are on £60,000 pa ....probably pimping for a pay rise...

[okaycuckoo]

She's right. Someone earning £60k pays£18,236 in combined tax and NI, so left with £41,763 which is only a few thousand more than you can get if you live in London on benefits top-ups if you work part-time for less than £15k. In London it will just be enough to live on renting a two bed flat in an average area. Don't forget council tax and no child benefit anymore.

That's a bit broad - a single mum with child tax credits for 3 kids + doing 16h per week in Tesco with working tax credits + accommodation paid by the state + bits 'n bobs of benefits = roughly the same disposable income as the £60k earner. In London the accommodation costs may mean the single mum is doing better.

[fluffy666]

We have a household income of c. £60k.

Are we rich? No.. rich means that you don't have to work, AND you can afford things you want easily.

Are we comfortable.. yes, subject to keeping jobs. Really can't complain.

It does help living in Somerset and not London.

As a thought experiment, though... to send the kids to private school and move to a more 'aspirational' house would probably add about £3k a month to family outgoings - and that would mean at least doubling pre-tax pay. If we count that as the 'next step' of richness.. well, it might as well be the moon.

[South Lorne]

That's a bit broad - a single mum with child tax credits for 3 kids + doing 16h per week in Tesco with working tax credits + accommodation paid by the state + bits 'n bobs of benefits = roughly the same disposable income as the £60k earner. In London the accommodation costs may mean the single mum is doing better.

...Gordo the Communist wanted it that way ...and Red Ed wants to raid the taxpayer even more....

[bristolhunter]

but even so, I don't believe that any single-person household needs an income of £50k to survive, even in London. I know people who live and work in London whose households on a lot less than that, and they seem to be surviving OK.

Nobody's saying you need £50k for survival. But you don't get to be 'rich' as soon as you're above survival.

[South Lorne]

Nobody's saying you need £50k for survival. But you don't get to be 'rich' as soon as you're above survival.

...but...but....the people paying out benefits think it's not enough ...they are paying out more ...see above and do the maths...like 1+1....not hard....

[Guest eight]

Hear hear. Whenever people in the UK whinge 'we're nearly as poor as India!' I just want to vomit.

The UK is a stunningly rich country. To put the context, by global standards, Romania is a rich country (61st/180). People here have no idea how good we have it.

You are correct, but it's a dangerous game making these comparisons and we should remain vigilant about what's happening under our noses. Besides, I have long thought that it isn't about where you are in life but rather the direction you are headed that matters.

I took a trip up Weardale to Alston yesterday for the first time in maybe ten years, and I was shocked. And I don't mean in the faux outrage, Daily Mail sense of the word. I mean, I actually felt shock at the state of the place. I even said to Mrs. Eight that, weather aside, the place reminded me of getting off the beaten track in one of the PIIGS countries - it was utterly dead. It was a Saturday in September and it might as well have been a Wednesday in February. Seemingly half the houses are for sale, and about 70% of the pubs are closed. There are barely any shops. We are talking about a whole area essentially without a functioning economy bar a few stray tourists - and there were precious few of those around, and they were likely to be disappointed. Keeping warm in one of these places until the winter which is already closing in finally ends sometime around next May is going to be no picnic. I feel for the residents.

Having said that, access to natural resources might make it a cheap bolthole for those with TFH tendencies. Except despite everything I wrote above, it's never going to be actually cheap, obviously. Those houses have boom era sized mortgages on them as a consequence of the Escape To The Country phenomenon, and the banks demand their pound of flesh.

[Guest eight]

As a thought experiment, though... to send the kids to private school and move to a more 'aspirational' house would probably add about £3k a month to family outgoings - and that would mean at least doubling pre-tax pay. If we count that as the 'next step' of richness.. well, it might as well be the moon.

Maybe you should "go over to the other side". I hear they pay better.

[justthisbloke]

The older I get, the more I am convinced that pre-tax income is in western societies more and more irrelevant to wealth. Assets = wealth.

If I can own a house with garden to live in and grow fruit and veg, retired, and I have an income of 15k, I am richer than someone on 60k renting and commuting.

Agree. Assets are the only definition of wealth.

But true wealth occurs for those for whom unearned income >= living costs[1]. Having to work to put food in your mouth or a roof over your head is servitude.

There are no half measures; "middle class" etc. Either you need to work or you don't. You're either wealthy or one of the poor.

[1] But I do believe that wealth is attainable for many people. So long as they stay off the drugs of materialism and consumerism.

[Ah-so]

We have a household income of c. £60k.

Are we rich? No.. rich means that you don't have to work, AND you can afford things you want easily.

Are we comfortable.. yes, subject to keeping jobs. Really can't complain.

It does help living in Somerset and not London.

As a thought experiment, though... to send the kids to private school and move to a more 'aspirational' house would probably add about £3k a month to family outgoings - and that would mean at least doubling pre-tax pay. If we count that as the 'next step' of richness.. well, it might as well be the moon.

From your language, you may have a joint income of £60k. That works out at roughly £4000 a year more than a single earner on £60,000, or roughly 10% of take home pay. It makes a big difference.

A single income of £60,000 supporting a family, particularly in the South East, is nowhere near "rich". It will afford you a lower middle class lifestyle, but no luxuries. Toyota not Mercedes. Acer not iPad.

[The Knimbies who say No]

That depends on what percentage of your income you spend on bread and fuel.

Agreed, and the furious protection of fields in preference to housebuilding has the side benefit of ensuring fuel use is higher than it would be otherwise.

Govt is trying, with a measure of success, to get a population which is on a knife-edge of perpetual debt service. Halifax economist talking about buying a house as a no-brainer is extraordinary. Encouraging people to gleefully give up their most prized asset-flexibility, often voluntarily, and then just keep milking them dry if they find themselves commuting a long way if the cost/ease of moving is prohibitive. Half of them barely understand why they are not making much despite a gross wage packet that would have done nicely a few short years ago.

[Imminent_plunge]

Shocker as liebour MP thinks only people who are richer than her are 'rich'.

statistically speaking she's in the top 2 or 3% of earners...

http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#Post_tax_household_income

I'm not easily offended, but one thing I actually do find offensive is people I know who get these kind of incomes (i'm on NMW at the moment) and whine to me about how hard it is.

Obviously they have a new car every 3 or so years, gym membership they use once in a blue moon, full sky package that never gets watched, whenever apple releases new tat, they buy that etc etc.

Just saying, it's hardly the breadline but £60k a year is not much in London once rent and commuting costs are taken into account. It's still not enough to buy the most miserable little shoebox in ANY borough without a substantial deposit.

[worried1]

Just saying, it's hardly the breadline but £60k a year is not much in London once rent and commuting costs are taken into account.

I wouldn't say anyone on £60k in London would count as 'rich', but an older couple (50s) without kids would be quite comfortable on that amount if they bought their house years ago.

It is high house prices that determine whether people are rich or poor these days, not income. If someone who now earns £60k bought a £100k semi in 1980 they will be a lot better off than the person earning twice as much who bought the same semi last year for £800k.

That is why the people living in such houses long term have been solid earners like cab drivers and plumbers and the people moving in to them now are bankers.

It's still not enough to buy the most miserable little shoebox in ANY borough without a substantial deposit.

Help to Buy will 'fix' that little problem. There are flats available in the poorer parts of most boroughs for £150k and if only a 5% deposit is required that will be £7.5k.