What effects do taxes/spending have on the UK?

[andrewducker]

Here is the ONS report on taxes/benefits for 2014. Some interesting stuff - the top section is their highlights, and I've made it even simpler underneath.

• Before taxes and benefits the richest fifth of households had an average income of £80,800 in 2013/14, 15 times greater than the poorest fifth who had an average income of £5,500.

Comments

[rhythmaning]

Thank you very much for doing this. It hasn't even occurred to me to look for that data.

There's a lot in there to think about.

Have you read The Spirit Level, which looks at inequality using a large international (between countries) and US (between states) data set. It is a curious book - I agree with the premise, but there is something about it that makes me distrust their analysis!

[andrewducker]

I haven't, I'm afraid.

Looking on Wikipedia it looks like there's been a lot of arguing back and forth about stats. The page makes it look like most of the people attacking have had dodgy takes on statistics, but I'm nowhere near qualified enough to make any kind of judgement.

[rhythmaning]

I'd recommend it, but I'm also quite confused by it: I agreed with its ideas before I read it, and yet despite the wealth of evidence which I completely accept, I found the book very unconvincing. Basically, I think the ideas and the evidence are right, but the writing has a certain smugness, perhaps, that I just didn't get on with.

I've been meaning to write a blog post about it - I read it a year ago, and it keeps niggling away.

[bobby1933]

Yes, thank you!
I would like to see a comparison with similar stats from the U.S.
I am afraid that taxes and spending are not nearly as beneficial (equalizing) here?

It is interesting that a so called "class ridden society" (UK) would seem to have greater equality and opportunity than a so called "classless society" (U.S.}

[alextfish]

I fear "Redistribution lowers inequality from 15:1 to 4:1" is a great oversimplification. When you group the top 0.1%, the top 1%, and the top 20% together, and group the bottom 5% and the bottom 20% together, then yes, you get those numbers. I'm not especially convinced that the same would be found if the data was divided differently. Certainly the pre-redistribution numbers would be much more disparate if they were comparing the top 10% vs bottom 10%, or top 2% vs bottom 2%, rather than top 20% vs bottom 20%. And I suspect up at the top 1% or top 0.1% the amount paid in taxes may actually go down as a proportion of income.