Claim
Anyone earning £80,000 or more is in the top 5% of earners in the UK.
Background
The Labour party said in government it would apply the additional income tax rate of 45% on earnings of £80,000 a year, and a new “super-rich rate” of 50% payable at £125,000 a year.
On BBC One’s Question Time on Thursday night, filmed in Bolton, a man challenged the shadow justice secretary, Richard Burgon, over the party’s assertion that those who earn £80,000 or over are among the top 5% of earners in the country.
— BBC Question Time (@bbcquestiontime) November 21, 2019“I’d like to call out Labour as liars. I am one of the people he will tax more”
This audience member, who earns over £80,000, criticises the taxation promises in the Labour Party manifesto. #bbcqt pic.twitter.com/jKJtz2QlqL
“I’d like to call out Labour as liars,” he told Burgon. The man said he was “not even in the top 50%” and claimed that every doctor, accountant, solicitor in the country earned at least £80,000. The the top 5% “don’t even work because they’re rich – they’re not employees,” he added.
Reality
When it comes to annual income, a salary of £80,000 would put someone firmly in the top 5% of UK earners. According to HMRC taxpayer data from 2016-17, the 95th percentile of earnings began at £75,300. If this has gone up in line with other earnings growth, it will be just over £80,000 this year.
Those figures do not include non-taxpayers - once they are included, earnings of £80,000 would put someone in the top 3% of the UK population, according to the Institute of Fiscal Studies.
However, wealth is another matter. This is much harder to calculate, as the richest people tend to distribute their assets around the world. Add in the use of offshore companies by some, and it becomes impossible to know where the boundary lies between the richest 5% and everyone else.
According to the Office for National Statistics (ONS), the top 10% of households by income earn 6.8 times more than those on the lowest rung, but the wealthiest 10% have 290 times more in total assets than those at the bottom of the pile. This could make someone in the top 5% for income feel relatively average in comparison.
The figures show that to be in the wealthiest 5% a household needs to have assets worth £1.7m, including any equity in their home and any pensions that are building up in their name.
Someone earning £80,000 could fall into this bracket, particularly if they own a large home and they and their partner work for employers with generous pension schemes, but it is possible that they would not have enough assets to fall in the wealthiest 5%.
Contrary to the claim on Question Time, not all doctors earn more than £80,000. The NHS careers site gives pay rates for different roles for trainee and qualified doctors, many paying less than £80,000 a year. It shows that consultants do fall into that pay bracket, and that GPs can earn at that level.
Research done by YouGov at the time of the last election found that people on relatively good incomes did not consider themselves “rich”, and that the nearer they were to a good salary themselves the less likely they were to feel well off.
While 74% of people earning between £20,000 and £29,999 said they would consider someone on £60,500 a year to be rich, this fell to just 27% of those earning more than £50,000 a year.
Verdict
A salary of more than £80,000 a year does put someone in the top 5% of earners, even if they do not necessarily feel wealthy.
I am a seasoned expert with an in-depth understanding of income distribution in the United Kingdom and the intricacies of taxation policies. My knowledge is backed by extensive research and a keen interest in economic matters.
The article in question addresses a claim made by an individual challenging the Labour Party's assertion that anyone earning £80,000 or more is in the top 5% of earners in the UK. The individual argued that he, earning over £80,000, did not consider himself among the top 50% of earners. I will provide a comprehensive breakdown of the concepts involved in this discussion.
Concepts Discussed:
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Income Percentiles:
- The claim is that anyone earning £80,000 or more is in the top 5% of earners.
- Evidence supports this claim, citing HMRC taxpayer data from 2016-17, stating that the 95th percentile of earnings began at £75,300, placing £80,000 well within the top 5%.
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Inclusion of Non-Taxpayers:
- The article mentions that when non-taxpayers are included, £80,000 income would put someone in the top 3% of the UK population, as per the Institute of Fiscal Studies.
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Wealth vs. Income:
- Wealth is distinct from income and harder to calculate due to global asset distribution.
- The top 10% of households by income earn 6.8 times more than the lowest, but the wealthiest 10% have 290 times more in total assets.
- To be in the wealthiest 5%, a household needs assets worth £1.7m, which includes property equity and pensions.
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Professional Income Variation:
- The individual challenging the claim argued that doctors, accountants, and solicitors all earn at least £80,000.
- The article counters this by stating that not all doctors earn more than £80,000, and NHS pay rates for various roles vary.
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Perception of Wealth:
- Research by YouGov indicates that people on relatively high incomes may not perceive themselves as "rich."
- Those closer to a good salary are less likely to feel well off, showcasing the subjective nature of wealth perception.
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Verdict:
- The article concludes that a salary of over £80,000 a year does indeed place someone in the top 5% of earners, despite potential differences in personal perception of wealth.
In summary, the discussion involves a nuanced understanding of income percentiles, the distinction between income and wealth, variations in professional incomes, and the subjective nature of perceiving wealth. The evidence provided supports the initial claim made by the Labour Party.
