That's a very interesting post there Ubes.I would not classify myself as rich by any stretch of the imagination, but I know this is how I'm perceived by some acquaintances and family members. What those is lower earnings brackets don't care to examine is the effort that goes into climbing a career ladder. There is a significant difference between those with a job and those pursuing a career. My wife, whose late father was a washing machine repair man, constantly moans about the late evening conference calls, the spreadsheets being cranked around the pool in Menorca, the emails being answered throughout the Saturday film, the stepping outside at social functions to take business calls, the staying up until 2am to get something done so that it doesn't encroach too much on her plans etc. She describes me to her friends as a workaholic as though that was some sort of derogatory criticism and rarely considers that without me embracing all this we wouldn't have the house we live in, the meals we eat out regularly, the cars we drive, the holidays in the sun we (she!) enjoys so much.
Now, of course, I partly do all this through choice, as do many others that I don't doubt share similar experiences. I suspect you're one of them. I might easily say knickers to this way of life and go work in a storeroom somewhere, for example. There's nothing wrong with working in a storeroom, of course, but one might have to accept the lower pay in return for less encroachment into personal life.
Like most other jobs what I do is not a job for life. In fact, it's very much a deck of cards liable to come crashing down any time soon, in which case I am going to really struggle to find something of equivalent reward. This is a major driver of the hours and effort that I put into it. The stress is always there. Changing regulatory and HMRC environments mean that every potential gain is offset by at least one punitive measure that threatens to take it away again. Only recently I successfully fought an HMRC tax inquiry that threatened to take £1 million in cash from my firm. The inquiry was put into the hands of a carrot crunching, semi-retired inspector in the rural West Country, about as far removed from my industry and an understanding of the mechanics of my industry as you may get. The result was that it took 2 years and around £60k of my firm's cash (on advisors) in a war of attrition with the man, before he finally admitted he was out of his depth and closed the inquiry. None of this was necessary in the first place, yet HMRC has been given targets to go after every Man Jack, raising stupid and, in many cases, deliberately aggressive inquiries in order to claw in monies the Revenue has now right to take. Many firms have not been as lucky as mine and it has cost them dear. We won't see our £60k again, which could've gone on staff salaries or bonuses, but had we lost the £1 million it would have ruined us.
On the outside there are people, as Col says probably driven by Class War (which is another way of saying irrational envy, I believe) thinking that I'm well off and fine n' dandy, and therefore it's only right that I pay disproportionately higher taxes. I can afford it after all, right? Well, I ****ing hate that attitude, particularly when it's largely driven by ignorance and comes from the "I want something for nothing" brigade. These people claim to have a vastly superior appetite for social conscience than me, which they want to sate by spending my money.
In general I have a big problem with taxation, particularly higher tax bands, which are nothing more than a mechanism for taking disproportionately more from those that are envied. I have always been of the opinion that I can spend my money better than any government.
I agree that there's nearly always envy when anyone in any position looks up the food chain and a lot of that is a perceived fortune in situation. Likewise, there nearly always seems to be the perception of laziness or lack of aspiration when looking downwards.
I certainly wouldn't suggest that hard work/personal sacrifice is the key factor in determining who should demand the higher earnings - there are people where I work, on minimum pay in the factory, who work extra hours and put in as much effort as anyone. OK, that doesn't get blurred into their home lives, but I have been in the position where I worked holidays, evenings, weekends and others (leaving my Mum's on Boxing Day to go home to check that reports have run and then heading straight back for one example) all for within 10% of Stan's average wage figure.
My personal belief is it's down to a combination of business acumen (which I have to some level) and the broad social skills - networking, salemanship, charisma (that I don't have and readily acknowledge that I never will) plus the wilingness to take responsibility for both a business entity and probably other people's livelihoods.
It is a combination of skills that is ideally suited to the capitalist idea but it also is a relatively arbitrary circumstance too (why should salesmanship be more highly rewarded than the ability to repair washing machines). My earlier assertion about fortune would be that you need to be in a prime position to benefit from the economy (on a more personal scale, it would, for example, be having the resources to purchase a house precisely when the market is low or on a business scale, having the opportunity to attain a business cheaply). The almost arbitrary nature of this leads to the resentment/envy I mentioned. It does ignore the self-made man - those with unique ideas and drive (those that learn and work hard) and to that extent is unfair.
In terms of the tax problem, what would you have - 40% for everyone from £1 earnings upwards? If you have a problem with the tax bands, then a flat rate is the only answer. Give any kind of allowance then you're penalising those above it for being higher earners (for example, someone earning 14K could have the same grievance with the 10.5K tax free bracket now). If you compensate those tax payers below a minimum standard of living then you're most descrimiating against those just on or over the threshold (they work for the same standard of living as someone who gets assistance meeting it).
If you abandon income tax and make it consumption related (a variant of sales tax for example)then you end up encouraging people to be thrifty in order to have a large wealth (in savings)which will shrink the economy and reduce the earning capacity of the self-made men like yourself. Give re-investment incentives (I assume the old dividend tax-rate of 32% still applies in some form, so some equivalent of that perhaps) and you'd be descriminating against those who don't have that spending potential. Such a taxation method would also make anyone who sells items actively involved in taxing others. I'm sure there could be implications there (especially in regions with monopolies).
Ultimately, someone always loses out. If you're asking if I would sympathise more with a minimum wage earner being the one missing out or someone further up the chain then you can guess the answer.
Should those that make the most out of the capitalist economy in which we live be the ones to reinvest the most? Well it brings everyone to more of a level and can be reinvested in schools etc that give more of a level playing field for the next generation too so from a socialist point, yes. From a capitalist point, pay your taxes, aspire to earn more, work even harder and make it happen...