Making Money
ARCHIVE: Where do your taxes actually go?
Apr 14, 2025
Paul Johnson, Director of the Institute for Fiscal Studies and author of 'Follow the Money,' dives into the complexities of UK taxation. He discusses where our taxes truly go and dispels myths about tax burdens. The conversation tackles public spending inefficiencies, especially in the NHS, and explores the ancient and bizarre tax laws that still echo today. Johnson emphasizes the need for tax reform to address modern financial pressures, particularly on families, and argues for a fair taxation system to tackle national challenges like an aging population and climate change.
01:04:12
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Quick takeaways
- The UK's income tax is facing its largest increase in history, burdening primarily lower to middle-income earners amidst stagnant thresholds and rising inflation.
- Demographic shifts, such as an aging population and climate change, necessitate a reevaluation of fiscal policies to ensure sustainable public service funding in the future.
Deep dives
The Impact of Taxation on Wealth Building
Income tax is experiencing its largest increase in history, with a projected £50 billion tax rise that will significantly affect individual tax burdens. This increase reflects a broader strategy to manage public finances amid growing demands on government spending, particularly in health and social care. Individuals may not readily notice this fiscal drag, as tax thresholds have remained static despite rising inflation, pulling more people into higher tax brackets unintentionally. The podcast discusses how the burden of taxation is disproportionately impacting lower to middle-income earners, raising concerns about the sustainability of personal financial growth in such an environment.
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