My name is Gary Stevenson former trader & people's economist  

This is gary's economics, today we're going  to talk about tax and national insurance

OK, so if you've been following the news the  last couple of months you will have seen

that the conservative government has raised national insurance contributions

that means that as long as you work for your money your pay packet

is going to go down at the beginning of the next tax year by an extra 1.25%

now what does that mean?

the first thing is we need to explain very clearly what national insurance is

National insurance is a fixed percentage of your salary which goes to the government as tax.

It's very simple, people think or like to say that it's used to pay for your pension or social care  

but it's not! it's just a tax in many ways exactly like income tax

a certain percentage comes out your salary & goes to government's tax

how is it different to income tax and  why is the government chosen to raise  

national insurance instead of income tax  okay so there are a few key differences  

the first thing is you start paying  national insurance at a lower rate of salary  

so you don't pay national insurance until you make about £9,500 a year

and you don't pay income tax until about £12,500 a year

so people on very low incomes will pay national insurance whereas

slightly higher income before you need to start paying income tax  

the second important thing is income tax is what we call a progressive tax

in the sense that it's designed so that the higher your income the more money you make

a higher percentage that you pay so you only start paying 20%

on low amounts of income and then on very high amounts of income you pay 40%

national insurance is designed the opposite way so you pay 12% on low incomes and then

when you get to higher incomes you only pay 2% so it's intentionally designed

National Insurance, so that very rich people pay a very low percentage.

unlike income tax where very high income people pay a high percentage

so that's strange, it's a very strange design of tax, it's designed specifically so that

rich people pay less than poor people in  terms of a percentage of their overall income

The third big difference is that national insurance is designed so that only working people pay it

now if you watched my earlier video 'what is wealth?' you will understand

that whilst the vast majority of people in this country make their money from working

most very very rich people and families don't make the money from work but

instead own huge amounts of assets and get income from those assets

so while you might be working and making £30,000 a year

somebody who has a wealth of £1,000,000,000 like Rishi Sunak's family

will make £30,000,000 a year just from owning so much assets  

national insurance does not tax income  from assets it only taxes income from work  

A 1.25% rise which is what they voted through  if you make £30,000 a year you'll pay £250 extra

If you are like Rishi Sunak's father-in-law and you have a £1,000,000,000

you'll make about £30,000,000 a year and you'll pay nothing (in tax)

so it's a very interesting tax high income people pay low percentages 

and extremely wealthy people pay nothing whereas very low income people pay it

and ordinary workers pay it so to be honest it's a pretty bad tax

falls largely on poor & middle income people  totally ignores very very high income people  

especially if you're extremely wealthy  and your income comes from wealth  

now if you watched my first video 'how the rich  get richer from covid-19' you will have seen that  

during covid-19 the rich made a huge amount  of money especially the very rich we have the  

data on that now we can see that billionaires  in this country saw their wealth increase by  

about 22% so the top 3 billionaires saw their  wealth increase by £20 billion just in Covid  

the top 250 had a wealth increase of over £100 billion so why is it that after a crisis  

where ordinary people suffered and the rich got  very very rich the government has chosen a tax  

which makes high-income people pay a low percent  and makes extremely wealthy people pay nothing  

i don't think the answer is very complicated it's  probably because our chancellor is a billionaire  

so this guy probably doesn't want to raise taxes  on billionaires um but you know it's not just  

the chancellor if you if you look at other senior  politicians like David Cameron like George Osborne  

like Nick Clegg like Tony Blair, if we look at  what they've done since they left office generally  

they've gone to work for big corporations  and made extremely high salaries so  

David Cameron for example went to work for Greensil  which is a company which went bust but he was  

making i think over $10 million working there so  if we live in a world where the main politicians  

become multi-multi-millionaires or even  are billionaires when they're in office  

they are unlikely to raise taxes on  multi-millionaires and billionaires  

the end result is they raise taxes on people  making 20 or 30 grand a year ordinary people

now if you watch my video what is wealth you will  see that we already have a system where wealth  

inequality is very high, a lot of money transfers  from people who don't have wealth towards the  

owners of wealth every single year which means  they get richer and ordinary people get poorer  

this is why housing is becoming less affordable  and why the economy is struggling to recover  

if we add on top of that system where we raise  taxes on ordinary people and we specifically  

exclude multi-millionaires and billionaires this  is going to get worse much quicker and it's going  

to affect ordinary families their ability  to get jobs their ability to get houses so  

basically it's a corrupt system  we've just come out of a crisis  

where lots of people have died many more  people have suffered serious financial hardship  

and yet multi-millionaires and billionaires have  seen their wealth increase by an enormous amount  

after that when the country needs money  and this money is being raised to pay for  

elderly care rather than taxing the billionaires  who made a fortune during the crisis a literal  

billionaire chancellor is taxing you now if we stand by and let this happen then

next time there's a crisis, next time they need money what do you think they're going to do?

They're gonna do the same thing again they're gonna protect multi-millionaires and billionaires  

because they themselves are multi-millionaires and  billionaires and they're gonna tax you your money

instead of them and their billionaire mates so  

i think now is an important time to take a  stand to push back to do whatever you can you  

know that means talking to your friends and family  explaining what's happening show them this video

send a letter to your MP telling me  you're not happy about it you know  

especially if you have a conservative  MP (who are in power) ask them why are  

these guys not taxing billionaires ask them  why they're taxing ordinary people instead  

don't just stand by and let it happen, understand  what's happening, push back, tell your friends

tell your family and take a stand because if ordinary people allow the super rich to tax them

while they themselves often end up paying  rates of tax: 10%, 5%, even less  

then it's going to be a system where ordinary  people progressively lose their houses,

lose their ability to make money and our next generation is going to be poor so yeah fight back

spread this message, share this video, tell your friends, tell your family, don't let it happen

housing could be so much more affordable wages  could be so much higher and we could have so  

many more options in how we live our lives some  of them put a lot of money into paying economists  

and think tanks to tell you that inequality  is important for the economy that is not true