3 Things For Which The Rich Pay Less

Life is not fair. It’s one of the first lessons we get. I used the phrase “But my brother could” countless times. And … it never worked. I could have been arround 18 years old, when my classmate tried to explain his actions to his parents with words “But my brother could”. It didn’t work either. I laughed at him so much. That he hadn’t learned yet that his parents also have double standards. Everybody heard latin phrase “Quod licet Iovi, non licet bovi” which means “What is permissible for Jupiter may not be permissible for a bull”.

Let’s look at 3 things for which the rich pay less.

1. The rich pay lower taxes

It’s been almost 10 years since Warren Buffet stated that he is paying lower taxes than his secretary. And you’ve probably noticed that the income tax of former US President Donald Trump in 2016 and 2017 was only $ 750. So if you think you’re poor, remember you’re paying higher taxes than Donald Trump … what a beggar. Just kidding!

Of course, Warren Buffet pays higher taxes than his secretary. But he, as a businessman, has many ways to reduce his taxes. Holidays abroad are a business meeting. Even a receipt from a hairdresser before appearing on television can be a tax-deductible expense. These are, of course, just drops in the ocean. Buffet also gives a large portion of his income to charity and because he employs around 360 thousand people, he is entitled to various incentives that reduce his tax rate below the level paid by his secretary. His secretary is not entitled to such tweaks. If she was employed in United Kingdom, 51% of her income would end up in Her Majesty’s Treasury. I will not tire you with the calculation, but if your Gross Income is £60000, your tax is £ 11432, and National Insurance is £5078 pounds and 84 p. So you take home £ 43 489 pounds and 16 p. Oh and your employer has to pay additional £7199,76 National Insurance. Those almost £7200 would your boss love to give to you but he can’t. I guess you are not living under the bridge… Average Council tax is £1818. Every time you go shopping there is Value Added Tax or VAT. Standard VAT rate is 20% or 6945,19 in year. And last thing you have to pay is Excise Duty. Excise Duty are chargeable for the following: wine, beer, cider, spirits, tobacco, hydrocarbon oil, biofuels and Climate Change Levy. I can’t tell how much you are paying for those every year. Let’s make it £2000 just for sake of argument. Let’s sum up. From £ 67199,76 which is cost of your employer only 32725,97 don’t end up as Tax, Duty or Insurance. In other words you are allowed to keep 48,7% of your salary. I know how you feel. Beeee.

And we forgot about Trump. He allegedly wrote off the loss from previous years. That’s why he got such low tax liability.

2. The rich pay less for car insurance.

Not because they are rich. It is because as a group they have a higher education, are married, and have children. And such a group has fewer accidents. You may remember an advertisement where a guy said he didn’t have insurance because nothing bad had happened to him yet, and the other guy says that that’s why he should be insured. People who have not had an accident are “insurers dream come true”. Because they want to insure them the most they reward them with lower insurance policies. Price of insurrance policy is also affected by how often the car is used. If you use your car only on weekends, you have less chance of having an accident than if you drive every single day during rush hour. Also place where you park your car affects your incurance. In densely populated areas, there is a greater chance that someone will steal or scratch your car, compared with parking in front of your mansion. Of course, the cars of the rich tend to be more expensive and their repairs also cost more, but they balance it with higher safety.

3. The rich pay less for goods and services

Imagine coming to the store and seeing two different price tags on things. One for rich, other for poor. And even if you don’t see them anywhere, the two price tags are really there. More precisely, final price is influenced by several factors which causes that rich pay less. This is how:

Quality: High Quality things are usually more expensive, but they usually last longer. For example if we compare shoes for 100 pounds, which will last 5 years with shoes for 50 pounds, which fall apart after one year, then shoes with a higher price were a cheaper option.

Quantity: Wealthy people can afford to buy things in larger volumes, which allows them to get volume discounts. Stockpiling on certain item allows them to wait longer periods of time until next opportunity for big volume purchase comes.

And last, the rich people don’t buy things they can’t afford. A simple rule: “If you can’t buy something twice, then you can’t afford it.” Poor people take loans to buy stuff they can’t afford. Interests can increase final price by 30%. To the poorest people only usurers lend money. For them even a single peace of bread can be as expensive as dinner in luxury restaurant.

Therefore, remember: It is expensive to be poor. If you have more money, you will be able to pay less for everything. Life just isn’t fair.

But don’t despair, you may not feel that way, but if you have a roof over your head, you ate today and have access to clean water, medication, and the Internet, you can express your opinion, choose your life partner, pick place where do you want to go on holiday or just what you will wear today, you are luckier than 90% of people out there. Life is not fair. Fortunately.

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