Wealth tax and the rich

[XFool]

Churchill said something similar, along the lines that socialism is good at turning rich people into poor people. But ineffective at saving poor people from the flaws and failings that made them poor in the first place.

Yes and there is much truth in the saying - If you're not a socialist at 20, you have no heart. If you're still a socialist at 30, you have no head!

There's also an old saying: "There's no cliché like an old cliché".

And, if there wasn't, there is now!

[88V8]

I strongly recommend you read this LSE report to get a better understanding of how it would work :https://www.lse.ac.uk/International-Inequalities/Assets/Documents/OLDWealthTaxCommission-Final-reportold.pdf

Interesting report.
The whole notion founders on the level of information required and the intrusion necessary to obtain and validate that information, in an era when privacy and our 'data' are allegedly sacrosanct. One could however envisage that a property tax might be feasible, raised at local level, a sort of 'enhancement' to Council tax with additional bands above the present levels.

I was incidentally struck by this observation in the report...
We firmly reject any adjustment of the tax owed by reference to income – if a wealth tax is desirable, its distinctive feature is raising revenue from those who hold wealth that is large in relation to their income.

So someone with wealth and a large income would not be classed as wealthy? Mind you, Labour has tended to regard non-work income as fair game, but woe betide a pensioner living in a large house.

V8

[Lootman]

I strongly recommend you read this LSE report to get a better understanding of how it would work :https://www.lse.ac.uk/International-Inequalities/Assets/Documents/OLDWealthTaxCommission-Final-reportold.pdf

Interesting report. The whole notion founders on the level of information required and the intrusion necessary to obtain and validate that information, in an era when privacy and our 'data' are allegedly sacrosanct. One could however envisage that a property tax might be feasible, raised at local level, a sort of 'enhancement' to Council tax with additional bands above the present levels.

I was incidentally struck by this observation in the report...
We firmly reject any adjustment of the tax owed by reference to income – if a wealth tax is desirable, its distinctive feature is raising revenue from those who hold wealth that is large in relation to their income.

So someone with wealth and a large income would not be classed as wealthy? Mind you, Labour has tended to regard non-work income as fair game, but woe betide a pensioner living in a large house.

V8

That article is a couple of years old and was discussed here at the time. The giveaway is its undue focus on Covid, a topic that has largely vanished from focus now. ''

Note also that it was presented as a one-time only tax in order to justify its invasive and confiscatory nature. Of course nobody actually believes that it would ever be only one time, and nothing could be legislated to ensure that.

The article is written by a small group of academics who are clearly in love with the idea of a wealth tax, which renders the piece biased and suspect from the start. They come across as almost giddy with joy about the prospect of seizing the wealth of others and, in that zeal, they mostly ignore the various ways that such wealth could be hidden or moved.

I find the distinction between income and wealth to be rather arbitrary. The more wealth you have, the more income can be generated from it. But I still think it is better to tax that income rather than the capital from which it derives. After all the assets may be illiquid, meaning that the cash to pay any wealth tax is not available - the same problem with council tax now.

And of course we already have a wealth tax. It is called IHT. Funny that the authors do not consider abolishing that as a quid pro quo.

[JohnB]

In 2021, Rachel Reeves was in favour of a wealth tax.

In 2023, Rachel Reeves was not in favour of a wealth tax.

As the next parliament will likely exist for around 5 years, it's likely she may have at least 2 more differing opinions on the matter.

We also might have another 8 or 9 Chancellors in that time looking back at history and Rachel might not even be one of them even if her party gets in.

Er, Brown was Chancellor for a decade, its the Tories who've had 7 in 14 years. Why do you think Starmer won't appoint Reeves as Chancellor?

[Lootman]

We also might have another 8 or 9 Chancellors in that time looking back at history and Rachel might not even be one of them even if her party gets in.

Er, Brown was Chancellor for a decade, its the Tories who've had 7 in 14 years. Why do you think Starmer won't appoint Reeves as Chancellor?

Starmer will appoint Reeves. The question is more about how long she lasts. Brown lasted a long time as he was keeping his seat warm and his nose clean waiting (and waiting, and waiting) for Blair to give him the PM job that he thought he had been promised. That did not end well, if you recall.

Given the lack of senior talent within Labour we might wish RR a long tenure, as she is actually sounding sensible, for now anyway.

[Gerry557]

We also might have another 8 or 9 Chancellors in that time looking back at history and Rachel might not even be one of them even if her party gets in.

Er, Brown was Chancellor for a decade, its the Tories who've had 7 in 14 years. Why do you think Starmer won't appoint Reeves as Chancellor?

It's not what I think. A week is a long time in politics as they say. Starmer might not be the leader by the time Labour get in power and the new man or any other gender might want a shuffle.

Even Rachel qualifyed it by saying "if" she is selected.

Personally I think he will appoint her.

[Gerry557]

University of Greenwich's case for a UK wealth tax took a while to digest. 18 pages of x3 different wealth tax ideas.

To reduce wealth inequality was one reason. They seemed to take the stance of taking money off those with more and I assumed give it to the less well off was the solution. Although didn't seem to consider trying to make the less well off better off which would also have the same effect.

Their preference was for households with £3.4m+ of all sorts of wealth on an annual basis as a starting point. Whist they included pensions it didn't make it clear if that includes government pensions who don't have an actual pot as it comes out of tax but could be equivalent to millions.

I assume it means double taxation so it's on top of all current taxes and doesn't care if you are cash poor, asset rich.

So if its all in a pension pot you can't access or in a painting on the wall of your council house etc.

Large ISA millionaires will suddenly find ISA's aren't tax free. Hopefully probate will get more efficient. If you get a large inheritance and have to pay both your IHT and wealth taxes before getting hold of that smaller pot might make it a difficult time period.

Of course it might come in at £500k.

I suspect we will all be cashing in our pension pots and buying those lamborghini's we were warned about. Then when we're old and it's rusted to nothing asking the state to look after us.

[csearle]

That Labour and the LibDems think that the voters have more integrity than that is refreshing.

I think when they get into power they will, eventually, revert to type. C.

[Bminusrob]

There is a good deal of lack of thought in Labour's wealth tax thinking. I don't suppose they have asked "Why is this group of people wealthy", or at least, they probably have, but thought "We'll bodge that one later".

Just as an example, let's take my oncologist. No amount of pay is enough for what he did for me, but let's take someone in his position. He works 48 hours a week for the NHS, and is paid at a guess about £180000 a year. He also works at two private hospitals, so let's say another £100000 a year. He is in his early fifties, and has been at the top of his field for fifteen or twenty years. He has been very successful. lives in a very nice house in Surrey and has a good pension. Why would he want to continue to practice medicine in this country? He is already being taxed at 45%. pays all sorts of further taxes like VAT when he buys things, and no doubt his pension is over the lifetime allowance.

Labour has already stated that they will reduce the lifetime allowance, changed in the last budget to address exactly this problem, but bodge it for public sector workers. Well, what if someone works in both the public and private sector. Another bodge?

Why would anyone likely to be affected by this type of wealth tax want to contuine to work - at least in this country? So, to me, a wealth tax is totally counter-productive.

[Lootman]

University of Greenwich's case for a UK wealth tax took a while to digest. 18 pages of x3 different wealth tax ideas.

To reduce wealth inequality was one reason. They seemed to take the stance of taking money off those with more and I assumed give it to the less well off was the solution. Although didn't seem to consider trying to make the less well off better off which would also have the same effect.

To my mind it is not the purpose of taxation to impose a redistribution of wealth amongst the population. Taxes exist primarily to fund the government and those services that cannot be performed by the private sector. And as much as possible that should be done in a manner that is agnostic and neutral to the distribution of wealth. And that does not distort behaviours nor deter ambition nor punish success.

This idea that "inequality" is some kind of evil is fundamentally flawed and dangerous.

[88V8]

To my mind it is not the purpose of taxation to impose a redistribution of wealth amongst the population. Taxes exist primarily to fund the government and those services that cannot be performed by the private sector. And as much as possible that should be done in a manner that is agnostic and neutral to the distribution of wealth. And that does not distort behaviours nor deter ambition nor punish success.

This idea that "inequality" is some kind of evil is fundamentally flawed and dangerous.

Have you ever considered running for PM?

V8

[XFool]

There is a good deal of lack of thought in Labour's wealth tax thinking. I don't suppose they have asked "Why is this group of people wealthy", or at least, they probably have, but thought "We'll bodge that one later".

Just as an example, let's take my oncologist. No amount of pay is enough for what he did for me, but let's take someone in his position. He works 48 hours a week for the NHS, and is paid at a guess about £180000 a year. He also works at two private hospitals, so let's say another £100000 a year. He is in his early fifties, and has been at the top of his field for fifteen or twenty years. He has been very successful. lives in a very nice house in Surrey and has a good pension. Why would he want to continue to practice medicine in this country? He is already being taxed at 45%. pays all sorts of further taxes like VAT when he buys things, and no doubt his pension is over the lifetime allowance.

Labour has already stated that they will reduce the lifetime allowance, changed in the last budget to address exactly this problem, but bodge it for public sector workers. Well, what if someone works in both the public and private sector. Another bodge?

Why would anyone likely to be affected by this type of wealth tax want to contuine to work - at least in this country? So, to me, a wealth tax is totally counter-productive.

How do you know that the putative "wealth tax" would affect somebody like your oncologist?

[Gerry557]

To my mind it is not the purpose of taxation to impose a redistribution of wealth amongst the population. Taxes exist primarily to fund the government and those services that cannot be performed by the private sector.

Not everyone shares your thoughts. Some think we should all have exactly the same. Although some communists are more equal than others I tend to find.

[Lootman]

To my mind it is not the purpose of taxation to impose a redistribution of wealth amongst the population. Taxes exist primarily to fund the government and those services that cannot be performed by the private sector.

Not everyone shares your thoughts. Some think we should all have exactly the same. Although some communists are more equal than others I tend to find.

I do not know of anyone who genuinely believes that everyone should have an exactly equal amount of money, if that were even possible, which it isn't. That is a particularly odd viewpoint to find on an investment website of all places - even The Guardian does not argue that.

But my point was that the primary purpose of taxation should be to raise revenues whilst minimising distortions. As such social engineering, if we have to do that at all, should be attempted by other means.

[Tedx]

Taxes exist primarily to make the currency worth something (i.e. the governement demands you pay your taxes in Sterling). They also exist to modify behaviour (i.e. The chancellor has put up fags again. That's it. Im giving up.) And they also control inflation by reclaiming the money spent in the economy.

[Lootman]

Taxes exist primarily to make the currency worth something (i.e. the governement demands you pay your taxes in Sterling). They also exist to modify behaviour (i.e. The chancellor has put up fags again. That's it. Im giving up.) And they also control inflation by reclaiming the money spent in the economy.

Politicians love taxes for many reasons. It gives them power and politicians love power. And it buys influence with the voters at election time. So even the politicians who claim to want lower taxes rarely deliver them. Truss tried and promptly got lynched by the establishment.

Since 2010 have the Tories lowered any taxes? OK, Brown's 50% top rate went away, but I struggle to think of any others before the recent NIC cuts. The other parties would have raised taxes by even more.

Go back further and really only Thatcher and Reagan lowered taxes, and it was easier for them as tax rates in 1980 were insanely high. Trump lowered taxes but those cuts end next year unless Congress votes to renew them.

Taxes are going to creep further towards 40% of GDP and there is nobody to vote for to prevent that. I am just grateful that I can control my income stream and optimise it to mitigate tax. But for folks still reliant upon wages the future looks grim, even without a wealth tax which I do not think will happen.

[Parky]

In the original post, Gerry 557 said
"I keep hearing these terms being banded about. Again on TV this morning with a discussion that included Rachel Reeves, Shadow Chancellor.

It's usually stated that it will raise enough to cover whatever needs some spending and will only be paid by the rich, whoever they are.

Has anyone come across a more defined term of either. Such as those with £5m+"

The answer is simple, the rich who should be taxed more are anyone who has more income, or assets than me and my family. We should be taxed less.

[Bminusrob]

There is a good deal of lack of thought in Labour's wealth tax thinking. I don't suppose they have asked "Why is this group of people wealthy", or at least, they probably have, but thought "We'll bodge that one later".

Just as an example, let's take my oncologist. No amount of pay is enough for what he did for me, but let's take someone in his position. He works 48 hours a week for the NHS, and is paid at a guess about £180000 a year. He also works at two private hospitals, so let's say another £100000 a year. He is in his early fifties, and has been at the top of his field for fifteen or twenty years. He has been very successful. lives in a very nice house in Surrey and has a good pension. Why would he want to continue to practice medicine in this country? He is already being taxed at 45%. pays all sorts of further taxes like VAT when he buys things, and no doubt his pension is over the lifetime allowance.

Labour has already stated that they will reduce the lifetime allowance, changed in the last budget to address exactly this problem, but bodge it for public sector workers. Well, what if someone works in both the public and private sector. Another bodge?

Why would anyone likely to be affected by this type of wealth tax want to contuine to work - at least in this country? So, to me, a wealth tax is totally counter-productive.

How do you know that the putative "wealth tax" would affect somebody like your oncologist?

If you look back through this thread, you will see things like "only the top 1%..." and figures like "£2m cutoff will raise £6bn". I am sure he is well in this bracket, and is also well in the top 1% pay bracket (probably just for his NHS work, and not including his private work). This is all before Labour gets greedy and starts reducing the threshold.

Look at the number of senior doctors who quit because pension lifetime allowances were reduced. How many of them have returned to work?

[XFool]

Taxes exist primarily to make the currency worth something (i.e. the governement demands you pay your taxes in Sterling). They also exist to modify behaviour (i.e. The chancellor has put up fags again. That's it. Im giving up.) And they also control inflation by reclaiming the money spent in the economy.

Shhh!...

[Lootman]

If you look back through this thread, you will see things like "only the top 1%..." and figures like "£2m cutoff will raise £6bn". I am sure he is well in this bracket, and is also well in the top 1% pay bracket (probably just for his NHS work, and not including his private work). This is all before Labour gets greedy and starts reducing the threshold.

Look at the number of senior doctors who quit because pension lifetime allowances were reduced. How many of them have returned to work?

One problem with any new tax is that they typically start out at a low rate, applying only to a small number of people. And then gradually it expands to cover many people, and of course rates creep up.

IHT used to apply only to the very rich and now anyone who owns a decent house in the south-east will be liable to it upon death.

Income tax was introduced as a temporary 2% tax only on high incomes to fund the Napoleonic war, and look at it now.

More recently UK VAT started out at 10% about 50 years ago, and has since doubled.

So we are entitled to be cynical about any claim that a wealth tax is "only for the wealthy" or "is temporary" or "is one-time only" or "is only 1%".