Wealth tax and the rich

[AndrewInDevon]

Charitable status is abused by some, no doubt.

I am not for once suggesting that taxes need to increase, let alone to 65%, I am arguing that the need reform. If NI is rolled income tax then average rates can be reduced to yield the same tax take.

This has nothing to do with envy. I am an additional rate tax payer who retired in July. I benefited from the abolition of LTA last April. I pay a lot of tax!!

But I'd like to see more equity in the system. Sunak is taxed at 20% on his capital gains, while I pay 45% on my employment income (plus zero personal allowance). I own a large house which is mortgage free....I feel for those who rent who won't have the same opportunities I have had, largely as a result of accident and being born in the 1960s! The system needs radical reform with a greater focus on equity.

[the0ni0nking]

If you want another take on wealth taxes, then here is Richard Murphy's shopping list:

https://taxingwealth.uk/2023/09/13/the- ... ted-value/

2. Abolishing the VAT exemption for financial services within the UK might raise £8.7 billion of additional tax revenue per annum.

You can delve into the rationale behind each one by clicking on the links.

FD

I just clicked on number 2 in the list and it doesn't provide any rationale at all. It appears he only bothered to explain the post he positioned at 1 in the list.

I was interested in 2 because I wanted to see his detail review of how it would work because depending on exactly how, presumably they Fin Servs would offshore the transactions to somewhere else (where the transactions remain exempt).

Even if they didn't, isn't the end result in respect of most things like this is that simply the end consumer pays for it either directly or indirectly depending on the specifics.

[tjh290633]

One saving of taxpayers money would be for left wing pressure groups such as Mr Murphy's not to be allowed charitable status.

Another point about limiting gift aid relief to the basic rate of tax, is that it is the charities which will suffer, not the person making the gift.

TJH

[SebsCat]

One saving of taxpayers money would be for left wing pressure groups such as Mr Murphy's not to be allowed charitable status.

I'm not a fan of Mr Murphy but I don't think his outfit is a registered charity. Have you got a source that says it is?

[XFool]

One saving of taxpayers money would be for left wing pressure groups such as Mr Murphy's not to be allowed charitable status.

I'm not a fan of Mr Murphy but I don't think his outfit is a registered charity. Have you got a source that says it is?

C'mon! This is the "Reds under the Beds" department of TLF. What have facts got to do with it?

https://en.wikipedia.org/wiki/Richard_Murphy_(tax_campaigner)

[scrumpyjack]

One saving of taxpayers money would be for left wing pressure groups such as Mr Murphy's not to be allowed charitable status.

I'm not a fan of Mr Murphy but I don't think his outfit is a registered charity. Have you got a source that says it is?

At least one is: The New Economics Foundation
https://neweconomics.org/profile/richard-murphy
Charity number: 1055254

I haven't bothered looking through the rest of the left wing pressure groups he is involved with.

[SalvorHardin]

At 20% CGT for me is a minor annoyance.

At 40% CGT greatly deters me from selling shares where CGT is liable. Looking back through my CGT records (paid CGT in every year from 2000-01 except 2008-09). I would probably have paid roughly half the CGT that I pay at 20% because I would have made far fewer sales.

At 60% CGT mostly stops me from realising chargeable capital gains.

There is a CGT equivalent of the Laffer Curve.

EDIT: I should add that when my marginal tax rate rose to more than 60% and the Inland Revenue refused to allow me to offset my temporary workplace costs against tax (further reducing my net income), I retired. Incentives matter

[XFool]

I'm not a fan of Mr Murphy but I don't think his outfit is a registered charity. Have you got a source that says it is?

At least one is: The New Economics Foundation
https://neweconomics.org/profile/richard-murphy
Charity number: 1055254

I haven't bothered looking through the rest of the left wing pressure groups he is involved with.

So, how is that "his outfit"? That he has contributed articles to it doesn't make it "his", does it?

Anyway... this charity is definitely not one of "his", AFAIK.

Institute of Economic affairs
"The IEA is an educational charity and the UK’s original free market think tank, founded in 1955."

https://iea.org.uk/
Charity number: CC/235 351

[Lootman]

I am not for once suggesting that taxes need to increase, let alone to 65%, I am arguing that the need reform. If NI is rolled income tax then average rates can be reduced to yield the same tax take.

I am interested in ideas to simplify and broaden the tax code, in a revenue-neutral way, thereby reducing marginal tax rates. So for example if we abolish allowances and reduce the number of tax bands, then we can both simplify the tax code and lower the most punitive rates (thinking here 45% income tax and 40% IHT).

But many of these left-wing think tanks who are brainstorming taxes are not thinking that way at all. That fails to convince and I would prefer that they first identify what it is they want to spend more of our money on. Don't make it look like an exercise in confiscation for its own sake.

[chas49]

Moderator Message:
Please take care to keep politics out of this discussion. That is for another board! (chas49)

[Gerry557]

.
But I'd like to see more equity in the system. Sunak is taxed at 20% on his capital gains, while I pay 45% on my employment income (plus zero personal allowance). I own a large house which is mortgage free....I feel for those who rent who won't have the same opportunities I have had, largely as a result of accident and being born in the 1960s! The system needs radical reform with a greater focus on equity.

I'm sure he paid 45% on his employment too as well as 20% on his capital gains. I think he paid a total of £500k in tax. It's not a small amount.

For most of us, we have already paid tax on our earnings and then taxed again on our savings from those earnings either by savings interest taxes, dividend taxes, stamp duties and CGT.

As for equity, who decides what that is. Why should I pay 20% and you 45%. I mentioned previously that IHT was seen as unfair although many don't pay.

Fair might be say 10% tax on everything with no allowances or exemptions. I've not worked out that figure just picked at random but can be adjusted if needed. You would be taxing benefits though and everyone would be paying something.

It's that word again "fair taxes." It's fair if I don't pay it.

[tjh290633]

My view is, and always will be that nobody who receives any benefits should pay income tax, and that nobody who pays income tax should receive any benefits. Benefits of course exclude the state pension. There ought to be a gap of income, where people neither receive benefits nor pay income tax. In the present system a lot of money goes round in a circle.

It should not be beyond the wit of the lawmakers to decide such a system.

TJH

[JohnB]

The list of benefits that are/are not taxable is a muddle, but it is remarkable that there are 28 of them in total.

https://www.gov.uk/income-tax/taxfree-a ... e-benefits

[csearle]

I inherited a small orchard in my father's garden in 1985.

Something tells me that orchard had apple trees growing in it. C.

[kempiejon]

Not the Nine O'Clock News budget, 100% duty on wheelchairs, white sticks etc https://www.youtube.com/watch?v=BI7fudmO7FY&t=3s

[ursaminortaur]

.
But I'd like to see more equity in the system. Sunak is taxed at 20% on his capital gains, while I pay 45% on my employment income (plus zero personal allowance). I own a large house which is mortgage free....I feel for those who rent who won't have the same opportunities I have had, largely as a result of accident and being born in the 1960s! The system needs radical reform with a greater focus on equity.

I'm sure he paid 45% on his employment too as well as 20% on his capital gains. I think he paid a total of £500k in tax. It's not a small amount.

For most of us, we have already paid tax on our earnings and then taxed again on our savings from those earnings either by savings interest taxes, dividend taxes, stamp duties and CGT.

Sorry but savings interest tax is as the name suggests a tax on the interest on your earnings not another tax on those earnings on which you have already paid interest. Similarly divided taxes are a tax on the dividends produced by the shares you purchased not another tax on the earnings you used to purchase those dividend paying shares/funds ( though after Osborne's changes there is a good argument that they are subject to increasing double taxation since they are paid out of money already subjected to corporation tax with the allowances constantly shrinking). CGT is similarly not a tax on already taxed earnings but instead on growth in assets.

Stamp duty though is different since it is a transaction tax, like VAT, which is applied on your already taxed earnings when you use them to purchase something.

As for equity, who decides what that is. Why should I pay 20% and you 45%. I mentioned previously that IHT was seen as unfair although many don't pay.

Equity is well defined as a share of ownership and dividends are paid out of profits accruing from that ownership which is paid out after corporation tax has been paid. The lower rate of taxation on dividends compared to earnings, and in particular compared to the taxation of bonds, is meant to compensate for corporation tax having already been paid on the dividends (whereas bonds are paid out of profits on which no corporation tax has been applied).

But I'm sure you already knew all that.

[MuddyBoots]

While we're examining income taxes what's the justification for dividend income being taxed lower than employment income? The explanation I heard during accountancy studies was to encourage entrepreneurship although the rates have converged a bit since then.

Or even corporation tax compared with income tax? Why aren't rates aligned for companies and people? Probably to avoid them shopping around and emigrating to a lower tax country which people are less inclined to do.

The whole thing looks like it's run on pragmatic, rather than equitable lines.

Because the dividend income is paid out of corporate income that has already paid corporation tax. The combined tax rate is similar or somewhat higher when CT is at 25%

That makes sense although the principle of double taxation is applied rather inconsistently. Corporation tax isn't an income tax but a profit tax, so we're not quite comparing like with like.

Income tax could be seen as a tax on disposable income, (as an equivalent to profit), if the allowance is meant to cover essential spending. Perhaps it used to!

[ursaminortaur]

Because the dividend income is paid out of corporate income that has already paid corporation tax. The combined tax rate is similar or somewhat higher when CT is at 25%

That makes sense although the principle of double taxation is applied rather inconsistently. Corporation tax isn't an income tax but a profit tax, so we're not quite comparing like with like.

Income tax could be seen as a tax on disposable income, (as an equivalent to profit), if the allowance is meant to cover essential spending. Perhaps it used to!

Until 1965 corporations were treated as virtual people for taxation purposes and subject to income tax. The introduction of corporation tax just meant that the government could set a different rate of "income" taxation for businesses as opposed to real people

https://en.wikipedia.org/wiki/United_Kingdom_corporation_tax

Until 1 April 1965, companies were taxed at the same income tax rates as individual taxpayers, with an additional profits tax levied on companies. Finance Act 1965[3] replaced this structure for companies and associations with a single corporate tax, which took its basic structure and rules from the income tax system

[stevensfo]

.
But I'd like to see more equity in the system. Sunak is taxed at 20% on his capital gains, while I pay 45% on my employment income (plus zero personal allowance). I own a large house which is mortgage free....I feel for those who rent who won't have the same opportunities I have had, largely as a result of accident and being born in the 1960s! The system needs radical reform with a greater focus on equity.

I'm sure he paid 45% on his employment too as well as 20% on his capital gains. I think he paid a total of £500k in tax. It's not a small amount.

For most of us, we have already paid tax on our earnings and then taxed again on our savings from those earnings either by savings interest taxes, dividend taxes, stamp duties and CGT.

As for equity, who decides what that is. Why should I pay 20% and you 45%. I mentioned previously that IHT was seen as unfair although many don't pay.

Fair might be say 10% tax on everything with no allowances or exemptions. I've not worked out that figure just picked at random but can be adjusted if needed. You would be taxing benefits though and everyone would be paying something.

It's that word again "fair taxes." It's fair if I don't pay it.

For most of us, we have already paid tax on our earnings and then taxed again on our savings from those earnings either by savings interest taxes, dividend taxes, stamp duties and CGT.

Not forgetting VAT, Duty tax and the iniquitous Council tax, the latter going to pay workers who then have to pay all those taxes again, out of the already-taxed money they receive!

Steve

[JohnB]

Surely anyone against a wealth tax is in favour of Council Tax, as it dramatically undercharges those with their wealth tied up in nice houses.

Remember folks, if you want public services, you need money, and its the wealthy who have it.