Wealth tax and the rich

[DrFfybes]

Then we can move on to the nonsense that is NI, which is a parallel income-tax system that has lost its original purpose...that also needs to go and blended in to income tax.

Not quite IMO - NI is more of a reverse Income tax, roughly. for most people..

Pay IT at 20%, NI at 10%.

Pay IT at 40%, pay NI at 2%.

I agree it does need simplifying. There is also the misperception that everything you earn over £50k is taxed at twice the rate as the lower band would disappear, as in reality the tax rate rises from 30% to 42%, (previously 32% to 42%).

Paul

[Bminusrob]

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/

The following recommendations have been made so far and will go on to form part of the Taxing Wealth Report 2024:

1. Restricting pension tax relief to the basic rate of income tax might raise £14.5 billion of additional revenue per annum.
2. Abolishing the VAT exemption for financial services within the UK might raise £8.7 billion of additional tax revenue per annum.
3. Reforming national insurance charges on higher levels of earned income in the UK might raise an additional £12.5 billion of tax revenue per annum.
4. Aligning capital gains tax and income tax rates in the UK might raise more than £12 billion in additional tax a year.
5. Abolishing capital gains tax entrepreneur’s relief, which might raise approximately £2.2 billion of additional tax a year.
6. Recreating an investment income surcharge in the UK tax system might raise up to £18 billion of extra tax revenue a year.
7. Capping the rate at which tax relief is given on charitable donations under Gift Aid might raise £740 million in tax a year
8. Abolishing the VAT exemption for services supplied by private schools might raise £1.6 billion in tax a year
9. The UK needs better estimation of its tax gap to prevent the illicit accumulation of wealth. No tax estimate has been made as part of this recommendation.
10. Capping ISA contributions to £100,000 in a lifetime might raise £100 million in tax a year.
11. Reforming the administration of corporation tax in the UK might raise at least £6 billion of tax a year.
12. Increasing the corporation tax rate for the UK’s largest companies could raise £7 billion in tax annually.
13. Reducing the annual exempt amount of capital gains a person might enjoy a year to £1,000 might raise at least £0.4 billion of additional tax
14. Charging capital gains tax on the final disposal of a person’s main residence might raise £10 billion of tax a year.
15. The UK needs to undertake tax spillover assessments if tax abuse is to be beaten.
16. Abolishing the inheritance tax exemption on some funds retained in pension arrangements at the time of a person’s death might raise £1.3 billion a year.
17. Reforming inheritance tax business property relief might raise £3.2 billion of tax a year.
18. Reforming inheritance tax agricultural property relief might raise £1.0 billion of tax a year.
19. Reforming Companies House might raise £6 billion of tax a year.
20. Reforming the rates at which inheritance tax is charged might make the tax considerably more progressive, even if it does not raise revenue.
21. Restricting charity tax reliefs to prevent their abuse is important to protect the charity sector from risk.
22. Reintroducing close company rules for income and corporation tax could raise at least £3 billion of tax a year
23. Abolishing the domicile rule for tax purposes might raise £3.2 billion of tax revenue a year.
24. Council tax reforms are essential to increase the progressivity of local taxation.
25. The reform of the use of ISA funds could result in the saving of at least £3.7 billion of tax subsidies a year and release £70 billion a year for investment in a UK Green New Deal
26. Reforming the conditions attached to pension tax relief could release £35 billion a year for investment in a UK Green New Deal
27. Reforming student taxation is required to create horizontal and vertical tax equity within our tax system and would cost £4 billion a year.
28. Removing existing anomalies within the UK system that prevent the delivery of tax justice might cost £19.1 billion per annum

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

FD

Strangely enough, no mention of how much money could be saved by changing public sector pensions to defined contribution pensions. I wonder why not, and who wrote this report.

[stevensfo]

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.

How do you define a nice house?

Maybe it's changed, but I worked in France 89-98, and slowly became confused about where my colleagues lived. There were houses and apartments that looked dilapidated from outside. Badly in need of fresh paint. Once through the door, the decor resembled the finest palaces. White grand pianos, indoor swimming pools etc. I then learned that the value of houses was decided by the area and the state of the house as seen from outside.

So people made sure to keep their houses looking cheap while having a 5* interior.

Not sure if it would work in the UK.

I still wonder about the humidity caused by the indoor pools!

PS In Poland, it was the complete opposite. The houses were a source of pride and looked amazing from outside. Once through the front door however, we soon discovered that half the appliances didn't work correctly, and flushing the toilet took a lot of practice and prayers!

[Lootman]

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.

Council tax works well in the sense that is broadly based, and is paid by residents of that location who use local services, rather than the owners of a property, who may not do.

I happen to think that it is right that council tax is capped, as there is a limit to how many local services an individual can benefit from.

Maybe it's changed, but I worked in France 89-98, and slowly became confused about where my colleagues lived. There were houses and apartments that looked dilapidated from outside. Badly in need of fresh paint. Once through the door, the decor resembled the finest palaces. White grand pianos, indoor swimming pools etc. I then learned that the value of houses was decided by the area and the state of the house as seen from outside.

It can be like that in the UK as councils use "drive by valuations" in some cases.

For 12 years I had a house that was narrow at the front, but very deep. From the street it looked like a small house but was actually 4,000 square feet. The council decided it was in band D even though comparably-sized homes in that postcode were G or H. Naturally I said nothing.

[ursaminortaur]

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/



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

FD

Strangely enough, no mention of how much money could be saved by changing public sector pensions to defined contribution pensions. I wonder why not, and who wrote this report.

Possibly because, as I've explained multiple times, switching unfunded public sector schemes to DC schemes would cost the government lots of money in the short to medium term since it could no longer take the employee contributions and would have to start making real employer contributions into each employee's DC pot but would still have to continue paying out to those already retired and when they retire those who had already built up benefits in the current schemes.

[Watis]

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.

Council tax works well in the sense that is broadly based, and is paid by residents of that location who use local services, rather than the owners of a property, who may not do.

I happen to think that it is right that council tax is capped, as there is a limit to how many local services an individual can benefit from.

Maybe it's changed, but I worked in France 89-98, and slowly became confused about where my colleagues lived. There were houses and apartments that looked dilapidated from outside. Badly in need of fresh paint. Once through the door, the decor resembled the finest palaces. White grand pianos, indoor swimming pools etc. I then learned that the value of houses was decided by the area and the state of the house as seen from outside.

It can be like that in the UK as councils use "drive by valuations" in some cases.

For 12 years I had a house that was narrow at the front, but very deep. From the street it looked like a small house but was actually 4,000 square feet. The council decided it was in band D even though comparably-sized homes in that postcode were G or H. Naturally I said nothing.

I've benefitted similarly. When the banding was done in my road, those houses with any sort of front extension got put in the next higher band than the rest. No account was taken of rear extensions, presumably because they are not visible when performing a drive-by valuation.

Watis

[Lootman]

Strangely enough, no mention of how much money could be saved by changing public sector pensions to defined contribution pensions. I wonder why not, and who wrote this report.

Possibly because, as I've explained multiple times, switching unfunded public sector schemes to DC schemes would cost the government lots of money in the short to medium term since it could no longer take the employee contributions and would have to start making real employer contributions into each employee's DC pot but would still have to continue paying out to those already retired and when they retire those who had already built up benefits in the current schemes.

That may be a short-term price worth paying to stop the bleeding and the distortions.

My other idea is a special and higher rate of income tax on all payouts from public-sector DB pensions, withheld at source. Say 50% to 60%?

[stevensfo]

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.

Council tax works well in the sense that is broadly based, and is paid by residents of that location who use local services, rather than the owners of a property, who may not do.

I happen to think that it is right that council tax is capped, as there is a limit to how many local services an individual can benefit from.

Maybe it's changed, but I worked in France 89-98, and slowly became confused about where my colleagues lived. There were houses and apartments that looked dilapidated from outside. Badly in need of fresh paint. Once through the door, the decor resembled the finest palaces. White grand pianos, indoor swimming pools etc. I then learned that the value of houses was decided by the area and the state of the house as seen from outside.

It can be like that in the UK as councils use "drive by valuations" in some cases.

For 12 years I had a house that was narrow at the front, but very deep. From the street it looked like a small house but was actually 4,000 square feet. The council decided it was in band D even though comparably-sized homes in that postcode were G or H. Naturally I said nothing.

Funny you should mention that. As a student, I was only partly interested in my family tree and while visiting Manchester, had the chance to see the house where my grandmother had grown up. A family of 9 children!! From outside, it didn't look big, but then I noticed how deep it was. I still wish I'd had the courage to knock at the door. PS With all those kids, the parents had to be strict. My grandmother told me that her mother used to shout upstairs, "Are you asleep?" If anyone answered "Yes!", they got their mother's slipper across their backside!

Steve

[funduffer]

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.

Council tax works well in the sense that is broadly based, and is paid by residents of that location who use local services, rather than the owners of a property, who may not do.

I happen to think that it is right that council tax is capped, as there is a limit to how many local services an individual can benefit from.

Yes, but there is something wrong when I pay more council tax for my 3 bed bungalow than Buckingham Palace!

FD

[Lootman]

Council tax works well in the sense that is broadly based, and is paid by residents of that location who use local services, rather than the owners of a property, who may not do.

I happen to think that it is right that council tax is capped, as there is a limit to how many local services an individual can benefit from.

Yes, but there is something wrong when I pay more council tax for my 3 bed bungalow than Buckingham Palace!

FD

Doesn't Buck House belong to the government anyway? So it would just be paying tax to itself?

[JohnB]

Tax is not about what YOU get back its what you can afford to contribute to society's overall needs.

[Nimrod103]

Yes, but there is something wrong when I pay more council tax for my 3 bed bungalow than Buckingham Palace!

FD

Doesn't Buck House belong to the government anyway? So it would just be paying tax to itself?

Council tax is there to pay for services, and I assume the Funduffer family use the same level of services as the Royal Family or (on average) any other family. Probably more, since I can't see the Royal Family going down the local library. So why should the Funduffer family pay less Council Tax than other families?

[Lootman]

Tax is not about what YOU get back its what you can afford to contribute to society's overall needs.

But if the voters cannot see any result or benefit from the taxes they pay, then they might seek to avoid or evade paying those taxes. Or vote to have them changed.

"Because you have the money" seems inadequate and unconvincing as a means of persuasion.

[Watis]

Council tax works well in the sense that is broadly based, and is paid by residents of that location who use local services, rather than the owners of a property, who may not do.

I happen to think that it is right that council tax is capped, as there is a limit to how many local services an individual can benefit from.

Yes, but there is something wrong when I pay more council tax for my 3 bed bungalow than Buckingham Palace!

FD

I didn't realise that you pay the council tax for Buckingham Palace, your Royal Highness!

[1nvest]

Question : For a state to impose a wealth tax that implies that state having total oversight of each individuals total global wealth and wealth distribution. Dual nationality and two states potentially setting the same conditions. Is that fair? Or should ones own wealth and wealth distribution be a personal/private matter? I would argue that when others know how much and where ones wealth lays it is no longer yours but is instead wide open to being taken/targeted at any time, either lost in a single take or eroded over time.

If one works to accumulate wealth, that fundamentally is not theirs, is just a loan that can be called in to be spent on benefiting others, then the incentive to work hard and save is lost.

Historically wealth taxes have been short lived/transitory, are a sign of failure and the need for confiscations, where application actually drives decline (flight of capital/investments) that subsequently leaves the population worse off overall.

[funduffer]

Doesn't Buck House belong to the government anyway? So it would just be paying tax to itself?

Council tax is there to pay for services, and I assume the Funduffer family use the same level of services as the Royal Family or (on average) any other family. Probably more, since I can't see the Royal Family going down the local library. So why should the Funduffer family pay less Council Tax than other families?

Because most council tax receipts don't go on libraries, but on social care and children's services. I have no need of any of these servicers, I am paying council tax largely for the benefit of others, not that I begrudge them this.

The Royal family also have little need of social care and children's services.......they get that funded by other means (i.e. us). Surely they should pay a commensurate amount of tax to benefit the residents of their district?

FD

[Nimrod103]

Council tax is there to pay for services, and I assume the Funduffer family use the same level of services as the Royal Family or (on average) any other family. Probably more, since I can't see the Royal Family going down the local library. So why should the Funduffer family pay less Council Tax than other families?

Because most council tax receipts don't go on libraries, but on social care and children's services. I have no need of any of these servicers, I am paying council tax largely for the benefit of others, not that I begrudge them this.

The Royal family also have little need of social care and children's services.......they get that funded by other means (i.e. us). Surely they should pay a commensurate amount of tax to benefit the residents of their district?

FD

You clearly take the view that Council Tax should be redistributive, such that a notionally larger or better quality house should pay more than a smaller cheaper house, irrespective of the number or income of its occupants.

I take the view that Council Tax is there to pay for the services used in that area, and should be raised locally. It is a long time since I looked at it, but I thought that a big chunk of local authority spending comes in the form of grants from central government anyway, so there is a big redistributive element as poor areas benefit to the disadvantage of wealthier ones.

There are already enough redistributive taxes anyway, such as IT, IHT, CGT etc etc etc.

[Wuffle]

Despite all of these heinous redistributive taxes, rich people tend to stay rich and poor people tend to stay poor. The economy would appear to be redistributive the other way and is the larger proportion.

W.

[Nimrod103]

Despite all of these heinous redistributive taxes, rich people tend to stay rich and poor people tend to stay poor. The economy would appear to be redistributive the other way and is the larger proportion.

W.

The way out of being poor is to have a job, yet:

https://www.bbc.co.uk/news/business-68534537
The UK's economic inactivity rate was 21.8% between November and January, marginally higher than a year earlier. It means 9.2 million people aged between 16 and 64 in the UK are not in work nor looking for a job. The total figure is more than 700,000 higher than before the coronavirus pandemic.

and:
https://www.telegraph.co.uk/business/20 ... -find-job/
Two-thirds of people granted sickness benefits since lockdown never have to find a job, official data shows.
Figures published by the Department for Work and Pensions (DWP) reveal that between April 2019 and November 2023, 1.5 million people applying for sickness benefits linked to Universal Credit were granted the most generous level of welfare payments.
The figures showed that mental health was the biggest driver of long-term sickness claims, cited in 69pc of cases.

The figures of economic inactivity were already shockingly high before Covid, but subsequently the rise seems to be driven by mental health disability claims in young people. Either the country has become sicker, or this is a scam of truly colossal proportions.

[JohnB]

Poor people have jobs, some have many jobs. Even with minimum wage forced on employers, economics dictate that at the bottom tier don't have an opportunity to progress, and at the top specialist skills are over-rewarded. If economics decides that the salary multiplier across a company is 100 fold and growing, the taxation system can be used to put checks in place. Income tax is not sufficient if people are rewarded with share options, or contractors run their own shell companies with fake dividends. So wealth builds.

Its a big failing of the Right here that because they had the background, skills and contacts to do well, they deserve their wealth, and that others aren't in their position because of fecklessness.