Wealth Tax in the UK

MikeUpNorth said:
It's not about being employed vs unemployed, it's about the incentive to work more hours or seek higher-paying work. In summary, from the Congressional Budget Office:

You can read the full report here, if you want: https://www.cbo.gov/sites/default/f...012/reports/43674-laborsupplyfiscalpolicy.pdf
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You specifically said it would affect getting people "back to work".
Apologies if we were at cross purposes, but I think it was reasonable for me to interpret it, in that way.

So, effectively, and I say this with full knowledge of the spin I am applying, people need to be made uncomfortable enough to have to chase the pounds, but in the process, not see it, as blatantly as on their payslip.
Yes, I'm being flippant.
 
Verminator said:
You specifically said it would affect getting people "back to work".
Apologies if we were at cross purposes, but I think it was reasonable for me to interpret it, in that way.

So, effectively, and I say this with full knowledge of the spin I am applying, people need to be made uncomfortable enough to have to chase the pounds, but in the process, not see it, as blatantly as on their payslip.
Yes, I'm being flippant.
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Sorry, that was someone else. I was just jumping in with relevant info.
 
Conor said:
I'm not sure which part of this post is stupider, blaming it all on 'spongers', or the fact that you bought a house, yet continued to live with your parents :lol:
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I like the way you quoted the word "Spongers" even though that's not what I said.

And also, what is stupid about getting on the property ladder as soon as possible, renting it out, using the rent to cover the mortgage and then saving for my own home that I live in? I'm now in a position where I'm 31, live in a nice house with an apartment that is rented out and will be my retirement fund. It took a few years of sacrifice to get there but it's the opposite of stupid.

If everybody was "stupider" some people wouldn't be in the financial trouble they currently are when they hit retirement..... Notice the correct use of a quotation.
 
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Dumbstar said:
I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?
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You don’t think you should pay your share of the massive financial hole created by Covid?
 
sullydnl said:
Raising income tax would have more of a behavioural impact though, wouldn't it? It logically reduces incentive to work, whereas a one-off wealth tax doesn't have that sort of impact. I'm particularly unsure whether you want to raise income tax at a point where you'll be trying to get as many people as possible back to work after a period of record unemployment.

As for the logic in hitting pensioners more, the report argues that it is in fact fair:

"Those currently around retirement age have, as a group, benefitted from a period of strong house price growth, generous occupational pension provision, and healthy wage growth, along with generous government policies such as free university tuition. These factors have enabled them to accumulate more wealth than other generations can expect to in future. Second, the pandemic has been economically most costly for younger generations, in an effort to protect older generations who are more at risk from the virus. Third, looking ahead, we are likely to be entering another era of very low interest rates, which will tend to benefit those who already have assets at the expense of those who don’t. Fourth, any future tax rises on income will be paid primarily by younger generations. In this context a one-off wealth tax is fairer between generations than income tax rises alone."
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It is depressing to see such an obvious mistake being used to justify policy decisions.

The generation currently around retirement age sent one in ten people of that generation to university free of charge. That is not a generous govt education policy. Considering the school leaving age has risen to 18 which is two more free years of education which was only afforded to 30% of those approaching retirement.

So not only has that generation paid extra for free education for those that followed, which it never received in the majority itself, it is now going to be used as a reverse justification to charge them again.
 
Verminator said:
Well done you for expertly avoiding appearing a pompous arse.

Whilst not in the group that ignores expert opinion, I would happily listen to an example of where being unemployed is preferable to being in work.
If it is plausible enough, I may even sell my tools.
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Bad times if I seem pompous to someone who started his last post with that "for an apparently intelligent person" schtick.

A simple example of a situation where a person may decide they are better off staying unemployed rather than returning to work would be a parent who would be working at a low-income job, who would incur extra costs (childcare, travel, etc.) in working that don't exist while staying at home unemployed caring for their child. If the net gain in employment isn't sufficient then they aren't incentivised to return to work. The more you reduce the gain (through whatever policies you implement), the less the incentive they have to work.

Beyond that, increases in income tax also disincentivises people from working more (e.g. overtime), which is also a negative.

Again, I'm not pretending to be an expert so someone who knows more could absolutely correct me and say increasing income tax absolutely will not have this effect. But as far as I'm aware the idea that raising income tax can reduce the incentive to work is basic economic theory, just as increasing capital gains tax can reduce investment and increases in corporation tax can encourage companies to reduce taxable profits within a jurisdiction. That impact taxes have on behaviour is also (as far as I'm aware) the notion underlying the idea of a laffer curve.
 
My main concern about tax policy is if it makes the wealthy leave the country. As long as it's doing that, I'm on board.
 
NotThatSoph said:
The working hard point is relevant for a wealth tax generally, not for why your house isn't wealth. You could have worked just as hard and placed your wealth in other assets than your mortgage free house, it wouldn't have made you richer.

As for working hard and saving, I interpret this in two ways:

1. You could have worked just as hard, but spent your money instead of saving it.
2. You could have chosen leisure over work.

As for 1), you will be taxed a lot less than someone who spent their money, so that point is rather moot, don't you think? Even if we accept that a tax is a punishment or penalty, clearly the people getting punished are the ones spending their money. Going with the assumption that you're £200 000 above the threshold, you're potentially paying 1 % of that for five years, or £10 000 total. Your alternative would have been to spend the amount above the threshold. The UK has a standard VAT of 20 %, so you would only be able to spend on stuff worth £166 667 worth of stuff and you'd have to pay £33 333 in taxes.

If you were to be punished for saving over spending the wealth tax would have to be higher than 16.7 %.

As for leisure over work, that argument is identical for income taxes. If you work two jobs to save money, is it fair that you have to pay more taxes than someone who works one job? Is it fair that a lawyer has to pay more in taxes than a cleaner? Most people are fine with progressive income taxes.
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Its not really though is it?

I mean you can argue the tax benefit of paying less wealth taxes now rather than VAT on potential previous spending but only if you are blind to the reality that we only get the one life. Enjoying your time and spending your money is way more enjoyable than going to work and saving your money. So in the end it is going to be retrospectively decided to change the rules on taxation and not factor in the human reality that most people have made sacrifices to be better off in the future and now that equation is being changed to reduce the benefit of those sacrifices.

It may have to happen and someone is going to have to pay more in taxes but lets not pretend that very different personal choices are to be classed as the same quite unfairly in order to make a case one way rather than an other.
 
finneh said:
Healthcare.jpg
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mKRE8lk.png
 
What are you guys trying to argue with these incessant graphs?!
 
I lived in Spain while they had a wealth tax (that basically kicked in at 1m in assets). That was underpinned with annual reporting on assets, even if those were far below the threshhold, but that offered the authorities an extra way to look for income tax evasion. It was great employment for tax accountants/lawyers and pretty painful to do correctly - particularly in year zero. They do have so many ifs/buts around the wealth tax itself that I doubt it's more than window-dressing, and I'd be amazed if a good accountant can't work magic on those potential higher wealth tax rate payers.

On a personal level I guess I'd have to wish I'd spent more of cars, holidays, clothes, phones etc and saved less, but that's a great problem to have. I'll admit though, I don't fancy the paperwork - or listening to the debate about allowances, special cases etc or discovering that I should have registered my house with a company in Ireland rather than in my own name etc, etc.

I'd sooner we saw a shift to a tax system that actually made the marginal rates of tax explicit though (like a combined NI and tax applying across income bands and to pensions, rental income, dividends) and looked at all sources of income as income, rather than giving preferential rates on CGT. I'd also limit all tax allowances for things like pension contributions to base rate only. I doubt that it would draw a lot of support from the tory benches though.
 
500k is not a wealth tax. A 50 year old who bought a 250k house 20 or 30 years ago could be sitting on a 1 million property, but on a salary of 50k. An extra 5k tax would be punishing for them, and that's the majority of the UK middle class.

As usual, these wealth tax ideas are inconsequential to/avoidable by the actual wealthy. Corporation tax or CGT are the ones to go after where the UK has amongst the lowest rates in the world.
 
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MikeUpNorth said:
What are you guys trying to argue with these incessant graphs?!
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his original point was that govt is inherently inefficient because it's not disciplined by markets.
i said, with a graph, that european countries with more privatised healthcare spend more, attempting to refute that point of his.
he said, with a graph, that the UK with its govt healthcare has had a significant increase in spending over the years.
i replied, with a graph, showing a similar trend for privatised switzerland.
 
11101 said:
500k is not a wealth tax. A 50 year old who bought a 250k house 20 or 30 years ago could be sitting on a 1 million property, but on a salary of 50k. An extra 5k tax would be punishing for them, and that's the majority of the UK middle class.

As usual, these wealth tax ideas are inconsequential/avoidable by the actual wealthy. Corporation tax or CGT are the ones to go after where the UK has amongst the lowest rates in the world.
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:lol:

There's always food banks.
 
berbatrick said:
his original point was that govt is inherently inefficient because it's not disciplined by markets.
i said, with a graph, that european countries with more privatised healthcare spend more, attempting to refute that point of his.
he said, with a graph, that the UK with its govt healthcare has had a significant increase in spending over the years.
i replied, with a graph, showing a similar trend for privatised switzerland.
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Cool. Correlate it to health outcomes please.
 
11101 said:
500k is not a wealth tax. A 50 year old who bought a 250k house 20 or 30 years ago could be sitting on a 1 million property, but on a salary of 50k. An extra 5k tax would be punishing for them, and that's the majority of the UK middle class.

As usual, these wealth tax ideas are inconsequential/avoidable by the actual wealthy. Corporation tax or CGT are the ones to go after where the UK has amongst the lowest rates in the world.
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Buying a £250k house 20 or 30 years ago might have meant you were doing quite well, to be sitting on that now at £500k plus then you've paid off the mortgage and just maybe have some disposable income. I can't really see it as such a hardship particularly when it isn't forever.

Amazon and the like paying tax just as all other companies do, have done would get us there more quickly at maybe a lesser rate. Branson giving up a glamour project or two would get us there sooner too. Can we deny that the people of the UK have made him and the corporations so fantastically wealthy and that their dues are, well, due.
 
DOTA said:
I think if we're going to make this experiment work you first need to give me a million pound property and a salary of 50k a year.
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I edited the post. It's actually a 40% increase.
 
NotThatSoph said:
200k wouldn't put you into mega debt, it would put you in a very comfortable situation with a mortgage at 50 % of your property value, something a lot of people can only dream of.

I guess it's just hard for the top 10 % to connect with the common man. :smirk:
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Again, I'm as honest with taxes as they come. I've already mentioned that. To answer your yacht question, yes I can buy one by remortgaging my house but who's going to help my two university aged daughters both racking up £30k debts, and two more kids to come. I'm saving to get them all on some sort of property ladder which probably won't happen now anyway. I'm not scrimping and saving because I'm a miser.

But this country would rather I fell into, and remain firmly in, debt so I can offer nothing to my kids who then also remain in debt. Yes this country allowed me this advantageous position which is why I love it too much to want to cheat it. So why is it punishing me after feeding me?

I'm ok with income tax and NI going up to cover the hole. It's fair on everyone. That way us 'wealthy' people will end up paying more anyway but everyone has to chip in.
 
Dumbstar said:
Again, I'm as honest with taxes as they come. I've already mentioned that. To answer your yacht question, yes I can buy one by remortgaging my house but who's going to help my two university aged daughters both racking up £30k debts, and two more kids to come. I'm saving to get them all on some sort of property ladder which probably won't happen now anyway. I'm not scrimping and saving because I'm a miser.

But this country would rather I fell into, and remain firmly in, debt so I can offer nothing to my kids who then also remain in debt. Yes this country allowed me this advantageous position which is why I love it too much to want to cheat it. So why is it punishing me after feeding me?

I'm ok with income tax and NI going up to cover the hole. It's fair on everyone. That way us 'wealthy' people will end up paying more anyway but everyone has to chip in.
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This is how we paid for these sorts of things in the past. I'm also a little wary on oates' point that its only for a few years because they introduced income tax for the Napoleonic wars and we still have income tax.
 
Hughes35 said:
I like the way you quoted the word "Spongers" even though that's not what I said.

And also, what is stupid about getting on the property ladder as soon as possible, renting it out, using the rent to cover the mortgage and then saving for my own home that I live in? I'm now in a position where I'm 31, live in a nice house with an apartment that is rented out and will be my retirement fund. It took a few years of sacrifice to get there but it's the opposite of stupid.

If everybody was "stupider" some people wouldn't be in the financial trouble they currently are when they hit retirement..... Notice the correct use of a quotation.
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I didn't quote spongers as something you said, it was to highlight that it wasn't a term I was directly using(single quotes). What's stupid about it is that you've clearly come from a place of extreme privilege to be able to buy a home to have as an asset in your 20s, while you lived at home with your parents, yet you're complaining about having to possibly pay tax on it. Living in your parents' house while you rent out an investment property, to pay off the mortgage on it is the polar opposite of sacrifice :lol:
 
Conor said:
I didn't quote spongers as something you said, it was to highlight that it wasn't a term I was directly using(single quotes). What's stupid about it is that you've clearly come from a place of extreme privilege to be able to buy a home to have as an asset in your 20s, while you lived at home with your parents, yet you're complaining about having to possibly pay tax on it. Living in your parents' house while you rent out an investment property, to pay off the mortgage on it is the polar opposite of sacrifice :lol:
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Having parents isn't extreme privilege!
 
Jippy said:
Income tax is paid at source, ie taken out of your salary at payroll, unless you're self-employed. Property is only loosely factored into council tax- which pays for local upkeep. I posted a link above- my council is still using property values from 1991, as an indication of where our databases are at!
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Sorry, I meant property tax in my post! That was a stupid 'typo'... Income tax is also paid at source over here of course. But you answered the question about assessing property values as well anyway. :)

What's this council tax about then? It's some kind of equivalent of property tax I take it? Property tax is really our main contribution as inhabitants to our municipality's revenue. (Although I suppose municipalities get additional funds from the province; not sure how that works exactly.)
The Corinthian said:
Not quite the reasons you listed, but in the same vein...

https://www.bbc.co.uk/news/uk-politics-56015861
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Yeah, vanity programs aren't good for tax morale either... (And should be banned by law, cause no government seems to be able to help itself in that regard.)
 
Dumbstar said:
I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?
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Most people in a house of any significant means are paying a mortgage. My house is worth a similar sum and my mortgage £800 a month. If I wasn't paying that I could sink it into a pension.

Re your latter point, be very careful and don't do anything without getting proper legal and tax advice. Even if that doesn't fall foul of any anti-avoidance legislation (which I suspect it will), the transaction could give rise to other tax implications. Also, could cause an issue for your parents given the effect of a joint tenancy, i.e. if you die.
 
Dumbstar said:
Again, I'm as honest with taxes as they come. I've already mentioned that. To answer your yacht question, yes I can buy one by remortgaging my house but who's going to help my two university aged daughters both racking up £30k debts, and two more kids to come. I'm saving to get them all on some sort of property ladder which probably won't happen now anyway. I'm not scrimping and saving because I'm a miser.

But this country would rather I fell into, and remain firmly in, debt so I can offer nothing to my kids who then also remain in debt. Yes this country allowed me this advantageous position which is why I love it too much to want to cheat it. So why is it punishing me after feeding me?

I'm ok with income tax and NI going up to cover the hole. It's fair on everyone. That way us 'wealthy' people will end up paying more anyway but everyone has to chip in.
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Your two daughters have debts that may never need to be paid off and will only impact them if they earn enough for it to be negligible outgoings.
When you unfortunately pass you are going to give them a share of 250k for your house. That is massive for them. More than most will get.
 
RedRover said:
Most people in a house of any significant means are paying a mortgage. My house is worth a similar sum and my mortgage £800 a month. If I wasn't paying that I could sink it into a pension.

Re your latter point, be very careful and don't do anything without getting proper legal and tax advice. Even if that doesn't fall foul of any anti-avoidance legislation (which I suspect it will), the transaction could give rise to other tax implications. Also, could cause an issue for your parents given the effect of a joint tenancy, i.e. if you die.
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To be clear you won't get any proper advice till there is a firm proposal

I think its unlikely they go for a wealth tax but that's a guess on my part... if they do though its would have to be pretty much unannounced and effective immediatley otherwise people will be looking for (legal) ways to avoid it...

Suspect trusts would bypass most things if people had enough time to set them up correctly (and the legal fees on hand)

That said I personally don't think a wealth tax is likely... probably an increase in income tax (at the higher end) abolishing higher rate tax relief on pensions... increase in corporate tax rates and looking to bring self employed taxes in line with employed will happen though I guess.

Perhaps a higher vat rate on some luxury goods? ... thats about as far as i think they would go.
 
Don't Kill Bill said:
This is how we paid for these sorts of things in the past. I'm also a little wary on oates' point that its only for a few years because they introduced income tax for the Napoleonic wars and we still have income tax.
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You mean they would keep it as an annual wealth tax? It wouldn't really make sense to do so as it would then become a lot more avoidable and would come with greatly increased admin costs, making it less effective than other approaches they could take. That's partly why direct wealth taxes aren't generally all that common among European countries.

If they were looking to keep taking that money afterwards then they'd be better off reforming existing taxes rather than introducing a wealth tax (as I think the report explicitly states).
 
11101 said:
500k is not a wealth tax. A 50 year old who bought a 250k house 20 or 30 years ago could be sitting on a 1 million property, but on a salary of 50k. An extra 5k tax would be punishing for them, and that's the majority of the UK middle class.

As usual, these wealth tax ideas are inconsequential to/avoidable by the actual wealthy. Corporation tax or CGT are the ones to go after where the UK has amongst the lowest rates in the world.
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Exactly - great post.
 
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