Wealth Tax in the UK

[Wumminator]

Did he say it was free?

There are not many families in the UK who could support and adult at home as they got their first house and rented it out.

Of course that is a privilege. I spend most days of my life working with people who have to scrape by for pennies at the end of the week/month. At the moment food bank usage is higher than ever. People are literally dying of hunger. I’d be happy to pay more for the good of the country and I’m on a lot less than 50kwith a million quid house.

 

[Wumminator]

Exactly - great post.

how is that a great post?

for a start it’s mentioning an 80 year old on 50k a year. Where the feck is that happening and why has that person not retired?

 

[Grinner]

There are not many families in the UK who could support and adult at home as they got their first house and rented it out.

Of course that is a privilege. I spend most days of my life working with people who have to scrape by for pennies at the end of the week/month. At the moment food bank usage is higher than ever. People are literally dying of hunger. I’d be happy to pay more for the good of the country and I’m on a lot less than 50kwith a million quid house.

Did he say it was free?

 

[Wumminator]

The median wage in the UK is around 30k. People claiming 150k isn’t extremely wealthy or asking me to be upset for people earning 50k in a million quid house is mental.

 

[Wumminator]

Did he say it was free?

Do you think he was paying a lot? That would literally make no sense at allwould it.

 

[Grinner]

Do you think he was paying a lot? That would literally make no sense at allwould it.

You're grasping. I prefer to make my judgments with more facts apparent.

Hopefully he'll clarify.

 

[Smores]

I'm fairly sure assuming even just a 20 year window that this wealth tax wouldn't even claw back the interest gained on the VAT not paid.

How can anyone really claim thats damaging to the will to save/invest?

Fair collection is another discussion, you can't punish the asset rich so you'd have to deduct it from income at a reasonable rate until it's repaid. The cost of doing that alone is why policies like these will never happen.

 

[Wumminator]

You're grasping. I prefer to make my judgments with more facts apparent.

Hopefully he'll clarify.

Grasping?
If someone is buying a house to rent out they aren’t also paying a lot to stay at home are they? Else... they’d just move out.

 

[11101]

When I have a million pound property and 50k salary?

Maybe. You're happy with a wealth tax because you don't fall into it. Everybody always wants to increase tax just outside their own circumstances.

Across all ages 670k puts you in the top 10%. Amongst 60 year olds 332k is smack in the middle. Look at the Southeast and it's even higher. None of that puts you in the elite wealthy, it's right in the middle of the middle class.

Most of the UK middle class is comfortable because they got there themselves, paying other taxes along the way. Focus on the extreme wealth that is compounded over generations and sits there idle.

 

[Grinner]

Grasping?
If someone is buying a house to rent out they aren’t also paying a lot to stay at home are they? Else... they’d just move out.

Dunno, could be a number of reasons.

 

[RobinLFC]

how is that a great post?

for a start it’s mentioning an 80 year old on 50k a year. Where the feck is that happening and why has that person not retired?

No it's mentioning a 50 year old on 50k.

500k is simply too low to be considered a proper wealth tax and would have the biggest impact for the middle class, not the rich that you're trying (or should be trying) to target with such a taxation.

 

[Wumminator]

No it's mentioning a 50 year old on 50k.

500k is simply too low to be considered a proper wealth tax and would have the biggest impact for the middle class, not the rich that you're trying (or should be trying) to target with such a taxation.

Ah I get it now. A 20 year old buying a 250k house 30 years ago is also not someone I have sympathy for.
The rich should also be massively taxed I agree. But there are numerous people in this country who do not know how lucky they are and should feel happy outing out others.

 

[sullydnl]

A 500k threshold would cover the (on paper) wealthiest 17% of the country. A 1m threshold the wealthiest 6%. I don't think it's unreasonable to describe people who fall into that bracket as wealthy even if the majority of that wealth is tied up in property they own.

 

[Wumminator]

Maybe. You're happy with a wealth tax because you don't fall into it. Everybody always wants to increase tax just outside their own circumstances.

Across all ages 670k puts you in the top 10%. Amongst 60 year olds 332k is smack in the middle. Look at the Southeast and it's even higher. None of that puts you in the elite wealthy, it's right in the middle of the middle class.

Most of the UK middle class is comfortable because they got there themselves, paying other taxes along the way. Focus on the extreme wealth that is compounded over generations and sits there idle.

60 year olds have benefited from rapid house price increases that the younger generations will never have. They’ve also been able to retire earlier than younger generations.

they’ll be fine.

 

[oates]

You're grasping. I prefer to make my judgments with more facts apparent.

Hopefully he'll clarify.

He was paying enough so that he had spare to save.

Not saying that didn't entail other sacrifices but it is still a privilege.

 

[Norman Brownbutter]

Dont worry. Its the tories, theyll go after the poor, the sick and disabled and Scotland before theyll come for you.

 

[Wumminator]

Dont worry. Its the tories, theyll go after the poor, the sick and disabled and Scotland before theyll come for you.

I mean, this is what it comes down to isn’t it.
it’s either people like dumbstar or the most vulnerable in society.

 

[Grinner]

He was paying enough so that he had spare to save.

Not saying that didn't entail other sacrifices but it is still a privilege.

It's not massive privilege like he's some trust fund kid or summat. His parents clearly wanted to help him as much as they could. I'm not going to slot him for that. My Nan lent me 2 grand for the deposit on my first flat....should I be wearing a top hat and a monocle?

 

[Wumminator]

It's not massive privilege like he's some trust fund kid or summat. His parents clearly wanted to help him as much as they could. I'm not going to slot him for that. My Nan lent me 2 grand for the deposit on my first flat....should I be wearing a top hat and a monocle?

No but you should acknowledge that this gives you a massive advantage over many people.

 

[Grinner]

No but you should acknowledge that this gives you a massive advantage over many people.

Not really. It's not uncommon for people to borrow from their families to get on the ladder.

 

[sullydnl]

60 year olds have benefited from rapid house price increases that the younger generations will never have. They’ve also been able to retire earlier than younger generations.

they’ll be fine.

There's also the argument that they disproportionately benefited from the anti-COVID measures while younger people have been disproportionately impacted by them economically.

I think it's crude to frame what should be a societal effort for societal benefit in that way but if people are making it a generational argument then it is a factor to consider in terms of "fairness".

 

[11101]

Ah I get it now. A 20 year old buying a 250k house 30 years ago is also not someone I have sympathy for.
The rich should also be massively taxed I agree. But there are numerous people in this country who do not know how lucky they are and should feel happy outing out others.

You're not expected to have sympathy, but it's about what is fair. A wealth tax should tax the genuinely wealthy and 500k does not do that.

60 year olds have benefited from rapid house price increases that the younger generations will never have. They’ve also been able to retire earlier than younger generations.

You can't possibly know that.

Consumer growth in the 1920s
Post war investment in the 1950s and 60s
Modernisation in the 1980s
Housing in the 2000s

Every generation has its boom period.

 

[RobinLFC]

There's also the argument that they disproportionately benefited from the anti-COVID measures while younger people have been disproportionately impacted by them economically.

How so? Just curious, as that hadn't crossed my mind (at least for the measures in Belgium).

 

[sullydnl]

Not really. It's not uncommon for people to borrow from their families to get on the ladder.

Just backing this with stats: as of a social mobility commission report in 2017, 34.1% of FTBs benefited from a gift or loan from parents, with another 9.6% benefiting from inheritance.

So not the majority but not uncommon either.

 

[Grinner]

Just backing this with stats: as of a social mobility commission report in 2017, 34.1% of FTBs benefited from a gift or loan from parents, with another 9.6% benefiting from inheritance.

So not the majority but not uncommon either.

So 1 in 3 are massively privileged I suppose.

We're a nation of toffs.

 

[RedRover]

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.

I appreciate that. He could however get advice on the implications of a transfer of that type, since it in itself will have tax (and legal) implications regardless of any wealth tax. The implications of that transfer (even in an attempt to avoid any potential liability later, as potentially ill advised as that could be) may well rule it out anyway. I have seen clients do very strange things without advice

My personal opinion is that there will be significant anti-avoidance legislation to back up anything like this, if it happens to catch as many people as possible.

The fact is, all of the money that's been handed out needs to be recouped, somehow.

 

[manc exile]

Not really. It's not uncommon for people to borrow from their families to get on the ladder.

it is for those families that dont have to lend them

 

[Wumminator]

So 1 in 3 are massively privileged I suppose.

We're a nation of toffs.

yes! This is a massive privilege that quite literally the majority don’t have. Don’t forget that the 33% of those who get help with their house buying from family represent only 65% of the population that will own a house.
Of course that is a privilege.

 

[djembatheking]

Are people being serious when they say earning £150 000 isn`t extremely wealthy ?

 

[Grinner]

Are people being serious when they say earning £150 000 isn`t extremely wealthy ?

Depends. Tech employees in Silicon Valley making that haven't a hope of buying a house in the area.

 

[Hughes35]

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

Living with parents instead of living alone is definitely a sacrifice...... especially if you'd met my dad

 

[Sweet Square]

Are people being serious when they say earning £150 000 isn`t extremely wealthy ?

 

[sullydnl]

How so? Just curious, as that hadn't crossed my mind (at least for the measures in Belgium).

I was just referencing the findings of the Tax Commission there who said "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" as part of their argument for why a wealth measure that disproportionately impacts an older generation isn't unfair.

As for why that economic impact would be heavier on younger generations, there are a number of reasons, I think. As far as I'm aware it's generally accepted that people who graduate secondary school & university during a recession suffer income losses that impact long-term earnings. Young people also make up a disproportionate amount of the workforce in the sectors that were hardest hit by COVID, such as retail, travel and the food industry.

Also as per a BBC Globescan poll:

"Financial hardship is more prevalent among Gen Z (63% saw a change to their income) and Millennials (65%) compared to those further along in their career paths (Gen X with 59%, and Baby Boomers and older at 42% who say their incomes were affected). Older generations are more likely to have escaped physical or financial harm - 56% of baby boomers and older report no physical or financial impacts, compared to 39% on average, globally."

If you google "pandemic economic cost younger generations" you'll see a load of articles that go into it in detail.

As I say though, I don't particularly like the argument as it rather ignores the fact not having your parents and grandparents die is a plus for young people too. Framing it as if the only people who benefit from old people being alive are old people themselves is grim.

 

[Hughes35]

Are people being serious when they say earning £150 000 isn`t extremely wealthy ?

Yes. Don't get me wrong I'd give my left nut to be on 150K and you'd have a very nice life.... You're not in extreme wealth though. Not in the South Anyway.

150K after current tax is 90K. You can easily spend 5K a month on rent in London = 60K per year.... So yea. I don't think 150K is extreme.

 

[The Purley King]

Are people being serious when they say earning £150 000 isn`t extremely wealthy ?

https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#/media/File:UK_income_percentiles.svg

£150k would put you somewhere near the top 1%, but that graph is from 2016/17 being the last entry so I'd imagine more people earn that now than before.
As an individual income its obviously very big, but as an income for a household as a whole especially in London it wouldn't make you extremely wealthy in my opinion. Comfortable yes, but not extremely wealthy.

 

[Walrus]

The thing we should remember is that there is a finite amount of wealth in the world (within reason). People talking about the "COVID black hole" - that money has to have gone somewhere. It doesnt just disappear. Even in a massive recession, that doesnt mean that money has simply ceased to exist - it is more about where it is located, how it is being spent, and general consumer confidence.

I am pretty big on wealth redistribution in a general sense. I am far less convinced that going after the middle class is the way to do it. You only have to read some of the stats and comparisons around Bezos' wealth to start to understand the real extent of wealth inequality. People who have a house arent the problem. Massive corporations and billionaires are the problem. At the risk of sounding like a filthy commie, what we are seeing at the moment is the issue with unregulated capitalism and a society where greed and wealth reign supreme (to clarify, unregulated communism has its own issues and is probably worse). Hell, look at the football industry and the disgusting amount of money that players are paid, which fundamentally is taken from the average (often working class) consumer in the form of extortionate subscription fees for Sky and the likes.

Ever increasing proportions of global wealth are being consolidated by the top ~1%. Until this is addressed, we cannot affect real change. Kudos to the likes of Bezos who have managed to benefit so enormously from the system, but its time we recognised that the system itself is flawed and needs reform.

 

[RobinLFC]

I was just referencing the findings of the Tax Commission there who said "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" as part of their argument for why a wealth measure that disproportionately impacts an older generation isn't unfair.

As for why that economic impact would be heavier on younger generations, there are a number of reasons, I think. As far as I'm aware it's generally accepted that people who graduate secondary school & university during a recession suffer income losses that impact long-term earnings. Young people also make up a disproportionate amount of the workforce in the sectors that were hardest hit by COVID, such as retail, travel and the food industry.

Also as per a BBC Globescan poll:

"Financial hardship is more prevalent among Gen Z (63% saw a change to their income) and Millennials (65%) compared to those further along in their career paths (Gen X with 59%, and Baby Boomers and older at 42% who say their incomes were affected). Older generations are more likely to have escaped physical or financial harm - 56% of baby boomers and older report no physical or financial impacts, compared to 39% on average, globally."

If you google "pandemic economic cost younger generations" you'll see a load of articles that go into it in detail.

As I say though, I don't particularly like the argument as it rather ignores the fact not having your parents and grandparents die is a plus for young people too. Framing it as if the only people who benefit from old people being alive are old people themselves is grim.

Interesting, thanks for that. Agree with your last paragraph though - it's hard on everyone in a way or in a sense, I guess.

 

[F-Red]

https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#/media/File:UK_income_percentiles.svg

£150k would put you somewhere near the top 1%, but that graph is from 2016/17 being the last entry so I'd imagine more people earn that now than before.
As an individual income its obviously very big, but as an income for a household as a whole especially in London it wouldn't make you extremely wealthy in my opinion. Comfortable yes, but not extremely wealthy.

Earning that value, you'd be on the highest income tax bracket in the UK. By status alone you'd be classed as extremely wealthy, earning roughly 5 times the median salary in the UK.

I don't even get why it's a discussion point in this thread around whether that sum of money is either wealthy or extremely wealthy, the difference is somewhat irrelevant in the bigger picture.

 

[berbatrick]

Maybe. You're happy with a wealth tax because you don't fall into it. Everybody always wants to increase tax just outside their own circumstances.

Across all ages 670k puts you in the top 10%. Amongst 60 year olds 332k is smack in the middle. Look at the Southeast and it's even higher. None of that puts you in the elite wealthy, it's right in the middle of the middle class.

Most of the UK middle class is comfortable because they got there themselves, paying other taxes along the way. Focus on the extreme wealth that is compounded over generations and sits there idle.

I'd argue that by its very nature being in the top 10% is "outside their own circumstances" for 90% of people, that by its very nature it isn't the "middle class", and that with an unbounded upper limit it includes "extreme wealth that is compounded over generations and sits there idle".

 

[The Purley King]

Earning that value, you'd be on the highest income tax bracket in the UK. By status alone you'd be classed as extremely wealthy, earning roughly 5 times the median salary in the UK.

I don't even get why it's a discussion point in this thread around whether that sum of money is either wealthy or extremely wealthy, the difference is somewhat irrelevant in the bigger picture.

I disagree, its all about context. Earning £150k living in Cornwall is completely different to earning £150k and living in London.
I don't think you could amend the wealth tax (if there is to be one) to take into account where someone lives though.