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Rishi's proposed 'wealth tax'


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55 minutes ago, Thistle_do_nicely said:

not going to pretend that I'm clued up, but from what i know about it i fucking hate VAT as a tax (iirc companies by and large just collect it since they offset any VAT from sales against VAT from purchases so its really only consumers that actually have any liability to pay it, companies just collect it). Hopefully they either leave it untouched or better yet drop the VAT rate/start getting more items zero rated for it. 20% on the cost of most goods and services is huge if you're on a low income.

I agree that there should be a wider range of zero rated stuff, but on the whole I like VAT more than most other taxes. The rich pay a lot more of it than the poor.

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1 hour ago, Brother Blades said:


Not proportional to earnings I wouldn’t have thought?

No, it's not progressive across the income scale, but it doesn't act as a disincentive to work and the burden is based, to some degree at least, on personal choices.

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10 hours ago, MixuFruit said:

Is there anywhere with a fairly well functioning wealth tax? I'd assume the moment something like this was on the table seriously you'd just get all the usual shenanigans of people selling their second homes to a LLC run by themselves etc.

Norway has one.  I think it's about 0.75% of net assets over £150k every year.  Yer hoose is included but only 25% of its value.  Everything to do with personal assets and tax is much more closely controlled in Norway than most places, so they are probably quite efficient in collecting it.  Although it is a rich country, I would reckon most Norwegians don't pay much wealth tax as they just take out mortgages/loans on their ski chalets / boats / Teslas which they can do with a bit more aggression than the British because they have full employment and a whopping pension to retire on (backed by their trillion dollar sovereign wealth fund from all that oil...).  There wouldn't be much scope for avoidance though, due to the electronic tax system, whereas in the UK we are very much "tell HMRC how much you have - remember to declare everything!", with predictable results.  

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Not proportional to earnings I wouldn’t have thought?

It is. There are exemptions - residential property (inc rent, mortgages both), zero ratings - most food stuffs, children’s clothes etc which mean that VAT is mostly paid on what (in 1973) were deemed luxuries. Power (leccie and gas) are 5%.

 

It relies on consumption, and proportionally hits the middle classes.

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On 20/12/2020 at 19:32, Gordon EF said:

Less than 2% of people in the UK have a combined wealth of £500k (including property, cash, shares, bonds, and investment trusts).

I've not read the rest of the thread but this has to be a nonsense figure.  The real number has to be closer to 20% then 2%.

If you're an auld c**t then garnering £500K in assets isn't a stretch - even after two divorces - but that doesn't make you rich as it's all pretty much in property and pensions.

The idea that someone with £500,000 in property and pension assets can write my big pal Rishi a cheque for £25,000 is risible and, TBH, is a tax on older people.  Could I do it?  Yeah, I could - provided I take my three weans out of Uni...

Sticks in my craw to say it but @DeeTillEhDehwas on the money when he said, "it will be the middle earners who end up paying for this.".

Edited by The_Kincardine
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1 hour ago, The_Kincardine said:

I've not read the rest of the thread but his has to be a nonsense figure.  The real number has to be closer to 20% then 2%.

If you're an auld c**t then garnernering £500K in assets isn't a stretch - even after two divorces - but that doesn't make you rich as it's all pretty much in property and pensions.

The idea that someone with £500,000 in property and pension assets can write my big pal Rishi a cheque for £25,000 is risible and, TBH, is a tax on older people.

Sticks in my craw to say it but @DeeTillEhDehwas on the money when he said, "it will be the middle earners who end up paying for this.".

Aye, I double checked and I'll hold my hands up, that figure was from 2004-05. Although, if you check what it includes, pensions weren't there. I'd imagine, pensions excluded, it's a fair bit off 20%.

I'd broadly agree though. Main home properties and pensions shouldn't count seeing as they're not liquid or revenue generating and of course, pensions hits those at late 50s / early 60s. 

As with most things regarding tax, the details would be what made it a good or bad idea. But generally, it's not going to be a substitute for a better tax system.

Edited by Gordon EF
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Surprised as I am, I find myself in lockstep with The Kincardine on this issue. In fact it's even worse than that, I'm a bit more militant than he is.

I'll start by saying there are already a set of wealth taxes, one is called council tax and the other is called Inheritance Tax.

For the record I have no problem with either and if I'm honest think my council taxes should be higher if nothing else.  (Like The Kincardine, I live in Tory Bucks 😠).

 

As The Kincardine has said, any tax that looks at properties and pensions will disproportionately impact the elderly, and I don't think it's a good look, evicting 'nans' from around the coutry and repossessing their houses.

 

That having been said, I'd like to see something done about second houses and probably the holiday let market.  We have a housing crisis, which I feel is exacerbated by housing stock in desirable areas being occupied for only part of the year.

More importantly, the government should abolish some of the tax rules around domicile/residency status and more importantly get to grips with all the 'tax efficient' investments that are a sham (more form over substance).  I acknowledge that this is easier said than done.

Thirdly, I'd crucify anyone caught for fraud, or dealing in the black/cash economy (and those that knowingly partook).  So any fvkking builder, tradesman, chef or waitress caugth not declaring 'cash jobs, or tips' would get the book thrown at them.  They are nothing more than common thiefs and should face the same ire.  Also any customer that got 'part of the job' done for cash (to avoid the VAT) should get the same.

Finally, I believe that in general, our progressive tax rates are not agressive enough, 2% on the 40% and 50% bands might mean that I don't get to buy a new Xbox or bigger telly (this year), but is that really such a hardship?

 

 Nobody likes paying taxes.  But paying taxes should be seen as a patriotic act and our moral duty, not as something that idiots do.

Yours

Che aDONis 

Edited by aDONisSheep
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2 hours ago, aDONisSheep said:

I'll start by saying there are already a set of wealth taxes, one is called council tax and the other is called Inheritance Tax.

That having been said, I'd like to see something done about second houses and probably the holiday let market.  We have a housing crisis, which I feel is exacerbated by housing stock in desirable areas being occupied for only part of the year.

Inheritance Tax is obviously a very direct sort of wealth tax but council tax really isn't. I'm renting and pay council tax, so that really is more of a tax on my income  more than anything else, except that it's not directly related to my income. People with no significant wealth whatsoever still pay council tax.

Absolutely agree with you on the second point. It will be incredibly difficult to change in the UK (see the staggering figures recently about how many MPs are also landlords). But I think we really have to move away from this model of housing being a commodity that the rich can earn passive income off at the expense of the poor.

This is not coming from a 'hammer the rich' place. I'm pretty comfortable with the idea of people being rich off the back of providing value. If you have a skill that's incredibly valuable, it's fine that you're paid well for that. If you own a company that provides value to customers, fine with that also. If you're just using cash to hoover up properties, outbidding first time buyers and driving house prices up, I don't think you're providing any value to society whatsoever.

Edited by Gordon EF
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10 minutes ago, Gordon EF said:

Inheritance Tax is obviously a very direct sort of wealth tax but council tax really isn't. I'm renting and pay council tax, so that really is more of a tax on my income  more than anything else, except that it's not directly related to my income. People with no significant wealth whatsoever still pay council tax.

Absolutely agree with you on the second point. It will be incredibly difficult to change in the UK (see the staggering figures recently about how many MPs are also landlords). But I think we really have to move away from this model of housing being a commodity that the rich can earn passive income off at the expense of the poor.

See something like Land Value Tax, as a replacement for Council Tax, presumably that functions as a wealth tax more than an income tax. How would that impact on landlords and renters?

Edited by renton
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3 minutes ago, renton said:

See something like Land Value Tax, as a replacement for Council Tax, presumably that functions as a wealth tax more than an income tax. How would that impact on landlords and renters?

You could arguably just say that council tax is to be paid by the owner of each property, rather than tenants and all that would happen is everyone's rent would increase by at least the value of the council tax.

For me what they've got to do with housing is increase stamp duty and capital gains tax for properties after your first and then introduce higher rates of tax on rental income. 

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4 hours ago, Gordon EF said:

You could arguably just say that council tax is to be paid by the owner of each property, rather than tenants and all that would happen is everyone's rent would increase by at least the value of the council tax.

For me what they've got to do with housing is increase stamp duty and capital gains tax for properties after your first and then introduce higher rates of tax on rental income. 

You do pay higher capital gains tax on second properties, or rather your main home is exempt. Of course, the rules are complicated enough to be gamed. 

Tax on property is particularly warped.

Tax on rental profit (as opposed to income) 2is really high if you're not rich enough to buy outright. Because of a relatively new interest restriction, you can end up paying tax in excess of profits if you morgage rental property. 

If you can view tax on property income as an indirect tax on wealth, the interest restriction makes it regressive by taxing gross wealth.

The interest still needs paid too, so the return to capital for a less wealthy person is less than for a very wealthy person because of tax. 

If you live in a holiday region and can't afford to rent a house, it may not comfort you to know that there are extra tax reliefs available to landlords that do short term holiday lets compared to those that let property as homes. This is hugely welcome to second home owners who can pay the mortgage with lets when they aren't there. 

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30 minutes ago, coprolite said:

You do pay higher capital gains tax on second properties, or rather your main home is exempt. Of course, the rules are complicated enough to be gamed. 

Tax on property is particularly warped.

Tax on rental profit (as opposed to income) 2is really high if you're not rich enough to buy outright. Because of a relatively new interest restriction, you can end up paying tax in excess of profits if you morgage rental property. 

If you can view tax on property income as an indirect tax on wealth, the interest restriction makes it regressive by taxing gross wealth.

The interest still needs paid too, so the return to capital for a less wealthy person is less than for a very wealthy person because of tax. 

If you live in a holiday region and can't afford to rent a house, it may not comfort you to know that there are extra tax reliefs available to landlords that do short term holiday lets compared to those that let property as homes. This is hugely welcome to second home owners who can pay the mortgage with lets when they aren't there. 

Well that's made my heard hurt a bit.

I'm not going to pretend I understand the details of a lot of this but my general take is that, whether it's because the rules aren't fit for purpose in either principle, practice, or both, property investment is still an attractive enough proposition to encourage landlordism on a pretty vast scale, whether that's through long-term or short-term letting. Ideally, I think we should be moving towards a situation where it's a far more unattractive prospect.

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3 minutes ago, Gordon EF said:

Well that's made my heard hurt a bit.

I'm not going to pretend I understand the details of a lot of this but my general take is that, whether it's because the rules aren't fit for purpose in either principle, practice, or both, property investment is still an attractive enough proposition to encourage landlordism on a pretty vast scale, whether that's through long-term or short-term letting. Ideally, I think we should be moving towards a situation where it's a far more unattractive prospect.

That's what the interest restriction was intended to do. It's just meant that landlords either get richer more slowly, put their properties in a company or sell them to people who don’t need a mortgage. 

The tax system can be used to incentivise behaviour and skew markets, but it's blunt and broad. 

My personal view is that the solution to exploitative private  landlords is a good stock of housing provided by the state to those who need it at a cost they can afford. 

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  • 3 weeks later...
I don’t have a problem taxing second homes but it’s a bit arbitrary.  I reckon closing tax loopholes would be easy if the political will was there.
It's very arbitrary. Could have one family with two homes valued at £100,000 each and another with one home valued at £750,000. Who is more deserving of taxation?
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Surprised as I am, I find myself in lockstep with The Kincardine on this issue. In fact it's even worse than that, I'm a bit more militant than he is.
I'll start by saying there are already a set of wealth taxes, one is called council tax and the other is called Inheritance Tax.
For the record I have no problem with either and if I'm honest think my council taxes should be higher if nothing else.  (Like The Kincardine, I live in Tory Bucks [emoji34]).
 
As The Kincardine has said, any tax that looks at properties and pensions will disproportionately impact the elderly, and I don't think it's a good look, evicting 'nans' from around the coutry and repossessing their houses.
 
That having been said, I'd like to see something done about second houses and probably the holiday let market.  We have a housing crisis, which I feel is exacerbated by housing stock in desirable areas being occupied for only part of the year.
More importantly, the government should abolish some of the tax rules around domicile/residency status and more importantly get to grips with all the 'tax efficient' investments that are a sham (more form over substance).  I acknowledge that this is easier said than done.
Thirdly, I'd crucify anyone caught for fraud, or dealing in the black/cash economy (and those that knowingly partook).  So any fvkking builder, tradesman, chef or waitress caugth not declaring 'cash jobs, or tips' would get the book thrown at them.  They are nothing more than common thiefs and should face the same ire.  Also any customer that got 'part of the job' done for cash (to avoid the VAT) should get the same.
Finally, I believe that in general, our progressive tax rates are not agressive enough, 2% on the 40% and 50% bands might mean that I don't get to buy a new Xbox or bigger telly (this year), but is that really such a hardship?
 
 Nobody likes paying taxes.  But paying taxes should be seen as a patriotic act and our moral duty, not as something that idiots do.
Yours
Che aDONis 
I think there's a slight difference between £8.50 p/h hospitality staff not declaring tips and tradespeople doing cashers.
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27 minutes ago, 10menwent2mow said:
On 22/12/2020 at 10:30, aDONisSheep said:
Surprised as I am, I find myself in lockstep with The Kincardine on this issue. In fact it's even worse than that, I'm a bit more militant than he is.
I'll start by saying there are already a set of wealth taxes, one is called council tax and the other is called Inheritance Tax.
For the record I have no problem with either and if I'm honest think my council taxes should be higher if nothing else.  (Like The Kincardine, I live in Tory Bucks emoji34.png).
 
As The Kincardine has said, any tax that looks at properties and pensions will disproportionately impact the elderly, and I don't think it's a good look, evicting 'nans' from around the coutry and repossessing their houses.
 
That having been said, I'd like to see something done about second houses and probably the holiday let market.  We have a housing crisis, which I feel is exacerbated by housing stock in desirable areas being occupied for only part of the year.
More importantly, the government should abolish some of the tax rules around domicile/residency status and more importantly get to grips with all the 'tax efficient' investments that are a sham (more form over substance).  I acknowledge that this is easier said than done.
Thirdly, I'd crucify anyone caught for fraud, or dealing in the black/cash economy (and those that knowingly partook).  So any fvkking builder, tradesman, chef or waitress caugth not declaring 'cash jobs, or tips' would get the book thrown at them.  They are nothing more than common thiefs and should face the same ire.  Also any customer that got 'part of the job' done for cash (to avoid the VAT) should get the same.
Finally, I believe that in general, our progressive tax rates are not agressive enough, 2% on the 40% and 50% bands might mean that I don't get to buy a new Xbox or bigger telly (this year), but is that really such a hardship?
 
 Nobody likes paying taxes.  But paying taxes should be seen as a patriotic act and our moral duty, not as something that idiots do.
Yours
Che aDONis 

I think there's a slight difference between £8.50 p/h hospitality staff not declaring tips and tradespeople doing cashers.

I agree there is a slight difference, but both are robbing the rest of us. 

Look at it another way, one may be stealing the parcel off your front step and the other is breaking into your garage.  There's a slight difference, but at the end of the day, they are both thieves and it's the punishment that defines the difference.

One of the problems that Greece has was that a large proportion of the population didn't pay their fucking taxes.  It grips my tits, when people try to find excuses for not declaring incomes.  We have a progressive tax system for a reason, it's not up to individuals to decide on their own system.

Yours

aDONis

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I agree there is a slight difference, but both are robbing the rest of us. 
Look at it another way, one may be stealing the parcel off your front step and the other is breaking into your garage.  There's a slight difference, but at the end of the day, they are both thieves and it's the punishment that defines the difference.
One of the problems that Greece has was that a large proportion of the population didn't pay their fucking taxes.  It grips my tits, when people try to find excuses for not declaring incomes.  We have a progressive tax system for a reason, it's not up to individuals to decide on their own system.
Yours
aDONis
Guess it depends on where you sit on tips as part of income. Personally, I don't think they should be taxed.
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3 minutes ago, 10menwent2mow said:
14 minutes ago, aDONisSheep said:
I agree there is a slight difference, but both are robbing the rest of us. 
Look at it another way, one may be stealing the parcel off your front step and the other is breaking into your garage.  There's a slight difference, but at the end of the day, they are both thieves and it's the punishment that defines the difference.
One of the problems that Greece has was that a large proportion of the population didn't pay their fucking taxes.  It grips my tits, when people try to find excuses for not declaring incomes.  We have a progressive tax system for a reason, it's not up to individuals to decide on their own system.
Yours
aDONis

Guess it depends on where you sit on tips as part of income. Personally, I don't think they should be taxed.

Right, my tits are now gripped!

It doesn't fucking depend on 'where you sit'!  Tips are taxable!  They are already NIC efficient (No NIC is payable on them) but they are taxable!

Taxes are for the benefit of all of us, our schools, hospitals, roads, military, social services et al are paid for by the public purse and each of us has a duty to pay our fucking taxes and not buck the system, because we don't think this should be taxed or that should be taxed, or any other lame-ass excuse we can use to justify our own selfishness.

If you don't declare your tips, you're a fucking thief!

Yours, Pay yer fuckin' taxes!

aDONis

 

 

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