Rich-Poor Divide Widening

bo_drinker

Britain needs a wealth tax


By Paul Routledge 29/01/2010

The gap between rich and poor is greater than at any time since the Second World War, and the reason is not hard to find.

People at the top decide how much to pay themselves, helped by fig-leaf "remuneration committees".

They filled their boots - and several spare pairs - in the good times.

People at the bottom have to take what they're given, which means as little as the employer can get away with.

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Despite 13 years of Labour seeking to close the gap, through National Minimum Wage, Sure Start, pension and working families' tax credits, fuel allowances, free buses for the over 60s and TV licences for the over 75s, the better-off have got even better off because they can put their hands in the till with impunity.

As TUC general secretary Brendan Barber says, the deceitful "trickle down" theory that giving the wealthy more will improve the lot of the poor has been tested to destruction.

A Tory government would only exacerbate this trend. A wealth tax is the answer. But which politician is brave enough to demand it?

Blacksheep1979

When there's little incentive to get off benefits due to how much you can get is there any surprises that people are taking the easy option and not growing?

Radiantsoul

Blacksheep1979 wrote: »

When there's little incentive to get off benefits due to how much you can get is there any surprises that people are taking the easy option and not growing?

I am not sure the recession is a quite as easily analysed as people deciding they would be better off on the dole than in work.

Blacksheep1979

Radiantsoul wrote: »

I am not sure the recession is a quite as easily analysed as people deciding they would be better off on the dole than in work.

No maybe not, but before our government made being on benefits a lifestyle choice (which wasn't in the last couple of years) this may have not been the case. In case you hadn't noticed, the topic here is rich poor divide and not recession...

baby_boomer

This report is primarily a tool for Harriet Harman to use in her post-election leadership campaign.

As far as I can see, "pension assets" are used. This would mean that someone with a £12K pension would be assessed as having £200K even if they owned nothing else.

To properly assess the gap, you should include the government minimum income guarantee in retirement assessed on the same basis.

Which would give even the very poorest £120K of "assets" and put things in their true perspective.

Arcaine

bo_drinker wrote: »

A wealth tax is the answer.

So what do you suggest? Its all very well saying these things but its a little light on actual solution. How much and what would you tax then? Property tax? More Income Tax?

Blacksheep1979

bo_drinker wrote: »

Britain needs a wealth tax

The answer by all great lefties - lets not lift people up out of poverty but drag everyone down so they're equal. That way all the nice graphs and figures show that whilst you're being screwed so is everyone else so you feel a bit better... The politics and methodology of envy strike again.

Harry_Powell

Radiantsoul wrote: »

What is wrong with that as a lifetime investment strategey? A house isn't much use when dead so why not sell it to fund retirement.

It may be a bit Oscar Wilde, but presumably the ideal way to die is having spent everything you own and perhaps leaving a little bit of debt!

Because you're putting all your eggs into a single asset that is expensive and difficult to monetise. You also might find that the idea of downsizing from a 4 bed home to a 2 bed terrace sounds good in theory but in practice it has the following problems:

1. You might not want to leave a neighbourhood where you know everyone.
2. You might like your house and may have spent a lot of money decorating/renovating to your personal taste.
3. You might like to spend retirement time in the garden, not many terraces have large gardens and those that do will be higher priced - negating the point of downsizing.
4. Your children might not leave home as fast as you'd like, or you may need the extra bedrooms for grandchildren.
5. You might not fit into a smaller house with a lifetime of accrued clutter, you might not want to park on the street (and fight for parking), you might not want to have the risk of noisy neighbours.
6. In order to produce a decent retirement income, you would have to release a LOT of money from your equity. A £100k release of equity would need a big drop in housing and would only purchase a 6K per year annuity.

Even if you do find a nice, smaller home you're still at the mercy of the market. a HPC is great when you're moving up the housing ladder or when you're trying to get onto the ladder. a HPC is devastating if you're trading down.

With shares and other forms of investment, you can move to much lower risk investments such as cash or government bonds 5 years before you retire, negating the possibility of losing your retirement in a crash. Not so with a house.

Relying soley on the income generated by downsizing in order to fund your retirement is madness and I'm amazed that anyone would even try to defend it. It's a valid part of a diverse portfolio consiting of Personal pensions, company pensions, ISAs, savings and perhaps BTL. In isolation it's a risky option that could bring a lot of misery - wanting to sell your home and having to sell your home are two very different beasts.