Question for the wealthiest 10%... how?

Aegis

Glen_Clark wrote: »

There are some people on here that think we shouldn't have to pay tax at all.
But if you do accept we need to pay tax for essential services, they have to take the tax from somewhere.
Consider this. If I employ a Gardener, and pay him £325,000 for 40 years work, he will have to pay tax on it. But if I leave £325,000 to someone who has done nothing to earn or deserve it, they will pay no tax on it.
Is that fair?
Is it productive, when the tax system is supposed to encourage people to work?
Why are we taxing earned income more than unearned income?

Since you put it that way, if you pay someone over that time frame, they will actually receive up to £324,200 free of tax, as their personal allowance can potentially cover the amount you gift them. This is assuming the personal allowance and the numerical value of your payments stay constant.

The key difference is that the IHT nil-rate band applies to the donor rather than the recipient, but the situation isn't quite as asymmetric as you stated if you take only the two referenced gifts in isolation.

Obviously few people have a whole personal allowance left over, but the point of the personal allowance is essentially to allow someone to earn a certain amount over their lifetime without paying tax, and that amount is very significant.

Glen_Clark

Aegis wrote: »

The key difference is that the IHT nil-rate band applies to the donor rather than the recipient.

How is that different?
If I pay £325,000 to a gardener for nearly a lifetimes work, I won't pay tax on it again as I have already paid tax on it, but he will pay tax.
If I leave the same amount to a billionaire who has done nothing to earn or deserve it, he will get it tax free.

I still cannot see any justification for this.
The only reason for it I can see is self interest - Cameron and Osborne both anxious to abolish inheritance tax altogether before they get their inheritance.
Its like a throwback to 'Victorian Values' where Inherited Wealth was deemed superiour to Earned Wealth, and 'New Money' was sneered at.

;)I must be a Bitter Communist Socialist like Warren Buffet :rotfl:

sabretoothtigger

If you listen to Buffet carefully he'll warn you not to store cash. His views are politically biased, what do you get the man who has everything explains why he is so keen to play along and win favour.

The IHT is a tax on money already taxed would be my objection. If there is some way to be rich, get an income and not pay anything then die and have your family do the same then sure its fair tax.

Otherwise its a double tax, the very rich can just move abroad before they die or some other clever scheme. So that just leaves people with big old houses and family business. IHT encourages people to sell all, maybe even shut down productive business and avoid tax by distance

lentrix92

cepheus wrote: »

How to get rich

1) run a seminar and other 'get rich scheme' advice and charge for it. The poor naive sods will only discover it is worthless 10 years down the road and by then you will have filled your pockets.

2) Another way is to run a very risky venture using borrowed money or a limited liability company, chances are you will go broke but you won't be any worse off, then start up again and again until it works, leaving more honest companies in debt.

3) Do something illegal like drugs or a scam, crime usually pays.

4) Marry it.

5) Inherit it.

6) Have some brains, a bit of luck and a lot of personality, like Martin Lewis.

Alternatively, you could follow his advice. You may not get rich but it should avoid poverty.

Pretty much as above :T

roswell

grey_gym_sock wrote: »

why can't everybody be rich?

give everyone £20 Million and tomorrow a loaf of bread will be £21 Million ;-)

Glen_Clark

sabretoothtigger wrote: »

The IHT is a tax on money already taxed would be my objection.

But I have already paid tax on the money I pay the gardener's wages with.
Be nice if money was only taxed once though. Then we would never pay taxes again.;)

sabretoothtigger wrote: »

Otherwise its a double tax, the very rich can just move abroad before they die or some other clever scheme.

There are ways round all of that, its just the political will to do it.
The Tax collectors have enormous powers, even more power than the Police. (This dates from when the Tax Collectors were given their power by the King. They collected his money, so they were more important to him than the police. The Police were only there to protect the plebs, he had his own forces, with unlimited powers, to protect himself)
They could put the tax on Land and Buildings - can't hide them, and easy to enforce. If the tax isn't paid, just seize the land and buildings - the owner would soon appear from behind his offshore trust .
Or they could do like they do with small businesses. If I run a fish & chip shop, put £30k a year straight in my pocket instead of the till, and then claim it only makes £10k profit, the taxman can just slap an assessment on me of whatever they like and I have to pay it.
The French have done that with Amazon. They just slapped a E300k bill on them and said if you want to trade in France you will have to pay French taxes. Amazon have since built a new Distribution Centre in France.

gadgetmind

Glen_Clark wrote: »

Be nice if money was only taxed once though.

If you impose draconian inheritance taxes, then it's taxed as you earn it, then again when passed onto your dependents, and yet again when they spend it to (probably) buy essentials.

Quite how much of our hard-earned money does HMG want to pocket?

Glen_Clark

gadgetmind wrote: »

Quite how much of our hard-earned money does HMG want to pocket?

Too much - I think we are all agreed on that.

My thoughts are about where they take it from, not how much they should take.

atypical

Interesting point of view here:
https://www.youtube.com/watch?v=GoV7qzwzoh0

He defends inheritance tax on the basis that:
1) As a %, after the allowance, the rate is very low.
2) It cancels capital gains tax which might otherwise be due at a higher rate.
3) As the money is a tax on money moving between generations, inheritance tax acts to reduce the wealth gap in society leading to a more harmonious society from which everyone benefits.

Controversial. Never considered the societal aspect before.

grey_gym_sock

or there's my favourite argument in favour of IHT: you need less money when you're dead.