Is personal tax optional ?

N1AK

michaels wrote: »

I don't see why wealth should be taxed, I 'amass wealth' from my taxed income in order to even out my lifetime consumption and will no doubt spend it (and pay vat) when I am no longer earning. Why should I pay tax for the priviledge of this income/expenditure smoothing?

I guess the point is that people will invariably be taxed the only question is how. My own view is that inheritance tax is a perfectly good way to tax 'wealth' if you can limit the ability to avoid it, however it is a very unpopular tax.

If you start from the premise that you are going to be taxed the same amount then it hardly matters whether you are taxed when it is earnt, while you hold it, or when you spend it.

HappyMJ

N1AK wrote: »

I guess the point is that people will invariably be taxed the only question is how. My own view is that inheritance tax is a perfectly good way to tax 'wealth' if you can limit the ability to avoid it, however it is a very unpopular tax.

If you start from the premise that you are going to be taxed the same amount then it hardly matters whether you are taxed when it is earnt, while you hold it, or when you spend it.

Depends which is the easiest to avoid.

Avoiding paying tax when you earn it is very easy.

Avoiding it whilst you're holding it is also easy.

Avoiding it when you're spending it is difficult. Whilst some goods and services might not have VAT included in the price it's unlikely all of your spending will be free of VAT.

michaels

N1AK wrote: »

I guess the point is that people will invariably be taxed the only question is how. My own view is that inheritance tax is a perfectly good way to tax 'wealth' if you can limit the ability to avoid it, however it is a very unpopular tax.

If you start from the premise that you are going to be taxed the same amount then it hardly matters whether you are taxed when it is earnt, while you hold it, or when you spend it.

Sure but if we are talking about wealth taxes whilst you are still alive then potentially you have two choices, spend as you earn and pay tax twice, once on earning, once on spending. Or earn, save and spend later and pay tax three (or multiple?) times, firstly on earning then perhaps every year on your savings and then when you spend your savings. I can't see that this makes economic sense or is fair.

princeofpounds

You just need context, and when you're talking about progressive/regressive in the context of taxation it has a well defined meaning that most informed commentators know. Using the correct term to mean the correct thing when there is clear context isn't either technical or limited it's correct, doing otherwise is incorrect

Sure, I agree - I was just pointing out that there is a gap in communication on this issue where people are using the same word but thinking of it in a different context.

None of those things are taxes on wealth, they are taxes on income that flows from wealth for the most part.

This. Wealth isn't taxed remotely aggressively; income and gains from capital is taxed much lower than income from labour, and it has many more special exemptions that enable to avoid tax quite easily.


And apart from inheritance tax (which is also regularly avoided, although not quite as badly as a decade or more ago) and (in partial respects) council tax there isn't really any wealth tax at all in the UK.


I'm not saying taxing wealth is actually better than taxing labour mind you, that's not a debate where I have a settled opinion. I just find it curious that employed individuals with modest assets can end up subsidising the asset-rich but cashflow-poor.

N1AK

HappyMJ wrote: »

Depends which is the easiest to avoid.

Avoiding paying tax when you earn it is very easy.

Avoiding it whilst you're holding it is also easy.

Avoiding it when you're spending it is difficult. Whilst some goods and services might not have VAT included in the price it's unlikely all of your spending will be free of VAT.

Have you got any evidence to back up this position or is it just your assumption? I can assure you that avoiding VAT is very simple if you're able to make major purchases abroad, or take advantage of some of the leeway being the owner of your own firm gives you with regards to company vehicles etc.

N1AK

michaels wrote: »

Sure but if we are talking about wealth taxes whilst you are still alive then potentially you have two choices, spend as you earn and pay tax twice, once on earning, once on spending. Or earn, save and spend later and pay tax three (or multiple?) times, firstly on earning then perhaps every year on your savings and then when you spend your savings. I can't see that this makes economic sense or is fair.

If you start with x money and end with y money and are able to buy a bunch of lemons with it then exactly how the tax gets your from x to y is minutiae. You seemed to be so obsessed with the idea of taxation increasing under such an arrangement that you're missing the woods for the trees.

Nobody is going to stop saving because a 0.1% wealth tax was brought in and the income tax or VAT taxes were cut to maintain the same total tax revenue for example.

*Not that I'm advocating for more taxes on wealth; I simply don't see it as a threat to civilisation as we know it.