How risk averse are you?

BananaRepublic

Glen_Clark wrote: »

still exaggerating, I never said Osborne created the housing crisis, just made it worse.

And yet you fill the forum with rants against Osborne's policies.

BananaRepublic

Glen_Clark wrote: »

When did Blair become Queen?

Oh, has he been seen walking along the docks again?

http://www.theguardian.com/business/2012/jan/31/fred-goodwin-loses-knighthood

"With unceremonial haste, a committee of five senior civil servants took away the knighthood given to Goodwin by the last Labour government in 2004 for services to banking."

Glen_Clark

BananaRepublic wrote: »

"With unceremonial haste, a committee of five senior civil servants took away the knighthood given to Goodwin by the last Labour government in 2004 for services to banking."

Sir Fred Godwin should have kept his establishment honours as he represents their honours system perfectly.

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BananaRepublic

It is a sad truth that some risk takers get the glory and commit the sins. But I'm sure most Knights and Dames are decent people.

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nb73

Meanwhile in other news, how risk averse are you?

grey_gym_sock

bowlhead99 wrote: »

To encourage investment (which increases the "money multiplier" in the economy), most worldwide governments have some sort of incentives on money that comes from investments ("unearned income" from tax man's point of view) rather than getting paid ordinary "earned" income.

You can bet that Mr Microsoft or Apple or Tesla or whatever new money millionaires are being all entrepreneurial right now, are very happy that unearned income is not taxed as highly as earned income as it incentivises them to do those entrepreneurial things which create wealth.

there is unearned income in general, and then there is unearned income from starting new businesses. the latter is something to be encouraged, i agree. the former is not the same thing at all.

what we have in the UK is lower tax rates for all unearned income (including capital gains) than for earned income; and, in addition, lower rates again for people starting businesses (e.g. via "entrepreneur's relief").

IMHO, we should start by taxing all income and gains at the same rates; and then have some lower rates, but only for the really useful stuff (i.e. starting new businesses). why should i be able to stop work, not start any businesses, have an investment income higher than the average earnings in the UK, and pay no tax on it? we have huge problems with the effects of increasing inequality. the tax system should be one - though not the only - way of mitigating those effects.

And generally those whose unearned income is mostly interest on savings rather than interest on risky investments - the increasing demographic who are little old ladies without the ability to get any more "earned income" for the last forty years of their life, or the young people without much savings - will not be getting an income which actually gives a return higher than inflation over the long term so perhaps should not be taxed because they didn't actually get wealthier by physically receiving interest payments.

the "little old lady" argument ... there are a few rich little old ladies, of course. but the amount of capital which is in the hands of not very well off pensioners (of either gender) is very low. capital is always distributed far more unequally than income. if you tax capital lightly (as we do), almost all the benefit goes to wealthy people (most of whom are men, BTW), not to pensioners with modest incomes. if you want to make pensioners with modest incomes better off, then you'd do better to raise the basic state pension, which is low compared to many other european countries (even if you look at the higher "single tier" or "pension credit" level).

grey_gym_sock

Glen_Clark wrote: »

Wheras if they just stopped interfering in the housing market (boosting demand whilst restricting supply) the free market would bring housing costs back into proportion to the economy like in the rest of Europe.

the free market won't build social housing, because it isn't profitable enough. in the private sector, with borrowing costs a bit higher than the 1% or 2% which the government pays, it would be barely profitable at all - and it's a very long-term investment: build a property, and collect rents over a few decades. the private sector is only interested if there are either bigger profit margins, or a much shorter timescale (for an extreme example of the latter, consider high-frequency trading).

i agree that, if less constrained, the private sector would eventually address the lower end of the market - but only by lowering standards. that would give us slums, not decent-quality, genuinely affordable (not what the government calls "affordable" now, which isn't) housing.

how do we get the benefits which cheap, decent-quality housing, which (as you said earlier) would benefit the other productive sectors of the economy? only if the government makes it happen.

grey_gym_sock

nb73 wrote: »

Meanwhile in other news, how risk averse are you?

if i were really risk-averse, i wouldn't be posting in this thread

BananaRepublic

I have a problem with the idea of CGT. If I work, I earn an income to live off, and I get taxed as I am using facilities in society such as roads and hospitals and I contribute to education which benefits us all in the long run. However, if I then take that income that I have earned, and paid tax on, and spend it on a holiday or whatever, well I am not taxed, apart from VAT. But if I live wisely, but a nice vase, keep it ten years and it goes up in value 10 fold, then sell it, I pay CGT subject to allowances etc. Then with the money gained, I spend it on a holiday say, I pay VAT. So, the government punish my wise investing, and holding back from splashing out until a later date. It seems unfair.

Then of course if I buy shares, I am supporting the economy by injecting money into companies, which benefits the economy. And that is money on which I have already paid tax. So again, CGT does not seem fair.

Then again, tax is all about milking as much as possible from us. No doubt it serves in principle a social good.

grey_gym_sock

buying shares on a stock market doesn't inject money into the companies, or into the real economy. that's a very different activity from putting money into starting or expanding businesses. the latter is more useful, and should be encouraged.

why do you think taxing money made by investing is "punishment"? when it's taxed much more lightly than money made by actually working. a gain is a gain. a good starting position is to tax all gains at the same rates. then we can consider which kinds of gains should perhaps be treated more favourably.