Tax on wealth suggested

zagfles

thegentleway said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

I think that’s a myth. There’s plenty of evidence that tax doesn’t make rich people leave:

https://www.forbes.com/sites/patrickwwatson/2018/05/10/high-taxes-dont-make-rich-people-move/?sh=2bcd4ec525e3
they find loopholes and pay a lot less but they don’t leave in droves. 

That article is the sort of stuff written by someone who wants to try to prove, or discredit a point, by mixing specific statistics with vague statements. If you read through the narrative you can see it doesn't make the point the author wants it to make.

Look at this sentence "Only about 2.5% of millionaires moved to new states each year, and not all went to lower-tax states."

"No all". So, how many then? 50%? 70%? 99%?  Presumably the researcher/journalist has these numbers, after all he can confidently say "not all", so it's not 100%, so what is the percentage? Why won't he tell us? Would it ruin the point he's trying to make?

Then there's the pointlessly vague "We know many wealthy people have not fled New York, California and other high-tax places, and don’t intend to, so apparently, there are reasons to stay."

Clearly. As with anything, there are a variety of reasons people choose to live in a particular place. For "many", taxes won't be the deciding factor. As with anything, incentives work at the margins. If there's a marginal decision whether to stay or move, or if there's a marginal decision where to move to, taxes could be the thing that swings it.

But going back to the statement above. "Only 2.5%" move each year. Is that supposed to be insignificant? 2.5% each year? So over 10 years, 25% (ok a bit less as some may move twice). How long is the average millionaire a millionaire for? Some people will be born into millionaire families so are millionaires all their lives, and others will be self made, so may become a millionaire later in life at say 50. Maybe the average millionaire is a millionaire for 50 years of their life.

Yet each year 2.5% move to a different state. That would imply the vast majority of millionaires move state. Of course "not all" go to a lower tax state, there will be other reasons for the move. But I suspect the "not all" implies quite a high percentage, otherwise why not just tell us.

So, from the stats actually provided, and a few (IMO sensible) assumptions, it would seem the vast majority of millionaire do move, and the vast majority that do move, move to a lower tax state! 

Of course my assumptions might be wrong. But if a researcher, journalist or academic wants to prove a point, they'll have to do better than the above rubbish and address the missing information which led to my need to make those assumptions. Instead of building a narrative around a few stats which certainly don't prove their point.

At least the first paragraph was accurate

Another_Saver

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

Your first point is an unsubstantiated nonsense myth. Also, if people do domicile outside the UK I think the gov should still levy the wealth tax on assets domiciled in the UK (property, pensions, cash, stocks, funds, private equity). If the owner won't pay then levy it directly on the asset. If not paid within... 3 years start adding penalties, if not within 5 freeze it, if not within 10 years seize it and let Bona Vacantia manage it. 
Via the VAT system or international tariff system one could identify "luxury" goods, or implement a "sales over" rule i.e. single alcohol items over £100, cars over... £30k etc., everything in Harrods and fortnum and masons (and remove all exemptions for airports, ferry terminals, ports, and foreign visitors) and levy a higher vat rate while exempting certain goods like Tesla's for obvious reasons. Say bring the vat rate from 20 to 25 or 30%.

End agricultural subsidies for animal agriculture and drive subsidies for plant-based, and we need a system to reward bothering with good ecological management, allowing plenty of wild spaces. Perhaps a popular vote in each county?

This could make the UK food self-sufficient which we haven't been since at least 1800.

But if we're talking about wealth then a transaction tax is a stealthy way to go about it. We already have the bank levy, so it isn't a huge step further to go via the FCA list and implement a 1bps tax on all transactions paid by financial institutions. They can choose whether to pass it in to customers directly.

Each institution just adds up their total transactions in all their accounts over the year and pays 1bps to the treasury. Compared to the cost of managing cash, credit card charges, business bank accounts, accountants etc. for most people and businesses this will be negligible. A household with a joint gross income of £60k would pay £6 on the way in (whether that goes to HMRC, pensions or take home) and £6 on the way out (whether that goes on spending or into a savings or other account). Although they are only really paying half that.

Someone self employed paying say, 1% of their turnover to an accountant would not notice 1bps of any cheque/cash deposits, card/bank transactions. And I think the banks would either absorb it Into their interest rates or start charging it directly if you transact more than say £1m a year, as this creates £100 of tax obligation, probably the minimum worthwhile for them.

This would be a proportionate way of targeting particularly speculative and high frequency trading and the only way to avoid it would be to operate fully cash. But take the biggest informal sectors - drugs and sex. Most of their income comes from the regular economy, most of their income goes back into the regular economy.
According to the BoE payments YTD have been £274tn, mechanically a 1bps tax would yield £27.4bn, realistically I would hope for £10-£20bn allowing for behaviourial adjustments, which is still upto 1% of GDP without necessarily harming GDP to raise it.

kinger101

Another_Saver said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

Your first point is an unsubstantiated nonsense myth.

It's not particularly constructive to dismiss something as an unsubstantiated nonsense myth without offering anything in the way of evidence to counter it.  Barnstar didn't make any specific claims about x % of people leaving the country leaving to £y loss in revenue - just that more people want want to leave and if they did, you'd get no money from them.  Your point on UK assets is true, but we know tax exiles and tax havens exist, and even people on this forum have discussed moving to IOM.  

zagfles

Another_Saver said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

But if we're talking about wealth then a transaction tax is a stealthy way to go about it. We already have the bank levy, so it isn't a huge step further to go via the FCA list and implement a 1bps tax on all transactions paid by financial institutions. They can choose whether to pass it in to customers directly.

Each institution just adds up their total transactions in all their accounts over the year and pays 1bps to the treasury. Compared to the cost of managing cash, credit card charges, business bank accounts, accountants etc. for most people and businesses this will be negligible. A household with a joint gross income of £60k would pay £6 on the way in (whether that goes to HMRC, pensions or take home) and £6 on the way out (whether that goes on spending or into a savings or other account). Although they are only really paying half that.

Seriously? Are you assuming all spending comes straight out of the account that pay has gone into?

I spend on my credit card. One transaction. I get paid. Another. My credit card bill comes. That gets paid by DD from my current account. Another. Some months I may have spare cash so move it to a savings account. Another. Other months I may need savings to pay off the credit card so move money back to my current account. Another. Some people who want to teach their kids financial management will give them pocket money by transferring money to their account. Another. They then spend it. Another. 

And that's not even getting started on typical MSE behaviour where people move money about all over the place eg to make use of bank switching/paying in thresholds, regular savers etc. It would stifle competition - if it adds cost to eg transferring a pension or savings to another provider. 

Albermarle

zagfles said:

thegentleway said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

I think that’s a myth. There’s plenty of evidence that tax doesn’t make rich people leave:

https://www.forbes.com/sites/patrickwwatson/2018/05/10/high-taxes-dont-make-rich-people-move/?sh=2bcd4ec525e3
they find loopholes and pay a lot less but they don’t leave in droves. 

That article is the sort of stuff written by someone who wants to try to prove, or discredit a point, by mixing specific statistics with vague statements. If you read through the narrative you can see it doesn't make the point the author wants it to make.

Look at this sentence "Only about 2.5% of millionaires moved to new states each year, and not all went to lower-tax states."

"No all". So, how many then? 50%? 70%? 99%?  Presumably the researcher/journalist has these numbers, after all he can confidently say "not all", so it's not 100%, so what is the percentage? Why won't he tell us? Would it ruin the point he's trying to make?

Then there's the pointlessly vague "We know many wealthy people have not fled New York, California and other high-tax places, and don’t intend to, so apparently, there are reasons to stay."

Clearly. As with anything, there are a variety of reasons people choose to live in a particular place. For "many", taxes won't be the deciding factor. As with anything, incentives work at the margins. If there's a marginal decision whether to stay or move, or if there's a marginal decision where to move to, taxes could be the thing that swings it.

But going back to the statement above. "Only 2.5%" move each year. Is that supposed to be insignificant? 2.5% each year? So over 10 years, 25% (ok a bit less as some may move twice). How long is the average millionaire a millionaire for? Some people will be born into millionaire families so are millionaires all their lives, and others will be self made, so may become a millionaire later in life at say 50. Maybe the average millionaire is a millionaire for 50 years of their life.

Yet each year 2.5% move to a different state. That would imply the vast majority of millionaires move state. Of course "not all" go to a lower tax state, there will be other reasons for the move. But I suspect the "not all" implies quite a high percentage, otherwise why not just tell us.

So, from the stats actually provided, and a few (IMO sensible) assumptions, it would seem the vast majority of millionaire do move, and the vast majority that do move, move to a lower tax state! 

Of course my assumptions might be wrong. But if a researcher, journalist or academic wants to prove a point, they'll have to do better than the above rubbish and address the missing information which led to my need to make those assumptions. Instead of building a narrative around a few stats which certainly don't prove their point.

At least the first paragraph was accurate

To add another variable , as far as I know there is not a fixed definition of 'millionaire ' and there are different interpretations of what constitutes being a millionaire.

Another_Saver

It just doesn't happen on a big enough scale to worry about. The people who do in it were either going to do it anyway or are already managing their taxes too efficiently.

And if their capital flight makes investing cheaper/normalises the cost of capital for the rest of us, all for the better I say.

zagfles

kinger101 said:

Another_Saver said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

Your first point is an unsubstantiated nonsense myth.

It's not particularly constructive to dismiss something as an unsubstantiated nonsense myth without offering anything in the way of evidence to counter it.  Barnstar didn't make any specific claims about x % of people leaving the country leaving to £y loss in revenue - just that more people want want to leave and if they did, you'd get no money from them.  Your point on UK assets is true, but we know tax exiles and tax havens exist, and even people on this forum have discussed moving to IOM.  

Indeed - it's blatently obvious that there do exist people who move country due to taxes, there are enough celebrity examples. So the idea that no-one does it is definitely a myth. The question is the extent.

But the other point is that it only takes a small minority of the rich to move to make tax increases on them fiscally negative, through the loss of all the taxes they currently pay, income tax, VAT, excise duties plus of course the indirect taxes from their spending such as restaurants, shop profits etc.

Mickey666

zagfles said:

kinger101 said:

Another_Saver said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

Your first point is an unsubstantiated nonsense myth.

It's not particularly constructive to dismiss something as an unsubstantiated nonsense myth without offering anything in the way of evidence to counter it.  Barnstar didn't make any specific claims about x % of people leaving the country leaving to £y loss in revenue - just that more people want want to leave and if they did, you'd get no money from them.  Your point on UK assets is true, but we know tax exiles and tax havens exist, and even people on this forum have discussed moving to IOM.  

Indeed - it's blatently obvious that there do exist people who move country due to taxes, there are enough celebrity examples. So the idea that no-one does it is definitely a myth. The question is the extent.

But the other point is that it only takes a small minority of the rich to move to make tax increases on them fiscally negative, through the loss of all the taxes they currently pay, income tax, VAT, excise duties plus of course the indirect taxes from their spending such as restaurants, shop profits etc.

Yes, but aren’t these things primarily driven by political rather than economic considerations.  I’m sure I’ve read somewhere that a 50% higher rate of income tax is fiscally negative, or at least insignificant, yet it remains very popular in certain political circles.

barnstar2077

Another_Saver said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

Your first point is an unsubstantiated nonsense myth. Also, if people do domicile outside the UK I think the gov should still levy the wealth tax on assets domiciled in the UK (property, pensions, cash, stocks, funds, private equity). If the owner won't pay then levy it directly on the asset. If not paid within... 3 years start adding penalties, if not within 5 freeze it, if not within 10 years seize it and let Bona Vacantia manage it. 
Via the VAT system or international tariff system one could identify "luxury" goods, or implement a "sales over" rule i.e. single alcohol items over £100, cars over... £30k etc., everything in Harrods and fortnum and masons (and remove all exemptions for airports, ferry terminals, ports, and foreign visitors) and levy a higher vat rate while exempting certain goods like Tesla's for obvious reasons. Say bring the vat rate from 20 to 25 or 30%.

End agricultural subsidies for animal agriculture and drive subsidies for plant-based, and we need a system to reward bothering with good ecological management, allowing plenty of wild spaces. Perhaps a popular vote in each county?

This could make the UK food self-sufficient which we haven't been since at least 1800.

But if we're talking about wealth then a transaction tax is a stealthy way to go about it. We already have the bank levy, so it isn't a huge step further to go via the FCA list and implement a 1bps tax on all transactions paid by financial institutions. They can choose whether to pass it in to customers directly.

Each institution just adds up their total transactions in all their accounts over the year and pays 1bps to the treasury. Compared to the cost of managing cash, credit card charges, business bank accounts, accountants etc. for most people and businesses this will be negligible. A household with a joint gross income of £60k would pay £6 on the way in (whether that goes to HMRC, pensions or take home) and £6 on the way out (whether that goes on spending or into a savings or other account). Although they are only really paying half that.

Someone self employed paying say, 1% of their turnover to an accountant would not notice 1bps of any cheque/cash deposits, card/bank transactions. And I think the banks would either absorb it Into their interest rates or start charging it directly if you transact more than say £1m a year, as this creates £100 of tax obligation, probably the minimum worthwhile for them.

This would be a proportionate way of targeting particularly speculative and high frequency trading and the only way to avoid it would be to operate fully cash. But take the biggest informal sectors - drugs and sex. Most of their income comes from the regular economy, most of their income goes back into the regular economy.
According to the BoE payments YTD have been £274tn, mechanically a 1bps tax would yield £27.4bn, realistically I would hope for £10-£20bn allowing for behaviourial adjustments, which is still upto 1% of GDP without necessarily harming GDP to raise it.

"Your first point is an unsubstantiated nonsense myth" is pretty damning.  As kinger101 says, you have offered no proof yourself.

I can say that if I was worth millions and was taxed in such a manner then it would make me more likely to live somewhere else and just visit the UK a few times a year.  100% fact!

kinger101

zagfles said:

kinger101 said:

Another_Saver said:

barnstar2077 said:

A percentage tax on anything over a million etc would just make wealthy people less likely to want to live in the UK, then you get no money from them.  If I ruled the world, I would find a way to stealth tax luxury items instead.  Champagne, expensive clothing, cars that cost more than 40k etc.  I would think of a novel way for each type of product so no one could point to one individual tax or tariff.  Yes, wealthy people would still know it was slightly more expensive to live in the UK, but from a psychological point of view I think it would be more effective. 

Your first point is an unsubstantiated nonsense myth.

It's not particularly constructive to dismiss something as an unsubstantiated nonsense myth without offering anything in the way of evidence to counter it.  Barnstar didn't make any specific claims about x % of people leaving the country leaving to £y loss in revenue - just that more people want want to leave and if they did, you'd get no money from them.  Your point on UK assets is true, but we know tax exiles and tax havens exist, and even people on this forum have discussed moving to IOM.  

Indeed - it's blatently obvious that there do exist people who move country due to taxes, there are enough celebrity examples. So the idea that no-one does it is definitely a myth. The question is the extent.

But the other point is that it only takes a small minority of the rich to move to make tax increases on them fiscally negative, through the loss of all the taxes they currently pay, income tax, VAT, excise duties plus of course the indirect taxes from their spending such as restaurants, shop profits etc.

More widely, it could potentially discourage inward investment.  

I personally think the UK's biggest problem is that middle earners don't pay enough income taxes. Granted, state pensions are usually better in other countries, but ........

https://en.wikipedia.org/wiki/Tax_rates_in_Europe

Seems we already have a perfectly good mechanism for getting a bit more from millions of people without the need to invent a new tax.