Tax on wealth suggested

Albermarle

You could look from another angle and just think what could they get away with and bring the least political damage .
There must be quite a lot of people who consider themselves reasonably ordinary and not 'wealthy ' ,who have a Million Pounds in Assets if you include pensions & property ( particularly in the South). The last ONS survey I looked at showed that up to 15% of households nationwide  had reached this level . The % of households with £2M or more is less than 5% - so a smaller but easier target and probably mainly in the Tory heartlands so unlikely to switch votes whatever happens .
The report also looked at households with £4M or more which I presume is a pretty small target /number of voters.

eskbanker

jimjames said:

thegentleway said:

Sounds great to me. I don't buy your what if you have a million pound house but no cash hypothetical scenario or the even more ridiculous what if you have a million pound pension but no cash. If you have a million pounds in wealth you can very easily afford to pay 1% tax increase. It would make no noticeable difference to your life. My partner and I don't have a million in wealth but it would be extremely easy for us to pay an extra 1% in tax and we would be very happy to do it. It's extremely good value for money.

How would you propose someone with a pension and house valued over £1m but little income would pay it then? Pension isn't accessible until you start drawing it and even then a DB one is only annual income.

As above, this liquidity issue is addressed in section 4.2.4 of the report, which puts forward primary options of payment by instalments and deferral to tax on pension, before going on to state that:

the evidence shows that the proportion of taxpayers who would be liquidity constrained under a wealth tax at an annual equivalent tax rate of 1% is low, after applying the two measures outlined above. Furthermore, of those who might superficially  appear to face difficulties, we have explained that many could in practice solve their illiquidity problems without being forced to sell any of their illiquid assets. Nevertheless, we recognise that there will inevitably still be some cases of genuine hardship, where the taxpayer has exhausted other options and would have no choice but to sell a large illiquid asset like their home or business, in order to pay the tax. We think that these cases – whilst likely to be rare in practice – do require a fair solution.

....which turns out to be a statutory deferral scheme.

Mojisola

Mickey666 said:

 That BBC article also states that the top 1% of earners pay 29% of all income tax and the top 5% pay 50% of all income tax.   I guess the question is how progressive can we be while still being ‘fair’.  

 The 1% and 5% pay a high percentage of all income tax because they are so wealthy. 
How does the percentage of their income paid in tax compare to the rate paid by the majority of the country?

Albermarle

Mojisola said:

Mickey666 said:

 That BBC article also states that the top 1% of earners pay 29% of all income tax and the top 5% pay 50% of all income tax.   I guess the question is how progressive can we be while still being ‘fair’.  

 The 1% and 5% pay a high percentage of all income tax because they are so wealthy. 
How does the percentage of their income paid in tax compare to the rate paid by the majority of the country?

All these stats are complicated The majority of the country is made up of many sections.  Many people do not pay tax at all and receive benefits - so a kind of negative tax .
Also many lower paid people claim work related benefits such as tax credits , so pay little tax overall .

AnotherJoe

EdGasketTheSecond said:

The following article suggests a 'wealth tax' as a means to pay for covid. I hope we don't go down that road but there are obvious pitfalls like someone with a valuable house but no cash to pay the tax; how do you value defined benefit vs money-purchase pensions?

With zero interest rates for savers and debasement of our currency it does seem as though the government is on a socialist agenda to wipe out any personal wealth, any incentive to to behave responsibly, and reward prolific spenders and borrowers.

https://www.bbc.co.uk/news/business-55236851

Once pensions are included then you attack the basis on why people save for them which is directly against what govt is trying to do, eg encourage investment in pensions.

grumiofoundation

Mojisola said:

Mickey666 said:

 That BBC article also states that the top 1% of earners pay 29% of all income tax and the top 5% pay 50% of all income tax.   I guess the question is how progressive can we be while still being ‘fair’.  

 The 1% and 5% pay a high percentage of all income tax because they are so wealthy. 
How does the percentage of their income paid in tax compare to the rate paid by the majority of the country?

Overall richer people end up paying a lower % of income as tax.


https://www.independent.co.uk/news/uk/home-news/lowest-earners-more-tax-richest-office-national-statistics-inequality-council-tax-vat-equality-trust-a7704331.html
https://www.theguardian.com/money/2014/jun/16/british-public-wrong-rich-poor-tax-research
https://www.independent.co.uk/news/business/news/wealthy-uk-tax-cost-rate-capital-gains-income-tax-a9566211.html

itwasntme001

Something needs to be done and someone's gonna have to pay.  It will be done via some combination of taxes and inflation.  Unless there is a miracle and a new source of wealth magically appears.

The problem with inflation is that you can't implement it without some form of default on government index linked liabilities (state pensions and DB pensions).

The problem with taxes is that what is palatable (higher CGT, lower pension and ISA allowances) is not going to be nearly enough.

I think it is reasonable to expect a wealth tax as, since the pandemic benefited asset owners, the asset owners need to pay the stimulus back.  And for the wealth tax to work well enough without harming the economy, it needs to be a globally coordinated wealth tax so that it applies to all citizens in the developed world.  Since most developed countries are in a lot of debt, it should be pretty easy to implement.

Mickey666

Another_Saver said:

Mickey666 said:

Wealth taxes are always popular because the majority of people are not affected.  Is that democracy or the tyranny of the majority? That BBC article also states that the top 1% of earners pay 29% of all income tax and the top 5% pay 50% of all income tax.   I guess the question is how progressive can we be while still being ‘fair’.  Indeed, what is ‘fair’ when it comes to taxation. Why is it ‘fair’ to pay a higher proportion of tax the more you earn when you would already pay more the more you earn anyway?  I suspect the answer is that it’s judged ‘fair’ to make other people pay more tax if it doesn’t affect you personally.
Anyway, how will a wealth tax actually work?  Annual returns of everyone’s net worth?  Plenty of ways to ‘adjust’ that I’d have thought - even HMRC once embarked on a tax saving scheme by leasing all their buildings from an offshore company!
Taxing income seems fair enough to me - you’ve got it so can afford to pay it.  Increase income tax rates, but also increase personal allowances to reduce the tax burden for those on low incomes.
Taxing wealth punishes the prudent over the feckless spenders.

You're straw manning that wealth is a product or prudence rather than luck and vice versa.

Well, like most things, it’s complicated.  Sure, some people are rich through sheer luck (or at least through no effort on their part) but some become rich though hard work and good decisions.  Others might earn a small fortune but blow it all on drugs and hookers, leaving them with nothing.  Basically, there is no commonality so how can a ‘one size fits all’ type tax possibly be ‘fair’.   Income tax, coupled with a generous personal allowance at least treats everyone the same (well, not quite because of its progressive implementation, but you get the basic point).

eskbanker

itwasntme001 said:

And for the wealth tax to work well enough without harming the economy, it needs to be a globally coordinated wealth tax so that it applies to all citizens in the developed world.  Since most developed countries are in a lot of debt, it should be pretty easy to implement.

Eh?  You seriously think that implementing a "globally coordinated wealth tax" would be easy - are you Liam Fox by any chance?!

itwasntme001

eskbanker said:

itwasntme001 said:

And for the wealth tax to work well enough without harming the economy, it needs to be a globally coordinated wealth tax so that it applies to all citizens in the developed world.  Since most developed countries are in a lot of debt, it should be pretty easy to implement.

Eh?  You seriously think that implementing a "globally coordinated wealth tax" would be easy - are you Liam Fox by any chance?!

Maybe I should have said easier.  It would be easier to implement as opposed to being the only country to impose it, since it will drive people out of the country.