Tax on wealth suggested

eskbanker

itwasntme001 said:

eskbanker said:

itwasntme001 said:

itwasntme001 said:

Nothing is impossible.  We had a new global monetary system in 1971.  We had the plaza accord in the 80s.  We had a globally coordinated effort to come back from the GFC in 2008.  Things can be done quite easily if well coordinated, especially under pressure.

Oh and how could I have forgotten.  We have also just had a massive wealth transfer from the taxpayer to the asset owners and the old and to the big tech company owners.  Due to the stimulus following a government induced shutdown of the world economy.  That is a massive wealth transfer probably never seen by the world before.

But using that sort of contrived and flimsy logic, anything can be contorted to fit a ridiculously broad definition of 'transfer of wealth' - I transferred some wealth in the local corner shop earlier when buying a pint of milk, so I should obviously expect that to form a blueprint for implementing a global wealth tax....

You are taking it way out of context as usual.  It is clear as night and day that there has been a wealth transfer due to the stimulus packages.  The government (aka taxpayer) are in a massive amount of debt.  That money funded by the debt went to the corporate sector, mainly tech companies, as well as those on index linked pensions, those who own assets, the professional upper middle class (who can easily WFH whilst getting paid above median wages) etc.

It is a bailout that disproportionately benefits them at the expense of everyone else.  And so it follows that they should disproportionately have to pay more of this debt back.  Hence a globally coordinated wealth tax makes a lot of sense and should be done.

You just paid for a pint of milk to have your morning Cheerios with.  No wealth transfer happening there.

I now have less financial wealth and the retailer (and others in the supply chain) now has more, but of course my point is that there are many activities that can be construed as 'wealth transfer', most of which have no relevance to the likelihood (or ease) of introducing a wealth tax in one or more jurisdictions, despite your increasingly desperate attempts to construct weak linkages with your irrelevant examples of choice.

itwasntme001

I think it is safe to say, given the type of people who frequent these forums, that we all have had our wealth increase this year.  Personally this year has been absolutely fantastic wealth wise since I own a lot of stocks, much of it in growth funds.

Does seem rather odd given this year we have had the worst recession since the Great Depression.

It is all because of the stimulus which ended up actually raising incomes to levels even more than prior to the crisis.  This money didn't grow on trees.  It comes from the taxpayer.  You and me.  How much will actually come from you and me is the real question.

itwasntme001

eskbanker said:

itwasntme001 said:

eskbanker said:

itwasntme001 said:

itwasntme001 said:

Nothing is impossible.  We had a new global monetary system in 1971.  We had the plaza accord in the 80s.  We had a globally coordinated effort to come back from the GFC in 2008.  Things can be done quite easily if well coordinated, especially under pressure.

Oh and how could I have forgotten.  We have also just had a massive wealth transfer from the taxpayer to the asset owners and the old and to the big tech company owners.  Due to the stimulus following a government induced shutdown of the world economy.  That is a massive wealth transfer probably never seen by the world before.

But using that sort of contrived and flimsy logic, anything can be contorted to fit a ridiculously broad definition of 'transfer of wealth' - I transferred some wealth in the local corner shop earlier when buying a pint of milk, so I should obviously expect that to form a blueprint for implementing a global wealth tax....

You are taking it way out of context as usual.  It is clear as night and day that there has been a wealth transfer due to the stimulus packages.  The government (aka taxpayer) are in a massive amount of debt.  That money funded by the debt went to the corporate sector, mainly tech companies, as well as those on index linked pensions, those who own assets, the professional upper middle class (who can easily WFH whilst getting paid above median wages) etc.

It is a bailout that disproportionately benefits them at the expense of everyone else.  And so it follows that they should disproportionately have to pay more of this debt back.  Hence a globally coordinated wealth tax makes a lot of sense and should be done.

You just paid for a pint of milk to have your morning Cheerios with.  No wealth transfer happening there.

I now have less financial wealth and the retailer (and others in the supply chain) now has more, but of course my point is that there are many activities that can be construed as 'wealth transfer', most of which have no relevance to the likelihood (or ease) of introducing a wealth tax in one or more jurisdictions, despite your increasingly desperate attempts to construct weak linkages with your irrelevant examples of choice.

You gained from owning a pint of milk.  Again you keep taking it out of context which makes you look very silly.  I am looking at the big picture.

If you think the massive increase in debt is irrelevant and that people talking about wealth tax just do it for fun, then I suppose you would think the way you do.  Blinded by the obvious.

thegentleway

Mickey666 said:

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).

The main variable for wealth is sheer luck. Sure, hardwork and decision making is a factor but it's orders of magnitude lower than luck. E.g. you don't pick which country you are born in. It's pure luck. How rich is the hardest working Ethopian making the best decisions?

zagfles

itwasntme001 said:

I think it is safe to say, given the type of people who frequent these forums, that we all have had our wealth increase this year.  Personally this year has been absolutely fantastic wealth wise since I own a lot of stocks, much of it in growth funds.

Does seem rather odd given this year we have had the worst recession since the Great Depression.

It is all because of the stimulus which ended up actually raising incomes to levels even more than prior to the crisis.  This money didn't grow on trees.  It comes from the taxpayer.  You and me.  How much will actually come from you and me is the real question.

Most people who haven't lost their job have seen their wealth increase over the last year. But it's nothing to do with asset prices, it's the very obvious point that they've not been able to spend as much as they usually do. Less nights out, less holidays, less socialising etc. We've spent about £10k less than usual. Even people we know who've been furloughed are better off financially overall due to enforced spending constraints.

eskbanker

itwasntme001 said:

eskbanker said:

itwasntme001 said:

eskbanker said:

itwasntme001 said:

itwasntme001 said:

Nothing is impossible.  We had a new global monetary system in 1971.  We had the plaza accord in the 80s.  We had a globally coordinated effort to come back from the GFC in 2008.  Things can be done quite easily if well coordinated, especially under pressure.

Oh and how could I have forgotten.  We have also just had a massive wealth transfer from the taxpayer to the asset owners and the old and to the big tech company owners.  Due to the stimulus following a government induced shutdown of the world economy.  That is a massive wealth transfer probably never seen by the world before.

But using that sort of contrived and flimsy logic, anything can be contorted to fit a ridiculously broad definition of 'transfer of wealth' - I transferred some wealth in the local corner shop earlier when buying a pint of milk, so I should obviously expect that to form a blueprint for implementing a global wealth tax....

You are taking it way out of context as usual.  It is clear as night and day that there has been a wealth transfer due to the stimulus packages.  The government (aka taxpayer) are in a massive amount of debt.  That money funded by the debt went to the corporate sector, mainly tech companies, as well as those on index linked pensions, those who own assets, the professional upper middle class (who can easily WFH whilst getting paid above median wages) etc.

It is a bailout that disproportionately benefits them at the expense of everyone else.  And so it follows that they should disproportionately have to pay more of this debt back.  Hence a globally coordinated wealth tax makes a lot of sense and should be done.

You just paid for a pint of milk to have your morning Cheerios with.  No wealth transfer happening there.

I now have less financial wealth and the retailer (and others in the supply chain) now has more, but of course my point is that there are many activities that can be construed as 'wealth transfer', most of which have no relevance to the likelihood (or ease) of introducing a wealth tax in one or more jurisdictions, despite your increasingly desperate attempts to construct weak linkages with your irrelevant examples of choice.

You gained from owning a pint of milk.  Again you keep taking it out of context which makes you look very silly.  I am looking at the big picture.

If you think the massive increase in debt is irrelevant and that people talking about wealth tax just do it for fun, then I suppose you would think the way you do.  Blinded by the obvious.

I'm exaggerating for effect to highlight the flaws in your line of thinking, but for the avoidance of doubt I'm not arguing against a wealth tax at all - I'm simply challenging the notion that this can realistically be delivered on a global basis and that unconnected past financial events offer any meaningful support to that hypothesis!

thegentleway

itwasntme001 said:

I think it is safe to say, given the type of people who frequent these forums, that we all have had our wealth increase this year.  Personally this year has been absolutely fantastic wealth wise since I own a lot of stocks, much of it in growth funds.

Does seem rather odd given this year we have had the worst recession since the Great Depression.

It is all because of the stimulus which ended up actually raising incomes to levels even more than prior to the crisis.  This money didn't grow on trees.  It comes from the taxpayer.  You and me.  How much will actually come from you and me is the real question.

Not everybody! I'm worst off this year: loss of income (due to self-employed business being forced to shut) is more than what I've gained from funds.

coyrls

zagfles said:

eskbanker said:

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?

There are already well-established principles available for valuing pensions, but if you're looking for detail about these proposals rather than the BBC's summarised take on them, the full 126 page report is accessible at https://www.ukwealth.tax/s/A-Wealth-Tax-For-The-UK.pdf

Edit: DB pensions are to be valued via CETV according to section 4.2.3 of the report, among proposals for all the other valuation challenges:

For pensions, the process for defined contribution (DC) schemes would be similar to other financial assets. Defined benefit (DB) schemes are more complex, because unlike a DC scheme there is no fund assigned to the individual. However, there are nevertheless several existing purposes for which DB scheme providers must determine the current value of an individual’s future pension entitlements. The most appropriate measure for the purposes of a wealth tax would be the Cash Equivalent Transfer Value (CETV), following the guidance that is already published by the Pensions Regulator for the purpose of transfers between pension schemes. This approach has the important benefit of ensuring, so far as possible, horizontal equity between holders of DC and DB pensions.

The issue of lack of liquidity for settlement is discussed at length in section 4.2.4 - no doubt there will be matters that haven't been considered but liquidity and pension valuation clearly have!

They don't seem to have addressed how pensions in payment would be valued. Presumably not exempt, otherwise people old enough could just crystallise early and avoid totally!

If it's on pension value, could use the current value for DC, what for DB though, there is no CETV for DB pensions in payment. Maybe some estimate of what the CETV would be for the current annual pension at the member's age.

But if this is intended to be a short term tax for 5 years, it would massively discriminate against those close to retirement age, as their pension wealth is obviously at its peak, compare to those well before retirement or those well into retirement. 

What about the state pension - some current pensioners have substantial SERPS/S2P in their state pension, others have just the basic state pension and an occupational scheme. If the state pension is ignored but contracted out pensions aren't, another source of discrimination.

They've clearly not thought this through when it comes to pensions.

With a DC pension in payment, money from the pension taken to pay the wealth tax would also be subject to income tax.  In many cases it will be the pension (rather than say property) that will be the most liquid asset.

Mickey666

thegentleway said:

Mickey666 said:

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).

The main variable for wealth is sheer luck. Sure, hardwork and decision making is a factor but it's orders of magnitude lower than luck. E.g. you don't pick which country you are born in. It's pure luck. How rich is the hardest working Ethopian making the best decisions?

I entirely agree with your example.  It's probably the main reason I've never understood how someone can be 'proud' of being such-and-such nationality.  What is there to be proud about if you had absolutely no choice about your nationality.  I'm certainly very grateful to be English but I can't honestly say I feel 'proud' about it.  In fact, nationalism seems to be the root of all manner of ills to me . . . but I'm digressing from the the topic of this thread.

So yes, we may not be able to control how much luck we 'inherit' though we can determine, to a large degree, how much we make of it.

PS: I couldn't resist checking up on rich Ethiopians . . . seems their place of birth is not necessarily as negative as you might think

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

HHarry

How about a wealth tax where a couple with assets of more than £1M are charged 40% on their deaths?  We could call it ‘Inheritance Tax’.

So the suggestion is that we pay 1% of the value of our assets while we’re alive AND 40% when we’re dead.