Tax on wealth suggested

Mickey666

Thrugelmir said:

itwasntme001 said:

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.

Anybody who is truly wealthy lives in Monaco already and pays zero income tax. 

Isn't that just a symptom of our global free market economy and why there will always be tax havens for the wealthy?

If a country decides that it wishes to attract wealthy people by implementing a favourable tax regime, what can anyone do about it?  In a free world, that sort of thing is a legitimate national economic strategy isn't it?

Mickey666

HHarry said:

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.

Nice

But of course it is only a pointless suggestion.  Pointless because anyone rich enough to be affected by such suggestions will simply change their behaviour such that they are not affected by them in practice.  It's just populist political posturing.  Good for gaining votes but little else in the real world.

thegentleway

Mickey666 said:

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

It's not just inhereted luck at birth. You also didn't pick your education or many of your opportunities. Most of the time, the hardest-working and most talented people aren’t the ones who experience the most success. Simple simulations of a meritocratic contest where 98% of a job candidate’s success is based on talent and hard work and the other 2% on luck shows the most talented or hardest-working person will very rarely win.
Re PS: A quarter of the population in Ethopia are without a toilet, a third don't have safe water, nearly half have no handwashing facilty, 1 in 17 children die before 5... I'd say it's pretty negative!

zagfles

thegentleway said:

Mickey666 said:

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

It's not just inhereted luck at birth. You also didn't pick your education or many of your opportunities. Most of the time, the hardest-working and most talented people aren’t the ones who experience the most success. Simple simulations of a meritocratic contest where 98% of a job candidate’s success is based on talent and hard work and the other 2% on luck shows the most talented or hardest-working person will very rarely win.
Re PS: A quarter of the population in Ethopia are without a toilet, a third don't have safe water, nearly half have no handwashing facilty, 1 in 17 children die before 5... I'd say it's pretty negative!

There are lots of other factors too - although none as significant as country of birth.

Stuff like willingness to take a risk, some people will go for the easy safe option eg a 9-5 desk job and others will risk all they have trying to build a business.  Clearly those who take the risks will be those who experience "most success", but equally are more likely to be those who end up bankrupt at the bottom of the pile. And luck will usually have played a part in the most successful.

Also the difference between "live for now" and "invest in the future" attitudes to life - as the famous marshmallow experiment shows this is a very significant factor in outcomes, more so than stuff like socio-economic background etc.

thegentleway

zagfles said:

Also the difference between "live for now" and "invest in the future" attitudes to life - as the famous marshmallow experiment shows this is a very significant factor in outcomes, more so than stuff like socio-economic background etc.

The Marshmallow experiment was replicated with a sample from a more diverse population, over 10 times larger than the original study, and showed only half the effect of the original study. The replication suggested that economic background, rather than willpower, explained the other half.

arnoldy

Plenty of fat to cut in Government expenditure first before we need a wealth tax - as evidenced by the tax payer funding "gender reassignments" for school age kids, university education that's not needed and will never be paid back,   etc. and many more examples of feeding frenzies on Taxpayers money. 

NottinghamKnight

arnoldy said:

Plenty of fat to cut in Government expenditure first before we need a wealth tax - as evidenced by the tax payer funding "gender reassignments" for school age kids, university education that's not needed and will never be paid back,   etc. and many more examples of feeding frenzies on Taxpayers money. 

Politicians don't care about public spending because they won't be around when the bill is realised. Billions from student loans will never be paid, and it's the reason why the only db schemes still in operation are in the public sector, as the cost isn't being paid today but in decades time. 

zagfles

thegentleway said:

zagfles said:

Also the difference between "live for now" and "invest in the future" attitudes to life - as the famous marshmallow experiment shows this is a very significant factor in outcomes, more so than stuff like socio-economic background etc.

The Marshmallow experiment was replicated with a sample from a more diverse population, over 10 times larger than the original study, and showed only half the effect of the original study. The replication suggested that economic background, rather than willpower, explained the other half.

Nonetheless a significant effect. There have been attempts to "adjust" the results based on stuff like socio-economic status in an attempt to disprove the correlation, but they necessarily make the fundamental assumption that personality traits (such as the ability to delay gratification for a larger future rewards) are caused by socio-economic status, rather than such traits being genetically inherited from their parents, resulting in kids with that trailt more likely to have parents with that trait, and as such the trait is the cause of their socio-economic status in the first place!

But that's an aside, it's fairly obvious that someone with an "invest for the future" personality will do better than someone with a "live for now" personality and that was the point. Whether someone studies at school, whether they eat unhealthy food, whether they spend their monthly salary/benefits in the first week on takeaways, nights out, etc and then starves or goes to payday lenders when they run out etc etc.

thegentleway

arnoldy said:

Plenty of fat to cut in Government expenditure first before we need a wealth tax - as evidenced by the tax payer funding "gender reassignments" for school age kids, university education that's not needed and will never be paid back,   etc. and many more examples of feeding frenzies on Taxpayers money. 

Lets say 1000 kids get gender re-assignment at £20k a pop. That's only £20m. Assuming 45% of the £17bn loaned to students gets written off, that's bout £7.65b a year. That's peanuts in comparison to the £280bn so you need to find a lot more fat!

Sea_Shell

£1m per couple seems quite a low threshold, especially if it includes your home and pension savings.    

When you're only 6% away from breaching it, and then only because you're at the whim of the markets, for both property and investments, you can bet they'd set the "wealth as of" date as being 7th December 2020 (a recent portfolio high point), rather than March 2020!!!

We've had nearly a £80,000 swing in net worth during that period.     Pinning down a date on which to apply this tax, could be controversial in itself.     You could owe tax one week, but not the next.

We are comfortable, but I wouldn't consider that we are "wealthy".    But then I guess that's relative in itself.