What do you think of this idea of a wealth tax?

[LuluJakey1]

This is from The Guardian this afternoon. It is the third article I have seen in the Press two days promoting this idea.

www.theguardian.com/commentisfree/2020/jul/06/arts-wealth-tax-rishi-sunak-nhs-public-services?CMP=Share_iOSApp_Other

Personally, I think it is bonkers. She seems to be suggesting that ALL wealth in this country - houses, savings, pensions, shares/paintings etc should be subjected to a one off tax of 10% to get us out of the financial mess.

DH and I would have to find about £80,000 cash! We'd have to sell the house?

Yes- Yes it is a good idea and you are BU to criticise it.
No- It is an awful idea and you are right to criticise it.

The problem with greatly increasing inheritance tax is that the wealthy will be able to pass on a great portion of their assets before death, bypassing this tax.
The greatest hit will be the middle income families, who have most of their money tied in their home.
The wealthy will be able to buy properties for their children and make regular large gifts from income. Or just give the wealth to their children and live 7 more years.

Yes. I suppose we could bring IHT bands down to zero so even if you leave £20k you pay 40% of it to the state but I would rather we worked towards much lower taxes and much less state provision.

Gift taxes are hard to operate too eg if they cover allowing your adult child to live at home rent free in some systems you have to write that down and notify authorities, buy them a car - note it down, help make their minimum student loan up to maximum - taxable gift etc etc...

@PigletJohn HMRC don’t know about individual accounts. They would expect you to declare a certain amount of interest/dividends so they can charge you tax and there is always the threat they can pick you out and check up if they don’t believe you/are doing random checks.

The savings account asking for NI numbers is more about money laundering. I got letters from certain banks asking me to clarify where money had come from because it was over a threshold even though it had been there for quite a while. Fine. Totally understand that.

However, for an asset tax this to work some Govt department would have to see everything you, i or anyone else do with our money which means we would lose control and they would gain it. If there wasn’t that level of detail it would be a pointless exercise.

The largest (and very large) amounts of untaxed wealth in the UK are Property and Private Pensions.

Neither is easy to hide. Property in particular cannot be squirred away in an overseas tax haven.

physical wealth, including paintings and gold bars, is much smaller, and much harder to track and value.

Working on the "goose plucking" principle of taxation, it's easy to see where the most feathers are.

If there was an asset tax (and it would not be a one off - these things never are) there would be a consistent system to measure wealth and what you do with your post tax money. You would be happy with that?! And it wouldn’t just affect the rich - they would have to measure everyone to check you don’t fit in that bracket. It’s a slippery slope, it really is.

@Thetimehascometochange

I don't think anyone with any influence has recommended an asset tax.

Sounds quite like living in a corrupt country where you keep assets low and money hidden because the dodgy politicians and organised crime habitually rob anyone who gets anything.

I assume you mean that it is not a policy recommended by the Government and not picking on my use of the word asset not wealth? After all, assets form wealth. But yes, luckily it should get no where near the drawing board

Let me guess - is this a Labour supporter's idea? If so then he or she fails to see that it would negatively affect many wealthy Labour voters, MPs and peers. Although of course, as with many other facets of life, the wealthy can afford good legal and financial advice to avoid minimise taxes.

@ginghamstarfish

No.

Could it be that this is being suggested in the media to encourage people to spend their savings now “before we get taxed on it” (which may never happen!) I think it’s a clever way of encouraging people to spend without telling them to do so.

@ActionNeeded

No.

FT says:

"Britain is on course to run a deficit of a scale only ever seen during world wars. Estimates produced by the Financial Times based on projections by the Office for Budget Responsibility, the UK’s fiscal watchdog, suggest the government will spend at least £350bn more than it receives in tax receipts as it seeks to limit the economic damage wrought by the pandemic. Much of this spending increase is temporary, as efforts to suppress the virus and revive the economy pay off, but it is unlikely that tax receipts will recover quickly."

Our current government has this problem. Our current chancellor (if Cummings permits him to remain in post) has to try to fix it.

This isn't about taxing the wealth of normal people surely? A well designed wealth tax would be a great way to get back money from the super rich 1 percenter types who are hoarding most of the money.

@TotorosFurryBehind I gave up on this thread because no one seems to understand that a wealth tax is designed to tax the wealthy. Labour has referred, repeatedly, to "those with the broadest shoulders". Obviously, where that line is drawn is unclear, but it's not going to be Mr and Mrs Smith living in their £420k semi they've owned for 30 years....!

Yes but to know where that 1% is you need to know what everyone is up to and who says it would stay at that 1%. Income tax was supposed to be a one off war tax for the wealth. How did that work out?

@Thetimehascometochange

"you need to know what everyone is up to"

Not if your tax is based on something that doesn't move, and where changes of ownership are recorded in some kind of government registry.

Can you think what that might be?

But it’s not though is it. Some of my net worth is in my house, the majority is not. How you gonna find it?

You seem determined to think that a new tax is coming and it will be based on the value of all your possessions, and will therefore be impossible.

Try to persuade yourself to think that if there is a new tax, it will be based on something that forms a huge proportion of untaxed wealth in the UK, and is easy to see and impossible to move, and is mostly owned by the richest people in the country.

look around you.

What can you see meeting that description?

That’s not a wealth tax, that’s a property tax

and is mostly owned by the richest people in the country

Not true. You could look at it as a penalty for living in the most expensive parts of the UK. Or a tax on giving up other luxuries and putting all your savings/efforts into owing the house you live in, only for some of that to be taken away.

On the way up to these supposed dizzy heights, you could acknowledge that some of us lost money on housing during house collapses, were in negative equity, and have spent the subsequent years trying to get back to where we were with even bigger mortgages to make up for the shortfall in the historical losses incurred. I am old enough to remember mortgage tax relief, and marriage allowance, and universal child benefit, all gone.

If you genuinely wanted to equally tax everything, you revalue the currency, and (as government) keep the difference. Makes no difference where or what your assets are. Think of it as inflation where the government gets the benefit.

Of course there's no genuine will to tax people equally so it's a moot point.

I believe the Dukes of Westminster of this world never really inherit, so never pay tax. There wealth is all held in trust, and they just take over the trust when the previous incumbent shuffles off their mortal coil. Which also means land doesn't change hands, and so is never registered. Private Eye have been digging into it for years.

I believe a better way could be to modify council tax, by increasing the number of bands so mansions pay more and also targeting second homes. I guess this is a kind of wealth tax

The really wealthy have already moved their assets out of the UK and into tax havens.

How much do you think a "wealth tax" will raise from Lewis Hamilton? How can it catch his private jet and mansion in a tax haven?

We need to be a lot more savvy than a headline grabbing gimmick like a wealth tax that will hit some people badly and not touch the sides of others who are genuinely wealthy.

@vickibee

I believe a better way could be to modify council tax, by increasing the number of bands so mansions pay more and also targeting second homes. I guess this is a kind of wealth tax

Let's pretend for some reason, that too is never going to happen.

An awful lot of these suggestions here are much like finding Lord Lucan: if it was going to happen, then it would have by now.