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.

did you even read the article? It's not Toynebee's suggestion, but that of a think-tank headed by a retired senior civil servant.

it's not saying they would tax people's homes. It will look at wealth - paintings, cash, reform of council tax, closing the many tax loopholes that allow very rich people to pay bugger all tax (my ex MP, Zac bloody Goldsmith, who's house was given to him 'in trust' so he pays no inheritance tax, despite being a multi-millionaire for example).

and yes, getting big business to actually pay some tax in this country would be a good start.

I guess you all know that the main reason the Tories wanted out of the EU I because it's about to bring in legislation for member countries to force the disclosure of offshore wealth so it can be taxed in-country? that's why they wanted out all all costs. There are billions created here and spirited offshore before the taxperson gets to it.

These proposals will never fly but I agree with the 'looking at the sacred cows' principle as we have some very old and shit taxation rules in this country.

it's not saying they would tax people's homes. It will look at wealth - paintings, cash, reform of council tax, closing the many tax loopholes that allow very rich people to pay bugger all tax (my ex MP, Zac bloody Goldsmith, who's house was given to him 'in trust' so he pays no inheritance tax, despite being a multi-millionaire for example).

Ah, OK folks, you can stand down. Clearly designed to fail.

@doolallyboo

Erm, you know the retired folk have previously worked and paid tax right?

I thought the wealthiest people often didn't pay income tax?

Because for most people their personal wealth has been gained from their salary or business profits and therefore already taxed once.

I also thought people who were wealthy tended to inherit it?

Doolally please could you explain more about wealthy people (presumably you mean those who are resident in UK and not tax exiles) not paying income tax?

If gambling winnings were taxed then wouldn’t everyone just take up gambling and claim their losses against tax And what about losses? Are they tax deductable?

Becuase that quid pro quo is why wins are not taxed!

Surely that depends on how you won the money, though? If you're a professional poker player and/or seriously spend or 'invest' a lot of money before you get a win, it would make much more sense; but what if you win £100m from a one-off £5 lottery ticket or go on a TV gameshow?

I wouldn’t object to higher inheritance taxes or a more sensible way of arranging it (although i know my in-laws and parents absolutely would) but I’d be furious if they brought in a wealth tax based on pensions. We have sacrificed holidays to put a good amount into our pensions from an early age and it would be the biggest signal not to bother saving for the future if they did that. Pensioners have planned their retirement based on their pension funds. I’d see a raid on personal pots as state enforced theft. I’d happily pay more income tax though.

I’d have thought they’d look at closing loopholes or reducing tax breaks. Eg junior ISA limits are now £9k per year. Only the wealthiest families could fill that but if they did, they children would have the option of a nice bit of tax free income from the investments when they reached 18.

We are in such a financial hole as a country that many of these options will have to be considered and applied. It’s not an either/ or scenario. There would be a lot of indignation and moaning around paying wealth tax from some groups in society but people will never like being taxed more.

Erm, you know the retired folk have previously worked and paid tax right

Probably true for the youngest retirees. However I think most of the very elderly ladies, like my DM mentioned above, never worked and never paid income tax, although as noted she did pay the CGT mentioned above.

Didn't there used to be (10%) tax on gambling ?

Gordon Brown axed it, as it couldn't be collected for offshore internet and UK bookmakers were losing out.

There's no requirement for HMRC to allow expenses on activities they tax. Prostitutes have to pay tax but can't claim for condoms, I believe.

If you want to charge tax, it makes sense to take it off the people who've got some money, rather than people who haven't.

If you happen to be a person with some money, you might not like that

But it still makes sense.

Tax-dodging billionaire owners of newspapers will try to rally the common people to their support.

@PigletJohn

If you want to charge tax, it makes sense to take it off the people who've got some money, rather than people who haven't.

If you happen to be a person with some money, you might not like that

But it still makes sense.

Tax-dodging billionaire owners of newspapers will try to rally the common people to their support.

If you really wanted it to be completely across the board, you'd just haircut the value of the £ - that way anything held or valued in Sterling is immediately and automatically taxed. It's quick, easy, and doesn't need to expend a moments effort in wasting time trying to argue over who owns what and what it's worth.

Obviously why it can't happen.

@Baaaahhhhh

You mention your DM selling a second home she had bought as an investment for her old age, and paying CGT on the gain. As you know, you don't pay CGT on your own main home.

If she'd bought shares, or gold bars, or antique porcelain, as an investment for her old age, would you have expected her to pay CGT on the gain?

Do you think that all investment profits should not be taxed? Or only that investment property profits should not be taxed?

Crazy idea. Why should I be punished because I’ve lived frugally? Like others on here, I’d have to sell my house to fund. Which would then lead to an instant 10% drop in the value of houses, as everyone would be doing the same - so no bugger would want to buy a house! Bonkers.

Like others on here, I’d have to sell my house to fund. Which would then lead to an instant 10% drop in the value of houses, as everyone would be doing the same - so no bugger would want to buy a house! Bonkers.

Which is why the scaremongering about a flat massive tax on all property is extremely unlikely to happen in the real world? Think tanks can point out that there's trillions of wealth lying around all they like, but in the real world, the practicalities and knock on effects are major if some kind of straight blanket charge was levied.

If Corbyn was in power, I might be slightly concerned that some of the more outlandish wealth tax suggestions might be considered, but realistically, it needs to be done in a way that doesn't cause additional financial hardship. Taxing someone's £400k house when they're barely managing hand to mouth because they bought the house 15 years ago for 150k is NOT going to help the economy.

Don't get me wrong, it's not like I think the Tories are particularly interested in the common people. But blanket massive taxes are not going to work. Realistically, a wealth tax will be on the genuinely wealthy ie not the rest of us (and will probably come with loads of loopholes the genuinely wealthy will pay expensive accountants to get them out of).

The biggest risk is for people who have, say, bought a house in central london 20 years ago for a perfectly reasonable amount of money. They've now paid all or most of it off while the value of their property has gone through the roof. So suddenly, their "modest" 3 bed house in putney represents real meaningful wealth, even if they can't necessarily spend any of that. If a wealth tax is on assets, minus debts, of say, £1mn, THOSE people could find themselves in a difficult situation.

As for lottery wins, I've always been confused that taxes aren't paid on that. But I assume taxes are paid subsequently on the substantial earnings those winnings should generate? And of course, taxes via VAT, stamp duty etc paid on expensive new purchases with that money?

Or only that investment property profits should not be taxed?

PigletJohn I didn't say it shouldn't be taxed. What I did say is that you can't tax it multiple times. She is using the capital to pay for her care, which saves the taxpayer hundreds of thousands. She is also subsidising others. If she didn't have that capital, or the capital was reduced by an additional tax, then the taxpayer would have to step in. Her estate, if there is anything left, will also pay tax at 40%. Swings and roundabouts, you can keep taking off slices here and there, but eventually there is nothing left, and the taxpayer then has to step in to support you. Same with taking money out of peoples savings or pensions. You either give people the incentive to save for their old age, or you tax everyone into oblivion and then have to support them through their old age. It's the future that's screwed, and our children will all pay the price.

They should introduce CGT on main homes. Plenty of very rich boomers who have seen their house values rise 1000s of percent in value without lifting a finger, just because they were born at the right time and paying no tax on the increase while young people in rented accommodation are paying 20-40% tax on their paltry earnings from work. Taxes should be moved onto unearned wealth and away from earned income.

What I did say is that you can't tax it multiple times.

So why is interest on savings that have already had tax paid on them also taxed ?

We used to tax windows at one point.

Tax data. A penny per megabyte. Job done.

Stamp Duty is a horribly unfairly-levied tax. People in the south-east are punished for having to pay a fortune for their houses compared to a similar house elsewhere in the country. Also, anybody who moves 'sideways' to another town - or even just next door.

If a home isn't going to be considered a fundamental human need and not a luxury , then for any purchase tax to be remotely fair, it should be adjusted to allow for expensive housing hotspots and ideally levied, from your second house-purchase onwards, on the difference in the value of the properties, not the whole value.

In theory, you should maybe even be able to offset the tax if you move to a cheaper house.

At the moment, you could lose your job, be forced to sell your £1m house as you can no longer afford the huge mortgage, buy a £300K house nearby - and have to pay SD on its full value as though you'd decided to treat yourself to a great luxury with your personal wealth.

@MiddlesexGirl

why is it that salaries are ok to be taxed extra to pay for this mess but personal wealth is not?

Because for most people their personal wealth has been gained from their salary or business profits and therefore already taxed once.

Of the ideas on this thread I'd support a luxury tax and I'd support a rise in general taxation. I don't think a wealth tax would be as easy to implement as Polly thinks.

That’s a ridiculous argument. Every time you buy something except food, you pay tax on it. When you fill your car you pay VAT and fuel duty out of taxed income. We pay countless forms of tax on the same money all the time. Unearned gains on a main residence never get taxed, let’s go for them - that’s a bill I’d be happy to pay.

I have assets from when I had a high paying job where I paid a lot of income tax. For health and other reasons I'm now self-employed and earn around 12k a year. My assets are my pension and a fund for care as my health deteriorates. If I had to pay this tax it would wipe out anything I have for the future, leaving me dependent on benefits.

The only real asset most people own is their house, and they only own part of it whilst they have a mortgage. If you want everyone to pay 10% of the value of their house, most people - me included- would have to sell their house to raise the 10%. The housing market would crash overnight as people had to downsize to pay the tax.
Surely a more sensible way is to hike inheritance tax - the money is then coming out of a pot that can afford to pay it. None of us rely on inheritance to pay our bills.

CGT on main homes would have I think undesired consequences. It's going to discourage people from selling, which discourages people from moving to seek new jobs, which depresses the economy. It will probably also create even more opportunistic landlords, as people choose to rent their house out rather than be hugely taxed on selling it. I'm not sure what the impact on house prices will be - buyers will have less money but there will be fewer sellers.]

The biggest "winners" will probably end up being the mortgage lenders as it becomes harder for anyone to get and stay mortgage-free.

And the people hurt the most will be the elderly who are selling their homes to fund their care, who will become less able to choose and will sooner need to rely on the state. The tax in this case backfires anyway since the care needs paying for one way or another. And it also means that it's central government that grabs the tax, but it's local council budgets that get hit for the care bill - and will then no doubt get blamed for the financial troubles that are of Westminster's making.

I would also say that the "on paper" gain in house prices is in a sense not a real gain. Yes the value of your house in pounds and pence has gone up, but the price of housing everywhere has gone up and the cost of renting too. So if you move house you're not automatically quids in, and you're not going to jump into a much bigger place in an equally desirable area.

SO

If you were someone in a low income family, but had managed to accrue a small amount of savings (and I mean tiny, like £1-1.5k) would you be drawing that money out of the bank to put under your bed?

Stamp Duty is a horribly unfairly-levied tax. People in the south-east are punished for having to pay a fortune for their houses compared to a similar house elsewhere in the country.

Why do they have to live in the South East ?

You also have to remember the knock on affect of people choosing to buy or extend. I know so many people, particularly in the SE, who decided that with stamp duty and increased prices it is cheaper to extend to move. This means that the prices of the houses go up as theyre all extended and there are less and less medium size properties on offer driving their prices up.

Then add in the new build which are virtually all flats and nothing else and you end up with massive gaps in the housing market. A 2 bed flat in my area costs about £300k if it isn't new build and about £400k if it is. A three bed house is arouund £750 and four bed houses start around £900k.

and it's all a bit insane