Proposed Wealth Tax

[BootsieBarnes]

It's been discussed in the press that the Chancellor is considering a one-off wealth tax of 5% on assets over £500k. Allegedly this is being considered as part of the March budget to make a dent in the huge Covid debt the UK is facing.

So in real terms that would be a £25k tax bill for someone who has assets valued at £500k, such as property.

What do you think about this? would your family be able to swallow a tax bill that size?

I'm not doing any research, I just read that and thought about the impact it would have on families living in houses in that price bracket.

I've put on voting as well for interest. I'm not actually sure where I stand on this as I can see both sides, so this is just an arbitrary allocation just for voting.

YABU - people with assets that big should pay

YANBU - that would be unfair

on the subject of philanthropy
(or perhaps we should make a separate category for modern philanthropy?)
www.theguardian.com/society/2020/sep/08/how-philanthropy-benefits-the-super-rich

The common assumption that philanthropy automatically results in a redistribution of money is wrong. A lot of elite philanthropy is about elite causes. Rather than making the world a better place, it largely reinforces the world as it is. Philanthropy very often favours the rich – and no one holds philanthropists to account for it.

Philanthropy is always an expression of power. Giving often depends on the personal whims of super-rich individuals. Sometimes these coincide with the priorities of society, but at other times they contradict or undermine them. Increasingly, questions have begun to be raised about the impact these mega-donations are having upon the priorities of society

The result has been what the late German billionaire shipping magnate and philanthropist Peter Kramer called “a bad transfer of power”, from democratically elected politicians to billionaires, so that it is no longer “the state that determines what is good for the people, but rather the rich who decide”.

I don't think philanthropy is a moral duty for wealthy people, very often (sadly) I think it's just another way to avoid paying tax.
I sometimes think tax is a bit of a red herring anyway, its hoarding of profits that's more the problem. If the profits of a company were shared out better, surely much more people would benefit. Ordinary workers would have more money to spend on things like meals out, new furniture etc, more money is spread about the economy. A few billionaires with vast unspent sums in the bank surely don't do much for the rest of the economy. If they buy a painting for £100,000,000. Ok, I'm sure a few jobs are created from that sale, but if you have a better paid workforce, and have 100,000 people, each spending £1,000 on a painting for their livingroom, that's a huge, huge about more work created and money circulating around the economy. Immeasurably more benefit and growth to society.

I think there's an economic theory of if the economy is in trouble basically just give money to poor people. Poor people spend all their money because they can't afford to save it, this then pumps money into shops and feeds through to the rest of society. I wonder how well that theory would work now though and if it would just pump even more money into Amazon who would then do everything they could to avoid paying tax on it while paying warehouse staff for little their wages have to be topped up with tax credits.

I wonder if a way to redress the balance and force a fairer distribution of company profits would be to ban zero hours contracts and have laws to limit the use of agency workers or self employed then have much stronger union membership amongst the workforce?

it is no longer “the state that determines what is good for the people, but rather the rich who decide”

I’m not sure that’s a such bad thing. I don’t have much faith in the state to determine what’s good for us. I can’t see how anyone can argue that the housing schemes, libraries, art galleries, hospitals, public open spaces and gardens created by Victorian philanthropy were anything but beneficial. Likewise Dolly Parton’s wonderful scheme to get books into the hands of children who would otherwise not have them.

@Kendodd

I wonder if a way to redress the balance and force a fairer distribution of company profits would be to ban zero hours contracts and have laws to limit the use of agency workers or self employed then have much stronger union membership amongst the workforce?

these parts of the article that I linked to seem to speak to some of your points KenDodd🤔

'At present, most philanthropists with concerns about disadvantage tend to focus on alleviating its symptoms rather than addressing its causes. They fund projects to feed the hungry, create jobs, build housing and improve services. But all that good work can be wiped out by public spending cuts, predatory lending or exploitative low levels of pay.
And there is a deeper problem. When it comes to addressing inequality, a well intentioned philanthropist might finance educational bursaries for children from disadvantaged backgrounds, or fund training schemes to equip low-paid workers for better jobs. That allows a few people to exit bad circumstances, but it leaves countless others stuck in under-performing schools or low-paid insecure work at the bottom of the labour market. Very few concerned philanthropists think of financing research or advocacy to address why so many schools are poor or so many jobs are exploitative. Such an approach, says David Callahan of Inside Philanthropy, is like “nurturing saplings while the forest is being cleared” '
........
Do the wealthy overlook the real causes of inequality out of unconscious bias towards their own interests, or is that too generous an interpretation.... is philanthropy really just a vanity project?

Philanthropy is only a vanity project if it benefits nobody. I’d rather see some saplings nurtured than none.

"You could take all the wealth of the countries top 100 millionaires, but it would just be a few pounds if you spread it over the country's 60 million population."

If you took the wealth of the world's 62 richest people, it would equal the wealth of all the others in the world put together.

@mygenericusername

1p on all tax bands only raises £5bn though, 2p about £9bn. It’s not much money in relation to the cost of covid and breaks a manifesto commitment to not raise income tax.

isnt the underlying problem down to the wealthy having the power to shape the world in their interests so that they stay wealthy at our expense?

People should feel happy to pay tax. If you are paying tax it is because you have gained /earned it. We should feel proud to pay into our government and help the less fortunate.
I don’t have any issue paying my taxes and feel incredible fortunate to be able to contribute more to subsidise people who have less

People gained/earned the money, not for the dubious joy of giving half or more of their monthly earnings away. High income tax takes away choice. If I want to give to the less fortunate I give to charity (and pay the tax obviously as that choice has been taken from me).

I don’t feel proud or fortunate to ‘subsidise those who have less’ I feel resentful that so much of my income is taken away from my own family and children. I work hard to secure their futures and a good standard of living. My income is the result of years and years of hard work, study, tuition fees, training and stress not ‘luck’.

I could have made different choices, like not bothered with a career, had 6 kids instead, and relied on those higher earners tax to feed, clothe and house my kids and me. So many people take and take from the system and pay very little into it.

I’d like to pay less tax. If you keep taxing people for earning more, they’ll lose the incentive to progress their careers beyond a certain point. As the more you earn the more you lose.

I don’t feel I’ve got much out of the system tbh. I just see my earnings being sucked away to ‘subsidise’ others who don’t contribute. If we had a great NHS, great schools, a benefits system that worked, vocational help and opportunities, fair wages for those on lower incomes, tax would feel more worth it.

i agree hikeforward. BIL is a lazy tike who has always taken the easy option with no responsibility or stress - few qualifications as didnt work at school, declined any promotion offers as didnt want the responsibility, didnt want to travel far from home to work etc etc. Husband worked away during the week in a high stress/responsibility job that required lots of qualifications. Clearly husband has to pay more tax than BIl but dont see why it should be higher than currently

@XjustagirlX I would be happy to pay tax in general if governments didn't have a habit of wasting it, squandering it, pissing it up the wall, funding their own incompetence, spending vast amounts of it on themselves, or their own vanity projects, such as war, their own duckhouses (remember the expenses scandal? They think we've forgotten), their rich mates, garden bridges. I always feel highly resentful handing my money to the taxman when so much of it goes on things such as the above.

If you keep taxing people for earning more, they’ll lose the incentive to progress their careers beyond a certain point

In my experience this just isn’t true. I’ve never known anyone decide they’re going to bring their career progress to a halt because they’ll pay more tax. Maybe I’ve just worked with driven, talented people whose main motivation isn’t money. Challenging work that brings job satisfaction and growing responsibility is what always motivated me and the people I worked with. I honestly never even considered tax - after all I was never worse off after a pay rise.

The changes to pension taxation (LTA) has resulted in a fair few doctors retiring/reducing hours to the detriment of the NHS.

@VinylDetective

If you keep taxing people for earning more, they’ll lose the incentive to progress their careers beyond a certain point

In my experience this just isn’t true. I’ve never known anyone decide they’re going to bring their career progress to a halt because they’ll pay more tax. Maybe I’ve just worked with driven, talented people whose main motivation isn’t money. Challenging work that brings job satisfaction and growing responsibility is what always motivated me and the people I worked with. I honestly never even considered tax - after all I was never worse off after a pay rise.

It's well accepted that the likes of doctors and dentists refused extra shifts if the pay would put them in the £100-£125k earnings bracket where the marginal tax rate is 62%.

Also, fora like these have had plenty of posters who have refused promotions or overtime to stop them breaching the £50k earnings threshold where not only is there 40% tax on the excess, but they also start to lose child benefit.

There are far too many of these thresholds which are disincentives to take promotion or overtime or extra shifts because you end up with effective marginal tax rates (inc nic, child benefit claw back, etc) of over 50%.

If people refuse promotions because they don’t want to earn more money - because that’s what this amounts to - it’s their loss. There will be plenty of people who are happy to take those opportunities because they’ll still be better off and their sole motivation isn’t money.

After some experience, I have decided that it is better to earn plenty of money and to pay some tax on it

than not.

5% on assets over £500k is not £25k. If you had £501k of assets, the tax would be £50. Seems alright to me.

@VinylDetective

If people refuse promotions because they don’t want to earn more money - because that’s what this amounts to - it’s their loss. There will be plenty of people who are happy to take those opportunities because they’ll still be better off and their sole motivation isn’t money.

I would. I work so I can pay the bills, have a reasonable standard of living and go on holiday (when I'm allowed), nothing more.

You’ve just proved my point @PinkSparklyPussyCat. There’s absolutely nothing wrong with your approach to work but it’s not the prospect of paying more tax that would stop you taking or seeking promotion.

It's well accepted that the likes of doctors and dentists refused extra shifts if the pay would put them in the £100-£125k earnings bracket where the marginal tax rate is 62%.
Isn't the issue for then the wanky way their pension scheme is set up meaning they wind up actually paying the NHS for shifts?
I don't know many people earning £125k who object to 62% (and yes I know quite a few who earn at this level)

That was my understanding @DynamoKev. I seem to remember that the pension scheme has now been adjusted so that’s no longer the case.

@VinylDetective

If people refuse promotions because they don’t want to earn more money - because that’s what this amounts to - it’s their loss. There will be plenty of people who are happy to take those opportunities because they’ll still be better off and their sole motivation isn’t money.

Only if there is a surplus of supply of able workers. That's NOT the case with doctors and dentists, where declining extra shifts to avoid the 62% marginal tax rate actually causes real problems as there are very few alternative workers available. The massive shortage of GPs is a classic example of this in practice, where huge numbers of GPs reduce their working hours thus creating a vacuum.

*I don't think philanthropy is a moral duty for wealthy people, very often (sadly) I think it's just another way to avoid paying tax"
If a group of reach people were to post that low income people who volunteer to work for charities such as food banks only did so for virtual.signsling reasons, they'd be shot down to the ground.

Yet it's ok to claim that the rich only engage in philanthropy for the purpose of lowering tax.

I feel that's it the masses who should start eating humble pies rather the riches.