Is a wealth tax the only way?

[Cuppasoupmonster]

…of raising capital for proper public service reform and not just sticking plaster ‘solutions’. Just interested to hear others thoughts.

YANBU = yes it is
YABU = no it isn’t

That would be great! But it’s not what you get. For your 10% contribution (university also pays in 20%) get guaranteed maximum. £500 in retirement each year for every year that you worked in the university. So if you work for 20 years you get £10k a year in retirement, but as I said, this is the maximum and assumes for every year of your working life you earned at least £40k. If you are on £20k you would get £5k a year for your 20 years of working.

this may seem ok if you are on a poor defined contribution scheme, but the university pays well, well below private sector pay rates, so you get a private sector pension on public sector pay.

I can guarantee that if public sector pensions were downgraded, the government would not be increasing public sector pay to compensate.

For a start, salary has to be paid now (so it is a pressure on current budgets), whereas the reduction in pension payments will only have an impact in 20, 30 year's time. If they did increase pay, they'd be hit with a short/medium term double whammy of having to fundthe current pensions (which have already accrued) plus the increased salary bill for current workers.

Also, every single time that public sector pensions have been downgraded in the past (which has happened many times, chipping away gradually over the years), pay has not been increased to compensate.

If you think we have massive staff shortages in the public sector now, it's nothing compared to what we'd see if the governmt carries on with the cuts to pay/ conditions/ benefits that have been seen over the last 12 yrs.

Aaah yes, I agree, and what is considered as 'frittering away money' is different for everyone. For me, I do spend on hobbies etc, but I wouldn't if it meant that I had no savings or security. I am just saying that SOME people spend money on luxuries etc that they can't afford, then are in trouble when an unexpected bill comes along. This frustrates me because then they depend on others to help them out.

I also don't trust the stockmarket and don't really invest anything there - too risky for me.

But if you're just living in it all you actually have in practice is the same one house. The value of it might have gone up in the past, but it also can go down again (prices could easily fall 10-20% this year: they fell 15% in the 2008 recession remember). Taxing people on what their house might be hypothetically worth on the day you levy your tax seems very unfair. Taxes on investment (like buy to let properties) I could understand, but on someone's main home that they are just living in seems very unfair, especially if they are forced to sell the house to pay the tax.

They wouldn’t be forced to sell, see my previous comments.

That is not remotely close to the university pension benefit and never had been.

First it switched from a final salaray to a career average scheme years ago. Second, the benefits are far lower. The defined benefit part gives you 1/85th of your salary per year up to a cap of £40k. So even if you got a £40k job straight out of your pdD (unlikely given the casual contracts and poor treatment of young academics) the maximum you could get in your pension over a long career would be around £18 a year. Better than many people have but a very long way from where it was a decade ago and nowhere near your post.

£18k a year!

I haven’t a problem with you inheriting that amount.

I know what you mean about not benefiting. Whilst we probably could do with the money I would do my best not to touch it. I have a young son and unfortunately due to previous health condition not eligible for life insurance.

It gives me some comfort that’s there for him if anything awful were to happen to me.

And I am not convinced about the circulation of money being sacrosanct. Sure money needs to circulate, but sadly in the age of multi national Corps and huge umbrellas the top billionaires cream off vast amounts of our cash every time it does get circulated. Sure frittering means different things to different people but do not mistake that every time you buy something in Amazon the majority of that profit is going into Jeff bezo bank account never to see the light of day ever again. It’s a game of diminishing returns for the public.

Why should the general public be discouraged from putting away in the same way. At worst this gives them financial security and independence. At best the public is driving inflation to try to eat up some of Jeffs deep value and reduce our public debt.

I'd prefer to see a "Thieving Bastards" tax for all those greedy swindlers that made fortunes out of the Covid pandemic.
It could be extended to the liars who sold Brexit to line their own pockets, too.

@Mark19735 "Taxing corporations is morally and conceptually no different to taxing people."

I flew that argument on another thread on windfall taxes for greedy energy companies. IDK why so few people have any idea of economics, fiscal policy and finance.

The really rich find a way round all these things, it's the hard workers that managed to save a nest egg for retirement or to help their children that would get clobbered as usual. They are easy pickings, not rich enough to have fancy lawyers to protect their wealth or hide it offshore somewhere.

I used to think put more VAT on luxury goods, fancy cars, expensive jewellery, etc, or higher stamp duty on multimillion pound homes but I guess the really rich would get around those too.

@Climatic123 So you say that every year you work in a university you get £500 a year.

So let's say you work those 20 years, and you get £10k. That pot, to guarantee that amount through retirement (of lets say 25 years) would have to be £250k strong as a basic. But that's not all as I assume it would be an equiv of the value of £10k for those years. Using a compound interest calculator to represent 2% inflation it would actually be a pot of £372k.

So, if you purely had to build that yourself as a business owner like myself, who has no one else to contribute to their pension pot, you would have to put in £18,600 a year. I accept that's not including possible gains in the stock market that I may have, but considering it's risky and can go tumbling to, for ease let's keep it a straight calculation and even if you say there is a 10% increase over that period, it would still be over £16.5k. Not exactly 10% of your salary huh.

Stamp duty never makes sense when you could raise council tax on ledge properties instead and not penalise people for moving house.

It would be interesting if we could all have household VAT rates. Low income asset poor household? You can have a VAT rate of 10%. High income asset rich household you can have a VAT rate of 30%. Swipe your card at the checkout to have your individual VAT rate applied. Obviously the tax system needed to administrate this id a long way off.

But during that time you worked there you would have taken a 30% drop in salary from the equivalent private sector pay rate ‘because of the good pension’. Those that work in university legal departments, accountancy, HR etc are leaving in their droves because they can earn much more elsewhere. Lecturers are striking as there are few private sector equivalent roles.

So somebody who bought their house in what is now considered to be a nice part of London working as an office clerk back in 1978 for £13k (four times their salary at the time) now has to pay an enormous tax because their house is now worth £1.4m?

That's a real life example, by the way. Please tell me how that would work in practice.

Where do you get that 30% from?! I am genuinely interested - that's not a dig.

And do you think that anyone in the private sector is getting some kind of magic rise? If they do, it's because the business has made money because people have gone out to find more contracts/more business. It's not because the Govt is just throwing more at it so people don't strike.

I think there's scope in tinkering with VAT. Introduce a higher luxury rate (or rates) covering e.g. jewellery, classic cars, high fashion, fine art, etc. Expand the sugar tax to include more foods. Introduce VAT on high-calorie junk and ultra-processed foods.

VAT is easy to collect - the nation's accountants already do it on behalf of the government.

But it's the businesses making their money from that Government money too. Who pays for the devolved services now that they've been privatised? Except now we're paying for the profits for the CEO's as well as the service itself.

@Transferwaiting I assume you are talking about the sale of publicly owned assets to private investors. As it goes these industries remain highly regulated – in several, regulators set the prices companies can charge and the amount they are expected to invest. Tbh though, I am not against the nationalisation of some of those services, if people understood that actually then it would be the Govt purse that would have to pay for them to be maintained ie: in 2019 the water companies invested £8bn in infrastructure. So that would something else the Govt would have to pay out for that they don't currently.

What it might be worth you remembering though is that corporation tax brought in almost £63bn last year and micro businesses brought in a turnover of £808bn by themselves. Having less than 9 employees probably means they aren't doing business in "devolved services". They are running shops, factories, tech, or some other such thing. The idea that they deserve to be hammered because a few are doing business in something you view as "bad" is not really sensible.

@Limer Yes, in principle. The problem you have is that I remember one thread on here where people were being discouraged to give tomatoes to food banks on the principle that the poorest wouldn't have the money to run the hob to cook them. Therefore, you introduce a tax on what might be seen as "convenience foods" (let's say the pot noodle) and suddenly it's a tax on those who can't afford to buy anything other than, or the "processed food" because poorer people want more bang for their buck and politicians are out of touch. That's what happened to Osborne with his pasty tax.

That's not what I'm talking about. I'm talking about schools/healthcare/CJS services having to buy in privately owned ones such as payroll/IT/HR/ because those services are no longer provided centrally. It costs a lot more and ultimately it's still just the Government funding them but just paying the profits to shareholders too. Serco for instance who recorded a £230 million trading profit.

Trianglesquarerectangle

And you realise that some of the owners of said shareholders are pension funds that, astonishingly enough, don't only fund the pensions of millionaires, but little old ladies too?

On the schools/healthcare/CJS point, which services are run privately by which schools in the state sector? I can't find the data and I am genuinely interested as it would be good to know.

Can you also tell me what percentage of business this represents cos i think the point you were originally making was it doesn't matter if businesses have to pay more for the pensions for their workers compared to the public sector, cos the majority of businesses are skimming profits off the Govt anyway so anything you do spend on pensions is actually public money too?

It wouldn’t be payable until the house was liquidised aka sold. You can argue it’s not ‘fair’ but then you could argue tax per se isn’t fair.