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

The 30% increase is what the equivalent private sector pay is for my specialism. I can't comment on others, but it's likely to be similar for anyone working a career that has directly comparable roles in both the public and private sectors (and there are lots of them: accounting, tax, HR, project management, law, IT, procurement, commercial...).

There are lots of e.g. lawyers in the public sector who accept the lower pay because the pension and flexibility is good. Remove the pension, and suddenly the private sector package looks significantly better.

Yes flexibility. Another day, another dollar.

If you work in many of those private practices they will probably give you a higher wage because you need to be on call over weekends, or stay late so you can't pick up your little cherub at 4pm. If you count up the extra overtime they do, that "day rate" probably drops quite a lot.

I've worked in private practice before, so Im familiar with it. It's common for people in these sorts of roles as having experience in different sectors can be very good for employability. E.g. Having experience at a government regulator is really useful if you then go into consulting in the regulated industry.

All jobs have their upsides and downsides. But if the pension goes, the public sector will lose its main upside, and will therefore lose people. Public services will get even worse.

I find it quite patronising that you assume that public sector workers couldn't possibly realise what private sector work is like. That may be true for some careers that are only really found in the public sector, but not for most in my experience.

No absolutely not it would force people from their homes
My parents for example live in a nice 3 bed house that they worked there arses if for but its worth money like all houses but all they have is their pensions to live on , how would those and people like them pay tax
Also if rich people would up and leave to live elsewhere

The use of the phrase "little cherub" is also patronising in the extreme.

I'm childfree BTW, but it would be patronising even if I wasn't.

Yes it is because we cannot borrow and we cannot tax low/middle earners....

So we will have to look at changes to council tax bands, inheritance and asset taxes.....

Growth won't happen for years... if at all....

So we either continue with failed public services or we tax those who have the most more....

These are the choices.

Schools operate on an SLA level for many of their functions. If you put schools business services into Google you will come up with many companies that offer these services in education and will be able to see what services they are.

I think this is (unfortunately) the long and the short of it. The choices are limited, and neither option will be particularly palatable.

@Dunelmer totally nothing go do with this at all you really are very jealous of people who have been able to but their Ha house aren't you ? The Op didn't even say in that what discount she was getting your assuming
But it has zero to do with this and your claim that taxes subsidise all HA which is also untrue

@Transferwaiting That still doesn't prove anything sorry cos you still haven't told me what percentage of business this represents. And it is important as 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? These businesses would have to represent a lot of UK business for such a sweeping statement to be made

The existing taxation system is a wealth tax. The more you work and earn, the more you are taxed.

so what on earth are you talking about?

the government could try using that tax appropriately and not lining their own pockets with it.

I always wondered why the national lottery was a private company and not run by goverment , I know it gives a certain amount to good causes but imagine if it was a not for profit at all and all funds after running/ prizes went to good causes
I know there are smaller lotteries around but the actual main big one must raise a fair bit

No it would be outrageous, and lead to more problems than it would solve. Loads of average people are only asset-rich on paper, how they are going to physically generate the cash? Sell their homes, cars?

Anyway before another single penny is forcibly taken off anyone I'd want to know what the plans actually are for the intake, HOW that extra money is going to reform things effectively, and how we measure this. I'm with you that "sticking plaster solutions" isn't needed, but people shouldn't be penalized in order to throw "sticking plaster money" around either.

Earnings are a small part of wealth! I am worth several million. Not much of that was earned. I’ve inherited, bought and developed my home, received gifts that have increased in value. Lots of what I have never came from employment.

So many posts, so much evidence that the hard of thinking are online today ....

A discussion about taxing wealth is about the method and basis for a tax ... not a commitment to tax at any particular level. I really cannot fathom why so many people are making assumptions about the level of tax that may be levied under either approach.

It the rate of a wealth tax were set at 0.001% of wealth, a person with a million in cash in a bank account would pay a tenner. If it were set at 45%, (like higher rate income tax), they'd pay £450k. That's quite a spread. Clearly it would be stupid to use the same levels of tax for wealth as you do for income., but there ought to be some level that would be electorally acceptable.

If you pointed out that presently, people already pay income tax on interest and dividends. So the same person as above with a million in cash, earning 3% interest, has income of £30,000 per year, and if they are a higher rate tax payer they currently have to pay £13,500 in tax. That is identical to a 'wealth tax' of 1,35%.

Calling it a wealth tax or calling it an income tax doesn't change the nature of taxation. It is just a different mechanism used to calculate the amount of tax levied. There are some advantages to levying the tax based on a assessment of wealth - it is harder to avoid, for one. There are some disadvantages too - mainly psychological ones, but there are also some practical ones about hard-to-value assets and liquidity. There are some advantages to taxing income - not least, the fact that the income transaction means that there is ready cash available to pay the tax at that instant, but there are some disadvantages - not least, it is possible through clever accounting to disguise, and minimise income whilst still enjoying non-cash benefits from owning assets, and thereby to avoid tax.

Broadly, if the obstacles to taxing wealth could be overcome, you could broaden the tax base and require each individual tax payer to pay less overall, for any given level of government spending. But it seems, from the comments above, that most people prefer to pay 45% income tax on incomes above £50k and to let the super rich off free. There's really no helping some people ...

I will tell my friend they are a liar. Good to know.

I have no idea who your friend is or what they have said but if they have said that University employees get 80% of final salary for life, providing you have done the requisite number of years doesn't really seem much of a downgrade. they are badly mistaken. If they are a University employee and think that is what they will get they need to do some reading. You can point them here if you like www.uss.co.uk/for-members/your-pension-explained/retirement-income-builder

looks like they will be disappointed then.

But it isn't often taxing those that have the most.

Our current tax system is heavily based on taxing earnings. A wealth tax taxes assets a person holds. Two totally different things. The only extent to which income tax taxes wealth is the way it taxes income generated by the assets held. Anyone - like the PP - who has inherited lots of assets is taxed relatively lightly in comparison with the average worker. This seems to be an area where tax receipts could fairly be raised.

The other point is about unproductive assets. By taxing wealth rather than income, it incentivises people to exploit the economic potential of their assets. So owning vacant second homes would be less desirable than renting them out. At present, the tax regime allows wealthy people to 'waste' the assets they own by using them in unproductive ways. Like having a croquet lawn instead of a vegetable patch. In a world where everyone has plenty, this is a luxury that society can afford. In a world where everyone is struggling ... maybe not. (See also WW2 propaganda to "dig for victory" ... same rationale).

Apologies if this has been mentioned before, but unlike the Swiss we are not accustomed to putting all our assets on an income tax return. And what value would we put in for a house or car, for example - second hand value, replacement value, or what. Suppose the house or asset was in poor condition? Who would check the figures? It will be a total nightmare for very little gain....

See earlier post. You'd let the owner decide the value themselves, but in addition to a wealth tax based on that value, you'd have a CGT liability for any proceeds in excess of the last recorded value if and when it is ever sold.

That way, there's no incentive to undervalue the asset to reduce wealth tax liability because you'd be hit with more CGT later.

Granted, there are practical issues with fast depreciating assets like cars (even expensive ones). But where an asset is held for it's potential to appreciate, or as a store of value (such as classic cars that are displayed, but not used) they can be valued in a manner similar to property. Same as fine art, collectibles, antiques. Racehorses are tricky ... they can die suddenly and depreciate to zero. Not sure how I'd recommend treating them ... so like all systems, there will always be some loopholes that remain. The trick is to reduce them to the lowest feasible level.