Tax system

[Cupcakes2024]

Watching some of Jamie dimon from JP Morgan and chase bank, speech's and one point he advocated is rather than tax the rich to raise taxes is instead its better to have a balanced tax system , basically is Jamie correct ?

I would love to know more about this and I have so many questions 🤣 1. Is wealth actually taxed? I know inheritance tax is a thing but is that for all or just for those that are not rich enough to find a loophole? 2. Can investments like bonds or actions in a company be taxed? Or only if they sell them?

I'm really not sure why you keep arguing that the deal your age cohort got is worse

I’m not. It isn’t worse. I’m not sure why you all think you’re the only ones getting a raw deal and older generations have had it so much better. Every generation has its challenges, they’re different. None of you arguing on this thread are prepared to acknowledge that.

I’m not. It isn’t worse. I’m not sure why you all think you’re the only ones getting a raw deal and older generations have had it so much better. Every generation has its challenges, they’re different. None of you arguing on this thread are prepared to acknowledge that.

Of course every generation has its challenges but that doesn’t change the fact things have got harder. But for whatever reason you cannot acknowledge that.

Younger people have been disproportionately affected by low productivity & stagnant wages & of course housing.

“the authors found that millennials born in the late 1980s earned, on average, 8% less at the age of 30 than their counterparts from Generation X did at the same age (Generation X is defined as people born between 1966 and 1980 and, therefore, now aged between 43 and 57). The audit also found that the typical weekly pay of graduates aged 30-34 fell by 16% in real terms between 2007 and 2023”

“Total net wealth in the UK has surged from about three times GDP in the mid-1980s to more than seven times in 2020, growing by £5.9trn. Some 73% of that increase has been accumulated by people born between 1956 and 1975 (people now in their late 40s to late 60s). Those generations are richer and younger than previous cohorts, but the next generation has significantly missed out. For example, the average Briton in their early 60s in 2018-2020 had nearly £170,000 more in assets than counterparts of the same age 12 years earlier, before the financial crisis. But the average person in their late 30s had almost £30,000 less.”

“According to the Centre for Policy Studies analysis, the share of national wealth owned by over-55s has risen 11 percentage points since the financial crisis. The share owned by under-55s has fallen by the same amount.”

“At the start of the century, 67% of households aged 30-34 were homeowners, but by 2021 this figure had fallen to 47%. Taking the wider 25-34 cohort, the proportion that owns their homes is currently just 28%, down from 51% in 1989. Pensioners now have higher disposable incomes than working households, on average, and although one in five lives in poverty, one in four lives in a household with assets of more than £1m.”

“But it really is true that some generations get a better deal than others. Someone born in 1956 will pay (on average) about £940,000 in taxes over their lifetime but receive state benefits of around £1.2m. Someone born in 1996 will get less than half that from the state – and barely more than someone born in 1931, a decade before the term “welfare state” was first popularised.”

Because it’s not necessarily true. You have no idea how hard life was for families raising children 40 or 45 years ago. All you see is a generation reaping the benefits of a life time of working, saving, paying the mortgage and paying into their occupational pensions. What you don’t see is what brought them to that point. And for whatever reason you won’t acknowledge that.

@BIossomtoes ive posted some statistics which details why I believe things have got harder. Feel free to post evidence that things haven’t got harder….

@shielder

Well young people today are worse off because they are spending all their money on fancy new iPhones. Whereas young people in the 1970s didn't.

(OK - that may have something to do with the fact that iPhones weren't released until 2007)

Frankly there are more holes in that article than the average colander. I’ll go through it tomorrow and point them out. I’d also really like to know the source of the numbers it quotes.

Lol, honestly do something else with your time. The whole “but it’s not harder because I say it’s not” isn’t really adding anything to the conversation.

What a nasty response. The other poster was countering your rather narrow definition of "harder", that's all. Statistics tell a story, but not the whole one, and they can be used selectively to prove almost anything.
Working conditions, the rights of Women' and minorities, health provision and even road safety have improved immensely over the period in question, just to take a few examples. I don't think anyone is saying that there isn't unfairness today, but the implication that it's a plan hatched by the evil boomers is hard to take if like me you're a boomer who is still working and paying tax and NI and has (for example) never voted Tory. It hasn't been done in my name or with my support.

It’s not nasty, it’s honest. As I said counter my argument with statistics that prove it hasn’t got harder for younger generations? And in that context income & wealth discrepancies aren’t narrow but very much a huge part of the conversation. Although yes it’s great that RTAs figures are lower.
I’ve not said anything about evil boomers so I’m not sure what your point is there? There’s a weird narrative in these types of threads that anything factual is a personal attack. Take Brexit, older people were more likely to vote for it & I personally think it’s damaged the economy. Queue a load of responses “I’m old & didn’t vote Brexit”. Right but that doesn’t change the facts…

What is the point in arguing with someone who doesn’t believe in wage stagnation, the change in housing costs eg house prices vs wages, reduced social housing, tighter lending, the change in pension schemes?

I’m assuming they meant women born in the 1950s who would have turned age 60 between 2010 and 2019 and were the first one to fell the effects of the pension age increase. My mum was born 1951 and had lived most of her life expecting to retire at 60, I can’t remember the exact age it changed to something like 63 and a number of months as it was phased in so there wasn’t a cliff edge of being over by a day and having to work an extra 5 years. Her sister was born in 1954 and her retirement age changed to 65 and then changed again later to 66

None whatsoever and nobody on this thread has said that. The article you quoted doesn’t bear scrutiny. You know that or you wouldn’t have told me not to bother. You’re firmly stuck in your tunnel vision and you have no intention of seeing outside it.

All the things you mention have had an adverse effect on society, only an idiot would say otherwise and they’ve affected everyone.

Which I didn’t say, I said it’s made things harder for younger people. Only an idiot would say it didn’t.

But again please feel free to show data that suggests I’m wrong.

I will have a go at answering the questions and avoid the arguing.

yes, certain wealth is taxed but at set points. If I buy shares in a company, the dividends are taxed as income and the increase in the value of the actual share is taxed when I sell it. The tax on the sale is capital gains. Same for houses that aren’t a main residence. Gains on the sale of a main residence aren’t taxed.

if I die owning the asset, then it is part of my estate and IHT is due unless I leave it to a spouse.

It is hard to tax the value of assets before they are sold as the person may not have the cash to pay the tax. When labour politicians call for a wealth tax, it’s unclear if they mean to increase the rate of capital gains tax or impose a levy on assets owned.

Everyone on mumsnet thinks IHT can be avoided if you are rich. It’s not easy to avoid unless you can give away your house to your children, live 7 years and afford to pay your children the market value of the rent to live in it. Or you need to give away investments, not need them to live on and accept that if your child gets divorced, the funds are in the marital pot to be split.

I think what would help is if national statistics on ‘disposable income’ were revised to truly reflect disposable income in laymen’s terms.

Currently, official statistics deem ‘disposable income’ to be income after taxes deducted. I think if the calculation were to deduct typical housing costs, student loan, childcare fees, council tax and car running costs, then the disparity between generations would be highlighted.

This isn’t about how hard pensioners have worked in the past, but having a true view of who’s got more disposable income such that when ministers consider increasing taxes, it isn’t automatically middle aged/young working families who are the first port of call/expected to cough up.

The other things I’d like to happen are

a) a recalibration of ‘typical pensioner’ portrayal in mainstream media. Currently, the image is a poor woman trying to find a few pennies in an old fashioned purse. That is not the case now

b) a national reflection on how far the narrative around pensioners’ rights to state support have shifted from ‘preventing destitution and poor health’ to ‘being kept in the manner in which one is accustomed’. It horrifies me to see complaints about the state pension that compare said income to typical salaries.

c) a national agreement that it is NOT ok to expect young families living in precarious rented accommodation to pay for wealthy pensioners to continue to inhabit large properties (via taxation that provides benefits to pay heating bills, for example)

This is fundamentally about being able to invest in the next generation. A penny in the pocket of the working family, is a penny spent on a child’s clothing, university fund, food.

Thanls so much for responding. I am always keen to learn more as I feel the general population is so ignorant on these matters. I think a levy on assets owned above certain amount should be imposed in order to tax wealth, I mean if people can borrow cash against those assets then this means they can just start more ventures based on assets without paying tax on said assets so this widens the divide between rich and poor further. I appreciate it is probably very difficult to implement.
For the marital split, don't a lot of rich people avoid this by putting big estates in a trust?

if people can borrow cash against those assets then this means they can just start more ventures based on assets without paying tax on said assets so this widens the divide between rich and poor further.

That’s the very definition of capitalism.

*HFJ · Today 11:44

I think what would help is if national statistics on ‘disposable income’ were revised to truly reflect disposable income in laymen’s terms.

Currently, official statistics deem ‘disposable income’ to be income after taxes deducted. I think if the calculation were to deduct typical housing costs, student loan, childcare fees, council tax and car running costs, then the disparity between generations would be highlighted.

This isn’t about how hard pensioners have worked in the past, but having a true view of who’s got more disposable income such that when ministers consider increasing taxes, it isn’t automatically middle aged/young working families who are the first port of call/expected to cough up.

The other things I’d like to happen are

a) a recalibration of ‘typical pensioner’ portrayal in mainstream media. Currently, the image is a poor woman trying to find a few pennies in an old fashioned purse. That is not the case now

b) a national reflection on how far the narrative around pensioners’ rights to state support have shifted from ‘preventing destitution and poor health’ to ‘being kept in the manner in which one is accustomed’. It horrifies me to see complaints about the state pension that compare said income to typical salaries.

c) a national agreement that it is NOT ok to expect young families living in precarious rented accommodation to pay for wealthy pensioners to continue to inhabit large properties (via taxation that provides benefits to pay heating bills, for example)

This is fundamentally about being able to invest in the next generation. A penny in the pocket of the working family, is a penny spent on a child’s clothing, university fund, food.*

Absolutely agree with all of this. 100%

Yes, imposing a flat rate tax on assets over a threshold works and the assumption is that the main residence would be omitted. The opposing argument is that people that wealthy can move from the UK if they don’t like the tax and therefore these people pay no tax here and the country is worse off. For every JK Rowling there is a Lewis Hamilton who moved to Monaco as soon as he was rich.

Re trusts, I am no expert and there may be people here better placed. It’s no longer correct to say UK trusts have beneficial rates.. Tax is paid by trusts at 45% on all non dividend income over £1000 every year so more than an individual. Trusts also pay a charge every 10 years on the value of its assets and so again, more tax than an individual pays.

To answer the second question -

one spouse can leave their entire estate to their spouse free of IHT. On the 2nd spouse’s death, the estate goes to the children and IHT is due. Assuming the marital home is included, IHT is only due if the estate exceeds £1 million.

Alternatively spouse one leaves the estate to a trust and there is no spousal exemption so IHT is due. The planning I think you refer to is for the estate to go into trust when both parties are alive and then the couple and later children receive incomes from the trust. It’s very involved and expensive and because IHT is only due on estates of over £1million, you need to be rich.

often the driver is actually control. If funds are put in a trust, the trust could lend a beneficiary (say the child) the deposit for a house. The trust would have a charge over the house and in the event of a divorce, the deposit returns to the trust. It is outside the divorce pot. The beneficiaries could also be limited to say biological grandchildren, cutting out concerns over step children inheriting later on. Not saying i agree morally with these choices.

Much appricated all