AIBU to think a 2% wealth tax on the rich is unfair?

[Mrspepperpotpot]

i just saw an article and petition from oxfam saying if we taxed the ‘super rich’ 2% it would solve a lot of problems. They were suggesting 2% on anyone worth 10 million. Everyone in the comments agreed

I just don’t understand this mentality. High earners are hit at every turn. They usually use private health and private schools, pay the most tax, get hit with tax on savings, IHT, land tax, pensions etc etc Why on earth should people earn money to be taxed on it, to then be taxed on it again and again.

Why do people begrudge others having money when they’ve worked extremely hard to get it? Why isn’t there uproar about benefits instead?

I know this will never actually happen but the amount of people who seem to want it to is astonishing

The Duke of Westminster owns the Grosvenor Estate, which has it’s assets in a trust fund. All trust funds pay 6% tax to the government every ten years. Any money taken as income out of the trust is also taxed at the normal UK tax rates.

So, as a pp has stated, he will be paying the equivalent of £60 million in UK tax per year just for the trust. Plus normal UK tax rates on any income taken out of the trust.

He hasn’t inherited 9 billion tax free.

Now all the VAT one has done is close schools

https://www.thetimes.co.uk/article/59776b58-0d17-456d-9414-d45cc922468d

From the Grosvenor Estates website, as widely reported in the national newspapers about seven years ago.

With regards to the...(tax), instead of a payment of 40% inheritance tax upon death, the majority of the trusts pay a recurring rate of 6% every 10 years – the same that is levied on all UK trusts of their type. This means that over a full lifetime, the trusts will pay this tax many times over, with the added advantage to the UK Exchequer of its regular, effectively in-advance payment schedule. The remaining trusts will be subject to 40% IHT on the death of the specific beneficiary.

Just to set the record straight. Over the Duke's lifetime the UK treasury will probably receive between £2.4bn to £3.0bn earlier than it would otherwise have done. It is all set out in the 1984 IHT act.

It does concern me that whenever any option to raise money comes up, people immediately jump to saving it instead by 'cutting welfare'.
Invariably ignoring that a huge chunk of it can't realistically be cut because it goes on retirement pensions (which could be means tested of course, but that raises hackles very quickly) Another chunk due to people not earning enough to live on, due to a combination of exploitative rents and wages (yet we can't get businesses to pay out more or cap private rents because...reasons).
It ignores that we have a health crisis, that 25% of us are disabled, which even if they can work are less likeky to be offered jobs, and may need support in other ways to work, such as the access to work schemes.
That the number of children who are disabled has doubled in the last two decades.
All they fixate on are the anecdotes about people they believe are fleecing the system. I agree with you. They exist. I've worked adjacent to welfare benefits long enough to know this. But also to know that its not an easy thing to pull off.
I keep waiting for the evidence that shows the size and scale of the problem and what a 'crack down' would look like, and importantly, that it saved sufficient we wouldn't need to consider taxation options.

Ridiculous assumption
I’ve got a millionaire friend with a building company
works horrendous hours and at one point sold there home moved in with parents to fund a building development
That’s why he’s a millionaire and I’m not

It’s not fair at all. You are punished for hard work.
Welfare used to be a last resort to keep people from genuine poverty funded by anyone working. Now it is a life style and actively discourages hard work.
We need to make people in receipt of benefit contribute to society the way more wealthy people do. Want your benefit, pick up litter from the local area don’t sit and watch Sky TV (funded by the tax payer).

keep benefit fir those who genuinely need it and stop taking from the shrinking hardworking section of society.

Why are so many people now disabled? Because we’ve lowered the criteria to be classed as disabled which has meant a ridiculous number of fairly minor ailments now put people in the disabled category

6% every 10 years - £60 million on 8 billion is a racquet - can I pay that?

They only then pay tax in income generated from assets and CGT is only liable when disposing of assets.

Can I pay those rates please? But you grovel and scrape at their shoes, they are better than you and me clearly

According to the latest reports the wealthiest 10 per cent of earners now pay almost 60 per cent of all income tax.

You may (or may not) have a point, but it's not for random strangers on an online to determine what does and doesn't constitute disability - that way harms a lot of people who are genuinely sick and disabled, just to get at people deemed not disabled enough.

60 million per year, so 600 million every ten years. Plus usual UK tax rates on any income taken from the trust.

Anyone can set up a trust. If you think it’s so lucrative, go ahead.

He pays the equivalent of inheritance tax as a regular tax of 6% of the value of the trust every 10 years.

How do you work out those numbers? 60 million every 10 years is way off 2.4 billion

It was reported he inherited 9 billion. 6% is way off that.

He is claiming the tax paid on the rent he charges is from him. It's not. Ultimately the tenant is paying that.

Which also raises the issue that the king charges the charities he is "Patron* of huge sums in rent.

It is a big con, but they are clearly better than us.

That is no way near equivalent

60 million every year not every ten years.

Saying he doesn’t pay tax on rental income his tenant does is a bit like saying you don’t pay any tax on your salary - your employer does, or you don’t pay tax on petroleum- the supermarket does.

That’s what I am hoping they will explain. - after all if assets are jointly owned, then it can’t be equitable for the whole sum to be taxed individually. Tbh I think there are so many holes in this and it has not yet been defined as to how it would work. For example, if you have a £1m mortgage on a £2m property, you only actually have assets worth £1m, don’t you? The irony is that billionaires - top 0.1% - WILL restructure their finances to avoid any new taxes. Many of the people on the top 0.5-0.3% do not actually have anywhere near £10m in assets individually - it’s an urban myth.

It makes more sense [is easier, thus cheaper] to look at an increase CGT on shares, properties etc and to simply add that penny to income tax. Which incidentally, we are happy to pay. Most of out friends may roll their eyes and whinge, but at the basic level we all accept that there is nowhere else to go for money if we want a fair and equitable society, and to invest in our defence systems at a time when the world is very volatile. The ‘wealthy’ are not all ogres - we care and want to do the right thing too. We have families and kid and many of us came from ordinary and working class homes.

But I think the proposed ‘wealth’ tax will fail as it is only property (due to being registered at the land registry) and share portfolios (because the interest on these are declared in annual tax returns and are also listed on company registers) that the government can track. People will start to liquidate those assets if it lowers tax liability - so, yes, it will impact pension portfolios [that everyone is impacted by], lead to stagnating business/economy as no-one will want to invest in new businesses, and bugger up the housing market for not only the upper end of the market but also for ‘ordinary’ home owners in the north and south as the erosion of house prices inevitably trickles down.

Burnham is not, I think, that foolish. You don’t get to Cambridge with his background if you are an idiot and he isn’t.

Nearly all countries in the OECD have an exit tax. Even the laissez-faire USA will charge a wealthy person 23% on unrealised gains if they leave. There is no reason we should not be taxing heavily those that make money using the UKs resources and then leaving.

Again, what is the evidence for this? When did the term disabled become redefined, and what is the new legal criteria? As far as I'm aware it's the same as it always has been, but happy to be corrected with facts and evidence.

My understanding is that it's largely due to an aging population, as the older we get the more prone we are to disabling conditions.
There is also the issue of poor access to treatments due to NHS delays and reduction of support for mental health conditions. The lack of early intervention and the increased waits for diagnosis and treatments has led to conditions that may have been reversible becoming a long term problem, and other people still waiting for the operations they need to be able to work.
The reason for the increase in numbers of children with disabilities isn't fully understood. Some argue it's due to older parents, but this is controversial, so you'd probably want to do your own research on that.
Then the cumulative effects of decades of austerity has played a part. 31% of UK children are raised in poverty. This means a significant number of UK families lack the resources to optimise their health. Their diet is not ideal, they lack access to activities and spaces that support mental wellbeing.

I’ll break it down for you.

1. The 6% every 10 years is on the £9bn value of the trust. Doing basic math £9bn x 6% gives £540m. To then simulate an annual payment ignoring inflation etc you could then divide by 10 gives £54m a year.
2. any money out of the trust to the Duke is paying normal income rates. Say he takes £10m he would pay circa £4.8m straight away to the gov.

In total that is circa £59m a year to the exchequer (admittedly making some withdrawal assumptions).

if we assume the Duke lives for another 60 years given his age (which is more than the very conservative 40 years anticipated by the prior poster) you can multiply 60 by £59m and get £3.54bn.

Not sure what point you are making at all on the rent paid. It will go into the trust if the property is owned by the trust and then the 6% will be paid on the rent (after maintenance and operational costs) and any valuation of the property.

Saying that they are massive tax dodgers just isn’t true. Or fair.

Oh dear, you have completely missed the point which is that it’s relative. Most people don’t just have stashes of cash 10K to an average couple would be difficult to find and no doubt they would consider it deeply unfair that they were being forced to find it. The same applies to very wealthy individuals.

6% every 10 years (not even every year) is a paltry sum. That is instead of inheritance tax.

If you are one of the small few that inheritance tax applies to why aren't you cross about how the 0.1% get preference? Why is your little inheritance taxed at 40% whereas some people get a much lower amount.

I mean, I’m no labour apologist, but to put the size and cost of our debt at the feet of labour is a bit sneaky. We are still massively impacted by the GFC, let alone Covid and Brexit. They didn’t exactly create the cost driven inflation either which is a result of an import based model this country seems to have wanted for decades

I agree. And that’s not to diminish teachers, nurses and other professions or jobs which are horribly underpaid. They deserve more, but the stress and extremely long hours associated with very high earning roles shouldn’t be equated to every other job.

Why is it relative ?

It would only affect the super rich. The average couple would not pay anything. Only the super rich would. In fact, with the super rich, halve their wealth could be taken, and most would still be super rich. Such is the unequal distribution of wealth.

There seems to be a thing on these threads where people with a couple of mil think they are super rich. But that is who we are talking about. We are talking about people with multiple tens of millions into hundreds of million. Billions even.

I have caught up with the Dan Neidle website and all these proposed taxes - tax the rich, LVT, British passport tax abroad etc.
It is ALL basically a no go, Britain has run out of other people to tax.
We have shafted plan 5 students with 40 years of debt at 29% basic and 49% higher rate tax. These are to good uns, many are working.

The real problem is NEETS, too many claiming benefits of all kinds and an elderly population. You cannot tax your way out of that! You have to get more out of these groups first.
So 5-10% inheritance tax for everyone is the best option. People will be dead, most will have used the NHS. Cut benefits for NEETS etc. and provide training.