Whitehall “braced for private schools collapse” 7

[ICouldBeVioletSky]

Continuation of previous threads discussing VAT on independent school fees. The thread title is a headline from a Times article last autumn.

https://www.mumsnet.com/talk/education/5237575-whitehall-braced-for-private-schools-collapse
https://www.mumsnet.com/talk/education/5242586-whitehall-braced-for-private-schools-collapse-2
https://www.mumsnet.com/talk/education/5280646-whitehall-braced-for-private-schools-collapse-3
https://www.mumsnet.com/talk/education/5301690-whitehall-braced-for-private-schools-collapse-4
https://www.mumsnet.com/talk/education/5317397-whitehall-braced-for-private-schools-collapse-5
https://www.mumsnet.com/talk/education/5337850-whitehall-braced-for-private-schools-collapse-6

Keir was literally comedic with his smashing the gangs rhetoric. Knob (and the people that believed he could magically do what no-one else had been able to before him).

„Depends where you are. Many state schools because of the declining birth rate have low numbers. Here’s what the stats say/„

Well we are in London with a supposed falling birth rate, yet my primary DC has 33 kids in their class and one teacher. Who also has to do training so isn’t there 100 per cent of the time either, with TAs covering on average at least every couple of weeks.

Not sure why any of us would be interested in „averages“ across lower year groups. Point is if we lived in most other European countries we would be getting a better state education and paying less tax. And I am not talking about tax havens here at all.

Comedic is the right word.

All these lofty ideals of tax the rich and tax the wealthy and tax the large empty properties in London, one can try but typically a lot of these people either leave or find a way around it and last time I checked Central London house prices were already declining and the stamp duty on lots of that type of housing was already a big money spinner. It’s not like we as a single country can tackle this super elite that has emerged in the last 20 years. We just lose out to other countries. The international super elite aren’t going to be paying en Masse for the poor here. We need to find ways to make them productive and be paid a fair wage for their labour. And people expecting cheap goods and ordering takeaways from migrant uber eat drivers and yet whingeing about immigrants are massive hypocrites.

@Araminta1003 ,

‘All these lofty ideals of tax the rich and tax the wealthy and tax the large empty properties in London, one can try but typically a lot of these people either leave or find a way around it and last time I checked Central London house prices were already declining and the stamp duty on lots of that type of housing was already a big money spinner.’

You can’t duck a property tax. It is on a property, not a person. A property duty incentives people downsizing, buying a sensible size property and diversifying investment into productive assets. It will catch criminals hiding behind blind trusts and liking UK (almost exclusively London) property as a store for some of their ill-gotten gains.

It is the polar opposite of stamp duty which is a tax on divorce, a tax on mobility and a tax on aspiration. Moving both up and down is a key part of life and shouldn’t be taxed. It is also, at least in part, the cause of infinite extension building, attic opening and basement excavation. (Apparently, parts of Chelsea and Belgravia are now unstable due to this!).

It is not an unreasonable proposition to take back some of what the rich have gained via government handouts!

I'm very much in favour of a property tax like this, but I think there should be a mechanism for the tax to accrue to the property, with compound interest, so that people who have an expensive house but don't have a high income can opt to just let the charges accrue in their lifetime, until such time as the accrued charges plus any outstanding mortgage secured on the property exceed the value of the property, at which point it becomes the property of the state. At that point if the owner is still living they can pay the state rent until they die. Or if they die before it reaches that point, the government debt is taken from the estate before the remainder is distributed.

With a mechanism like this, the empty mansions of London would soon become publicly owned even if their current owners are trying to dind loopholes.

How can you possibly do a property tax in Central London? That would surely also include social housing, because who exactly gets to decide who is still allowed to live there? It is already extremely expensive to live there and it would just lead to even more of an exodus of any normal people left. They already gave councils the right to charge double council tax anyway for empty properties. There are people still living there who bought many many years ago and what now we should make them all leave and pay thousands in extra taxes? That would be full on communism. There is no demand for this type of thinking. People always want to tax the rich as a concept but when it starts having unintended consequences then one inevitably has to rethink. People in London working there already pay a ton of tax. Question is more to make other areas more productive long term. However, inevitably if other cities have well paid jobs then house prices rise there as well.

@Araminta1003 ,

You really want to protect wealth, however easily earned. I think you love the idea of future proofing your family rather than giving them the tools to compete.

The tax I would propose would be heavily tiered, kick in high (maybe 750k) and be like stamp duty in that you pay different percentages starting at different levels. And I would be all for being able to roll it up until a property was sold.

But, if you are sitting in a £3 million property, yes you should pay maybe £30k of tax on it annually. How is this different from income tax?

It is incredibly economically inefficient and unfair that you can just roll up effective income into your primary residence, benefit from an effective government subsidy for years (QE) and then sell it CGT free. Why should the £3mio wealth be taxed differently from £3mio in shares, where you would pay income tax on the dividends and CGT when you sold them?!

So now that non dom is failing, you want to bring back the idea of a mansion tax? That is all this is.

I do not agree with non dom taxes via inheritance tax either. I do not see why the British Government should claim rights to some Chinese national who happened to live in the UK for 6 years for a jolly, on moneys earned primarily in China over many years. I think it is unfair on China. Let’s call a spade a spade. This is the UK running itself into the ground and overreaching elsewhere. No surprise Lakshmi Mittal left. If he is going to pay tax he should give it to India that has far more poor people than we do.
I have a friend who is a detective pursuing a foreign national for huge moneys owed in back taxes in eg something like Crypto. No surprise the other foreign Government involved in the case wants a slice of the pie.
The non dom Reeves and Co proposed is overreach, including diplomatically. Of course it was going to fail.

And sadly, no I do not have a 3 million pound mansion. But if I did, no i would not sit around and pay 30k tax on it. I would move to eg a nice part of the country and work even more part time. We have paid enough tax here and still do. The problem are the people not paying their way, not us.

Ok will need to redraft that reply as I mistakingly used one of the no go words again.

Essentially, a mansion tax is going to fail as well.
The non dom proposed by Reeves and Co via inheritance tax internationally was a diplomatic overreach. I do not see why eg a Chinese nationale who lived here for eg 10 years should pay 40% of their wealth here on death, when creates primarily in eg China. I think that would be unfair on eg China.

@Newbutoldfather - if I had a 3 million mansion I would not sit back and pay 30k on it. I would sell it before the deadline and move somewhere cheaper in the country, roll up my sleeves and work even more part time. Why would I stay put and hand post tax income to HMRC and subsidise everyone else at the expense of my own family. When I can in this country buy a bigger and far cheaper mansion elsewhere.
How can you do a mansion tax in a country where the most productive areas economically have the highest house prices. The answer is you cannot, without huge harm to productivity.
You really need to start rethinking -the problem here are not those people creating wealth and subsidising everyone else.

Also @Newbutoldfather - I do personally know people earning more than 750k a year and living in 3 million pounds mansions, but rest assured that all of them are paying loads and loads of PAYE tax, 45% on most of their income, many paid a lot of stamp duty, are paying for private health care, private schooling, cannot put anything tax free into their pension either. I guess the only thing they still have is an ISA allowance - which I am going to assume they spend on shares as they can take more risks than the rest of us.
However, this is a tiny proportion of the population and I highly doubt a mansion tax on some of these people will make much difference.
When we had the 50% tax rate it apparently brought in less money and that is why it was lowered again. People make choices based on extreme levels of taxation and I think we already have reached that point here for those who are on PAYE.
As for the international super rich, like I said, I do not think we have any moral rights to their wealth. If anything it belongs to the countries where it originated, not us.

@Araminta1003 ,

For about the 8th time, you can’t just look at tax, you have to look at how and why the income is made.

It was funny the way when tax was raised to bail our the banks or business owners took Covid payments, none of that was seen as socialised scrounging, and yet these SAME people think of themselves as the most productive and subsidising others. The capacity of the financially successful to deceive themselves that this was purely down to their own brilliance is incredible.

You can’t get tax from poor people, they have nothing to pay. And a vast proportion of housing wealth is due to an effective government subsidy.

You really do need to look at how a successful society works, be it more socialist or more capitalist. They both can work but crony capitalism is unsustainable and will ultimately end badly.

Taxing rich people who send their kids to private school was a test in my opinion. It won’t be long before they directly start taxing (or charging) rich people who send their kids to state school too - the schools won’t be able to cope otherwise.

Really?

By what mechanism?

@Newbutoldfather - you are largely talking about a 45 plus demographic sitting on housing wealth but who are still high earners who can easily retire tomorrow if you disincentivise them to work. I work with such people so I do know what I am talking about. So many bought a house in eg Richmond for 1 million 20 odd years ago which now has a paper value of 3 million and are still working into their 60s. Start with a mansion tax and already stop them leaving their SIPP to their DCs, they will 100 per cent not work to be fully productive. There is just no incentive to keep working beyond a certain age if most of it all ends up in the hands of the tax man. People’s time is actually more valuable than their money, especially in old age, so why would people optimise wealth if there is not a reasonable balance for them and theirs.
As for private schools, people optimising and investing their hard earned money in the future productivity of society as a whole via their DC is ALWAYS a good thing in my books. If @strawberrybubblegum wants to optimise her DCs achievements and happiness that helps my state school DC too, it means they all share the future tax burden. Not at all a threat to me or my high achieving kids, it is positively welcome. I cannot really see why it would be a threat to anyone, even anyone on benefits or not able to work. The more education others receive the better.
If you start viewing productivity and education as something benefitting society as a whole rather than taking away from others, then you will come round.
Like I said, the vast majority of successful people I know now have at least one other nationality too so nobody is actually trapped in this country anyway. The more it keeps being mismanaged the worse its future looks. I really think workers at the higher end are already taxed to the hilt and there is no incentive to do the extra hours/work anymore.

They both can work but crony capitalism is unsustainable and will ultimately end badly.

@Newbutoldfather When you say crony capitalism will end badly, do you mean it will lead to a financial crash or revolution?

@pottylolly - one would assume they would start charging all rich over 60s a mandatory NHS surcharge first and let
everyone pay an inheritance tax rather than not invest in the next generation?
Except maybe they wouldn’t as that wouldn’t be „popular“ with the elderly demographic so maybe we will see an inverse handmaiden‘s tale unleashed on the young. Enslave them for the benefit of the old and keep them trapped and u educated and poor.

So @Newbutoldfather - I do not agree with you. It is not capitalism that is the problem. It is letting the ageing demographic dictate democratic decisions. It has already given us Brexit, an over the top Covid response, too much put into the NHS at the expense of Education. Not enough invested in the future because all politicians are simply self interested and want the middle aged and elderly vote, because they are now the majority holding all the power, wealth and voting power. At the expense of many of the young.

@Araminta1003 ,

‘you are largely talking about a 45 plus demographic sitting on housing wealth but who are still high earners who can easily retire tomorrow if you disincentivise them to work. I work with such people so I do know what I am talking about.’

I and my friends ARE that demographic! And we are lucky enough to be sitting on housing wealth (and other wealth). I suspect that those you know from that demographic are selected for particularly the bias you claim that they have.

My friends are aware of societal issues, and their decisions aren’t based purely on wealth optimisation. A couple worked abroad due to exciting opportunities but most stayed here. And they mostly weren’t that bothered when they paid 50% tax. They certainly didn’t threaten to leave over it. And the vast majority sent their children to private school and some are now paying the VAT perfectly happily (most of their children have left school now).

And, now they have adult children who are (generally) very much in favour of property tax for obvious reasons, some are also buying into the idea, even if it would cost them.

Most wealthy people want to live in a happy functioning society. This is far more important to them than whether they end up being worth 12 mio rather than 8 mio at the end of their lives.

“some are now paying the VAT perfectly happily (most of their children have left school now).”

Apres moi le deluge. Yes, most of your friends DC’s have left, most of their kids will get a deposit.
The figures on the 50% tax rate say otherwise. The take was less and that is why it was reversed.
Your goodie goodie two shoes friends @Newbutoldfather can give as much away as they like to HMRC and charity. Funny how the figures of voluntary donations to HMRC are so low though?!

Giving to charity is more tax efficient than giving to HMRC…

but if anyone wants to, here is how

www.gov.uk/guidance/voluntary-payments-donations-to-government

Most of my friends (and I) are philanthropic, some of my friends large donors to various causes.

But, if you are donating money, you do have the privilege of choosing where it goes. So, most won’t donate to the exchequer.

But, if you are donating money, you do have the privilege of choosing where it goes. So, most won’t donate to the exchequer.

@Newbutoldfather
According to this letter to the Guardian, those who wish to pay extra tax can say what they want it spent on:

“I want to pay more tax for the public services I enjoy.” She might be relieved to know that she may do so simply by sending a cheque to HMRC. I understand that you can even specify where you would like to see that money spent.

@Southwestten see the link I just posted - you can’t specify. Unless you want to specify paying down the national debt.