“Tax the wealthy” (RR budget) what does this even mean?

[gggddjkki]

I don’t remember anxiously waiting for budgets like we have the last few years earlier on in my adulthood. But when you read statements like this (as I have seen in the headlines today) what do you interpret it to mean? What does taxing the wealthy look like to you? Taxing higher earners more? From what point? Higher taxes on industry?

The lottery is already taxed - but everybody pays a small amount of tax on their ticket, rather than entering being tax-free but then the tax burden falling on the winners.

Also, everybody thinks about the massive winners - and who of us would be distraught at losing, say £2m out of £20m that had just come our way randomly? However, what about all of the smaller winners? Winning a tenner (already not getting your stake back, like with most gambling) and then losing £2 (or however much) of it to tax would rile people more than not winning at all.

A bit like pensioners often get more annoyed at being given an insulting extra 25p a week on reaching 80 than they would be if they didn't get an increase at all.

The USA has tax payable on winnings - I think it may be as much as half of the value of the winnings - meaning that, if you won a new car, you would have just won the obligation to pay for half the price of a new car, regardless of whether you can afford it or not! Great if you were in the market for a new car of that kind in the first place; bit of a white elephant if your budget extended to bargain old used-car territory at best!

Increased equity in property through inflation is a prime example of untaxed wealth until its owners die and it may become liable for inheritance tax - which less than 10% of estates pay. That runs into billions.

All assets will.have been taxed at some point. How was the house purchased originally? Untaxed money? It doesn't exist.

The profit is untaxed. Unless you know of some tax I’ve somehow inadvertently avoided paying on a house that has quadrupled in value since it was purchased.

Inflation is not a gain

tje gain is what you get after inflation has been computed

this used to be reflected by indexation allowance but they got rid of that and reduced the rate of tax you pay on gains instead

You can't tax a "profit" until it is realised. Ie sold. Otherwise it's just on paper.

House prices are crashing anyway. You may not have that "value" for much longer.

You relocated to avoid paying tax? No loss to the UK then

CGT isn’t payable on a primary residence. And house prices aren’t “crashing”, the market is slow.

I've already taken that part out.

Obviously House prices can go down. You haven't made a profit or a gain until you sell.

Well there is a loss if they.were paying tax. They just don't want to be shafted by Labour. Perfectly reasonable.

The Mail has a pretty decent article on things the Chancellor might do to raise tax revenue. www.thisismoney.co.uk/money/pensions/article-15187979/Rachel-Reeves-pensions-Budget-ROS-ALTMANN.html

What? It is a loss in tax revenue.

I can't remember where I saw it or read it (but it was recent) that they are considering taxing gains on main properties. They will start big ie houses over a million or something and so most of us will not be bothered.

However they will bring this threshold down over time till most of us are impacted.

The trouble with this theory is if you sell a 2 bed house for 200K and a profit of 50K which you get taxed on. You now have less than 200K to spend. Assuming you were buying a like for like property, you now can't actually afford your own house.

It's not really a gain if everything you want to buy has risen by the same amount ie your purchasing power has not increased

P.S. Okay It was The Independent in Aug I read it (although other papers had the story too.)

But in real terms, the massively increased value of the property that you originally paid much less for is still roughly the value of 1 house.

Granted it isn't fair at all if the original buyer was in the right place and the right circumstances at the right time to do so, when many people never could do/have done the same.

It would be completely different if only your house had rocketed in value, and nobody else's had.

And how often are you going to have to cough up? Once? Every five years? On any gain?

I mean if she does tax 'gains' on your main property then quite frankly who will be able to move ever again.

You sell you 2 bed house for 200K. You pay out estate agents fees, removal fees, solicitor fees, a lump to the goverment in tax on your 'gains'. You then look for another similar house for 200K except now you've only got 170K to spend (made up number). So you find a house and now you have stamp duty and more solicitor fees and surveyor fees potentially. So these taking your spending pot to 150K.

So now moving from a 200K house to a 200K house costs you 50K. The biggest part going to the goverment. Look at how well increasing house 'wealth' is working out for them.

You relocated as a tax avoidance measure

Any capital gains on housing would distort the market and create negative, secondary effects. Everyone would hesitate to move. Old people wouldn’t downsize, young people would find it hard to move for jobs. People in the Southeast who had to allocate more of their salary to housing with the expectation of downsizing upon retirement and living in part on the proceeds (since high housing costs meant less could be saved in pensions) would be screwed.

The answer is not CGT on main residences, but to build adequate amounts of housing.

‘You’ are you reading the posts. It’s another poster. And now the tax paid here is gone. That’s the loss.

What worries me is the talk about taxing pension pots. Public servants have protected pensions which are good value and protected but the rest of us are not going to be so lucky from what I’ve read with talk of taxing the 25% and cutting allowances; it’s all very scary.

If Reeves imposes CGT on main residences, Labour will be out for a multiple of 14 years.

No question.

The UK tax system is overly complicated and poorly drafted in a lot of cases. Unintended drafting means businesses make decisions to move activity out. Cliff edges mean people work less, not more. Increased employment taxes mean UK staff become much less attractive than staff in other countries.

but this government don’t seem to be able to look at cause and effect. The problem they have is that the black holes are computed based on forecasts and that Nic decision has fed into the black hole. So put up taxes then impact employment/growth and forecasts grow the hole despite a short term boost in tax revenue. So we are going to end up in a death loop

Yes and the stalling impact @EmpressoftheMundanetalks about.

Do you understand a cost of carry, without resorting to google?

This is my issue - given a tax on wealth/property would likely see the immediate devaluing of those houses would you be allowed to apply for a revaluation every year reduce the tax charge on your rapidly depreciating asset? Plus how does it work if you, say, have 1.5m property, but the mortgage is 700k? Would you only pay a wealth charge on the 800k that you actually own? Because to tax you on the notional wealth of ‘owning a 1.5m house’, when you don’t really, seems extraordinarily unfair.