The Guardian has reported that the Office for National Statistics has found that:
Britain's richest households have pulled further ahead of the rest of the population as house prices have accelerated, with the top 10% now owning almost half of the country's £11.1tn total private wealth.
Since the previous survey was carried out two years earlier, the top tenth of households had seen a 21% increase in their wealth, including property. Over the same period, the poorest half of households also saw their wealth rise – but only by 7%.
That left the top tenth of households owning 45% of total wealth, while the bottom half were left with just 9%.
I am proposing a wealth tax. This is now possible for the first time because of the information- sharing agreements that we now have with so many of the world's tax havens. We will pursue such deals with those that have still not signed them. In the meantime any professional adviser who in any way assists a person to avoid tax by exploiting the remaining states who have not cooperated with us will under new arrangements become personally liable for all tax not paid as a consequence, without limit.
The wealth tax will not be charged on main residences, family farms and private businesses that will now be subject to capital gains tax in life, whether gifted or sold, and on death. Nor will it be charged on pension wealth.
This charge will then be on let property portfolios, financial investment portfolios, personal property and other assets of similar type primarily used to generate unearned income, unless they are otherwise exempted by law using the new principles for writing tax law that I have already outlined. The charge will be introduced on all such portfolios worth more than £1 million at the rate of 1 per cent per annum, although the rate will increase with the scale of declared wealth. All wealth will be subject to self-declaration. Any assets not declared will become the property of the state. Any asset undervalued will be subject to sale to the state at the under-declared price if the Department of Taxation decides to exercise that option. Wealth will be calculated on a worldwide basis.
It's important to read the point about residences and businesses correctly: I had already proposed the extension of capital gains tax to these assets when writing this part of the chapter. The consequence was a proposal for a wealth tax targeted at financial wealth, or the savings of a very small but immensely rich part of society to put it another way.
I believe that such a tax is essential.
But who will say so?
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Interestingly enough I (a tax lawyer) had lunch with a trust services provider a few days ago and we were talking about this very point.
He is much further to the right of the political spectrum than me, but is convinced that we will see a proper wealth tax introduced within the next five years (mainly because the new Common Reporting Standard makes information so much easier to obtain). It’s long overdue, and for the first time in history it’s just possible that enough information about hidden assets will be obtainable by governments to make a wealth tax practical and enforceable; not that this will stop the usual suspects naysaying the whole idea on the grounds that it’s been tried and failed in the past (i.e. pre-CRS).
I like the idea of the punitive measures available for non-declaration or under-valuing…
You will note I share his view that this is now possible for the first time
Just brilliant to hear that a Tax Lawyer agrees!! Thank you.
Or we could just replace CGT, SDLT, Inheritance Tax, NI… and a number of others with LVT, including main residences. Simplification whilst attacking unearned income (land appreciation) and reducing tax on earned income.
That will not work
Read the book
In addition to LVT I would like to see a tax on living space over a certain threshold (say, 100 sq m), self-declaratory (like ATED), with random checks to keep owners on their toes. It would be cheap to collect and difficult to dodge.
But I totally support Richard’s proposal. The self declaration principle is most important.
I wonder if many readers actually have any idea of the size of most rental houses?? I would say an average three bedroom house would be around 55 sq m. I had a 4 bedroom house which was only 75 sq m. Rooms are getting smaller all the time which causes considerable stress to families who have no quiet place to sit, ever!!
I agree
New houses are so small….
Would this include social housing providers? Afterall the executives gain from the ‘social rents’ which when it comes to the YMCA in southampton is £220 per week!! Plus not sure if its true but has mooted social rent last 5 years are up 20%
Plus it should be noted Norway abolished theirs last year and so did India. Both of whom don’t have any kind of estate tax let alone ours which is among the highest in the world. Switzerland has such a tax but their income tax rate is no more than 28% and most of the time 18% (they have a local income tax)so to have both and income tax high seems unique in the world. Its all well and good to say top 10% but it needs factoring in age after all it is obvious those who approaching retirement will probably be earning and worth more than those starting their careers.
Oh dear
If it was so obvious all the older people would be wealthy
This is just a convenient fiction promoted by those defending inequality
But surely this would have already happened in a truly equal society. The government (full of rich, powerful people) is unlikely to implement a policy that would affect themselves, their families and their business friends. Turkeys do not vote for Christmas so I think a genuine wealth tax that taxes “unearned” income is unlikely to ever happen.
You mean you really think we could never have a left of centre government?
By some measurements this country could be considered ‘left’. Income tax in this country is 10% higher than it was in ‘socialist’ Venezuela and their estate tax is more than half here Now of course they charge more corporation tax (it is to low here and grossly uncollected!!). Sweden’s ‘national’ goverment only gets 30% income tax the other 30% goes to the local goverment(ie no wealth tax there). The real issue is corruption and misallocation of money spent. We spend about £12 billion on int aid, could that not be better spent on say abolishing tuition fees? Considering this debt was probably just printed(excuse for austerity) why not write it of? And print money ourselves rather than private banks? Instead of trying to raise/introduce taxes to levels seen nowhere else to pay of this ‘debt’. If this debt is real whom is in ‘credit’? As across the world just about every country is in debt?
I might add the labour party of the 60’s did not compel the queen to pay tax and most ‘far left’ campaigners never mention the royal family. Same in the states the clintons say they will get the rich but are chummy with warren buffet. The epicenter of inequality/vulture capitalism is the UK/USA yet those are the countries that have in terms estate tax the highest, which if the ‘real’ rich paid it would have long ago lobbied to abolish it, after all the royal family has an exemption to name one example. Plus I read somewhwere when it was introduced it exempted ‘old estates’
For the record I not saying the excesses of capitalism do not need to be reined in just to then get rid of capitalism all together could be a equally bad
Pitchforks and guillotines for all those who resist!
Seriously though, since the fall of communism there has been little to reign in the excesses of capitalism until it very nearly imploded under its own uncontrolled greed.
The left would actually be doing most capitalists a favour by allowing the system to continue but under a properly regulated and taxed model of operation. A capitalism that fairly distributed its rewards in the first place, would require no re-distribution. That would come about through the democratic ownership of the means of production and the financial surpluses that were generated.
Re-distribution of some of the historic surpluses in the meantime is a good first step.
History is littered with events that “were never going to happen”. If everyone relied on the permission of vested interests then nothing would happen. Nothing worthwhile.
Don’t you think confiscating property flies in the face of a thousand years of legal precedant and individual rights in this country? Rights which were actually initially unique to the British Isles – Magna Carta etc – and which many countries have copied to their great success also. Maybe that is your intention, but why propose such an extreme change? Surely we should show a bit more respect to history and traditions which have by and large proved beneficial to this country.
Magna Carta provided a legal basis for Tax
Maybe you should get your facts right instead of spouting nonsense
Just a quick point of clarification.
Would that thousand years of legal precedent in relation to the confiscation of property include the confiscation of shed loads of common land and the so called “legal” theft of enclosure are are you talking about some other thousand years of legal precedent which no need else has ever heard of?
Take your time. No rush.
Shock horror how could anyone consider taking property from the rich and wealthy that is “rightfully theirs”?
I wonder if the same values were considered when land and property was confiscated and reallocated by the Romans, the Vikings, the Normans, the Tudors. Or how about the land appropriated by the East India Company, the American settlers, Australian settlers, African settlers and the list goes on.
The “law” is always adapted to meet the needs of the rich and powerful, and where the law doesn’t work then violence will do the job just as nicely. In the world of “might is right” it is about time that the tables were reversed and if necessary their own medicine applied to those who cry foul play!
My apologies. I neglected to include a mention of the recent proposed legalised theft of social housing which is/was the property of Housing Associations but are now the subject of effective confiscation of private assets by the Contemptuous State.
Still waiting here patiently for you Jamie G.
I am not sure how practical a wealth tax is. You took me to task a few weeks ago on the difference between money and assets.
If I am taxed on the nominal value of my portfolio of shares, this can easily rise or fall by 10% or even 30% in a matter of days. If someone (not me) buys a gold bar as an investment, its value is even more arbitrary. On any one day, opinions on the value of a painting might differ 2- or 3-fold. Would you not be creating the same situation on wealth that you rightly object to with small businesses and HMRC? You could go from being an honest citizen to a tax cheat over the weekend.
I would have thought that a better place to start would be to remove the ridiculous anomaly that earned income is taxed at nearly twice the effective rate of unearned income. The less you do to earn it, the less tax you pay.
I will deal with that second issue in the book
But wealth inequality will never be tackled without a wealth tax
And dishonesty would not pay in the wealth tax I suggest
If you’re looking to tax only assets which generate an income, why tax the the value – which is always going to be a subjective estimate – rather than the income itself, which is a known figure?
Because some asserts are kept to roll up value, not realise income
So when you say “This charge will then be on let property portfolios, financial investment portfolios, personal property and other assets of similar type primarily used to generate unearned income”, you mean assets that don’t generate an income as well?
If you’re taking about perhaps gold bullion, which doesn’t generate an income but does hopefully appreciate in value, I can see that you might want to tax the increased value.
This would then seem to be a combination of taxing income, and taxing gains. I’m struggling to see how that is much of an improvement over the current position.
I am sure you are
This is about taxing to redistribute
I argue all tax has a social purpose
In this case serious redistribution is that purpose – to save society
Yes, I know why you want to tax people. What I’m struggling to understand is why the logic of your calculation seems to be:
– Income-producing assets should be taxed
– Tax should increase as the income increases
– Therefore tax should be based on the value of the asset
This means that you are taxing income, but indirectly and inefficiently. Either:
1) The value you have used for the asset correctly reflects the income it generates, in which case you might as well have used the income figure and saved yourself a calculation; or
2) The value does *not* reflect the income generated, in which case the tax you levy is going to be unfair and arbitrary. If the value is intended to represent the income, but the value is mis-stated (I would expect values to be understated, for one thing), then by taxing value not income you’re generating a huge amount of uncertainty.
The clue Andrew is in the name
I know this is hard to follow, but it’s called a wealth tax
The aim is to reduce wealth inequality
It increases the tax rate on unproductive those with wealth
That’s the aim
It would work
And you may I have noted I have dealt with problems on underdeclared wealth: any underdeclared assets would be available to the state to buy
And there is not an iota of uncertainty in this
It’s just a tax people would have to pay
Yes, Richard, but why are you calling it a wealth tax, when it is the income that makes the asset taxable?
Your “wealth tax” is not taxing wealth, it just is an indirect and inefficient way of taxing income.
The only way your explanations make sense is if you tax things that don’t produce income. But you said in your post that you weren’t proposing to do that.
That’s a definition of a tax base
It’s a way of approximately excluding some things that I note
And it’s not an income tax: plenty of things that will never produce income will be included
Like works of art used as metaphors for conspicuous consumption
So just go and think again Andrew
“…it’s not an income tax: plenty of things that will never produce income will be included”.
Oh, sorry, my mistake. I was fooled by you saying:
“This charge will then be on let property portfolios, financial investment portfolios, personal property and other assets of similar type primarily used to generate unearned income, unless they are otherwise exempted”
It seems odd, though, to define the relevant assets as being ones that generate an income if you actually want to include ones that don’t.
most of wealth after excluding the items I noted is defined by that list
It was not meant to be 100% comprehensive
perhaps you have never listened to a Chaceklor’s speech?
Andrew Jackson
is just being silly
By some measurements this country could be considered ‘left’. Income tax in this country is 10% higher than it was in ‘socialist’ Venezuela and their estate tax is more than half here Now of course they charge more corporation tax (it is to low here and grossly uncollected!!).
For many historical reasons Venezuela is not a good comparator. Prior to Chavez the rich went, essentially, untaxed.
Sweden’s ‘national’ goverment only gets 30% income tax the other 30% goes to the local goverment(ie no wealth tax there).
Tax should be spread out to local authorities-you’re right.
The real issue is corruption and misallocation of money spent. We spend about £12 billion on int aid, could that not be better spent on say abolishing tuition fees?
No it couldn’t. If it all “goes off” we will end up spending an awful lot more on war than we do on aid. If, e.g., Pakistan were to elect a pro-Taliban Government, spending double what we do on Trident wouldn’t help, doubling our forces in Afghanistan wouldn’t help & bringing back national conscription wouldn’t help. Put simply, if the Pakistani Government stops bribing the populace, & if they elect a pro-Taliban Government, we’re SO @@@ed .
Considering this debt was probably just printed(excuse for austerity) why not write it of? And print money ourselves rather than private banks? Instead of trying to raise/introduce taxes to levels seen nowhere else to pay of this ‘debt’. If this debt is real whom is in ‘credit’? As across the world just about every country is in debt?
Well we can’t write it off. It was printed to stop the banks going bust so if we cancelled it the banks would all go bust. Then, who would cavort around the wine bars of Shoreditch wearing orange braces?
I might add the labour party of the 60’s did not compel the queen to pay tax and most ‘far left’ campaigners never mention the royal family. Same in the states the clintons say they will get the rich but are chummy with warren buffet. The epicenter of inequality/vulture capitalism is the UK/USA yet those are the countries that have in terms estate tax the highest, which if the ‘real’ rich paid it would have long ago lobbied to abolish it, after all the royal family has an exemption to name one example. Plus I read somewhwere when it was introduced it exempted ‘old estates’
Not true. The royal family are exempt but all other aristocrats pay.
For the record I not saying the excesses of capitalism do not need to be reined in just to then get rid of capitalism all together could be a equally bad
Cheers
– See more at: http://www.taxresearch.org.uk/Blog/2015/12/18/we-need-a-wealth-tax/comment-page-1/#comment-742500
At the time you wrote that, Andrew Jackson was asleep.
What do you think I’ve done that is silly?
Richard has proposed a tax, but either he hasn’t decided what he wants to be taxing, or else he’s unable to describe it sensibly. So if you’re going to say anyone’s being silly, I don’t think it’s me 🙂
I called for a wealth tax on everything barring a list of exempted items
It really was not hard to work that out
Sorry Andrew – but you are really trying my patience with your stupid comments (the word is used advisedly)
No, Richard – you may think that’s what you said, but what you wrote was:
“The wealth tax will not be charged on [List 1]…This charge will then be on [List 2]”
There is no other sensible way of reading that, other than that the tax is on items in List 2.
If you’d meant it to be “everything barring a list of exempted items”, then your List 2 is redundant.
It’s nice that you’ve now clarified what you meant, but it would really have been far more helpful had you said it that way in the first place.
Andrew
The lists were illustrative
Read chapter 9. It is a Chancellor’s speech, not legislation
If you are fool enough to argue that Chancellor’s speeches are comprehensive statements of the law I pity your clients
I see. You’re the first to complain when a chancellor’s speech is misleading, and yet you’re entirely happy to publish a proposed speech that suggests a tax will only be on certain assets, when in fact you intend it to be far broader.
Have I claimed a Chancellor has been misleading? Not that I recall – I know the limitations
My house is worth a lot of money (relatively – it’s not exactly a mansion) but far more than it was worth when I bought it…. not because I’m rich, but because successive governments have failed to promote enough house-building and allowed the population to spiral. This increases prices and rents to everyone. So, people can’t afford rent in many places now and the government then force companies to pay a new ‘living wage’ to pay for the increased rents that everyone’s having to pay…. it’s perverse and ineffcient. People can spent 50-60% of their earnings on living expenses – that is crazy. So, my house is now worth over £1M…so that’s nice…but so does every other similar house and I can’t realise the value without making myself homeless, downsizing or renting at inflated prices due to a shortage of stock.
So?
I just heard during a Lord’s enquiry into the housing market that since 1951 the population of London has increased by 5%. I don’t know by how much the housing stock in London increased, but the real price of houses has increased by 6 times. Demand exceeding supply is clearly not the main reason for house price increases. (Clue, the owners of £multi million homes in Westminster pay just £1,345.48 Council Tax, less than that paid by tenants of a £599 per month flat in Weymouth.)