I am curious to know the answer to a question which is of particular concern to me right now.
I am working on the blogs that will comprise the recommendations for reforming the taxation of wealth because, as I have shown, if there is a need for more revenue the owners of wealth have most to contribute.
So the question is, what reform most appeals in this area? Is it a wealth tax? Or a land value tax? Or capital gains tax on homes? A reform to inheritance tax? Or somewhat easier measures like equalising income and capital gains tax rates? Or increasing the tax on investment income whilst reducing tax reliefs for the best off?
I am genuinely interested in what people think.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
CGT on house sales. I’m also in favour of IHT, for which the threshold seems to me to have been set way too high. Transactional taxation gets round the liquidity issue (my old mother lives in genteel poverty in a £1m. house for which late father paid £9,500 in 1969). If both regimes applied then death of a property owner in the South East would cause a large tax bill. I’m not sure this is unjust although it would of course be unpopular with voters.
Just curious, but why are you asking? There’s a wealth of literature and expertise out there on optimal tax theory. A land value tax collected from landlords, not tenants, is the simplest and least distortionary system of taxing wealth. To be most effective it would mean eliminating all the other wealth taxes. This will free up human resources to other things, the investor to invest, and the tax collectors not working in the valuation office to work in health.
Optimal tax theory and reality rarely coincide in my opinion
Rather like perfect competition and real markets have very little to do with each other
Sorry to be so cynical
And your claim for LVT is proof if that. I support LVT as a small part of the tax system. After that it would be deeply destructive
Why would lots of LVT be harmful? Surely the taxation of unearned income/assets has to start with land. Partly to redistribute land based rights in society.
My main aim with LVT would be to try to stop excess profiteering in house building. Would your limited use be for that purpose?
I have no problem with using an LVT
But no, tax does not have to start with land because that is not where added value is
And land is not by a long way the only source of rents
And so if you are serious you have to tackle all rents and not just land
And that’s why simplistic answers just don’t work
They simply allow abuse elsewhere
And that’s why we need a lot of taxes
Not least because there is no way on earth that the modern state can be equitably funded from LVT
Ending of all tax havens!
Among all the other taxes that could be introduced, while others are reformed, I’d like to remind readers that Council Tax bands are way, way out-of-date, and that we need to levy much more tax on really big, expensive houses and flats. Incidentally, why not merge National Insurance and Income Tax, thus simplifying matters? Oh, and consider a Universal Basic Income.
Financial transactions taxes need to be looked at.
Lower VAT and lower income tax below say, £50K p.a.
LVT – yes.
I’d like to see taxes on pensions looked at again – this needs to be lower at the low end, but I’m not sure about the higher payments.
Second home tax rate – for obvious reasons.
Tax rates on all unearned income need looking at and raising across the board – are share options taxed? I admit to having no idea. But the principles of the Joy of Tax should all come into play – fairness, proportionality, behavioural changes.
All loopholes eradicated please – there are too many.
A system that upholds the sovereignty of the currency issuer needs to be reasserted.
All on the list
CGT on all property disposals.
And I’d add in IIS for all those folks avoiding NIC and now moaning that there’s no support for their NIC avoidance dividend arrangements.
I agree…
NI on all forms of income (with no upper age limit). Don’t see why I, as a landlord, shouldn’t have to pay it.
I agree. Extend the scope of Class 4 NIC to all income and gains not otherwise subject to NIC. Whilst we’re at it, scrap the upper earnings limit on Class 1 and Class 4 NIC and extend the scope of Class 1 to include employers’ pension fund contributions.
Definitely equal CGT and income tax bands.
Go after tax havens and make all the digital companies pay in each country they function in instead of the current loop holes.
Stop the worst of the financial scams eg “buying” stock without paying up front for them and selling them at a profit. Time to stop the sheer gambling of money that does nothing useful.
I’m not clear about the difference between levying CGT instead of inheritance tax on house value at point of death – wouldn’t CGT mean the amount of tax rather depended on how recently the house had been bought? Why not just make IHT function better- that you cannot set up trusts and other means of dodging it, and perhaps lower the starting point.
The cgt would be in lifetime gains….not final gain …. I will explain
Richard – just a thought, have you ever looked into and considered the concept of Zakat?
In very board terms it can be described as a wealth tax at rate of 2.5%, payable on assets held/possessed for a whole year.
I will look
But that is not my direction of travel now
If you’re looking for a list of priorities, I’d say these two were the most important and possibly easiest to “sell” to the public and to implement:
Treating earned and unearned income in the same way.
Financial transaction tax.
Thanks to you and many others
My thoughts have always been twofold:
Firstly, there’s no need for a difference in CGT and IT rates (or between income and dividend rates) or for an additional personal allowance. Any tax system should be simple and that there shouldn’t be significant clawbacks or deductions available depending on individual income or investment circumstances such as EIS relief or child benefit/personal allowance tapers. No individual should have an ETR of more than 50% on £1 of income earned. Also linking the tax bands to a living wage (say on a 30 hr week for 50 weeks a year) would help (ie earn 2x Living wage – rate of x%, earn 4x living wage – rate of (x+y)%).
Secondly, my plan would be to tax the worldwide wealth (homes, businesses, chattels, trusts) of all UK Citizens and tax resident individuals at a rate of 1% above a certain threshold, say £10m.
The aim would partly be to simplify the system as IHT would disappear (the 1% rate chosen to mimic IHT over the course of a lifetime) and remove some of the annual compliance costs and double taxation as all assets around the world become subject to tax. For example, a sale in a business should be tax free as there would be no difference in the tax treatment of £20m in the value of a business and £20m in cash after a sale.
I appreciate that there would need to be anti-avoidance legislation (around gifts of cash or assets with a value above, say, £250) and that the rates and thresholds are open to discussion but that would be the idea in principle.
I already plan the tax band idea….
How will your Union paymasters feel about you applying significant taxes to the pensions of their members?
Union paymasters?
Wow, you’re misinformed….
Wealth and in particular land tax, and inheritance tax (and trusts) are some of the biggest drivers of inequality.
If a society can not manage the land it physically consists of, is it actually a country or a collection of little (or big) fiefdoms? If society cannot stake an claim in the benefits it has provided to its citizens during their life, how can it provide equal opportunity to all to succeed?
Two ‘free-thinking’, freewheeling suggestions.
The implicit threat of a Land Value Tax was an important measure that lay behind the House of Lords rejection of the Government’s Finance Bill in 1911 (The Lords being the last redoubt of the Landowners, who had successfully spent the eighteenth and nineteenth centuries transferring the burden of tax from themselves to business and to the new mass electorate’s incomes). The House of Lords was changed by the experience, and never again challenged a Government Finance Bill, but they won the war. Land tax disappeared forever.
Land tax, which is really a rent demanded by the state for the right to own the land and operate on its sovereign territory (an annual ground rent, or AGR), remains an important lever, because in a commerical globalised world the taxation of business and corporations is becoming both more and more abstract, and more and more mobile; a ‘double whammy’ that makes it easier to avoid. Land is fixed, permanent, and everybody needs a ‘foot on the ground’. It meets the fundamental criteria – easy to tax, hard to avoid.
I also believe that for anyone who operates in the UK, if they represent an entity registered in a tax haven should be subject to an automatic tax surcharge (it could be applied as an income tax surcharge, a corporation tax surcharge or an AGR surcharge, whichever works best); effectively it is a penalty simply for operating a tax haven entity in the UK, which by definition means the state knows nothing about how much tax is being avoided: and no apologies for its brutal crudity. Consider it the 21st century version of the Window Tax (1696-1851), if you like. The window tax was introduced as a reaction to coin clippage. It was ended for health reasons; it encouraged people to reduce the light in their homes and the medical profession were increasingly concerned about light, air and clean water, at a time when there were still cholera outbreaks in Britain.
I’ll muse both
A tax on fossil fuel energy producers such as Shell, BP et al then on energy consumers but only after a certain level of consumption considered in a reasonable light of average per capita consumption. Land tax should be evaluated on the ecological and social cost for example high density office/ factory/warehouse premises at a high rate, agriculture, horticulture and amenity land a lot lower. Aviation (if it still exists) ,travel and cruise companies, high fashion and companies that are not really addressing our basic needs and is having a negative ecological or social impact.
Tax the Bank of England, and all the other banks
The Bank of England is 100% state owned
Thats the beauty of it
If the Bank of England can be charged with achieving monetary stability it an be charged with raising a suitable tax on capital.
Its the objective that important not how its done.
At least they know where all the bodies are buried.
1% would do.
Er, no it can’t
You’re confusing issues
Sorry…
Of course under current rules it would be outside of its remit , but I thought we were in the business of using our imaginations.
Money is all about trust. Making large scale money transfers is fraught with risks and unintended consequences. Capital flight , disincentives, illegality and tax evasion ; culminating in economic collapse and poverty for many.
The trick is to maintain a flow of money to maintain welfare payments and government functions whilst retaining monetary stability.
I therefore recommend you consider as a tactic allowing the government to impose a toll on the activities of the Bank of England. It is in the final analysis no more than the Bank of England is doing now to bale out the banks; except this time it is baling out people who need it most.
Of course I may have missed something , but if i have can you explain more fully.
No sorry, I said it can’t do it not because it’s not a tax authority but because it really does not know where the money is
It could do an FTT, maybe, but cash is only a small dimension of wealth
I’m not lacking imagine
And you do realise that imposing a toll on the BoE is the government taxing itself, don’t you? It is nationalised
Apologies for pursuing my line…
And I am not accusing you of lacking imagination…
I am encouraging all of us to consider how best to ensure a flow of money to welfare recipients and to public services.
You have asked for ideas on a wealth tax as one way of doing so.
The problem is that much of wealth is hidden so its difficult to tax at source.
Tax the intermediary therefore is my suggestion.
It risks people moving to offshore banks if you tax the UK banks so my idea is to tax their ability to operate in the UK by raising the levy that the banks have to deposit with the Bank of England as the precondition for their continuing operation.
Then the government could borrow from the Bank of England in perpetuity.
If people relocate to other jurisdictions they would have to prove they owned their assets, gained them honestly , paid appropriate taxes and have cleared their debts before being allowed out or risk losing their residual assets.
Actually, I think that a great deal of wealth is now being found
What you said was true
But we have made real gains, most especially offshore. All that campaigning has yielded results
Not perfect, of course, but much better
And the gov’t can borrow from the BoE in perpetuity now
If the government can borrow in perpetuity from the Bank of England then the only reason for a wealth tax is for the UK to demonstrate fiscal responsibility by minimising the public spending gap. There should never be a reason to use the capital markets and pay bankers high fees.
There can be two reasons for a spending gap : a once off or at least not very often crisis requiring emergency action , and a recurring revenue deficit (I am assuming a recurring capital investment funding requirement can be met by long term borrowing).
In the case of the former a once off levy of all identified assets would spread the burden.
Most assets are represented by the notional value of domestic property / farming land/development land, companies balance sheets and investment funds held by individuals. A charge payable to the government could be entered on land registers, company accounts and in investment funds calculated to raise sufficient funds to cover the crisis need. To be collected in due course.
In the case of an ongoing revenue deficit a wealth tax would be best levied on the dead, via financial transactions taxes , and land taxes.
How the various income, expenditure and wealth taxes are balanced is the job of government.
The moral Hazard is in considering what constraint may be necessary to stop a government plundering the wealth of its citizens for political advantage.
Roger
Please learn some MMT
And please appreciate that tax does not fund gov’t spending
The reason for a wealth tax is to withdraw cash from circulation whilst reducing the income and wealth gaps
I have discussed these issues in some detail on the bog now
Perhaps you could direct me to a particular blog
amongst your 1891 that covers this matter.
MMT according to https://en.wikipedia.org/wiki/Modern_Monetary_Theory
doesn’t seem to contradict but to assert what I am saying.
But I’m happy to be corrected if MMT is the gospel.
I thought we were in uncharted waters however.
I’m sorry but I cannot recall what you are asking now and when I moderate I do nit see comments in their context
Apologies
But, I suspect 8 have addressed the issue in recent discussions in the tax after coronavirus series
I think the first and easiest idea would a reform of the council tax bands which have not changed in nearly thirty years.
Council tax is fundamentally flawed. For a start, taxing people based on the notional value of their property in 1991 is absurd.
An American hedge-fund billionaire Ken Griffin. Has recently bought three homes (as You do) one overlooks Buckingham Palace at Hyde Park Corner and cost £100m.
Another is a new townhouse across the park at Carlton House Terrace, costing £95m. The third is a penthouse atop a “pencil block” at New York’s 220 Central Park South, costing $238m (£200m)
The property tax that Griffin will pay to New York on his £200m home will be at least $280,000 a year.
But in London Here the sum total of what Griffin will pay Westminster for his property is just £2,842 — that is the council tax on two H-band properties
Whilst the Treasury happily squanders money on defence procurement, high-speed trains and other vanity projects, local government can go hang. This year the increase in funding for local councils is 1.4% lower than four years ago in real terms. This is on top of a 49% real-terms cut in central government funding of local councils between 2010 and 2017.
For a decade central government cuts to councils have butchered youth clubs, health centres, daycare for the elderly, libraries, museums, parks and gardens. Now councils are barely able to sustain statutory “core” services, notably to the old and very young.
Its high time for a change.
Not strictly about wealth taxes but still relevant, I think……
Income tax should be neutral about where it comes from. My son’s marginal tax rate is 46% (if you include NI, both Employer and Employee), mine is 20% on income from savings, less from capital gains (if I have any!!). This is nonsense. Taxing pensioners is politically difficult but as we all live longer and medical intervention in old age becomes ever more costly then wealthier old people should pay up. A sufficiently progressive tax scale should prevent howls about “pensioner poverty”.
Pension contribution tax relief should be abolished/curtailed. The people who NEED to save can’t afford to whatever tax incentives there are; rich people will save anyway. Second best choice would be severe restrictions on tax relief…. but by far the best solution would be a state old age pension that you could actually live on (or Universal Income??) and NO tax relief on saving at all. It would also have the merit of simplicity because I find pensions very complicated.
Inheritance tax. Why does it evoke such anger? Seems to me a good tax.
Council Tax. Make it more progressive.
All of these would be fairly simple and would be seen as fair. Of course, loads of people will argue their corner but it should be politically possible (under a sensible administration).
Financial transaction taxes are interesting – but not from a revenue raising perspective. They might have benefits in reducing the “financialization” of our economy but turnover would plunge and move offshore meaning little revenue raised.
Land Taxes? Theory sounds good but I am not sure that we have the mechanisms to get them to work… besides lets get the easier bits done first.
Thanks
The differing tax rates will be a major theme
What counts as wealth? Property, land, business, stocks & shares, pensions, cash, bank deposits, collections of things like stamps, wine, classic cars etc, patents, copyright….
What principles determine how to tax wealth? An annual charge of 2% (or some other amount) or only on death or disposal? What about national interest in enabling, for example, the family farm or business to be passed on to the next generation without a tax charge that would force a sale. Should the same apply to large feudal estates which seem to be able to be passed on down the generations without much trouble? Should inherited wealth be curtailed since it is neither fair or equitable to the rest of society as those in receipt get a head start on everybody else. (I doubt if Trump or Johnson would have got very far if they didn’t have wealth and contacts) Should we prevent clever tax planning to avoid taxes on wealth or inheritance?
Then there’s the family house. In the example above the house bought in 1969 for £9500 is about £110K in today’s money, or around 4 times today’s median wage, but is “worth” £1m or around 30 times today’s median wage thanks to government policies designed to drive up house prices in some areas. A wealth tax could bring prices down to earth, but an annual charge could force the “old mother living in genteel poverty” to sell her house. That doesn’t seem fair – or good for a person’s health and wellbeing.
I would like to see a twin track approach, preventing people from accumulating massive wealth in the first place and taxing ordinary wealth equitably and fairly in order to redistribute.
The old woman in a house problem is so easily overcome by roll up until death…
It’s simply not an issue
The “little old lady” issue always comes up…. and you are right, it can be solved by roll-up.
I would be tougher (and less patronising to older women) – if you can’t afford the house you live in then you should move… whatever your age or gender. My parents did it, my grandmothers did it (when widowed) and I have done it. For all of us it was a liberating experience not to be burdened by and unsuitable/unaffordable house.
It then frees up larger houses for younger families that need the space.
I presume that is what I will do
My father did
It was quite emphatically the right thing for him
Just to clarify, I don’t know if Clive Parry was referring to me being patronising to old ladies, but I was quoting from the first reply on this thread by John Lowe.
On a more general point about wealth taxes we need some general principles about why it is appropriate to tax certain types of wealth and not others, with “fairness & equity” being central.
As a long term campaigner for better provision for the homeless, the “Old woman in a house” problem, is reversed. How do we get her to move into more appropriate housing to release it to a family
? The “Bedroom Tax” (which I successfully lobbied for) has to some extent solved it for social housing, but it is still a problem in the rest of the market. Yes, there needs to be appropriate housing for the Old Lady to move into.
I wouldn’t call the bedroom tax a success Peter unless you think penalising the disabled a really good idea
“Bedroom tax! has been a massive success, thousands of families have been housed.
The edge cases of the disabled are few and often highlighted, even when they could have been dealt with by Local Authority discretion.
The happiness of a family getting a home, isn’t reported. But if you want a few heart warming references, go to the Resonance Ltd website, where my company has housed 100s of homeless families
Sor4ry Peter
But I think your deeply unpatronising attitude is unwelcome here
I’ve had enough of it
Make all tax progressive – ie get rid of/minimalise flat taxes like VAT
Should we consider intangible assets within “wealth”? All sorts of things increase the income an individuals can generate from a particular quantum of effort, a high IQ, an ACA qualification, a public school education, being male, being white etc. Should the capital value of these attributes, qualifications etc. be assessed and subjected to tax? I can’t see it happening and I can’t see it making sense but contemplating the question might lead us to a better understanding of exactly what we mean by “wealth”.
I think we tax those by proxy
Progressive taxes on income….and wealth
You’re right of course but does not the same also apply to many of the other types of wealth that we would, quite reasonably, seek to tax – e.g. landlords get taxed on their rental income. I’m only seeking to suggest that we contemplate the question of what wealth is and then consider whether and how, where, when and whether we tax it.
Accepted
BHow would you tax it then?
I am not sure how to
Apologies for posting off topic but you didn’t have an appropriate blog post today to post this and I thought it was worth mentioning.
Richard, what do you make of the speech yesterday by Gertjan Vlieghe of the Bank of England on financing the government during this time, where he talks about the ways and means account and monetary financing and how what the BoE is doing is not the same as Zimbabwe or the Weimar Republic?
https://www.bankofengland.co.uk/-/media/boe/files/speech/2020/monetary-policy-and-the-boes-balance-sheet-speech-by-gertjan-vlieghe.pdf?la=en&hash=D76269239470F000514B5F6AA76500590254DBDC
I will read later…
I will try to blog asap…maybe tonmorrow
It looks interesting
There is some interesting analysis in the speech made by Gertjan Vlieghe, especially the acute analysis of the contrast between what is still working very well in the economy, and that which is not working – at all. This should tell us something about our future, for two reasons.
First, what is working is what must work for us, even in a lockdown (the NHS, care homes and so on of course, but not forgetting such services as the traditional utilities, supermarkets, postal services and now online business), but factors which also tells us what is absolutely essential for humans in a crisis, and – by a process of deduction or omission – what is not working, or in some significant cases, much missed; and that in turn, much to everyone’s surprise tells us something about the latent absurdity, the oversold, puffed-up froth that doesn’t deliver anything of value, that yet makes up so much of the economic activity in what we have come to take for granted and have been seduced by advertising, PR and propaganda to believe was important for “normal” human life. When, quite clearly, and ’when the chips are down’, it isn’t.
Second, we spend enormous amounts of our time, effort and public and private resources on precisely these things which deliver nothing of any intrinsic value at all, or provide any real reward for the expenditure of effort and resources; and simultaneously starve ourselves of things that matter vitally to us, or for our wellbeing; most notably in the realm of the ‘public good’. These are matters we urgently require to re-examine, even before we work our way out of the lockdown, and certainly before that process is complete. Yet that is not the message Gertjan Vlieghe presents.
He says this:
“The ultimate aim of monetary policy, as it always is, is to meet the inflation target, by ensuring that aggregate demand grows sustainably in line with the economy’s potential. The economy’s potential is severely disrupted at the moment but, once the pandemic is over, and other things equal, in principle it should return approximately to the pre-virus trajectory. A persistent undershoot of the economy relative to its pre-virus trajectory is, in my view, most likely to be disinflationary. So the current priority for monetary policy, with a lot of help from fiscal policy, is to return the economy to that pre-virus trajectory as soon as possible”.
We certainly wish to see a full recovery of the economy, but what precisely is meant by“return the economy to that pre-virus trajectory”. If it is to the economy and our lives precisely as they were ex-ante the COVID-19 pandemic, the answer is; surely not? Either as a plausible real outcome that is likely to follow from where we actually find ourselves at the end of this, or as an objective? Vlieghe has no comparator to make such an extrapolation credible, or model to fit the facts; because we are in deeply unknown territory. We have never been exactly here before, and such a comparator as 1918 was in a quite different world, at the end of a world war. Later in the speech Vlieghe refers to the economic shock of 2009, but it would be bold to assume the process from here will be the same; indeed need I add, that in economic terms the banks and hedge funds did well, but the damage inflicted on everybody else, compounded by ten years plus of austerity may be said to have contributed to the operational plight we find ourselves in today, with the resilience infrastructure of the NHS, for example systematically stripped bare in the name of monetary rectitude. I suspect the seat of his pants is all Vlieghe has to guide this flight of fancy.
The prime objective of recreating the past as an economic objective need only be stated to appear somewhat bizarre. It is, we may suspect the result of the over-abstraction of monetary policy analysis that it even seems plausible. It would mean that we have learned precisely nothing from the experience we have been obliged to live through at great cost to so many. That seems neither wise nor credible. It is also a reminder of how limited and blinkered the intellectual range of economics as a discipline, or the conventional wisdom at least, appears to have become; or is this merely a function of the nature of the economists we actually have? The best they can envision is to repeat the past endlessly, presumably in that bland, essentially mindless rewind of a fictitious equilibrium, because it seems safe, but is actually all they know or hope for; even when we know, and they know it is seriously defective.
The “ultimate aim” of monetary policy we are offered here is a mechanical inflation target; very necessary and worthy of course, but it is at best a self-regulating machine; scarcely a worthy goal of human aspiration, even for a discipline that sets it sights low, presumably because it fails so often. If this is still the substance of modern Economics, it reminds me too much of the old Peggy Lee song: “Is that all there is?”. I trust not.
Peggy Lee’s answer was to “break out the booze”; but that will not do either. Nevertheless, it is just not good enough for the times in which we now live and find ourselves, if that is all the economists have to offer us.
The speech is here
I am blogging it tomorrow
https://www.bankofengland.co.uk/speech/2020/gertjan-vlieghe-speech-monetary-policy-and-the-boes-balance-sheet
I wonder about the case for bringing back Schedule A Income Tax for owner occupiers (on the notional rental income received from themselves).
(An interesting aside that property income was schedule A, going back (AFAIK) to its intruduction – income from from emplyment was E)
Issue on it (as with domestic rates and Council Tax) is the revaluation required: my thought is a rolling programme – revalue a few every year, and adjust the rest pro rata.
The real problem with Council Tax is that once you’re in the top band, there’s no further increase.
An interesting idea
But how does it become an issue in local democracy?
First, I’d have a Unitary Tax Allowance – one tax allowance for all taxes. For example, you might have a £10,000 UTA, which you could choose to apply to employment income, dividends, capital gains or a mixture of those.
People are already used to the single ISA allowance that can be split between cash, stocks & shares or both. A UTA would remove the unfairness of richer people having enough money to take advantage of multiple tax allowances when poorer people sometimes struggle even to earn enough to use their income tax allowance alone.
I also wonder whether any unused UTA could be carried forward – for example, a mother who chose to stay at home until the children were older could have her childcare efforts recognised by being able to build up UTA to use later when she returned to employment, thereby offsetting the cost of some of the lost career progression.
People taking a career break to care for elderly or disabled family members also come to mind, although it might be more useful to them if they could transfer their UTA to a partner or spouse who was earning money for the household.
====
Second, would it make sense to have an inheritance tax that only applies when passing on assets that you yourself inherited?
For example, if you’ve inherited £10,000 in your lifetime, but you leave £30,000, your inheritor would only pay the 40% inheritance tax on the £10,000, thereby receiving £6,000 plus the untaxed £20,000 for a total of £26,000.
When your inheritor eventually died, leaving (say) £35,000, their inheritor would pay the 40% inheritance tax on the £26,000, thereby receiving £15,600 plus the untaxed £9,000 for a total of £24,600. This system would continue down the years as successive people inherited.
The idea would be to avoid taxing the assets that you had built up yourself – “being able to pass on the fruits of your labour” – but tax the assets you were given without having to work for them.
I’d support some exemptions, like proper agriculture, forestry or fish farming (shooting estates and trout streams need not apply). Another one could be an exemption to allow a multigenerational family home to be passed on to people who had already been living there for a reasonable period as their main residence.
The first is an interesting idea
The second emphatically not
We need to tax housing stock and all the inflated gains in it
And why not tax the gains in businesses? Second generation managers are rarely much good and third are dire
I emphatically agree with taxing the overinflated gains, but it seems to me that the rich political donors whose estates would lose the most always manage to nobble anything that would bring progress.
Basically, “if you’re going to hammer my estate when I leave it to my children, then you’ll not be getting any more donations from me” and the Tories (especially) fall in line.
I was trying to think of a way to break the “stealing the fruits of people’s labour” line they always seem to use, so that the public might see through it and support the reform.
Mind you, I did wander away from the immediate objective of this thread, because my idea means the state has to wait longer for the increased tax income to come in, so it doesn’t help with improving things right now in the aftermath of coronavirus.
Why believe their line when it is not true?
“Why believe their line when it is not true?”
I don’t know why people believe it, to be honest.
I suspect the right wing newspapers pushing their owners’ low tax agendas have a lot to do with it, though. They’re forever banging away at the Scottish Government for daring to make income tax ever so slightly more progressive than the Westminster version.
Land is the source of all rent as Henry George makes clear in Progress and Poverty. All other forms of rent must stem from the occupation and use of land at its source, for without land there is no capacity for anything of value. We can not work without land, therefore we also can not earn or consume. If we can do neither work nor consume, we cannot rent. Working from home requires land, sleeping in the street requires a street. Diamonds and gold reside in the land. Minerals and aggregates, oil and gas all require access to the land.
Land value is achieved by the efforts of all and is distributed to the landlord. LVT redistributes this value to the community that delivered it and deters speculation, this preventing bubbles and busts. Land is finite – other rentier vectors are not. It can not be stored, but it can be hoarded, depriving millions of a place to reside. A LVT is cheap to collect and impossible to avoid. It is the source of all wealth and it’s monopoly the source of all misery.
“If you had all the money and I had all the land, how much could I charge you for your first night’s rent?”
But Henry George was wrong
There are many sources of rent
And rent cannot be the base for all taxes
Stopping the abuse of rents is important
But please don’t think you have a magic answer to all questions
You most certainly have not
I suggest a 100% death tax. (If you didn’t trust your beneficiaries while you were alive, why should society trust them when you are dead). It is truly a victimless tax!
I also like the idea that all Corporates are 30% owned by the state. This ensures 30% of dividends to go to the tax payer,( replacing corporation tax) It also means the state has the law on minority interests to ensure that fake “Royalty” payments designed to move profits to low tax areas could be caught. They could be special shares that ensure short term political interference isn’t common place, but also ensure national interests are at least considered.
Should all these Covid “Grants” actually be share purchases?
In essence I am suggesting that
It is of course too late to do anything about it
I did also suggest it in time
100% inheritance tax is a great idea. It means those who worked for their money whilst alive are more likely to enjoy the fruits of their labour and wealth doesn’t come without working for it.. you would have to have very strict rules on gifts and accordingly penal tax rates. What better way is there to achieve equality of wealth?
I have to say I disagree simply because this goes against all the mores of our society and the tax system should reflect them
People want to gift
And they want to pass on something
We can have limits without tax, of course.
But 100%. That’s one of the many ridiculous ideas Peter Dawe proposes and them wonders why no one takes him seriously
And why is your idea also unworkable Jenny? Because a parent could not then provided for their child.
A wealth tax would surely cover other tax changes you list as possibles with it being the most effective rebalancer to the redistribution to the wealthy over the last forty years. The screams of unfairness will be loud and hostile, the accusation that this change is the politics I envy, but it must be the major tax reform we undertake as a country if we want a fair society. The associated question of how often that wealth is taxed would depend on the degree of re-distribution desirable.
Maybe we do need a wealth tax in the long term
But right now we need tax changes that avoid tax charges in those who cannot afford to pay
And a wealth tax would take a long time to introduce meaning that it would be counter productive fir now