I have posted this video on YouTube, Instagram and TikTok this morning:
The transcript is as follows:
One of the proposals that I make in the Taxing Wealth Report is that capital gains should be taxed at the same rate as income.
Capital gains are the profits that people make from selling land and buildings, or pieces of art, or stocks and shares, or, anything else of that sort that, by and large, wealthy people own.
And I can't see any reason why they should pay a lower rate of tax on the money that they make from this activity than you and I do on working for a living. But that's what happens now. By and large, they pay tax at half the rate they would do if they were working to make the same amount of money.
That's unfair.
It's also very costly. We could raise at least £12 billion of extra tax revenue a year. If we equalise these two rates, do you think we should do that? If so, I've got a suggestion to make to you. Please tell Rachel Reeves, or send her a letter, or send her an email, or tweet her and say something like this:
Rachel Reeves
Why is it that the Labour Party will not charge capital gains at the same rate as income?
Nigel Lawson did when he was Conservative Chancellor. Why won't you?
And why don't you think that's fair? I do, because it would raise enough money to help fund the programmes that are essential to restore our public services.
Best regards, etc
That's a positive action you can take to make a difference as a result of reading the Taxing Wealth Report 2024.
As is apparent from that transcript, the video includes the suggestion that those who watch it might want to contact Rachael Reese and ask why it is that she is willing to tolerate this type of justice when correcting it would provide essential funds that would permit Labour to spend more on essential public services.
I am particularly curious to know whether those here think that making such a call for action is a good idea.
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Writing to Rachel Reeves with this proposal is a very good idea.
Later today i will copy in my local Labour Councillors and suggest all my fellow Green Councillors and members in Sheffield do the same.
I’ll write to The Sheffield Star and Telegraph so they know i’ve done this.
Thank you Richard for all your work on The Taxing Wealth 2024 Report. There is no longer any excuse for polititians to say “We cant afford to pay for fit for purpose public services, provide people with a decent income and properly tackle the climate and nature emergencies.”
You get it Bernard
Such a call to action is an excellent idea!
Hurray for you Bernard Little! At last a courageous and intelligent politician appearing on this blog!
Richard,
Just watched your latest videos on YouTube, and they are excellent as expected.
However, when I hit the “notifications” bell to get future alerts, the system told me it was disabled because the videos are in the “For Kids” section.
Is this an uploading thing or YouTube?
I assume you hadn’t realised.
Keep them coming.
Weird
We will investigate and learn
And of course I want these in the section available to all. They’re hardly adult content!
Curious what we consider ‘adult content’ to mean nowadays.
Prior to Thatcher in the UK it appeared to be an accepted principle of taxation that earned income (gained from productive work) attracted a much lower rate of tax than unearned income (Capital gains) from not working.
As I understood it at the time, apart from the objections of wealthy non-workers, this appeared to be accepted as both fair and a way of encouraging the kind of behaviour that would build a strong heathy economy and nation.
I was young at the time and may have misunderstood taxation in the 1960/70s, but it still seems to me to be both a rational and effective way of building the sort of country that the overwhelming majority of us would like to live in.
Wholly agreed
Capitals gains was set at 30% from its introduction by James Callaghan in 1965, then aligned with income tax by Lawson in 1988 and then reduced by Gordon Brown (well, wouldn’t you know it) to 18% in 2008 to ‘reward risk taking and promote enterprise’.
So New Labour (Mandelson and his ilk?), and therefore probably exactly the reply you’d get from Reeves and Starmer.
You may well be right
What then was the 90% plus taxation that was frequently complained about and appeared to apply for instance to the income of, for example, the Rolling Stones?
I always understood that this was because it was some form of unearned income.
Is my mistake that there are many other forms of unearned income that are not classified as Capital gains?
The 98% tax was 83% income tax plus 15% investment income surcharge. I approve of the latter. I do not think 83% a sensible rate. Investment income is rent, interest, dividends, capital gains and the like.
In point of fact, most capital gains were not taxed at all in the UK until 1965. (Short term capital gains were taxed as income from 1962.) And the rate was fixed at 30% from 1965 to 1988. Lawson aligned the rates in 1988 so capital gains were taxed at the same marginal rates as income. But Brown broke that equivalence with taper relief in 1998.
Unearned income was taxed at higher rates than earned income from 1973 (replacing surtax on all income) to 1984, but the 30% rate of capital gains tax was lower than the top rates of income tax.
When you look at the distribution of people who pay capital gains tax it becomes obvious that gains should again be taxed at the same rates as income, and any reduced CGT rate is simply welfare for the already wealthy.
Entirely agreed
Well I think the whole point of creating a Starmer Party out of the Labour Party is to minimise accountability and that I think is what will happen trying to get any response out of Reeves or Starmer on this particular issue. There will be either zero response or just a load of weasel words to avoid being pinned down. I’d love to know what the Weasel Words Department is called in the Starmer Party! Probably the Re-Butt-All Unit if you know your American!
Of course when Nigel Lawson did it we had indexation relief so that only real gains and not nominal gains (losses in real terms) were taxed.
But you don’t mention that – why not? Why is it fair to tax someone on an asset that has effectively gone down in price? That’s hardly encouraging investment.
I think it fair to tax any current pound arriving in someone’s pocket equally. Why don’t you?
I assume you mean that inflation should be taken into account when assessing the original cost of an item and the ultimate income from selling it? So the amount to be taxed should not include any amount ‘gained’ from inflation? Can we, please, also apply that to income tax? When I started work I was earning under £1,000 per year and was taxed on that amount. For some reason, when my income increased every year due to inflation, the amount of tax I had to pay increased as well. To whom do you suggest I should apply for a refund?
🙂
The fact that the debate has moved onto “inflation relief” on Capital gains suggests that there is little resistance to equalising tax rates for income and Capital Gain; good news.
However, it might be worth a short piece on why “index relief” is not “fair” or a good idea.
As a stand-alone statement. “My (non-income generating) investment has not made a profit at all after taking inflation into account. Why should I pay tax?” has some plausibility. This needs to be de-bunked.
Assume (for the purposes of simplifying the sums) a 1 year time horizon and 10% inflation, 10% interest rates and 50% income tax.
If I place £100 pounds on deposit I will receive £10 interest and pay £5 in tax… leaving me with £105 to spend.
If I buy a non-income generating asset at £100 and I manage to sell it at £110 then, to give equality with “income” I should pay £5 tax…. or 50% on the gain with NO inflation relief.
So, if the aim is to equalise the taxation of capital and income then rates needs to be aligned and no inflation relief given; it is simple arithmetic.
As a footnote, gilts (both conventional and index linked) are capital gains tax free.
Thanks
And I see no reason why gilts should be CGT free
Agree wrt to gilts. It’s a bit niche but should be changed.
I always think Nigel Lawson does not get the credit he deserves for destroying company pension schemes.
It is hard to know if Robert Maxwell got the idea from Lawson or vice versa.
Either way we end up with the ethical sewer of the abominable Tory party asset-stripping the pension fund of UK miners whose jobs and communities they lied about and destroyed forty years ago.
Call to action is a really good idea. People are desperate for change, and too often all we hear, day in and day out, are expositions of all the problems we face, and no solutions. The Taxing Wealth Report is a welcome exception.
Thanks, Helen
You ask, Richard, whether making the call for action of contacting Rachel Reeves is a good idea. My reply is definitely yes and I have now written to her along the lines you suggest, in my own words (all polite), attaching your report.
My message alone, of course, is highly unlikely to make any difference. Large numbers may. We have to try.
Thanks
I’m sure the Rachel Reeves reply will be the same weasel words as Gordon Brown’s were “But we gotta encourage private entreprise!”
I tried to write to Rachel Reeves on the TWR by e-mail to Parliament. The email has now pinged back to me several times. There is nothing wrong with how my email was set up. I have no problems with other emails. I write only to find out if anyone else has had the same problem?
Weird
I got through…
Labour members are not happy, there has been a sharp fall in membership of late. I imagine that Labour’s ‘policy’ of not engaging with anyone that disagrees with it will not be helping. Over the last 24 months, prompted by articles here, I have written to various Labour figures and have never had any response.
I like Bernard’s idea of linking enquirees to the party with parallel approaches to other individuals/organisations.
If enough people do this it might be noticed that Labour simple ignores anything it doesn’t like, which is not a good look.
If I could ask Keir one question that he had to answer it would be ‘who do you represent?’
Meanwhile Gordon Brown after 14 years of waiting for private entreprise to perform (one of the Tories’s justifications for austerity) NHS waiting lists continue to grow longer!
https://www.theguardian.com/society/2024/apr/03/almost-10-million-people-in-england-could-be-on-nhs-waiting-list
And how Gordon Brown do you explain the following if private entreprise is performing after 14 years of the Tories supposedly encouraging it to raise its productivity?
https://www.theguardian.com/money/2024/apr/06/uk-car-insurance-cost-up-by-third-despite-smaller-rise-in-payouts
“The UK motor insurance market is expected to record an underwriting profit in 2020, according to EY’s UK Motor Insurance Results, due to the COVID-19 lockdowns and resultant reduction in motor claims with costs expected to fall by 12%. The Net Combined Ratio (NCR) for 2020 is predicted to be 93.8%, a 7.2% improvement on 2019’s performance” (EY website).
The motor insurance market also benefited from ‘whiplash claims’ reform. It is amazing how the free market obsession with “financial stability” from government, is never, ever matched by financial stability in “free market” practice.
“Free market” I have come to understand, is in reality an interest group in search of monopoly profit, or a subsidy from the public sector; or, if it can pull it off …. both, at the same time.
Your last sentence is spot on! No attempt is made by pro-marketeers to identify the subsidies they get from government it would make their ideology appear weak!
Here is Rachel Reeves responding to the suggestion re CGT:
https://twitter.com/SaulStaniforth/status/1641335958640500737
She really does belong in the Tories.
And she needs to be persuaded she is wrong
Here’s your answer why the Starmer Party aren’t going to budge on taxation:-
https://labourheartlands.com/selling-out-the-nhs-the-shocking-links-between-labour-mps-and-private-healthcare-donations/
(Money figures in the article taken from the House of Commons’s Register of Member’s Interests.)
In the Starmer Party like the Tory Party it’s good to grift!
Talking of capital gains in relationship to private sector capital expenditure (the we must have private sector growth before government can spend more mantra) here’s Wynne Godley smashing into Labour over 18 years ago in regard to public expenditure. He says both public capital expenditure and current expenditure amount to the same. This is a bit like an entrepreneur say Jeff Bezos of Amazon wanting to expand saying I’ll borrow money to build a new warehouse but I’ll not borrow any money to staff it!
“As for the longer term, I think that adequate growth will require a budget deficit larger than that permitted by any version of the Golden Rule. Monetary policy cannot maintain stable growth and full employment regardless of fiscal policy – although many people write as though it can.
Criticism of the fiscal policy regime has focused too much on whether Gordon Brown will break his self-imposed Golden Rule and not enough on whether the rule is acceptable. The Golden Rule states that the balance between receipts and current expenditure should be zero over the cycle, exempting public investment, which does not ‘count’ for the purpose of making this calculation.
A relatively minor objection to this arrangement is that there exists no relevant difference between, say, capital expenditure on school building and current expenditure on teachers. Both are equally necessary for education and both absorb resources (pound for pound) to roughly the same extent.
More fundamentally, the budget balance is equal to the difference between the government’s receipts and outlays, but it is also equal, by definition, to the sum of private net saving (personal and corporate combined) plus the balance of payments deficit.
https://www.theguardian.com/business/2005/aug/28/politics.comment
Labour politicians are clearly monetary illiterate dumbos seemingly incapable of learning anything!
I agree with Wayne Godley
That’s how to do it! Current popular medium. Short, crisp and punchy; with neat, clear sub-titles. Carefully spaced, keep them coming (but not too many, not too fast)!
Actually, Tik Tok rewards lots of posting. They may come thick and fast.
We live and learn ….
We will
Seriously, we can only try
I’ve tweeted her. We’ll see.
Thanks
May I suggest that if anyone is writing to Rachel Reeves, acknowledge that she must undoubtedly receive voluminous correspondence, but you would at least appreciate a response via her staff/researchers, after they have consulted her.
I have written to her 5 times now over the last 8 months & all I have ever got back is an automated acknowledgement & nowt else!
BUT, if sufficient numbers respond to Richard’s suggestion of writing to her along the lines he has proposed, it might just prompt some sort of response.
You never know.
Agreed
Write to your local MP and ask them to raise it with Reeves, copying Reeves intothe letter as well. Parliamentary convention is that an MP, even a minister, will not reply to another MP’s constituent. As I am no longer a Labour party member I would not expect a response.
I was not aware of this convention that “an MP, even a minister, will not reply to another MP’s constituent”! It maybe explains why Reeves has never replied other than the standard auto-acknowledgement. Given that I was writing to her in her position as Shadow Chancellor, rather than MP, & made this apparent to her & stated that I did not reasonably expect a personal reply from her, but did reasonably expect some sort of reply from her research staff, I won’t be forgiving her any time soon.
Thanks however for that information.
On 2 occasions I did copy in my local MP Ian Mearns & on both occasions I at least received replies from his office to the effect that Mearns was “aware of & admired the work of Richard Murphy, Danny Blanchflower & others”. I have doubts however that he would have broached matters with her. I will try again via my local MP.
Note that I once jokingly commented to RM that my death certificate will record the cause as “Fatal Concussion As A Result Of Repeatedly Banging His Head Against A Brick Wall”
We can but try!
I did not realise that she would rely on it. That is absurd.
If, weight of numbers is the consideration and not individual content, an open letter signed by all and shared widely could be an option.
I shall email the Shadow Chancellor, but I am wholly out of my depth on matters of national finance. That is why I come here for the free education from Richard and contributers, thank you all, keep up the excellent work.
I tried to email Rachel Reeves but got the usual response that as I am not one of her constituents she can’t reply and that I should contact my local MP instead. I’ve done this but how have others managed to get through to RR?
Oh well, I won’t try that again
The Starmer Party – Five year accountability only!