Monday 5 December 2022

Wealth tax proposals: target 'those other guys'

 Gotta laugh at this earnest Grauniad article

One of us is a millionaire, the other a care worker. The cruel divide between rich and poor disgusts us both ...  Britain’s cost of living crisis is disastrous for one of us and will barely touch the other. The best answer is a wealth tax

The two ladies in question are Julia Davies and Winsome Hill.  In case you are wondering, it's Julia that is a member of "Patriotic Millionaires" (sic), and Ms Hill who is the care worker.  Entertainingly but somehow inevitably, the article includes the words "the two of us have never met" !   No, really? -  you surprise me.  "... but we both felt the inequality in this country couldn’t continue ... and decided to write this piece together."

So what have they, errr, spontaneously agreed as a solution for inequality?  Even though they've never met. 

Let’s start with taxing the seriously wealthy – people with wealth of more than £10m. A wealth tax of just 1% or 2% on their stocks of wealth over £10m ...    [my emphasis]

I think we know what this means.  It means - I'm just guessing here - that Ms Davies' "stock of wealth" is somewhere in the band £1m to £5m.  Because that's the very definition of people who think that "seriously wealthy" means north of 10.  Left on her own with the pen, Ms Hill might, I suspect, have written "people with wealth over £1m" - or even £500k, given that the average UK house price is £256k and the median personal pension pot is only in the tens of thousands (though the data is hard to summarise simply).  But that wouldn't do, Ms Davies - would it?   No no no!

Yup, it's human nature to reckon that "serious wealthy" is always someone else.  You got a yacht?  Yeah, but he's got his own island.



Don Cox said...

I reckon anyone who owns a car (fully paid for) is wealthy.


patently said...

Similarly, anyone who overtakes me is a lunatic speed freak, whereas anyone who holds me up is a lane-hogging dawdler. T'was ever thus.

Anonymous said...

I like this line:
We also need to make sure that people’s incomes are taxed at the same rate

SO they must be against a 45% tax rate for the highest earners and against a personal allowance, as this means low earners pay a lower % of their total income taken as tax.

DJK said...

Wealth taxes and income taxes are two very different things.

The biggest block of untaxed wealth is the houses people live in. There are probably plenty of Labour activists who think that a 1% pa tax on the value of people's houses is entirely reasonable. (To be honest, I think they have a point, given that anybody who bought a house over 20 years ago is sitting on a big chunk of unearned, untaxed capital gain.) But then again, do you tax the value of the house or just the mortgage free equity? Probably fewer people think that taxing private pensions as wealth is reasonable.

But that's the trouble. Wealth taxes, like income taxes before them, only really start to raise useful amounts of money once you tax the comfortably off, and not just the stateless, super-rich. (Like Mrs. Sunak).

Don Cox said...

" anybody who bought a house over 20 years ago is sitting on a big chunk of unearned, untaxed capital gain."

But that isn't money that you can spend. You have to live somewhere.

I certainly didn't buy my house as a capital investment. I bought it to have a roof over my head.


Nick Drew said...

These things are never straightforward and involve a load of "accidents of history". The Council Tax is essentially a blunt (very blunt) form of recurring asset tax. Nobody riots over that.

(The principle having been established, I have never understood why the CT bands don't extent infinitely upwards. Well, the lefties will tell me quickly enough: it's because the propertied classes have the MPs of all parties thoroughly house-trained ...)

DJK said...

>But that isn't money that you can spend...

Wealth is like that. Nobody keeps a stack of pound notes under the bed, or even a million points in the bank. Real wealth is assets that have monetary value. If they're taxed, then you either need an income stream to pay taxes on your assets, or you need to borrow against the assets.

If you're wealth consists of just the big house you're living in and the incoming government decides to tax it as wealth (in addition to local taxes to pay for schools/refuse collection, etc) then you need to take out a mortgage to release some equity.

Not saying it's right, it's just that wealth taxes can get ugly, quickly.

Of course the really rich, like Mrs. Sunak, have their wealth overseas, out of the reach of HMRC.

DJK said...

And if your justification for your house being untaxed is that you live in it, then you're just inviting the local commisar to come round and decide if a single couple really need a five-bedroom, detached house to live comfortably, or whether they should downsize to a single bedroom retirement flat, if they want to live untaxed.

dearieme said...

"the median personal pension pot is only in the tens of thousands"

When I retired none of my seven pension pots was in the tens of thousands. But when I put them together they become a useful backstop to my DB schemes.

E-K said...

There is no need for a wealthy, Labour voting socialist to wait for a change in policy in order to pay more tax.

There is an option to overpay in the self assessment process.

Or they can just give to charity in a sacrificial way.

If they have any spare then they should not claim to be a socialist and should not be asking anyone else to contribute more.

That is hypocrisy.

Tax always ALWAYS hits those who aren't rich enough to avoid it, ie the luckless professional classes - who now inhabit bedsit land and get spanked for higher taxation in the form of student loan repayments (as well as the higher tax rate) just as soon as they hit a mortgage-able salary.

This is why the true crisis facing Britain is not mass immigration but mass EMigration. 500,000 per year at last count and ALL of them taking with them something we want to keep here. You can't emigrate anywhere decent without youth, energy, wealth and/or qualifications.

The answer really was TAX CUTS (they would have been revenue neutral) and not tax rises for anyone at all.

Truss was not saved by the adults in the room but hobbled by them.

It really is no wonder at all that Britain - which rewards every bad behaviour punishes all the good - is looking more and more like there has been a mass prison and mental hospital breakout.

Matt said...

I've paid all the tax and NI that I ever want to pay. I'll be retiring ASAP and ensuring that I arrange my pension to pay as little tax as possible during retirement.

Also aware that might not be enough as the state is devouring all the money from the economy, so I'll be off somewhere that doesn't punish those who made provision for themselves.

dearieme said...

There's been a fascinating back-and-forth in the Tel about an anonymous rich man who declared in (I think) 1919 that his business had done well out of the Great War and so he was donating 20% of his capital to the Treasury. He invited others to follow his example. It seems damn few did.

In 1924 it was discovered that the chap was Stanley Baldwin who was by then PM. One commenter said that Baldwin may have regretted his action because later in life he was a bit pinched for cash. Someone else said that Baldwin had paid financial support to some of the workers his business had had to lay off.

I suspect that spending income on former employees and gifting capital to the Treasury might well result in feeling pinched. Still, they don't make 'em like that any more.

jim said...

Feeling hard-up? roll up your sleeves, spit on your hands and write a symphony, or a Potter novel, or scribble some FinTech code. Simples.

Sure, the rich should be taxed, and so should corporations - but how and how much. Then we might consider the >10,000 people employed? in the UK Cabinet Office. WTF do they do for their corn? BTW, not a rant against the public sector - we need that - badly - but >10k in the Cabinet Office?

Anyway, trivial against the real earthquake. The world seems to be splitting between the US axis and the China/Asia axis with Europe having no energy and shortly no economy. Both sides are cornering the traditional technologies, cars, semicon, pharma and employment opportunities. Meanwhile BASF is running out of feedstock. Fairly soon there will be no wealthy in Europe to tax - humans or corporations. That's serious.

Now just figure out how to beat Mr Putin. So we lose a city or two, but we could use a bit of population loss. Optimising the loss/gain should be what our planners are working on over Christmas.

Anonymous said...


Presumably not a city that is close to you ?

Anonymous said...

How do you put the true value on a house until someone has agreed a price to buy it?

The inside of my house may resemble a squatters crack-den or high-end hotel, both of which could drastically alter the value of the asset and therefore my wealth.

Would they get an army of inspectors to force themselves into everyone homes so they can value them?

E-K said...

Anonymous @ 10.36

The value of the house is also determined by how many of them are for sale in that vicinity at the time of valuation.

Our whole economy is valued on the rate of release to market of housing stock... when a punitive (redistributive) tax causes a rush of impoverished householders to sell at the same time... then is when we find out that our economy is pure fluff.

E-K said...

We can't 'beat' Putin.

He may well lose but so will we. So that Ukraine may join the EU while the EU annexes part of our country and makes us a vassal state.

Why was Boris so energetic in Ukraine ? Was it really about democracy ?

Bloke in Callao said...

'Would they get an army of inspectors to force themselves into everyone homes so they can value them?'

Yes, they probably would.

rwendland said...

> "but >10k in the Cabinet Office?"

Most of these are only nominally in the Cabinet Office, ie civil servants for some reason not clearly in a department. eg all the Fasttrack new-grad SCS trainees are all listed in the Cabinet Office while for 3 years they spend their 6 & 12 month stints in various departments and agencies. I expect you'd have to dive deeply into the statistics to work out how many of them are near Downing Street.