Discussion
Wealth taxes are one of those classic "common sense" taxes that supposedly "intelligent" people champion in times like this.
Simply put it only "works" if you completely ignores the reality of the steps/cost required to implement, not to mention the behavioural changes that get triggered as people look to avoid. Finally no advocate ever considers the second and third order effects they trigger which further impact investment and capital flows, the impact being reduced growth and less tax in other areas.
There is a reason when they are implemented they are usually swiftly unimplemented.
Given the state of childish discourse and lack of even the most basic understanding of economics amongst the political journalists this will no doubt end up being implemented. The politicians will simply ignore the consequences and look to the next tier of "evil people" they will aim to tax.
Simply put it only "works" if you completely ignores the reality of the steps/cost required to implement, not to mention the behavioural changes that get triggered as people look to avoid. Finally no advocate ever considers the second and third order effects they trigger which further impact investment and capital flows, the impact being reduced growth and less tax in other areas.
There is a reason when they are implemented they are usually swiftly unimplemented.
Given the state of childish discourse and lack of even the most basic understanding of economics amongst the political journalists this will no doubt end up being implemented. The politicians will simply ignore the consequences and look to the next tier of "evil people" they will aim to tax.
Gary C said:
acricha3 said:
The politicians will simply ignore the consequences and look to the next tier of "evil people" they will aim to tax.
They will just end up taxing the same people they have always taxed.The middle...
The Duke of Westminster left £9.3bn to his son who paid no IHT.
Good analysis. It ties in with what I was saying on the Gary's Economics thread about wealth taxes, on the top 0.1% anyway, only raising about 1-2% of what is needed if you're lucky. In fact someone should send Gary a link to that video. I think that debunks his ideas more effectively than Dan Neidle did.
So to generate any significant revenue from this approach Andy Burnham will end up having to apply tax hikes to the top 10 or 20% instead.
e.g. The middle class.
It will end up hitting anyone earning over £50,000, anyone with a house worth over £500,000, and so on. With probable carve outs for the public sector, MPs and so on.
So to generate any significant revenue from this approach Andy Burnham will end up having to apply tax hikes to the top 10 or 20% instead.
e.g. The middle class.
It will end up hitting anyone earning over £50,000, anyone with a house worth over £500,000, and so on. With probable carve outs for the public sector, MPs and so on.
Edited by WayOutWest on Thursday 9th July 15:53
TwigtheWonderkid said:
Exactly. The problem with wealth taxes is that the very rich don't pay them. Like IHT. The poor don't pay, and the rich don't pay. The comfortably off pay.
The Duke of Westminster left £9.3bn to his son who paid no IHT.
In theory he pays the very definition of wealth tax - the Trusts pay 6% every 10 years. I say in theory as I don’t think it’s reported how much they actually pay.The Duke of Westminster left £9.3bn to his son who paid no IHT.
It's the stupidest idea since communism. The idea that a wealth tax would work is really just another excuse to try steal from the middle-classes to placate the layabouts. It has never worked. It will never work. It will make everyone worse off, and no one will raise revenue from it.
Even recently due to tax rises and the end of non-dom, plus concerns over Britain's direction and residency test conditions, we saw something like ~11,000 millionaires and entrepreneurs leave the UK. Taking with them over £64bn if I recall correctly.
A few months back I was at a conference with a chap who advises HNW/UHNW clients on property, accounting for their businesses, and tax. He said he's lost half of his clients in the last 18 months due to relocation.
That's before we get to the ~249k exodus; many of whom I suspect of being qualified professionals/occupations who are fed up with the unfair system that taxes the productive and gives to the feckless, the liars, and the lazy.
Something these champagne socialists forget - making money (wealth) is challenging. That's why only a few small % of the population usually achieves it. Ironically they're okay with Taylor Swift being a billionaire, just not Mr. Dyson. They're okay with a footballer making millions, just not a businessman.
I think this is because they lack the capacity to see past their own spiteful noses, and therefore if they see a footballer succeed they can connect the dots; but they lack the intellectual capacity to do the same for someone who builds a multi-million pound business that employs dozens of people.
Whether or not they realise this, the reality is that most business people aren't thick. Hence being able to make the wealth; I'm not saying they're rocket scientists, but they aren't thick. And given the prospect of being taxed unfairly on their wealth that they were already taxed during the process of creating (corporate, dividend, VAT, etc.) I'm 100% convinced that all of them with a triple-digit IQ will be moving money, using tax shields, companies, etc, or just deferring realising the wealth, or alternatively emigrating, to avoid paying it.
Wealth isn't stupid. Governments are.
Even recently due to tax rises and the end of non-dom, plus concerns over Britain's direction and residency test conditions, we saw something like ~11,000 millionaires and entrepreneurs leave the UK. Taking with them over £64bn if I recall correctly.
A few months back I was at a conference with a chap who advises HNW/UHNW clients on property, accounting for their businesses, and tax. He said he's lost half of his clients in the last 18 months due to relocation.
That's before we get to the ~249k exodus; many of whom I suspect of being qualified professionals/occupations who are fed up with the unfair system that taxes the productive and gives to the feckless, the liars, and the lazy.
Something these champagne socialists forget - making money (wealth) is challenging. That's why only a few small % of the population usually achieves it. Ironically they're okay with Taylor Swift being a billionaire, just not Mr. Dyson. They're okay with a footballer making millions, just not a businessman.
I think this is because they lack the capacity to see past their own spiteful noses, and therefore if they see a footballer succeed they can connect the dots; but they lack the intellectual capacity to do the same for someone who builds a multi-million pound business that employs dozens of people.
Whether or not they realise this, the reality is that most business people aren't thick. Hence being able to make the wealth; I'm not saying they're rocket scientists, but they aren't thick. And given the prospect of being taxed unfairly on their wealth that they were already taxed during the process of creating (corporate, dividend, VAT, etc.) I'm 100% convinced that all of them with a triple-digit IQ will be moving money, using tax shields, companies, etc, or just deferring realising the wealth, or alternatively emigrating, to avoid paying it.
Wealth isn't stupid. Governments are.
Mr_Megalomaniac said:
Wealth isn't stupid. Governments are.
I'd put forward an alternative suggestion, that wealth isn't stupid and neither are Governments. People are stupid.With how our voting system works, what's important is getting in to power and trying to stay there.
How do you get in power? You win votes. As such, you have to do what you know the public will vote for.
That's where the stupidity seeps in to the mix, a Government's hands are tied by the ropes of 'votability'. The media (social or otherwise) will spin things up one way or another, and all you can hope for is that the great mouth breathing public will get angry enough at the opposition that they'll trudge out to vote for you to try and stop the others getting in.
So you need to raise a lot of money, and as such, you need to raise taxes, and crucially, you need to raise taxes in a way that stupid people will vote for, hopefully in great numbers.
What are the alternatives available to them? If you honestly think any Government would be successful by pitching the full complexities of a balanced and fair approach that distributes the tax burden in a logical and financially sound way across the nation, you're either delirious or just quite innocently out of touch with how people receive information, process it and react to it.
You're concluding what you think is right or effective in some sort of mystical world based on logic and a full understanding of economics. That's not the world we live in, but the reason for that isn't that Governments and everyone in them are magically stupid, it's that they have to meet the demands of voters, who are not bound by logic, an understanding of economics or even an understanding of the tax system as it is currently.
People just want 'someone else' to pay, and all a Government seeking votes can do is try and pitch it so that the 'someone else' being targeted is considered 'someone else' by enough people that they win more votes.
Mr_Megalomaniac said:
By way of further context on the Norwegian example, the increased outflow of the wealthy was triggered by an increase in their wealth tax from 0.85% to 1.1% on wealth above approx $2m. That is how sensitive people are. Yet it's the sort of % figure that sounds entirely benign and would be pedalled as something the wealthy can easily afford.The other interesting thing about the Norwegian example is that it became essentially impossible to establish a start-up or scale a business there. Founders were expected to pay taxes on unrealised equity value. Anyone who has ever started a business will tell you that such an approach simply doesn't fly.
SturdyHSV said:
People just want 'someone else' to pay, and all a Government seeking votes can do is try and pitch it so that the 'someone else' being targeted is considered 'someone else' by enough people that they win more votes.
And that is the crux of the problem. The desire to see people a bit richer than yourself taxed (instead of you) knows few boundaries.If this helps reduce tax rates for lower earners or reduce our debt - why not.
Uk is a great country to make money in. If someone decides to leave and sell businesses - someone else will pick up the niche.
Some rich guys selling portfolio of properties they are renting out would only help people get on property ladder.
Not sure its the most optimal solution for our situation but it would make progress certainly.
I anticipate all billionaires with news channels and news papers will do their best to take out Andy Burnham from office though.
Uk is a great country to make money in. If someone decides to leave and sell businesses - someone else will pick up the niche.
Some rich guys selling portfolio of properties they are renting out would only help people get on property ladder.
Not sure its the most optimal solution for our situation but it would make progress certainly.
I anticipate all billionaires with news channels and news papers will do their best to take out Andy Burnham from office though.
Blue_star said:
If this helps reduce tax rates for lower earners or reduce our debt - why not.
Uk is a great country to make money in. If someone decides to leave and sell businesses - someone else will pick up the niche.
Some rich guys selling portfolio of properties they are renting out would only help people get on property ladder.
Not sure its the most optimal solution for our situation but it would make progress certainly.
I anticipate all billionaires with news channels and news papers will do their best to take out Andy Burnham from office though.
It wouldn't produce enough revenue to lower other peoples taxes, and it would make a zero difference to debt, and a tiny difference to the deficit.Uk is a great country to make money in. If someone decides to leave and sell businesses - someone else will pick up the niche.
Some rich guys selling portfolio of properties they are renting out would only help people get on property ladder.
Not sure its the most optimal solution for our situation but it would make progress certainly.
I anticipate all billionaires with news channels and news papers will do their best to take out Andy Burnham from office though.
It's not a great place to make money if the government decides it wants to keep taxing wealth over and over. Why would you base a thriving business in the UK when it will be taxed from under you based value you may never see? Live somewhere warmer and keep your assets there. Tax is a tool altering behaviour, not just raising revenue
If a lot of property gets liquidated then it may drop prices a bit, but increase rents for those that can't afford to buy. Thats includes a lot of people reliant on benefits.
More taxation isn't progress.
SturdyHSV said:
I'd put forward an alternative suggestion, that wealth isn't stupid and neither are Governments. People are stupid.
With how our voting system works, what's important is getting in to power and trying to stay there.
How do you get in power? You win votes. As such, you have to do what you know the public will vote for.
I will partially agree with you here - that's where the messaging and the glad handing happens. And then promptly they turnaround and create loopholes (all parties do, that's the point).With how our voting system works, what's important is getting in to power and trying to stay there.
How do you get in power? You win votes. As such, you have to do what you know the public will vote for.
Where I disagree is your generalised point on how to model taxation and society. We've already seen empirical evidence prove that the Laffer curve peaks at 32.3%.
We know that low-tax jurisdictions are a gold mine for tax revenue despite the low rates because they're attractive.
We have seen first-hand how JFK cut the top tax rates in the US from something obscene like 93%, and how within 7 years the IRS doubled taxation receipts. Yes, doubled, in 7 years.
That's why Singapore, UAE, Switzerland, Hong Kong, Andorra, Guernsey, Jersey, half the Caribbean, etc. all have economies that punch above their weight.
It's a simple premise in terms of the social contract:
a) Work, be rewarded for work. Don't work; suffer for not working.
b) Work, suffer for working. Don't work; be rewarded for not working.
Britain created one of the greatest empires in the world, and the US the greatest economy in the world by choosing a.
Since 1948 we've suffered decades of b, through the uniparty, and we're on track to destroy ourselves for it.
98elise said:
Blue_star said:
If this helps reduce tax rates for lower earners or reduce our debt - why not.
Uk is a great country to make money in. If someone decides to leave and sell businesses - someone else will pick up the niche.
Some rich guys selling portfolio of properties they are renting out would only help people get on property ladder.
Not sure its the most optimal solution for our situation but it would make progress certainly.
I anticipate all billionaires with news channels and news papers will do their best to take out Andy Burnham from office though.
It wouldn't produce enough revenue to lower other peoples taxes, and it would make a zero difference to debt, and a tiny difference to the deficit.Uk is a great country to make money in. If someone decides to leave and sell businesses - someone else will pick up the niche.
Some rich guys selling portfolio of properties they are renting out would only help people get on property ladder.
Not sure its the most optimal solution for our situation but it would make progress certainly.
I anticipate all billionaires with news channels and news papers will do their best to take out Andy Burnham from office though.
It's not a great place to make money if the government decides it wants to keep taxing wealth over and over. Why would you base a thriving business in the UK when it will be taxed from under you based value you may never see? Live somewhere warmer and keep your assets there. Tax is a tool altering behaviour, not just raising revenue
If a lot of property gets liquidated then it may drop prices a bit, but increase rents for those that can't afford to buy. Thats includes a lot of people reliant on benefits.
More taxation isn't progress.
Blue_star; for an interesting thought I modelled this out differently. I ran the numbers on the following tax strategy; double the personal allowance, increase the base level of tax to 25%. Scrap all other tax brackets including the tapering at 100k and the pension bit. Dropped corporate tax to 20%, dividend tax to 10%.
That's it - one FAIR, and I want to emphasise that - FAIR, tax rate. Fairness isn't asking the other guy to pay more; it's paying the same. That's your "fair share". You want him to pay 45%? Then you do too.
So anyway I ran the numbers and it forecast that in year 1 we'd have a ~2%-3% drop in revenue, but then due to labour force increases and capital allocation forecasts including the increase of businesses relocating and social effects etc etc etc.
Turns out we'd have the same revenue in 3 years and about 10% more in 7 years.
We (us, society, the government) are literally too stupid and prejudiced for our own good.
BTW none of that even required the necessary step of re-balancing the books wrt social welfare, but alas.
Mr_Megalomaniac said:
I will partially agree with you here - that's where the messaging and the glad handing happens. And then promptly they turnaround and create loopholes (all parties do, that's the point).
Where I disagree is your generalised point on how to model taxation and society. We've already seen empirical evidence prove that the Laffer curve peaks at 32.3%.
We know that low-tax jurisdictions are a gold mine for tax revenue despite the low rates because they're attractive.
We have seen first-hand how JFK cut the top tax rates in the US from something obscene like 93%, and how within 7 years the IRS doubled taxation receipts. Yes, doubled, in 7 years.
That's why Singapore, UAE, Switzerland, Hong Kong, Andorra, Guernsey, Jersey, half the Caribbean, etc. all have economies that punch above their weight.
It's a simple premise in terms of the social contract:
a) Work, be rewarded for work. Don't work; suffer for not working.
b) Work, suffer for working. Don't work; be rewarded for not working.
Britain created one of the greatest empires in the world, and the US the greatest economy in the world by choosing a.
Since 1948 we've suffered decades of b, through the uniparty, and we're on track to destroy ourselves for it.
I wasn't aware of the name of the curve, but was aware there are successful tax regimes, so appreciate the clarification.Where I disagree is your generalised point on how to model taxation and society. We've already seen empirical evidence prove that the Laffer curve peaks at 32.3%.
We know that low-tax jurisdictions are a gold mine for tax revenue despite the low rates because they're attractive.
We have seen first-hand how JFK cut the top tax rates in the US from something obscene like 93%, and how within 7 years the IRS doubled taxation receipts. Yes, doubled, in 7 years.
That's why Singapore, UAE, Switzerland, Hong Kong, Andorra, Guernsey, Jersey, half the Caribbean, etc. all have economies that punch above their weight.
It's a simple premise in terms of the social contract:
a) Work, be rewarded for work. Don't work; suffer for not working.
b) Work, suffer for working. Don't work; be rewarded for not working.
Britain created one of the greatest empires in the world, and the US the greatest economy in the world by choosing a.
Since 1948 we've suffered decades of b, through the uniparty, and we're on track to destroy ourselves for it.
I think the issue is still however that you need people to turn out and vote for the Laffer curve!
By the time a politician gets out their graph to point at and begin explaining what empirical even means, their opposition has shouted "tax billionaires" and won 10x as many votes, frustratingly
SturdyHSV said:
I wasn't aware of the name of the curve, but was aware there are successful tax regimes, so appreciate the clarification.
I think the issue is still however that you need people to turn out and vote for the Laffer curve!
By the time a politician gets out their graph to point at and begin explaining what empirical even means, their opposition has shouted "tax billionaires" and won 10x as many votes, frustratingly
Indeed, sadly you are completely correct about that.I think the issue is still however that you need people to turn out and vote for the Laffer curve!
By the time a politician gets out their graph to point at and begin explaining what empirical even means, their opposition has shouted "tax billionaires" and won 10x as many votes, frustratingly
It's not just the flawed nature of our humanity, it's our propensity to be manipulated.
Mr_Megalomaniac said:
SturdyHSV said:
I wasn't aware of the name of the curve, but was aware there are successful tax regimes, so appreciate the clarification.
I think the issue is still however that you need people to turn out and vote for the Laffer curve!
By the time a politician gets out their graph to point at and begin explaining what empirical even means, their opposition has shouted "tax billionaires" and won 10x as many votes, frustratingly
Indeed, sadly you are completely correct about that.I think the issue is still however that you need people to turn out and vote for the Laffer curve!
By the time a politician gets out their graph to point at and begin explaining what empirical even means, their opposition has shouted "tax billionaires" and won 10x as many votes, frustratingly
It's not just the flawed nature of our humanity, it's our propensity to be manipulated.
It's a tough one for sure!
acricha3 said:
Wealth taxes are one of those classic "common sense" taxes that supposedly "intelligent" people champion in times like this.
Simply put it only "works" if you completely ignores the reality of the steps/cost required to implement, not to mention the behavioural changes that get triggered as people look to avoid. Finally no advocate ever considers the second and third order effects they trigger which further impact investment and capital flows, the impact being reduced growth and less tax in other areas.
I suspect it's more about populist votes than actual revenue or common sense. Everybody likes 'tax the rich' and those affected don't have enough votes to matter.Simply put it only "works" if you completely ignores the reality of the steps/cost required to implement, not to mention the behavioural changes that get triggered as people look to avoid. Finally no advocate ever considers the second and third order effects they trigger which further impact investment and capital flows, the impact being reduced growth and less tax in other areas.
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