The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
Whilst Jose's proposal above is well intentioned it misses the point that the issue is wealth inequality not income inequality. Income inequality in the UK is worse than most developed countries but wealth inequality is way off the scale of basically everyone but the US. The top 20% in the UK hold 65% of wealth.
Every proposal for a wealth tax I've seen has come alongside a reduction in income tax or an increase in the bands. So under a wealth tax those people would actually pay less income tax. But may if they have high enough assets be subject to an element of the wealth tax.
It's a question of whether you tax the flow or the stock. Previously flow led to increases in stock. Now the biggest drivers of stick are intergenerational and therefore the question is becoming should we focus on the stock.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
With all due respect in the example above you are not someone who would be targeted by a wealth tax.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
I honestly find it difficult to understand why anyone would go through the slog and risk of starting up a small business these days.
Because no small business would be affected by this. It would be targeted at the mega rich at the very top of which small businesses and their owners would not fall into. And the whole purpose of it is so that things like the NI rise, NI threshold dropping and various other things that have clobbered small businesses wouldn't actually have had to have happened as those at the top would have been paying their fair share.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
You are right about a 100% tax on earnings over £380k being unfathomable. Probably because it hasn’t been tried so we don’t know what it would lead to.
Why would anyone ever take a job paying more than £380k if they didn’t earn anything, in fact why would a company ever pay above £380k as overal it’d be a tax greater than 100% with employers NI etc.
i don’t think you’ve thought this through, be interesting for Premier League footballers though, some would only get paid for half a week a year 😂
There wouldn't be a Premier League as we know it if some of the proposals on this thread went ahead, likely not many decent Championship players either.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
You are right about a 100% tax on earnings over £380k being unfathomable. Probably because it hasn’t been tried so we don’t know what it would lead to.
Why would anyone ever take a job paying more than £380k if they didn’t earn anything, in fact why would a company ever pay above £380k as overal it’d be a tax greater than 100% with employers NI etc.
i don’t think you’ve thought this through, be interesting for Premier League footballers though, some would only get paid for half a week a year 😂
There wouldn't be a Premier League as we know it if some of the proposals on this thread went ahead, likely not many decent Championship players either.
The Premier League would become an under 21/18 league with zero SKY money and any talent hoovered up by Spanish/Italian/German clubs.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
Its just a proposal. There are others but this one is i belive going to be the one most worked through and imo most credible. 1% over £50m, 2% over £100m 4% over 1bn.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Interesting project to work on.
How do you ensure that your or rather the sponsors natural bias doesn’t influence the outcome of your analysis? As in lies, lies damned lies and statistics?
I simply mean it’s surely quite hard to be completely neutral with analysis and modelling not to arrive at an answer you want it to be.
Not a personal slight a genuine question.
For what it’s worth I’m more inclined to some sort of wealth tax on the super rich but very interested you suggest it should be done alongside reductions for the more modestly rewarded - not seen that suggested much before.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Why is increasing the minimum wage stupid? People at the bottom have to live too. Why is the waiter in a restaurant or a shop assistant not worth an increase. Inflation up again this month, food prices up 4.5%, the person on minimum wage spends a greater proportion of their income on food than the boss of a company.
If people at the bottom of the pay structure were paid properly by the companies that employ them, there would be no need for the state to top up wages with universal credit.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
And here's me thinking I'm doing well knocking me nuts off for £100 a day after tax.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
Its just a proposal. There are others but this one is i belive going to be the one most worked through and imo most credible. 1% over £50m, 2% over £100m 4% over 1bn.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
The below is based on estimates (made by others) so don't quote me on that!
There are around 5,000 people in the UK worth more than £50m and there are around 150 billionaires. The figures I've seen quoted for tax revenue from a wealth tax are in the order of £24 billion a year. Based on your sliding scale, someone worth £1 billion today (and maintaining that level) would pay their entire current wealth in tax in 25 years. Their normal tax burden on top of that. Also most of their wealth will be in illiquid assets.
So based on that your model is anticipating getting an additional £24 billion a year in additional tax revenue from 5,150 individuals, although in reality most of that additional tax take would come from a few hundred individuals. The vast majority of that wealth will disappear abroad - far away from the clutches of HMRC.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
We can argue the toss about what constitutes exploitation/bad business practices/inheritance etc. But we're never gonna agree on that and it's largely a matter of opinion based on where your morals lie. So I'll try a different tack.
Do you or do you need think wealth inequality in the UK needs addressing?
Personally I do. It's quite clear from my work and background it is acting as a huge anchor on the UK economy.
Whether or not they got there the right way they are now there. They have high salaries which is great and no one is begrudging them that. The maths says the majority of that net worth will have had to come from investment growth, something most people don't have. If they do pay tax on that it will be at a lower rate income tax. With inequality so large is it wrong to ask them to pay a little more?
Even if they pay "everything that is due" it is still a lower rate than someone who only gets income through a Salary. A wealth tax would not even close to equalise that rate.
Most of your arguments stem from trickle down economics. It's very ingrained in the psyche of older generations in the UK. But it's disproven. It worked for a short time but 50 years of mist of the western world religiously following it and repeatedly doubling down has got us where exactly? Massive inequality, a society that isn't functioning and an economy not growing. And as the ultra rich have chewed up the poor and working classes they are now doing the same to the middle classes who are actually the ones starting and running businesses and creating growth. But there is no one else and no other wealth to chew up. And there is no where else to get money from so the government bring in things like the ridiculous NI lower bound. Say what you want about Gary's economics and the shock lines he says to grab headlines. His long form assessments of what has happened to the UK economy are bang on.
As for your last line. I'm in the same boat. As are almost all of my friends. Degree educated people in their 20s or 30s are leaving at rates never seen before. I worked out 40% of my uni group of mates are now no longer in the UK, its higher for my wife (she went to Cambridge). Our wedding was like the 4 corners of the earth coming together! The reason for this is that an educated young person can relative to cost of living be at least twice as well off in at least 20 other countries as well as the opportunity to live under much more progressive social policy.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
We can argue the toss about what constitutes exploitation/bad business practices/inheritance etc. But we're never gonna agree on that and it's largely a matter of opinion based on where your morals lie. So I'll try a different tack.
Do you or do you need think wealth inequality in the UK needs addressing?
Personally I do. It's quite clear from my work and background it is acting as a huge anchor on the UK economy.
Whether or not they got there the right way they are now there. They have high salaries which is great and no one is begrudging them that. The maths says the majority of that net worth will have had to come from investment growth, something most people don't have. If they do pay tax on that it will be at a lower rate income tax. With inequality so large is it wrong to ask them to pay a little more?
Even if they pay "everything that is due" it is still a lower rate than someone who only gets income through a Salary. A wealth tax would not even close to equalise that rate.
Most of your arguments stem from trickle down economics. It's very ingrained in the psyche of older generations in the UK. But it's disproven. It worked for a short time but 50 years of mist of the western world religiously following it and repeatedly doubling down has got us where exactly? Massive inequality, a society that isn't functioning and an economy not growing. And as the ultra rich have chewed up the poor and working classes they are now doing the same to the middle classes who are actually the ones starting and running businesses and creating growth. But there is no one else and no other wealth to chew up. And there is no where else to get money from so the government bring in things like the ridiculous NI lower bound. Say what you want about Gary's economics and the shock lines he says to grab headlines. His long form assessments of what has happened to the UK economy are bang on.
As for your last line. I'm in the same boat. As are almost all of my friends. Degree educated people in their 20s or 30s are leaving at rates never seen before. I worked out 40% of my uni group of mates are now no longer in the UK, its higher for my wife (she went to Cambridge). Our wedding was like the 4 corners of the earth coming together! The reason for this is that an educated young person can relative to cost of living be at least twice as well off in at least 20 other countries as well as the opportunity to live under much more progressive social policy.
Not a great tactic - playing the moral high ground.
Nobody on here has claimed wealth inequality is a good thing - it's how it is tackled. A wealth tax will not work - chase those who cheat the system.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
Its just a proposal. There are others but this one is i belive going to be the one most worked through and imo most credible. 1% over £50m, 2% over £100m 4% over 1bn.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
The below is based on estimates (made by others) so don't quote me on that!
There are around 5,000 people in the UK worth more than £50m and there are around 150 billionaires. The figures I've seen quoted for tax revenue from a wealth tax are in the order of £24 billion a year. Based on your sliding scale, someone worth £1 billion today (and maintaining that level) would pay their entire current wealth in tax in 25 years. Their normal tax burden on top of that. Also most of their wealth will be in illiquid assets.
So based on that your model is anticipating getting an additional £24 billion a year in additional tax revenue from 5,150 individuals, although in reality most of that additional tax take would come from a few hundred individuals. The vast majority of that wealth will disappear abroad - far away from the clutches of HMRC.
Bonne chance, Canters
I could genuinely go into all the reasons why capital flight is a massive economic lie (though I wouldn't want to take that joy away from @Bournemouth Addick) but I can't be arsed. I will point out 2 facts.
1) despite all the media spewing over the last year that millionaires are leaving in their droves because of this government the official figures when released showed the exit rate to be 0.03%. About average for the last 20 years.
2) by my count at least 12 countries have already got wealth taxes (plus another couple like France that have voted for it more recently). The millionaire exit rate in those countries remains around 0.03%.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
You will have to excuse my ignorance, if they work for a re-insurance broker, unless they founded the company, how are they self made?
Just an afterthought, the country is skint, we need more income. Where do you suggest that income comes from?
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
Its just a proposal. There are others but this one is i belive going to be the one most worked through and imo most credible. 1% over £50m, 2% over £100m 4% over 1bn.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
The below is based on estimates (made by others) so don't quote me on that!
There are around 5,000 people in the UK worth more than £50m and there are around 150 billionaires. The figures I've seen quoted for tax revenue from a wealth tax are in the order of £24 billion a year. Based on your sliding scale, someone worth £1 billion today (and maintaining that level) would pay their entire current wealth in tax in 25 years. Their normal tax burden on top of that. Also most of their wealth will be in illiquid assets.
So based on that your model is anticipating getting an additional £24 billion a year in additional tax revenue from 5,150 individuals, although in reality most of that additional tax take would come from a few hundred individuals. The vast majority of that wealth will disappear abroad - far away from the clutches of HMRC.
Bonne chance, Canters
I could genuinely go into all the reasons why capital flight is a massive economic lie (though I wouldn't want to take that joy away from @Bournemouth Addick) but I can't be arsed. I will point out 2 facts.
1) despite all the media spewing over the last year that millionaires are leaving in their droves because of this government the official figures when released showed the exit rate to be 0.03%. About average for the last 20 years.
2) by my count at least 12 countries have already got wealth taxes (plus another couple like France that have voted for it more recently). The millionaire exit rate in those countries remains around 0.03%.
That exit rate will grow rapidly if a wealth tax along the lines you outlined was introduced. It isn't millionaires that will be the issue, it's the billionaires/high hundreds of millions.
The semantic argument about what is income/earnings/wages/payment for laboue etc... is meaningless. Income is 'incomings' for which there is a tax liability.
Now let's look at actual figures as percentages are misleading in my opinion.
Income £50,000 = tax of £7,500
Income £100,000 = tax of £27,500
Income £1,000,000 = tax of £435,000
This assumes no clever tax avoidance schemes, and anyone on PAYE hasn't got a chance of avoiding tax. So tax as it is due.
So someone earning £1,000,000 (20x that of someone who earns £50k) pays 58x the tax. That seems pretty progressive to me (and you will all know my politics are left of centre).
Let's get on to wealth tax. Let's say I earn £10m pa - I pay tax of approximately £4.5m. I invest a high proportion of that net income in assets (property, art, classic cars, whatever) and when any of those assets are realised I pay CGT if applicable. Why should I then pay an additional wealth tax on my net worth, accumulated from net income?
Your post demonstrates exactly why the semantic argument about income/earnings needs to happen. As for the cohort of people we are talking about the majority of what they make is not under PAYE and therefore your entire example doesn't apply to them.
Of course what you set out is how the system was originally designed to work and did so about 50-70 years ago. It's how it would still work in the real world. But again those with net worth of the scale we are talking about may make some through PAYE but the vast majority is made through other means. Some of this is taxable some of it is not. Much of the other taxable bit is avoidable if they so choose.
To use Rob7Lee's above example someone with a net worth of 100m and makes 1-2m cash income a year that is subject to income tax/ PAYE etc. However on top of that they will be bringing in other cash through the various other means which may or may not be taxed depending on avoidance schemes and offshoring. And further on top of that they will be expecting to make a minimum of 15% a year asset growth on which they pay nothing until they withdraw it. But they are able to and frequently do borrow against this to fund further investments or lifestyle (chartering private jets, buying super yachts etc). The cost of this borrowing can then be offset against future earnings further reducing their tax liability. That's where the 4% comes from. There's also further tricks used by the ultra rich such as selling assets to themselves at a loss from one holding company to another in order to offset future tax liabilities. Musk did this with twitter buying it for 44m then selling to himself at an £11m loss to offset tax liability.
So yes if you only look at the traditional taxable bit of it then yes they do pay much more. But that misses the vast majority of what these people make. The whole point of the wealth tax conversation is to recognise that the inequality in society isn't about that traditional part of earnings but about wealth as a whole. And the wealth tax is the proposed solution to that.
How many people, roughly, do you think fall into this category of offshoring, selling assets to themselves at a loss, who borrow against asset security to fund private super yachts, chartering private planes and so on? It's not a huge number, Canters, and HMRC could easily focus on that cohort - prosecuting tax evasion and closing unfair avoidance loopholes. Tax people on what they should pay, but don't tax them again on what they have left - however much that might be.
All of my assets, liquid or otherwise, have been acquired from net income, the vast majority of which was under PAYE (and all that wasn't was fully declared). Whether that leaves me with net £100k, £2m or £20m is irrelevant - and that applies to the overwhelming majority of high net worth individuals. Chase the others by all means.
It's a small but growing number. But that's the point. The couple thousand individuals right at the top of the UK wealth distribution hold disproportionate wealth. The top 1% hold more than the bottom 70% combined. These are the people that should be targeted and that's what a wealth tax does. If we don't address this wealth inequality the UK economy will never recover. History shows in any developed nation growth comes when policy levers are pulled to reduce inequality. Not the other way around.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
I know at least 10 of the one or two and I suspect you know similar, Bob!
Why is it in this country so many love putting down success.
Thats what all the research shows. Exploitation is the term they use. Camel through the eye of the needle sort of stuff. Same picture in UK, Europe, US etc. I'm sure your anecdotes > data is definitely reliable and the picture these people paint of their lives is definitely 100% correct and not even a little bit spin.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
We can argue the toss about what constitutes exploitation/bad business practices/inheritance etc. But we're never gonna agree on that and it's largely a matter of opinion based on where your morals lie. So I'll try a different tack.
Do you or do you need think wealth inequality in the UK needs addressing?
Personally I do. It's quite clear from my work and background it is acting as a huge anchor on the UK economy.
Whether or not they got there the right way they are now there. They have high salaries which is great and no one is begrudging them that. The maths says the majority of that net worth will have had to come from investment growth, something most people don't have. If they do pay tax on that it will be at a lower rate income tax. With inequality so large is it wrong to ask them to pay a little more?
Even if they pay "everything that is due" it is still a lower rate than someone who only gets income through a Salary. A wealth tax would not even close to equalise that rate.
Most of your arguments stem from trickle down economics. It's very ingrained in the psyche of older generations in the UK. But it's disproven. It worked for a short time but 50 years of mist of the western world religiously following it and repeatedly doubling down has got us where exactly? Massive inequality, a society that isn't functioning and an economy not growing. And as the ultra rich have chewed up the poor and working classes they are now doing the same to the middle classes who are actually the ones starting and running businesses and creating growth. But there is no one else and no other wealth to chew up. And there is no where else to get money from so the government bring in things like the ridiculous NI lower bound. Say what you want about Gary's economics and the shock lines he says to grab headlines. His long form assessments of what has happened to the UK economy are bang on.
As for your last line. I'm in the same boat. As are almost all of my friends. Degree educated people in their 20s or 30s are leaving at rates never seen before. I worked out 40% of my uni group of mates are now no longer in the UK, its higher for my wife (she went to Cambridge). Our wedding was like the 4 corners of the earth coming together! The reason for this is that an educated young person can relative to cost of living be at least twice as well off in at least 20 other countries as well as the opportunity to live under much more progressive social policy.
Not a great tactic - playing the moral high ground.
Nobody on here has claimed wealth inequality is a good thing - it's how it is tackled. A wealth tax will not work - chase those who cheat the system.
That was absolutely not my intention. Genuinely meant it was a matter of opinion nothing more.
On your second point. Your solution will not tackle wealth inequality. Even if it was possible to close all the loopholes and get these people to pay exactly what is "due" they will still pay less than someone on PAYE so the gap will only widen just slower. It also only looks at the income. The problem isn't income its wealth. You don't solve the stock problem by looking at the flow. You have to tackle the stock problem directly. A wealth tax is the only way to solve wealth inequality.
Ohh and wealth taxes have been around for years in other countries. They do work.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
Its just a proposal. There are others but this one is i belive going to be the one most worked through and imo most credible. 1% over £50m, 2% over £100m 4% over 1bn.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
The below is based on estimates (made by others) so don't quote me on that!
There are around 5,000 people in the UK worth more than £50m and there are around 150 billionaires. The figures I've seen quoted for tax revenue from a wealth tax are in the order of £24 billion a year. Based on your sliding scale, someone worth £1 billion today (and maintaining that level) would pay their entire current wealth in tax in 25 years. Their normal tax burden on top of that. Also most of their wealth will be in illiquid assets.
So based on that your model is anticipating getting an additional £24 billion a year in additional tax revenue from 5,150 individuals, although in reality most of that additional tax take would come from a few hundred individuals. The vast majority of that wealth will disappear abroad - far away from the clutches of HMRC.
Bonne chance, Canters
I could genuinely go into all the reasons why capital flight is a massive economic lie (though I wouldn't want to take that joy away from @Bournemouth Addick) but I can't be arsed. I will point out 2 facts.
1) despite all the media spewing over the last year that millionaires are leaving in their droves because of this government the official figures when released showed the exit rate to be 0.03%. About average for the last 20 years.
2) by my count at least 12 countries have already got wealth taxes (plus another couple like France that have voted for it more recently). The millionaire exit rate in those countries remains around 0.03%.
That exit rate will grow rapidly if a wealth tax along the lines you outlined was introduced. It isn't millionaires that will be the issue, it's the billionaires/high hundreds of millions.
Which is the fear mongering we are told any time we attempt to tackle an issue in the country. Or a threat from the very rich whenever we try and close loopholes like the non-dom status. However the evidence from countries like Iceland that have had wealth taxes and harsher ones at that for a number of years show its simply not the case.
Either way there is an argument that their UK assets will remain here, whether it be UK bonds, mortgages, stocks or property. Levy the tax on their remaining UK assets should they choose to leave. You don't get to own a part of the country and not contribute.
Using the example above, which is framed in nicely simple terms you get:
£50,000 income, £7,500 tax, leaves you £42,500 to live on. £100,000 income, £27,500 tax, leaves you £72,500 to live on. £1,000,000 income, £435,000 tax, leaves you £565,000 to live on.
So when it comes to paying the bills, the person with a £1,000,000 income has about thirteen times as much more to live on compared with the person with an income of £50,000.
If the person earning £1,000,000 a year was left with five times the income of the £50,000 person to live on, they would get £212,500 to make ends meet, and pay £787,500 tax.
Based on the current tax rates, you would need to earn £380,000 to net that £212,500 - so you are effectively proposing a tax rate of 100% on any earnings above £380k. The impact that would have on the economy is unfathomable.
Yes but it would fuck the high earners which a lot of people seem to want to do. Wreck the country as long as those greedy few get clobbered lol it’s a race to the bottom
The figures don't stand up, but the neither do the richest 1or 2% being millions better off after years and years of austerity. I don't think most people want to fuck the high earners, I think they want to see an end to those at the bottom suffering more and more cuts and instead having the richest paying more tax into a system that needs it.
You use the term greedy few yourself Andy.
But you shouldn’t blame the people it’s the system that needs changing. I have a small business that employs 137 people. There are a few in the business that earn more than I do and I own the business. I try to make it as rewarding as possible for every member of staff but the stupidity of things like NI increases, minimum wage increase (that does not just effect minimum wage earners ) I agree our system is fucked but taxing the creators is not the answer. Rather than trying to create a vibrant dynamic economy some people seem set on stifling it
Neither is squeezing those at the bottom, hence wealth tax for the very rich who make more from unearned income than business.
Out of interest is the expectation to tax the asset annually (Wealth tax), tax any realisation of gain (capital gains tax) and also tax any income the asset achieves (income/dividend etc tax) and then tax again the asset on death (IHT)?
and is it on all assets? Ie if I bought John Terrys house in Keston as I reckon he’ll soon take a low ball offer would wealth tax apply to that type of asset also? And what about assets owned by companies? If so what if said company only has the asset but no income?
This is the problem isn’t it where do you draw the line when it comes to assets ? I live in the North but how many of you guys live in a £m + house ? That’s an asset so should you get a tax bill every year on its percentage increase ?
Only if its worth £50m or more. In which case you'd have enough other assets with which to pay the tax.
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Yes. As I said at the start of the conversation I am literally working pro bono for a think tank (proper one, well respected transparent funding etc) on a proposal for a wealth tax. I'm an economist (usually work in health economics) but am helping out with the modelling and analysis for the paper. And as outlined above there is a proposed sliding scale starting at 1% over £50m.
Sorry I missed that - I've seen £10m being reported/speculated. Based on it starting at 1% £50m+ would that percentage increases at higher thresholds?
What does the model indicate would be the tax take from all these people who have a net worth of more than £50m? (apologies if I've missed that info as well).
Its just a proposal. There are others but this one is i belive going to be the one most worked through and imo most credible. 1% over £50m, 2% over £100m 4% over 1bn.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
The below is based on estimates (made by others) so don't quote me on that!
There are around 5,000 people in the UK worth more than £50m and there are around 150 billionaires. The figures I've seen quoted for tax revenue from a wealth tax are in the order of £24 billion a year. Based on your sliding scale, someone worth £1 billion today (and maintaining that level) would pay their entire current wealth in tax in 25 years. Their normal tax burden on top of that. Also most of their wealth will be in illiquid assets.
So based on that your model is anticipating getting an additional £24 billion a year in additional tax revenue from 5,150 individuals, although in reality most of that additional tax take would come from a few hundred individuals. The vast majority of that wealth will disappear abroad - far away from the clutches of HMRC.
Bonne chance, Canters
I could genuinely go into all the reasons why capital flight is a massive economic lie (though I wouldn't want to take that joy away from @Bournemouth Addick) but I can't be arsed. I will point out 2 facts.
1) despite all the media spewing over the last year that millionaires are leaving in their droves because of this government the official figures when released showed the exit rate to be 0.03%. About average for the last 20 years.
2) by my count at least 12 countries have already got wealth taxes (plus another couple like France that have voted for it more recently). The millionaire exit rate in those countries remains around 0.03%.
That exit rate will grow rapidly if a wealth tax along the lines you outlined was introduced. It isn't millionaires that will be the issue, it's the billionaires/high hundreds of millions.
Which is the fear mongering we are told any time we attempt to tackle an issue in the country. Or a threat from the very rich whenever we try and close loopholes like the non-dom status. However the evidence from countries like Iceland that have had wealth taxes and harsher ones at that for a number of years show its simply not the case.
Either way there is an argument that their UK assets will remain here, whether it be UK bonds, mortgages, stocks or property. Levy the tax on their remaining UK assets should they choose to leave. You don't get to own a part of the country and not contribute.
What is the net wealth tax in Iceland?
Gains
from the sale of and leasing income from, immovable property situated
in Iceland are taxed by assessment at a flat rate of 22% in the year
2024. Dividends paid by resident companies to non-residents individual
shareholders are subject to a final withholding tax at a rate of 22%. Net wealth tax has been abolished.
Gains should absolutely be taxed - nobody is arguing about that. Whether you call it gains, revenue, income (ings) or anything else.
Comments
Every proposal for a wealth tax I've seen has come alongside a reduction in income tax or an increase in the bands. So under a wealth tax those people would actually pay less income tax. But may if they have high enough assets be subject to an element of the wealth tax.
It's a question of whether you tax the flow or the stock. Previously flow led to increases in stock. Now the biggest drivers of stick are intergenerational and therefore the question is becoming should we focus on the stock.
As for your suggestion of targeting the loopholes I agree that should be done in the first instance but, a) the people paid to find and explout them are much greater in number and paid much more than those paid to close them b) even if they were all closed as demonstrated by Sunak example above they still only pay an effective rate of 20ish % whilst still holding massively disproportionate amount of wealth. More than can be spent in several liftimes.
As said above all the research shows that those with a net worth of £50m or above did not get there the way you describe. The vast majority of them received multi million, multi generational wealth. The rest either had government cronyism leading to lucrative contracts or dodgy/exploitative business practices. There may be one or 2 who did it the "proper way" but there aren't many. It's a small enough cohort to study individuals and a massive %sample.
These are not wealth creators they are wealth hoarders.
Just one or two - but all the others are either inherited wealth, Government cronies, or dodgy businessmen?
The definition of high net worth in the UK is £10m in assets and/or £1m in liquid assets. Is £50m a figure you have heard to be the likely threshold of a wealth tax?
Why is it in this country so many love putting down success.
It's not putting down success. Its asking those at the very top of the wealth distribution to pay a little more. It will actually create tax freedoms and more incentive for those actual businesses which are creating jobs and growth not hoarding obscene levels of wealth.
The Premier League would become an under 21/18 league with zero SKY money and any talent hoovered up by Spanish/Italian/German clubs.
Model isn't finalised. And I'm not at liberty to share numbers as it might steal a headline when the paper is released. It is in the rough ball park of figures talked about for other proposals.
I simply mean it’s surely quite hard to be completely neutral with analysis and modelling not to arrive at an answer you want it to be.
I work for the largest Reinsurance broker in the world, sadly i'm nearer the bottom of the food chain than the top, but am not complaining.
There are at least 3 people on my floor who would fall into your +£50m+ wealth tax bracket. All three are self made, have earned multiples of 7 figure salaries for many many years, I know two came from poor backgrounds, none of the three went to Uni. In the building there are likely at least another 10-15 in the above £50m bracket, no idea other than a couple what their back grounds were. Some will be multiples of the £50m so into your higher bands.
Our two closet competitors will have similar numbers of people at similar levels, I know one personally and am lucky to call a lifelong friend, he grew up in a council flat in bethnal green, he'd be worth north of £50m. Another (competitor) who's son was an F1 driver, again self made, worth multiples of the £50m and started his ow brokerage.
I have a number of clients (insurance company owners), again all will be well above that bracket. Not aware any of them came from money, some certainly not.
I know a number of reinsurers, some are friends, again a number will be in that bracket and the few I know well I know didn't come from money.
My old chairman, at least £150m, didn't come from money and one of the nicest most generous people I have ever met, stuff that literally brings tears to your eyes. Everyone loved working for him, myself included and I can guarantee he paid every penny of tax and some!
Now whilst some may have come from better background than others, I doubt any got to where they were due to family money buying them in (remember these are mostly employee's not owners).
Ever heard of Purelake Property in Bromley? The owner (my best friends cousin) would be in the next bracket up, north of £100m. Started as a sole trader builder, although to be fair he was a bit of an a$$ as did some work for him when we were young, always gave us the crapiest of jobs!
aside from the last two, all of the others wealth has been created from salary and bonus on PAYE although of course they will have invested much of that NET income as you would expect which no doubt will in part have appreciated and form part of their wealth.
So maybe i'm just lucky, but I just don't see the stereo type picture you paint of these tax avoiding nasty wealthy people who are simply out to not pay their 'fair share' and need hitting with a big stick.
I'm so glad i'm of the age I am, if it wasn't for having children here (all be it adult) i'd have left the UK by now. Still may do when I retire in a few years time. This country is literally just punching itself in the face day after day.
If people at the bottom of the pay structure were paid properly by the companies that employ them, there would be no need for the state to top up wages with universal credit.
Do you or do you need think wealth inequality in the UK needs addressing?
Personally I do. It's quite clear from my work and background it is acting as a huge anchor on the UK economy.
Whether or not they got there the right way they are now there. They have high salaries which is great and no one is begrudging them that. The maths says the majority of that net worth will have had to come from investment growth, something most people don't have. If they do pay tax on that it will be at a lower rate income tax. With inequality so large is it wrong to ask them to pay a little more?
Even if they pay "everything that is due" it is still a lower rate than someone who only gets income through a Salary. A wealth tax would not even close to equalise that rate.
Most of your arguments stem from trickle down economics. It's very ingrained in the psyche of older generations in the UK. But it's disproven. It worked for a short time but 50 years of mist of the western world religiously following it and repeatedly doubling down has got us where exactly? Massive inequality, a society that isn't functioning and an economy not growing. And as the ultra rich have chewed up the poor and working classes they are now doing the same to the middle classes who are actually the ones starting and running businesses and creating growth. But there is no one else and no other wealth to chew up. And there is no where else to get money from so the government bring in things like the ridiculous NI lower bound. Say what you want about Gary's economics and the shock lines he says to grab headlines. His long form assessments of what has happened to the UK economy are bang on.
As for your last line. I'm in the same boat. As are almost all of my friends. Degree educated people in their 20s or 30s are leaving at rates never seen before. I worked out 40% of my uni group of mates are now no longer in the UK, its higher for my wife (she went to Cambridge). Our wedding was like the 4 corners of the earth coming together! The reason for this is that an educated young person can relative to cost of living be at least twice as well off in at least 20 other countries as well as the opportunity to live under much more progressive social policy.
1) despite all the media spewing over the last year that millionaires are leaving in their droves because of this government the official figures when released showed the exit rate to be 0.03%. About average for the last 20 years.
2) by my count at least 12 countries have already got wealth taxes (plus another couple like France that have voted for it more recently). The millionaire exit rate in those countries remains around 0.03%.
Just an afterthought, the country is skint, we need more income. Where do you suggest that income comes from?
That exit rate will grow rapidly if a wealth tax along the lines you outlined was introduced. It isn't millionaires that will be the issue, it's the billionaires/high hundreds of millions.
On your second point. Your solution will not tackle wealth inequality. Even if it was possible to close all the loopholes and get these people to pay exactly what is "due" they will still pay less than someone on PAYE so the gap will only widen just slower. It also only looks at the income. The problem isn't income its wealth. You don't solve the stock problem by looking at the flow. You have to tackle the stock problem directly. A wealth tax is the only way to solve wealth inequality.
Ohh and wealth taxes have been around for years in other countries. They do work.
Either way there is an argument that their UK assets will remain here, whether it be UK bonds, mortgages, stocks or property. Levy the tax on their remaining UK assets should they choose to leave. You don't get to own a part of the country and not contribute.
Gains should absolutely be taxed - nobody is arguing about that. Whether you call it gains, revenue, income (ings) or anything else.