[Finance] Rachel Reeves to reveal £20bn shortfall left by Conservative Government

[Harry Wilson's tackle]

Winter fuel payments: 'I'll miss out by £2 a week'

Pensioners have told of their dismay about missing out on their winter fuel allowance under new rules.

www.bbc.co.uk

A perfect example of the point I was making.

Is this not an incredibly rare example of someone being right on the threshold, like 1 mg/L over the blood alcohol limit, or speeding at 71 MPH?

That's how thresholds work.

 

[Jim in the West]

It's not just current pensioners which lose this fuel allowance. It is those who will one day be pensioners as well. You and me.

It is obvious now it will be one tinkering tax rise after another.

They should have not ruled out raising income tax, VAT, NI.

One increase on one of those and done. Spread the load. Rather than targeting the unlucky ones who happen to be currently in the crosshairs.

I agree - but imagine the furore that would have caused! Meltdown at the Telegraph, Mail, Express etc. Unfortunately in our system honesty gets you nowhere.

 

[Thunder Bolt]

It's not just current pensioners which lose this fuel allowance. It is those who will one day be pensioners as well. You and me.

It is obvious now it will be one tinkering tax rise after another.

They should have not ruled out raising income tax, VAT, NI.

One increase on one of those and done. Spread the load. Rather than targeting the unlucky ones who happen to be currently in the crosshairs.

It is possible the first Budget will raise tax thresholds which will help a lot of pensioners who only have a small private pension. It has been frozen for quite a while,

 

[Jim in the West]

Was it not offered as a salary sacrifice into your pension?

Even if not offered, you could have opted to make the pension contributions yourself.
A colleague of mine, many years ago, religiously put all his bonuses into his pension scheme. Made huge financial sense, and enabled him to retire happily aged 56.

 

[jcdenton08]

Is this not an incredibly rare example of someone being right on the threshold, like 1 mg/L over the blood alcohol limit, or speeding at 71 MPH?

That's how thresholds work.

Time will tell.

 

[KZNSeagull]

It is possible the first Budget will raise tax thresholds which will help a lot of pensioners who only have a small private pension. It has been frozen for quite a while,

They said the wouldn't before the election but this would be a welcome U-turn

Labour confirm 'tax rises' will remain after election

Both Labour and Tories plan to keep the freeze on the personal tax allowance - effectively raising taxes.

www.bbc.co.uk

 

[Half Time Pies]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

 

[Is it PotG?]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

Do you think that this might encourage the big boys to move off to friendlier climes?

 

[Weststander]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

Also council tax and an easy one to collect rather than assessing wealth (people's matters are complex and fluctuate wildly e.g. markets crash, also huge sums are held overseas). Perhaps further council tax bands at the top end.

 

[dsr-burnley]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

I have a suspicion that it might change people's behaviour, at least at the top end. If the Hinduja family, for example, are told that they will have to pay tax of £2 billion or else leave the country, which do you think they would choose?

Do you think it might also have an effect on the number of rich people willing to come in to the country? Whatever the moral objection to the rich paying taxes and how much they are paying, it can't be denied that if the rich don't pay, the poor have to.

 

[Pretty Plnk Fairy]

I used to like her when she presented Countdown but have gone off her not she is a commie

Regards

DF

 

[pb21]

Do you think that this might encourage the big boys to move off to friendlier climes?

Maybe some, got any ideas you consider to be good?

 

[schmunk]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

Whilst this idea has merits, I can foresee the popular press laying into it with stories of old dears being evicted from their "family homes that they've lived in since 1968" over a £20k tax bill.

 

[timbha]

Also council tax and an easy one to collect rather than assessing wealth (people's matters are complex and fluctuate wildly e.g. markets crash, also huge sums are held overseas). Perhaps further council tax bands at the top end.

That makes a lot of sense. In many nicer areas the top tier of CT covers properties valued from £700k to £5m+ merely because of where they are located. Surely the £5m+ properties have more bins to empty

 

[Bodian]

Rubbish….. you’re taking about the high end of earners. The top 5%.
I am not in that bracket, far from it.
Parents (me, my wife) work bloody hard for 40 years to provide for their kids. I want to leave my kids something they can build their life from, from my hard work.
Why is hard work, ambition, hard work, be better than your parents, somehow seen to weathly and the state needs to take more to be penalised??
You should always strive and encourage your kids to better than you were.

Not much to worry about then given that less than 4% of estates pay IHT.

I did ask earlier if your estate was likely to be subject to IHT given that you say you live in an average house in an average street in Sussex.

How much IHT do you actually think your children are likely to have to pay?

This.

Practically every tax involves taxing income, that someone has already paid tax on.
That's how an economy works.
IHT is no more or less unfair than any of the other taxes.

Yes. I have paid income tax on the £1 in my pocket, and when I spend it at a small family business, a bit goes to VAT, the person who then receives my £1 will have to pay income tax / business tax etc - and will then pay VAT when they spend it, and so on and so on. In fact - I wonder there's any money left at all.

 

[Weststander]

Not much to worry about then given that less than 4% of estates pay IHT.

I did ask earlier if your estate was likely to be subject to IHT given that you say you live in an average house in an average street in Sussex.

How much IHT do you actually think your children are likely to have to pay?


Yes. I have paid income tax on the £1 in my pocket, and when I spend it at a small family business, a bit goes to VAT, the person who then receives my £1 will have to pay income tax / business tax etc - and will then pay VAT when they spend it, and so on and so on. In fact - I wonder there's any money left at all.

The answer is zero.

The estate of the deceased pays IHT.

 

[beorhthelm]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

first how is this "one off" if it's for 5 years, then how likely would it not be repeated - spending leads to future spending. second, how can anyone seriously propose this wouldn't distort behaviour, then immediately acknowledgeing taxes distort behaviour? there would be a sell off of assets if anyone seriously proposed something like this, the problem of unaudited, unrecorded ownership of assets, obvious loopholes (savings turned into gold sovreigns, each one under the £3k threshold).

 

[Half Time Pies]

I have a suspicion that it might change people's behaviour, at least at the top end. If the Hinduja family, for example, are told that they will have to pay tax of £2 billion or else leave the country, which do you think they would choose?

Do you think it might also have an effect on the number of rich people willing to come in to the country? Whatever the moral objection to the rich paying taxes and how much they are paying, it can't be denied that if the rich don't pay, the poor have to.

I don’t because this is a one off tax payable on the situation someone was is in at the time it would be introduced and to pay for a hang over from a very extreme event (e.g COVID). The one off nature of it is key here and you couldn’t do anything to avoid paying it including making a decision to subsequently move.

Most of the data also shows that taxing the ultra rich more does not cause them to leave the country they live in.

If you tax the rich, they won't leave: US data contradicts millionaires' threats

Does raising taxes on the rich really trigger their migration to more obliging states or countries? This study of every million-dollar earner in the US shows otherwise

amp.theguardian.com

For most asset rich millionaires and Billionaires, getting and staying rich is intimately connected to where they live. A lot of their money comes from businesses and assets which are based in the UK. In the longer term there is also nothing to stop us from closing loop holes that allow rich people to earn income from UK based assets but live elsewhere and pay no tax on them.

 

[BLOCK F]

Desperate times call for desperate measures, I would be looking at a one of wealth tax similar to that proposed by the wealth commission. https://www.ukwealth.tax/

A one off wealth tax of 1% per year for 5 years on all individual net worth (assets minus debts) over £500k would raise £260 billion, at a threshold of £2 million it would raise £80 billion. As the tax would be based on the net worth of the individual at the time it was introduced it would not distort behaviour. In contrast taxes on income from employment or self employment reduce incentives to work, capital taxes reduce investment and corporation tax increases encourage companies to reduce uk profits.

I don’t think even Rachel Reeves would go along with this, but who knows.
I see that ‘wealth’ would include pensions, so I assume they mean the pots of those have paid into such vehicles as SIPP’s to provide for their retirement. If pensions pots are to be included in wealth, then surely calculations would have to be made about those fortunate people, such as in the public sector and other DB schemes as to how much the theoretical ‘pot’ would be worth to provide whatever pension they are benefitting from.
What fun!

 

[Half Time Pies]

first how is this "one off" if it's for 5 years, then how likely would it not be repeated - spending leads to future spending. second, how can anyone seriously propose this wouldn't distort behaviour, then immediately acknowledgeing taxes distort behaviour? there would be a sell off of assets if anyone seriously proposed something like this, the problem of unaudited, unrecorded ownership of assets, obvious loopholes (savings turned into gold sovreigns, each one under the £3k threshold).

Page 19 of the FAQ for the proposals cover all of this https://www.wealthandpolicy.com/wp/WealthTaxFinalReport_FAQ.pdf

In terms of the one off nature, I think people understand that COVID was a once in a generation crisis which has left us with an exceptional situation that needs a resolution. In normal times these types of taxes would not be needed or indeed be desirable.