Taxing the rich to pay for the poor

Germanshepherdsmum

*undines*, what’s stopping you from donating £50 a month (even more with Gift Aid) to charities which support the homeless and hungry? Do you have to wait for the government to make you pay up?

Of course individuals can donate, but that doesn't help society as a whole.

Some POV here remind me of Thatcher's "there is no such thing as society".
But we seem to have abandoned even levelling up which is desirable not just in terms of food, housing, education, but also in terms of any social harmony.

sorry, typo, "wealthy"

Germanshepherdsmum

foxie48

If I were chancellor of the exchequer I'd find a way of targetting the increase in house prices aimed at the house owner rather than a house purchaser. I know this wouldn't be a popular choice but it is home ownership that drives so much of the disparity between those who have and those who don't. Also it has driven rents up to a punitive level, so if it prevents so many young people from being able to save for their own home as well as decreasing social and geographical mobility. Take X who I have written about, she bought her holiday home for less than 100K in the mid 80's for cash. It's now worth well over a 3 million. She hasn't scrubbed floors, worked nights or slaved to make that amount of money, she's just sat in a beautiful garden overlooking the sea watching the gardener at work and it is now sitting in a trust fund in her grandchildren's name earning more money. Surely she can pay some sort of tax on it?

It sounds as though she no longer owns it - but why shouldn’t she and her grandchildren enjoy the benefits of the house? She will have paid council tax, employed tradesmen and benefitted the local economy. I don’t subscribe to ways of financially punishing someone who is well off just for the sake of it.

We certainly don't regard ourselves as very wealthuy, but also have a holiday home i this country, though it is only worth a tiny fraction of the home you mention.
Over the years it has meant that we have holidayed in this country, rather than go on foreign holidays spending money abroad. And yes, we have shopped locally there, paid council tax (whilst not using many of the services), used local tradesmen and so on. If we didn't have this house we would have spent thousand of pounds a year on holidays abroad, not helping our economy at all.
When the house is sold we will also be liable for Capital Gains Tax as it is not our main residence.

choughdancer

As a shorthand description of a much more detailed policy, I am all in favour!

Always, in times of austerity and crisis, the 'rich' have continued to get richer rather than poorer, while the 'poor' have got poorer. I think we have to find a way to prevent this.

Trickle down has been dismissed by most experts, as it is clear that most rich people don't buy more, start more businesses etc. with their excess riches; rather they are able to afford to have ways found for them to place money in the most lucrative places. When poorer/middle income people have more money in their pocket, they are much more likely to spend it, boosting the economy, or use it to start businesses, so employing other people.

I know tax avoidance is not illegal at the moment, but I think it should be if possible. I also think there should be restrictions on bonuses and other means of avoiding income tax. Surely MPs have the brains and ability to find ways to do this? And a wealth tax of some sort.

People do actually pay tax on bonuses, though some evade tax by having salary/bonuses paid abroad.
Those of us who have retired have often saved for our retirement and I'm anxious that "normal" pension pots shouldn't be considered for a wealth tax. A great deal of the investment in this country is designated for pensions, be it personal pension or pensions paid and managed by institutions.
Gordon Brown has already taken quite a chunk from these by making them taxable when he was chancellor.

One area that I think should be looked at further is the way in which tax relief is given at the higher rates. The govt have already done this with mortgage interest on rental properties. They should also do it for pension contributions. Higher rate tax payers making pension contributions will get their basic rate band extended by the gross amount. This means that less of their income will be taxed at the higher rates.

A simple example:

Earned income £50k
Investment income £10k
Pension contributions £30k net

£2k of the investment income is at the Nil rate
The basic rate band is extended by £37.5k to £75,200.

The total tax liability on the above is £8636 which gives a rate of 18.207%

Is this equitable?

undines, what’s stopping you from donating £50 a month (even more with Gift Aid) to charities which support the homeless and hungry? Do you have to wait for the government to make you pay up?

Germanshepherdsmum

foxie48

If I were chancellor of the exchequer I'd find a way of targetting the increase in house prices aimed at the house owner rather than a house purchaser. I know this wouldn't be a popular choice but it is home ownership that drives so much of the disparity between those who have and those who don't. Also it has driven rents up to a punitive level, so if it prevents so many young people from being able to save for their own home as well as decreasing social and geographical mobility. Take X who I have written about, she bought her holiday home for less than 100K in the mid 80's for cash. It's now worth well over a 3 million. She hasn't scrubbed floors, worked nights or slaved to make that amount of money, she's just sat in a beautiful garden overlooking the sea watching the gardener at work and it is now sitting in a trust fund in her grandchildren's name earning more money. Surely she can pay some sort of tax on it?

It sounds as though she no longer owns it - but why shouldn’t she and her grandchildren enjoy the benefits of the house? She will have paid council tax, employed tradesmen and benefitted the local economy. I don’t subscribe to ways of financially punishing someone who is well off just for the sake of it.

As long as its viewed as "punishment" as opposed to the necessity of improving services of all kinds by raising a little more on those who can afford it, we will never be able to get out of the current cycle of the widening gap between the haves and the have nots.

Tax is not "punishment", it's the means of raising money for police, defence, social and care services, improvement of early years help, and so on.

On the machete thread we had recently there were the usual points made about what the police should have done more of, and the lack of support by families to interrupt the cycle of violence and so on.
People complain the police for example don't do this and don't do that, but when it comes to paying for it?

Poppyred

Making tax avoidance illegal would be a good start!

Tax EVASION is illegal

It’s the only way to go IN PRINCIPLE
In practice it will be hard to do in a way that does not make things worse
We are what I would call comfortable
This means we can buy good food have as much heat as we want and maintain our small woodland (which doesn’t demand much)
We have to think carefully before splashing on foreign holidays
But I would happily give £50/month more in tax IF I COULD BE ABSOLUTELY SURE IT WAS GOING TO THE HOMELESS AND HUNGRY
and that is the problem
As for the rich (hard to define but if you’ve got a butler and private plane you are) I do not know how they sleep at night
It’s a pity people can’t just stop being selfish of their own accord and see if they can do some good with their money
And if I ever win the lottery I will prove I mean it by spending it to help others, because that’s the way to long term satisfaction (and no, Jesus does not want me for a sunbeam!)

Er yes of course. Eye of a needle and such.

Dinahmo

GrannyGravy13

You are currently able to draw 25% lump sum of your pension pot tax free, the rest will be taxed at the going rate according to your income.

Dividends are subject to tax once they are over the personal allowance, not liable for NI though.

Not strictly true. The first £1k of dividends and also interest is taxed at Nil. Effectively increasing the PA by £2k.

Tax year 2024/2025 the amount has been reduced to £500 tax free dividends.

foxie48

If I were chancellor of the exchequer I'd find a way of targetting the increase in house prices aimed at the house owner rather than a house purchaser. I know this wouldn't be a popular choice but it is home ownership that drives so much of the disparity between those who have and those who don't. Also it has driven rents up to a punitive level, so if it prevents so many young people from being able to save for their own home as well as decreasing social and geographical mobility. Take X who I have written about, she bought her holiday home for less than 100K in the mid 80's for cash. It's now worth well over a 3 million. She hasn't scrubbed floors, worked nights or slaved to make that amount of money, she's just sat in a beautiful garden overlooking the sea watching the gardener at work and it is now sitting in a trust fund in her grandchildren's name earning more money. Surely she can pay some sort of tax on it?

It sounds as though she no longer owns it - but why shouldn’t she and her grandchildren enjoy the benefits of the house? She will have paid council tax, employed tradesmen and benefitted the local economy. I don’t subscribe to ways of financially punishing someone who is well off just for the sake of it.

It is essential. Social inequality is increasing rapidly with the rich getting richer, the rich owning more and more and the poor are getting poorer. At the current rate, there will be no middle class to speak of.
I am however concerned that we don’t have any politicians capable of doing this correctly and I suspect any of them will still look after their rich cronies. Their idea of rich will almost certainly be inaccurate too. I am worried whoever gets in because any politician needs to work with people who can implement this and who we can trust, is this even possible in the current world we live in?

GrannyGravy13

You are currently able to draw 25% lump sum of your pension pot tax free, the rest will be taxed at the going rate according to your income.

Dividends are subject to tax once they are over the personal allowance, not liable for NI though.

Not strictly true. The first £1k of dividends and also interest is taxed at Nil. Effectively increasing the PA by £2k.

GrannyGravy13

Currently out of the U.K., but managed to catch a Labour MP this morning pledging that they are definitely not going to increase, NI, PAYE or VAT.

I am seriously concerned as to what taxes they are going to increase and by how much.

Me too. There is plenty of scope. It’s thought that they will only raise £8.6bn by 27/28 through VAT on school fees, tax from non-doms (which is already being phased in anyway) and ‘closing tax avoidance loopholes’ and catching tax evaders. That is a drop in the ocean in terms of government spending. So where are the further billions needed to carry out their ‘plans’ coming from? I posted yesterday that the NHS received £181.7bn in 22/23. That demonstrates how minuscule the amount which would be raised by 27/28 by the tax plans which they are willing to mention is. One of the ‘tax avoidance loopholes’ they have said they will target is fund managers’ pay (known in the financial sector as ‘carried interest’) being subject to CGT - as it is in Europe and the US - rather than income tax. This potentially has very serious consequences for attracting investment, as would aligning dividend tax with income tax. But just watch them do it.

Not saying it's fair Doodledog after lifelong NI payments, but the link between NI contributions and NHS directly was broken a long time ago.
The reality is that when we paid NI we were paying for health at that actual time not from contributions made long before.

I noticed Keir Starmer said the other night he wouldn’t pay for private treatment.

I doubt he'd have to, he'd get 'private treatment' on the NHS if he needed it. As our likely next PM does anyone think he'd be put on a two year (or more) waiting list for a hip or knee replacement? That goes for many politicians who access NHS treatment. Would Starmer or any other high profile person be sat in A&E for 8 hours like my husband just has? Of course not, that's life, but let's not pretend their treatment is identical to Joe Bloggs.

If I were chancellor of the exchequer I'd find a way of targetting the increase in house prices aimed at the house owner rather than a house purchaser. I know this wouldn't be a popular choice but it is home ownership that drives so much of the disparity between those who have and those who don't. Also it has driven rents up to a punitive level, so if it prevents so many young people from being able to save for their own home as well as decreasing social and geographical mobility. Take X who I have written about, she bought her holiday home for less than 100K in the mid 80's for cash. It's now worth well over a 3 million. She hasn't scrubbed floors, worked nights or slaved to make that amount of money, she's just sat in a beautiful garden overlooking the sea watching the gardener at work and it is now sitting in a trust fund in her grandchildren's name earning more money. Surely she can pay some sort of tax on it?

Wyllow3

Given the increasing number of older people in the population needing more health care I think at some point its inevitable that we'll have to raise more taxes in the future to some extent.

Is it? Inevitable, that is? Haven't we paid in at a time when there were fewer older people, so our contributions should go further?

I know there is no pot, before some bright spark pretends they are the only one to realise this, but if there is a principle of paying in to get out, that has to count for something or the edifice crumbles and people will revolt at the thought of having large sums taken from their earnings to be told they count for nothing.

If there is no pot to pay for health, then equally there is no way the notional pot can be empty.

Currently out of the U.K., but managed to catch a Labour MP this morning pledging that they are definitely not going to increase, NI, PAYE or VAT.

I am seriously concerned as to what taxes they are going to increase and by how much.

Yes, dividends are taxed at lower rates than other income, but in bands according to the rate at which the recipient pays income tax. If Labour try to raise dividend tax rates (and CGT) to the same rates as income tax, that would hit the markets, and the investment they want to encourage, badly.

Given the increasing number of older people in the population needing more health care I think at some point its inevitable that we'll have to raise more taxes in the future to some extent.

GG13 much lower rates aren't they?

I can't comment on the pension complications (other than to say that I think it should be the same rules for all, or if not that people on lower incomes should get more incentives than those on higher ones), but I agree that the additional tax rate is badly thought through.

Yes, people on higher incomes should pay more tax, but disincentives to earn more by means-testing in this way are divisive and unfair, whether at the bottom of the scale or the top. Just as people working full-time should take home much more than those who work part-time and get top-ups, those who earn over £100k should take home more than those on £99k and there shouldn't be a gap of £25k before they see a return on their efforts.

You are currently able to draw 25% lump sum of your pension pot tax free, the rest will be taxed at the going rate according to your income.

Dividends are subject to tax once they are over the personal allowance, not liable for NI though.