Taxing the rich to pay for the poor

Germanshepherdsmum

*Wyllow*, using ISAs is tax avoidance. There’s nothing ‘technical’ about it. So some forms of tax avoidance, even used by wealthy people, are ok but others are not?

To be exact in my opinion GSM:

ISA's are OK to my mind in principle, but they should be limited to as how many and what type so they do the job I believe they were intended for - to allow lower and middle incomes to save modest amounts.

I’m not sure this is a Labour policy (we shan’t know until their Manifesto is out later this week) but I suspect anyone hoping for meaninful change to the tax system to ensure it’s genuinely redistributive, is going to be disappointed, whoever wins.

Germanshepherdsmum

I hope for your sake that it doesn’t come to this Sago, but I entirely understand. The desire to take from high earners and anyone who has accumulated wealth is written through Labour like a stick of rock. A lot of wealthy people, many of them employers, will be looking to leave the country - it’s not a myth. Labour propose to change the tax on fund managers’ income from capital gains (as it is in Europe and the US) to income tax. That would have a serious effect on the finance sector, which is vital to the economy. A very short sighted policy. Guess where the fund managers will be going?

I hope these people don't pretend to be patriotic.

Under the present system the poor pay a larger percentage of their income in tax than the rich do. It's due mostly to VAT and council tax. citizen-network.org/library/graphic-poor-pay-the-most-tax.html
Surely it's reasonable to expect the rich to pay more.

MaizieD

Sago

We have friends that are poised to leave if Labour get in.
Our daughter,SIL and grandchildren will also be very likely to leave.
The people they employ in the home and garden, local dry cleaners, car valeters, butchers, fishmongers, restaurants, tailors etc will all suffer as a result.
The money wealthy people put into the local economy needs to be taken into account.

Where do they intend to go, Sago?.

I've always understood that 'capital flight' is, looking at past evidence, largely a bogey man rather than a reality.

I've always understood that 'capital flight' is, looking at past evidence, largely a bogey man rather than a reality.

I can't find it now, but there was a 'study' done on this.

The reality was that most did not leave, and the reasons were family, culture and an established business.

Even if you are rich, it's quite a big thing to uproot your roots completely.

Wyllow3

Germanshepherdsmum

Wyllow, using ISAs is tax avoidance. There’s nothing ‘technical’ about it. So some forms of tax avoidance, even used by wealthy people, are ok but others are not?

To be exact in my opinion GSM:

ISA's are OK to my mind in principle, but they should be limited to as how many and what type so they do the job I believe they were intended for - to allow lower and middle incomes to save modest amounts.

Agree Wyllow3.

Could someone explain the point of gathering millions/billions in the bank that will never be used instead of helping your fellow man?

Never could understand that, nadateturbe, of the very rich. Some very well off give a substantial % to charities, its a shame for example that Sure Start Centres aren't a focus.

Who says the money will never be used? Anything wrong with helping your family and giving to charity?

Germanshepherdsmum

Poppyred wants tax avoidance to be made illegal, so that includes ISAs.

But that doesn't mean that the measures that help more people than they do rich people have to be banned! Of course at the moment they all come under an umbrella of 'tax avoidance', but surely the policy can be set up so that ISAs aren't affected but multi-millionaires and billionaires cannot continue to avoid paying tax?

This country (and I'm not sure any other country) has ever tried out making the mega-rich poorer, the middle static, and the poor richer, successfully.

Whichever statistics I look at (and I don't pretend to be an expert!) show that even in bad times the rich get richer. The poor always get poorer, and the economy, always get poorer. I'm talking relatively.

How much income is defined as rich?
Pensioners who have private/professional pensions are often described as rich or well off pensioners. I have a professional pension, but I’m certainly not rich. It’s really not very much but I’m not poor enough to need pension credit. I paid all my working life into my professional pension.

Better than Sunak's method of craftily taxing the poor to give tax relief to the rich by not raising the tax thresholds inline with inflation.

Which Labour don’t look set to change. They won’t even match his plan to raise the income tax threshold for pensioners.

I wonder if the new Duke and Duchess of Westminster will ever get round to spending their tens of billions?
No envy by the way, they are just a lucky and lovely young couple starting out on a life together but this is inherited wealth, not earned in any way.
I have no idea how much the estate paid in inheritance tax on the death of his father.

All interesting comments.
It is weird when the government, whoever is running the country, often mention about wanting school pupils to do well. It seems that is so they can tax more people once they do well.
So much for encouraging scammers to steal from the rich,
Governments have tried this idea so often which has never worked.

Well, there are no very wealthy people on this site as far as I am aware.

Labour appear to have no such plans,

Wait until Thursday then we can discuss it with more sense.

My understanding is tax avoidance is using existing rules to avoid paying tax whereas tax evasion is concealing information to evade paying tax. Some tax avoidance schemes are later found to be tax evasion! An ISA is not tax avoidance according to the sources that I have looked at.
taxpolicy.org.uk/2024/01/22/avoidancefaq/

Of course it is! The fact that it’s a legitimate, government-endorsed scheme doesn’t mean it’s not tax avoidance. All legitimate tax avoidance schemes are lawful. Those which are dodgy and not specifically authorised by law may well be challenged by HMRC and found to be tax evasion.

I'm not a tax expert but "Putting money into an ISA isn't tax avoidance because Parliament introduced ISAs as a tax-privileged way of encouraging savings. " From the Gov website.

www.gov.uk/government/publications/use-of-marketed-tax-avoidance-schemes-in-the-uk/use-of-marketed-tax-avoidance-schemes-in-the-uk

It talks about "bending the rules" and"Tax avoidance involves bending the tax rules to try to gain a tax advantage that Parliament never intended. It usually involves contrived transactions that serve no real purpose other than to artificially reduce the amount of tax that someone has to pay. It’s about seeking to operate within the letter but not the spirit of the law. " Government initiatives that enable people to save or invest do not constitute tax avoidance.

Germanshepherdsmum

Who says the money will never be used? Anything wrong with helping your family and giving to charity?

No, there isn't. I'm sure many of us do.
But a lot of money will be passed on and never used. Who will ever need a billion pounds? You could live very well on the interest. Meanwhile some people haven't got clean drinking water.
Thanks Wyllow3

I have premium bonds and am happy not to pay tax on my small wins.
I pay enough tax on my private pensions.

Germanshepherdsmum

*Wyllow*, using ISAs is tax avoidance. There’s nothing ‘technical’ about it. So some forms of tax avoidance, even used by wealthy people, are ok but others are not?

But there are annual limits on how much you can put into ISAs, IIRC it’s £15k p.a., so hardly likely to be favoured much by the really rich - and nowadays that means earning millions - or many millions - annually.

Though I dare say some people would say that anyone who can spare £15k a year is rich - compared to many.

foxie48

My understanding is tax avoidance is using existing rules to avoid paying tax whereas tax evasion is concealing information to evade paying tax. Some tax avoidance schemes are later found to be tax evasion! An ISA is not tax avoidance according to the sources that I have looked at.
taxpolicy.org.uk/2024/01/22/avoidancefaq/

That list Foxie just convinces me that tax avoidance needs a good looking at as much looks like creeping evasion.

I understand your frustration about absolutely correct descriptions, GSM.

Perhaps ISA's need a new definition tax wise, and clear boundaries as I suggested above. I don't think anyone could disagree about saving schemes to benefit low and middle incomes.

Germanshepherdsmum

*Wyllow*, using ISAs is tax avoidance. There’s nothing ‘technical’ about it. So some forms of tax avoidance, even used by wealthy people, are ok but others are not?

True.
It’s tax evasion that needs to be clamped down on not avoidance really.
The big beasts as Terribull says should be gone after but guess the amount of people they employ here would be out of a job if the companies decided to go elsewhere?
Sheiny Shite, 😂love that description.

Witzend

Germanshepherdsmum

Wyllow, using ISAs is tax avoidance. There’s nothing ‘technical’ about it. So some forms of tax avoidance, even used by wealthy people, are ok but others are not?

But there are annual limits on how much you can put into ISAs, IIRC it’s £15k p.a., so hardly likely to be favoured much by the really rich - and nowadays that means earning millions - or many millions - annually.

Though I dare say some people would say that anyone who can spare £15k a year is rich - compared to many.

When I looked up ISA limits I was quite surprised just how much you could accumulate by using them to the absolute max, definitely part of a personal finance manager's tools for the very well off. Definitely a case for limits as part of looking at the whole issue of avoidance/evasion definitions.