Taxing the rich to pay for the poor

Germanshepherdsmum

Do you have an ISA Poppyred? That’s tax avoidance.

You always trot out the ISA example, knowing full well that is not what anyone means. What I mean, is the Ritz hotel paying (legally) less Corporation Tax than I did when I employed 6 part time staff.

“I'm sorry if Sago is going to lose some close contact with some friends and family as a result of Labour winning the election, but if Labour then start a programme of very significant investment in public services, which would include enhancing pay for the poorly paid and lifting levels of benefits, then the amount of extra money entering the domestic economy could well compensate for the loss of that currently input by those friends and family members.”

*MaizieD” Firstly I am unlikely to lose contact as even in the North of England we have telephones, internet and airports.

Regarding upping benefits this is crazy until we have reduced the benefits bill, we have far too many people claiming benefits that are entirely capable of work.
Benefits should be a safety net not a lifestyle option.
Only people genuinely ill or disabled should be in receipt of benefits and they should be given more money.

A neighbours son lived at home on benefits from 16 to 34, the benefits stopped so he did an access course went to university and has been in steady employment since.
His “anxiety” seems to have miraculously disappeared along with the smell of cannabis from the garden.

Regarding public service, why are we training doctors and nurses and allowing them to go into the private sector?
Why are nurses working the 12 hour shifts they voted for then either going off sick or working as bank staff in their spare time or often whilst still signed off sick.

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.

Boo hoo. Lots of people make wild statements like this, sadly they never carry put their threat.

Whose expectations? Those who have the money or those who want to get a slice of it?

Germanshepherdsmum

Why on earth should higher earners not use ISAs? ‘We lose money that way’ - no, they get to keep more of their money. Their money, their choice.

Very high earners - They've got loads of money. Share it out a bit better. They don't need ISA's.

I suppose it depends on what expectations are?

Why on earth should higher earners not use ISAs? ‘We lose money that way’ - no, they get to keep more of their money. Their money, their choice.

Cath9

A reply to the above message.
‘And those in the middle always gets the worse deal’. As what happened while we were bringing up the kids

What do you mean?

PS
Bloomberg reports (Jan 2024) that a study by the LSE indicates that a tax squeeze on the 1% is unlikely to trigger an exodus.

All those surveyed (about 35) said they had no plans to leave.

Calendargirl

The ISA limit is £20000 a year.

Yes, but you can accumulate year on year.

It's my strong feelings that ISA's are for low and middle income savers and the very well off shouldn't be using them as part of their tax breaks, we lose money that way better spent on the many priorities to fund essential services.

A reply to the above message.
‘And those in the middle always gets the worse deal’. As what happened while we were bringing up the kids

Germanshepherdsmum

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

Exactly this, we know two families who are in the top few percent of wealth in the UK.
They are both huge employers, altruistic and support very many charities and organisations.
Their money does not just sit in a bank increasing by the day it is being used to grow the UK economy by investing in business and education.

MaizeD

I was looking for that, too, but couldn't find the right search terms.

I had it bookmarked for future reference, but my bookmarks got out of hand so one day during computer 'housework', I deleted them all.

It was not, IIRRC, an in depth-study - more a survey - but it threw up some interesting insights into the thinking behind this issue.

The idea that wealthy people simply decide to uproot, lock, sock and barrel, and take themselves and their wealth elsewhere, was not born out by the study / survey.

I do remember that the word 'attachment' was used - it doesn't seem to occur to some that wealthy people do form an attachment to where they live, and have an established way of life, as many ordinary people do, which is quite difficult to abandon.

Obviously, some do just bugger off so to speak but I think the idea promulgated that wealthy people will just up sticks and move to another country is a bit of an urban myth.

A very useful one.

The ISA limit is £20000 a year.

What are you suggesting GrannyRose?

Glorianny

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.

Why? Even if the “rich” are paying a smaller percentage if their income they are still very likely to be paying a larger sum to the treasury. Talking in percentages is very misleading.

That was in reply to Wyllow.

There are limits, but obviously you would like to reduce them. They are by no means just for ‘the very well off’.

The trouble is that although a good principle it never works. The truly rich can essentially decide how much they pay which means middle income families are overtaxed to make up the shortfall.

And what do you count as rich. People with a lot of assets don’t necessarily have a lot of income and vice versa. Some people like to spend all they earn while others like to save. Do you penalise those who have saved up for a comfortable retirement by living modestly in order to pay for those who spent all their money and have nothing left.

What we need is a just tax system which doesn’t divide the country into rich and poor but makes sense to most people and is transparent. Our present tax regime is far too complicated and can be terribly unfair in certain circumstances.

I always thought that it was more the middle ground, not the rich or the poor MaizieD who did that.

Dickens

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.

I was looking for that, too, but couldn't find the right search terms.

I'm sorry if Sago is going to lose some close contact with some friends and family as a result of Labour winning the election, but if Labour then start a programme of very significant investment in public services, which would include enhancing pay for the poorly paid and lifting levels of benefits, then the amount of extra money entering the domestic economy could well compensate for the loss of that currently input by those friends and family members.

What Labour doesn't need to do is to raise taxes to 'pay' for it's increased investment as properly targeted investment will inevitably increase the tax take.

What it also needs to do is to arrange the tax and regulatory system so that the wealthy cannot accumulate more wealth so easily. Despite GSM's assertions the 'rich' are not the lifeblood of a thriving economy. It is the poorer paid who have the greater propensity to spend and stimulate economic activity in the domestic economy.

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.

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.

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?

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.