Going after the economically disadvantaged!

Germanshepherdsmum

Well your suggestion certainly doesn’t.

Why? Can't you see you are being just as rude as you accuse others of being? You think we should agree just because you are you. I'm prepared to listen to a proper argument in favour, but you haven't made one.

People who we need here - people who pay a lot of tax and generate jobs - leaving the UK. Taking the example of Sunak’s tax rate averaging 22%, there will be many wealthy businessmen and investors in that position who would simply decamp to a more favourable tax regime if there wasn’t a preferential rate of tax for capital gains and dividends. It’s something the UK can’t afford.

GrannyGravy13

There has to be some incentive for folks to invest their money, whether that money be from salary or inheritance.

ISA’s are exempt from all tax as are premium bonds.

Virtually every time you open your purse you are paying tax.

Are you suggesting everyone will keep their money under the bed ignoring the dividends, etc.? I doubt that would happen. We are discussing are the tax advantages, not what the money earns. Even without preferential taxes, people will still want to grow their savings/wealth. Those with little other income will probably come out with little difference in their tax on investments. Those with vast wealth will find a real difference, but then why should they not pay according to the income their investments make?

It isn’t only people with vast wealth. I have explained why successive governments have not thought it sensible to tax ‘earned income’ and ‘unearned income’ at the same rates. I put those terms in quotation marks because some ‘unearned income’ has been very much earned by adding value to companies and creating jobs.

Germanshepherdsmum

People who we need here - people who pay a lot of tax and generate jobs - leaving the UK. Taking the example of Sunak’s tax rate averaging 22%, there will be many wealthy businessmen and investors in that position who would simply decamp to a more favourable tax regime if there wasn’t a preferential rate of tax for capital gains and dividends. It’s something the UK can’t afford.

But do they generate jobs? Do they do anything useful for the rest of the country. So many of those making the most out of these schemes offshore their wealth. How does that help us?

Germanshepherdsmum

It isn’t only people with vast wealth. I have explained why successive governments have not thought it sensible to tax ‘earned income’ and ‘unearned income’ at the same rates. I put those terms in quotation marks because some ‘unearned income’ has been very much earned by adding value to companies and creating jobs.

Where have you explained "successive governments have not thought it sensible to tax ‘earned income’ and ‘unearned income’ at the same rates". Perhaps you can reference the post.

Dinahmo Why? Most people work hard for their salaries/wages. Most people who have capital gains or investment income don't.

My husband surely does work exceedingly hard for the money he earns, saves - and thus investments made with taxed earnings!

MaizieD

^Norah has made the point very succinctly. Any CGT and divided tax I pay relates to assets purchased with taxed income^

So, by that reasoning we shouldn't have to pay vat on any of our purchases as those purchases are made with already taxed income.

It doesn't wash...

Yes it does wash. VAT is unrelated.

We all pay VAT on all purchases (some random exceptions).

DaisyAnne

Norah

DaisyAnne Back to the point: why should you pay less tax on income earned from investment than someone else does from the same amount of income earned from work?

Taxes have been paid on money one earns, seems logical and fair to pay at a reduced rate when one invests that money.

Tax has indeed been paid on the money earned through work. It isn't taxed twice though. The tax is on the gain, i.e., what the investment "earns".

I may (quite easily )be missing something but why should that be a reduced rate?

The investor is investing, growing businesses is good for everyone.

GrannyGravy13

There has to be some incentive for folks to invest their money, whether that money be from salary or inheritance.

ISA’s are exempt from all tax as are premium bonds.

Virtually every time you open your purse you are paying tax.

INDEED!!!!!

DaisyAnne I am not of retirement age, own along with DH a SME.

Financially and stress wise it would be easier to sell up but that would mean redundancy for our employees and a knock on effect for our suppliers and customers.

Governments should look at keeping SME’s happy as they are the backbone of the U.K. economy. If that includes tax breaks so be it.

I put those terms in quotation marks because some ‘unearned income’ has been very much earned by adding value to companies and creating jobs.

I think the operative word here is 'some'.

A lot of unearned income is a result of speculation in shares or dividends from shares. Now, we know that, unless you buy a new shares, issued to raise capital for a company, that the money involved in share dealing goes nowhere near the companies whose shares are being bought and sold once they have passed the initial issue stage. If you buy shares in established company X the money passes from the person buying the shares to the person selling them. The company doesn't get a penny. This is just speculative dealing in the hope of making a profit. Likewise, any dividend paid on those shares is not the shareholder's reward for taking the risk of investing in the company because they are not investing in the company. I see no reason why these cannot be taxed at what they are, income, and be subject to the same rate as tax on earned income.

GrannyGravy13 Governments should look at keeping SME’s happy as they are the backbone of the U.K. economy. If that includes tax breaks so be it.

Agreed.
Thank you.

I'm wondering how many people start a business with the explicit aim of creating jobs for other people? I have always thought that the prime reason for starting a business was to make money with which to support oneself.

Taking on staff as the business expands seems to me to be a pragmatic business decision, like buying new machinery, rather than a burst of virtuous philanthropy to be rewarded by the employer paying a lower rate of tax than the employee.

Then maybe all those business owners should just stay at home and play the stock market. I really don’t know what would satisfy you Maizie - perhaps you could enlighten me. And as I have told you before, my shares were purchased direct from the company as a long term investment.

GrannyGravy13

DaisyAnne I am not of retirement age, own along with DH a SME.

Financially and stress wise it would be easier to sell up but that would mean redundancy for our employees and a knock on effect for our suppliers and customers.

Governments should look at keeping SME’s happy as they are the backbone of the U.K. economy. If that includes tax breaks so be it.

I think small and medium-sized businesses should be supported by our government. They are and always have been the backbone of society. However, government (citizen) support for a business differs from government (citizen) support for shareholders. Should a government choose to financially support a business, it would use direct support. The cutting of employer NI is an example. The only occasion share purchase goes to the company is from the first sale.

Do you really think that when someone buys a second-hand (or more) house, more houses get built*? Other than when it is sold by the builder, the profit/income never goes to the building of more homes. The "profit" goes to the previous owner as an additional "income". No more buildings get built; no more money goes into businesses from traded shares. In the case of shares, the profit/new income is the only part that is taxed.

Why keep trotting this misinformation out? This country has had enough decisions made based on misinformed "facts" to last us a lifetime.

*I know the tax on house sales is different but that's a discussion for another day. It is still the case that the investment into the company only happens once.

Germanshepherdsmum

Then maybe all those business owners should just stay at home and play the stock market. I really don’t know what would satisfy you Maizie - perhaps you could enlighten me. And as I have told you before, my shares were purchased direct from the company as a long term investment.

You do know "what would satisfy" Maizie; it would be unearned income being taxed with all other income and at the same rate.

Maizie was talking about generation of jobs.
However to address your point - at what rate?

Germanshepherdsmum

Then maybe all those business owners should just stay at home and play the stock market. I really don’t know what would satisfy you Maizie - perhaps you could enlighten me. And as I have told you before, my shares were purchased direct from the company as a long term investment.

Your shares might have been bought direct from the company but don't tell me that people who buy shares in long established companies are financing the company.

You are arguing this from a personal point of view. I think you need to see the bigger picture. Perhaps look at how much 'investment' is directly funding businesses and how much is speculative. I would be prepared to bet that the latter is by far the greater amount.

I keep answering this GSM. I obviously need to make this very simple.

I am not the government.
I do not have access to the relevant figures.
I imagine an intelligent government, working for all in this country, would have already done the maths or would do it very quickly.
You would find out what extra tax you would get by treating all income as we treat earned income.
I might decide to charge all income at the current tax levels (do you understand what I mean by that?) for, say, a year (but I am not a government).
During this year, a government could put a budget in place to re-establish some of the things we have lost, such as an NHS, free at the point of need.
At a point that makes sense to our destroyed economy you could decide which tax thresholds to raise and which tax rates to lower.

You and you the government

So do you seriously think that successive governments - Labour, Liberal, Conservative - haven’t done that exercise and decided that it’s important to keep the differences in rates? I believe your argument, and the arguments of others here who want to see ‘earned’ and ‘unearned’ income taxed at the same rate comes purely from a dislike of anyone with what you perceive as wealth and any system in which people can have ‘unearned’ income. Not sure how you’d achieve that without resorting to communism.

MaizieD

Germanshepherdsmum

Then maybe all those business owners should just stay at home and play the stock market. I really don’t know what would satisfy you Maizie - perhaps you could enlighten me. And as I have told you before, my shares were purchased direct from the company as a long term investment.

Your shares might have been bought direct from the company but don't tell me that people who buy shares in long established companies are financing the company.

You are arguing this from a personal point of view. I think you need to see the bigger picture. Perhaps look at how much 'investment' is directly funding businesses and how much is speculative. I would be prepared to bet that the latter is by far the greater amount.

You have literally bought a "share" in that company and expect, in the years that the company does well, your "share" in the profit GSM That is the income you get from your investment. It is no different than investing your time, knowledge and ability in a job and getting a "share" of the profit as wages/salary.

Why do governments think it right not to tax these in the same way? Why do you? Both have a relative chance of providing a good income, a poor income or no income. Both require "investment" on the investors part.

Please tell me what the real difference is - not a made-up one.

Germanshepherdsmum

So do you seriously think that successive governments - Labour, Liberal, Conservative - haven’t done that exercise and decided that it’s important to keep the differences in rates? I believe your argument, and the arguments of others here who want to see ‘earned’ and ‘unearned’ income taxed at the same rate comes purely from a dislike of anyone with what you perceive as wealth and any system in which people can have ‘unearned’ income. Not sure how you’d achieve that without resorting to communism.

Yet again, you jump to conclusions about me (and others) in order to be insulting.

I can only imagine this is because you have no real argument.

Then maybe all those business owners should just stay at home and play the stock market.

Well, that's just absurd, GSM, without their business where are they going to get the money with which to play the stock market?

You have missed my point. People start businesses to earn themselves a living. They don't go into it with some altruistic desire to provide jobs for other people. Employees are just another necessity, like the tools of their trade, which are needed to expand the business. Do they sit back and congratulate themselves that they are keeping other businesses afloat by buying the tools of their trade from them? Do they think they need special treatment for doing so?

Employees have nothing to sell but their labour, but they are an essential part of the success of a business. Why should they work to earn a living on worse terms, tax wise, than do the people who would have nothing without them?