Taxing the wealthy, point of discussion.

ronib

Wwm2 traditionally private schools had charitable status and were not designated as a business. It would be simple to have charitable status schools with no profits as vat free.

Charitable status is a double edged sword there are several disadvantages. One is you can’t reclaim VAT on Inputs another is there are strict rules on accounting.
I’m pretty sure the government won’t get any where near the net gain they expect. That doesn’t matter because its really an ideological policy anyway.

Fleurpepper

A shame this converstation has yet again been derouted. It was not meant to become yet another thread about private school fees and VAT.

No really. It is part of the debate about wealth and how to address the problem of some of the super-rich avoiding paying their taxes.

Announcing moves such as removing the Winter Fuel Allowance from pensioners, charging VAT on private school fees etc may be popular amongst some but they are hardly going to make any significant difference to public finances and may in fact have a negative effect in the end.

Why can't people get to a certain stage of wealth- the stage when they can't possibly even consider spending their money at all, just accumulate for the sake of .. not be happy to contribute to a better society.
James Dyson is a good example of someone contributing to a better society in fact.

A family member runs a small business employing 4 other people. Since early this year tgey have been considering selling business including the property due to costs. Any further financial pressures on employers will, they say, push them over the edge making it unviable. A national company will probably buy them out and close the premises with the staff either having to travel if tgey are offered a place elsewhere or more likely lose their jobs. Small businesses all over are struggling.

It is interesting that an estimated 50%+ of journalists for national newspapers, including The Guardian, were privately educated compared to 7% of the population as a whole.

newnanny

Personally I believe there should be one rate of tax for everyone. If people save and invest O do t see why they should pay more because others choose to spend their money. If everyone in the UK had the same amount of money some would spend within their means, others would spend everything they had then need state hand outs, others would save to pass money to their children and others would invest and make more money than they needed and wanted to pass on lots of their money to their DC and DGC. Why should savers or investors pay more tax than those who are spenders?

Hear, hear, totally agree!!!

4allweknow

A family member runs a small business employing 4 other people. Since early this year tgey have been considering selling business including the property due to costs. Any further financial pressures on employers will, they say, push them over the edge making it unviable. A national company will probably buy them out and close the premises with the staff either having to travel if tgey are offered a place elsewhere or more likely lose their jobs. Small businesses all over are struggling.

It is difficult for those employing a few, many will cut down to just themselves and not employ others or use sub contract skilled labour. To justify having a “manager” to administer employees you need 10+ employees, it’s all about Chiefs and Indians

Allira

It is interesting that an estimated 50%+ of journalists for national newspapers, including The Guardian, were privately educated compared to 7% of the population as a whole.

I'm surprised that it's only 50%. I thought it was much higher.

MaizieD

Allira

It is interesting that an estimated 50%+ of journalists for national newspapers, including The Guardian, were privately educated compared to 7% of the population as a whole.

I'm surprised that it's only 50%. I thought it was much higher.

I think the figure was about 54% a few years ago, could be higher now.

I doubt those running small businesses employing a few people will fall under the umbrella of the super rich.

hugshelp

I doubt those running small businesses employing a few people will fall under the umbrella of the super rich.

That’s the problem though isn’t it? We are sold the idea of taxing the super rich because “they can afford it” and very soon the taxes are extended to very ordinary people like small business owners. Just look at how many people now pay 40% income tax. Very few of these would consider themselves even moderately rich.

Doodlebug
Savers do not take money out of the economy. They invest it in business. Where do you think people get money from to start new businesses. They get it from banks who can only lend because other people have deposited money in them. Likewise big business couldn’t run without shareholders who have invested their savings.

There would be little point running a small business if it didn't make you "rich"!

Many small businesses just make a living. Certainly not making anyone rich.

Banks don't need savers' money to lend it to borrowers. In any case, in the UK more money is lent for property than SMEs.

www.bankofengland.co.uk/explainers/how-is-money-created

Aveline

Many small businesses just make a living. Certainly not making anyone rich.

Interesting, though not wishing to derail the thread to pursue this. Some people are driven by making money, and if my business were not making me rich enough to enjoy additional advantages, I wouldn't bother. That's the philosophy on Dragons' Den, too.

escaped

Aveline

Many small businesses just make a living. Certainly not making anyone rich.

Interesting, though not wishing to derail the thread to pursue this. Some people are driven by making money, and if my business were not making me rich enough to enjoy additional advantages, I wouldn't bother. That's the philosophy on Dragons' Den, too.

It’s not so much driven to make money, much more paying the rent/mortgage and improving your life and families life. It’s taking responsibility and control of your life instead of relying on an employer to look after you.

Almost all my friends and family run their own businesses, most are one man/woman a few employ others, they work long hours and “live” the business in many cases. Typically their social lives revolve around the business, for example, my wife’s hairdresser is mobile, socializes with customers, always busy it’s her lifestyle and pays the bills.

David49 spot on.

David49

escaped

Aveline

Many small businesses just make a living. Certainly not making anyone rich.

Interesting, though not wishing to derail the thread to pursue this. Some people are driven by making money, and if my business were not making me rich enough to enjoy additional advantages, I wouldn't bother. That's the philosophy on Dragons' Den, too.

It’s not so much driven to make money, much more paying the rent/mortgage and improving your life and families life. It’s taking responsibility and control of your life instead of relying on an employer to look after you.

Almost all my friends and family run their own businesses, most are one man/woman a few employ others, they work long hours and “live” the business in many cases. Typically their social lives revolve around the business, for example, my wife’s hairdresser is mobile, socializes with customers, always busy it’s her lifestyle and pays the bills.

David is right, but the implication that people in employment are somehow feckless is a bit insulting.

Relying on an employer to look after you?
Like the police, nurses, shopworkers, local and central government employees, roadworkers, recycling and water board employees, etc?
Without whom the country would grind to a halt.

These people in public sector jobs have security with pensions and prospects in a way that people who run small businesses don't.

Aveline

These people in public sector jobs have security with pensions and prospects in a way that people who run small businesses don't.

Relying on an employer to look after you is really quite insulting.

Job insecurity is part and parcel of public sector jobs as successive governments change policy and privatise, cut numbers.

Then decide, of course, it was all a big mistake 🤔

GrannyRose15

Doodlebug
Savers do not take money out of the economy. They invest it in business. Where do you think people get money from to start new businesses. They get it from banks who can only lend because other people have deposited money in them. Likewise big business couldn’t run without shareholders who have invested their savings.

growstuff has already posted the Bank of England's explanation of how bank loans create new money; no depositors' money is involved. In fact, in the process the banks take some money out of the economy because, although their loans are 'new money', and do promote economic activity, they charge interest on the loan and so take back more money than they create. The interest is their profit, and pays the high salaries of the top management and the huge annual bonuses...

Only banks licensed by the state are able to create this new money. And, as pointed out, it is subject to regulation.

Contrary to popular belief, people who buy shares are not contributing to the businesses capital, unless they are buying shares in a new business, or shares a business has issued in order to increase their capital.

Most shares are bought on the secondary market in the hope that they can either be resold at a higher price (i.e for speculation) or will provide a good income from dividends. The purchase money for the shares bought on this market goes to the seller. It goes nowhere near the company.

Big businesses run on loans...

The interest is their profit, and pays the high salaries of the top management and the huge annual bonuses...
Yes, so those who have large savings pots are getting interest, the bank is getting interest too, and the savers still have enough to spend, and it is that spending money which props up the economy.

Meanwhile, their less wealthy neighbours, who 'spend everything they have' are paying a much higher overall rate of VAT (as a percentage of income), and are simultaneously spending more of a percentage of their money on paying the wages of the hairdresser, the plumber and the others who don't 'rely on employers to look after them', as well as the wages of those who are employed to serve in shops, sweep the floor in the hairdresser and so on.

Public sector workers pay tax too, which seems to be often forgotten in conversations like this. Often there is a trade off between relatively low pay and relatively good conditions in the public sector - the much-resented pensions are not free, they rely on employee contributions, and the employer contributions form part of the salary of the workers.

I don't understand newnanny's point upthread about people paying more tax because others spend their money, though - how does that work?

In reply to GrannyRose, I have some savings (not much now, as I have spent a lot on living expenses as my pension age was delayed, but that's by the by). I didn't invest in business - in fact my only 'investment' is in a small S&S ISA - at the level of savings I have I can't afford to take risks, so I save, rather than invest. Nobody is going to retire on what they make on my accounts, whether I save or spend, but the only time my savings help the economy is when I use them to get things done to the house, and employ decorators, builders etc to get it ready for older age, or go on holiday in the UK etc. The rest of the time, I circulate my money from income by buying things and using services such as hairdressers, podiatrists, and the like.

I can't see how any of this gives anyone the moral high ground. If you work and pay tax you are contributing, whether you work in the public sector, the private sector or are self-employed. Savers only contribute directly via the tax they pay on the interest on their savings. I fully understand the desire to have some money in the bank, particularly as we get older, so also understand why people object to seeing savings diminished by tax. In fact I think that protecting ourselves from poverty is an instinct rather than a desire, when we look ahead to becoming less able to earn new money, so need to rely on what we've put aside. I think those objections are reasonable in themselves, but am less keen on their being couched in moralising, although I also understand that we all tell ourselves stories to explain our actions, and they usually justify whatever decisions we've made along the way .

Yes, so those who have large savings pots are getting interest, the bank is getting interest too, and the savers still have enough to spend, and it is that spending money which props up the economy.

The people with the large savings pots are least likely to spend and they certainly don't spend anywhere near enough to prop up the economy. That is the long discredited 'trickle down' theory 😁