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This is the view of the guardian - I thought it worth a discussion.
Taxing the rich: essential for economic fairness and growth
Powerful vested interests are trying to stop the wealthy from paying their fair share.
Denis Healey is often misquoted as saying he wanted to “squeeze the rich until the pips squeak” in the 1970s. He never actually used that phrase. What Labour’s finance spokesman did predict, however, was that his proposed top tax rate would spark “howls of anguish from the 80,000 people” wealthy enough to pay. With Labour in power again, it seems plus ça change, plus c’est la même chose. On Thursday this newspaper reported that Rachel Reeves, Healey’s successor in the Treasury, was looking at taxing the rich more by increasing capital gains tax. That would be a very good idea. Yet “howls of anguish” fill the airwaves and can be found on newspaper front pages. Ms Reeves should ignore them.
For decades the rich have projected ideas that support their interests, notably by reframing political language to valorise “wealth creators”. Post the financial crisis, this has been a harder sell. But plutocrats won’t easily give up their muscle, privileges and wealth. In Britain, the grossly unfair distribution of power fuels the effort to protect 3,000 individuals in private equity from Labour’s plan to make them pay their fair share in tax. It’s absurd to think that successful capitalists require an annual state subsidy of £188,000 just to perform their roles. However, this is probably only the beginning of Labour’s efforts. On paper, Britain’s tax system seems relatively progressive, with a headline rate of 47% for those earning over £3m. In reality, nearly a quarter of this ultra-wealthy group pays less than 12% in taxes.
The true scale of income inequality in the UK has been obscured by the methods the wealthy use to generate income. Current measurements exclude the capital gains from selling or shutting down businesses – one of the primary ways the rich earn money and benefit from lower tax rates. A 2020 study found that the top 1%’s share of total income had stayed steady at 14% since 1997. However, when capital gains were included, that figure rose to 17%, with the bulk of the increase concentrated among the ultra-wealthy.
Ms Reeves should act to make Britain more productive. This week, the Institute for Fiscal Studies highlighted how the current tax system discourages investment, undermines productivity, and ultimately makes the country poorer. To reform capital gains tax the chancellor should look at the work of researchers from the Centre for Analysis of Taxation (CenTax). Their latest paper provides a blueprint for necessary reforms. It proposes aligning capital gains tax rates with income tax rates, introducing allowances to incentivise productive investment, taxing the increase in an asset’s value when it is inherited, and implementing an exit tax (common in major economies) to prevent individuals from dodging British taxes on gains made while residing in the UK. In total the package would raise £14bn.
Capital gains tax has morphed into a driver of inequality. The top 5,000 taxpayers account for over half of the taxable gains, receiving an average of nearly £7m each. In fact, the benefits per capita are four times higher in London compared with poorer UK regions. Creating a low-poverty, low-inequality society requires, as the Beveridge report declared in 1942, much more than “patching”. But powerful vested interests are pushing to make opposition to taxing the rich a key element of UK economic policy. Ms Reeves must remain committed to building a fairer and more productive economy, and taxing the rich is essential to achieving that goal.
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 🤔
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?
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.
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.
David49 spot on.
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.
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.
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
Many small businesses just make a living. Certainly not making anyone rich.
There would be little point running a small business if it didn't make you "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.
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.
I doubt those running small businesses employing a few people will fall under the umbrella of the super rich.
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.
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.
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
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!!!
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.
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.
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.
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.
But I believe you were the first person, on page 3, to mention VAT on school fees Fleurpepper.
I can see why it is a big topic on such threads, at the moment it is possibly the only thing we know about for certain in the upcoming budget. That and the WFP.
Maybe just the wealthier? Not all parents with children at private schools are wealthy. They just make different choices for their spending.
Fleurpepper vat on private school fees is definitely a tax on the wealthy.
A shame this converstation has yet again been derouted. It was not meant to become yet another thread about private school fees and VAT.
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