Surely we must pay more taxes!?

I’m not going to get involved with Pikety theories, successful business take opportunities offered by government. I started in 1970 times were good until 85 or so, the 90s not so good, 2000 to 2008 very good, since then OK.
I’ve been investing to expand the whole time successive governments have done very little, just a string of short term quick fixes neglecting the economy, the result was entirely predictable.

Yes, that's true too, and I agree that taxation should be used to correct that sort of thing, but those with estates worth over a million pounds refuse to accept that this is a lot of money, regardless of the difference between what they paid for their house and how much it is worth now. It may be the case that a house value is only average for the street and that it was paid for from earned income, but that doesn't mean that the profit it has made was earned - it wasn't.

The current system takes more (proportionately) from the have-nots than the haves. Things like the amount at which people have to pay for care is static across the country, when the average house value is anything but. Caps on the amount that people should pay are often discussed, and again - a static cap could wipe out a family in one area and barely touch the sides of the inheritance for another.

The fact that people in some parts of the country have geographical mobility and others don't is very unfair, too. It prevents equality of opportunity and flies in the face of meritocracy.

I see all of those things as contributing to the drift to the far right we are seeing - people are disenchanted and resentful, and in many ways I don't blame them.

I know that those with (my definition of) wealth can 'earn' from it, and those 'earnings' are what I would like to see taxed. I understand people wanting to shield savings from inflation, particularly when they are retired and on a fixed income, but even modest savings are taxed if they are not shielded by ISAs, so it can be difficult for many people to feel financially secure, even after a lifetime of work. A lump sum such as an inheritance can make a huge difference to someone's life chances, and I do understand parents wanting to give their children those chances, but a cap on individual inheritance would be a lot fairer.

I don't see the point in an insistence on a figure for 'what is wealthy', unless we want to cap earnings - it is purely subjective otherwise.

that was in answer to growstuff's post.

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

“I doubt any government would be so stupid as to try to do that.”

I wouldn’t bet on that, they have to get more from those that have it.

David49

I’m not going to get involved with Pikety theories, successful business take opportunities offered by government. I started in 1970 times were good until 85 or so, the 90s not so good, 2000 to 2008 very good, since then OK.
I’ve been investing to expand the whole time successive governments have done very little, just a string of short term quick fixes neglecting the economy, the result was entirely predictable.

Oh, David.

Pikety isn't a 'theorist'. He's an economist with an interest in wealth and inequality. Nothing at all to do with businesses.

He has analysed data on wealth and taxation in several countries with 'advanced' economies. Some of the data (the French) goes back 300 years! Having analysed the data he can give a clearer picture of wealth distribution and the way it is affected by taxation (or non taxation) and can suggest ways of improving distribution to make it more equitable, if that is what is desired.

Business has nothing to do with equality it’s the opposite, surely a government should be aiming to improve the prospects of the nation.
We still have the rich getting richer, 100 yrs ago it was idle rich, now it’s the business rich and they're much cleverer

I see all of those things as contributing to the drift to the far right we are seeing - people are disenchanted and resentful, and in many ways I don't blame them.

I absolutely agree with you, Dd.

We still have the rich getting richer, 100 yrs ago it was idle rich, now it’s the business rich and they're much cleverer

It isn't only the 'business rich', though. There's a great deal of inherited wealth, too, we still have the 'idle rich'. But a large part of the problem is that the rich don't always invest in anything productive; they make very little contribution to society, to the extent of taking great pains to avoid taxation of their non productive wealth.

Barleyfields

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

I don't know if any government will be brave enough - I don't see it as stupid.

Dead people don't shell out anything. The tax would be on the unearned money being given to the heirs.

I wonder if a cap on the amount people can inherit is fairer than on a cap on the amount people can leave? That way, someone from a large family can inherit the same as an only child and the surplus in both cases go to the exchequer? Maybe that's not fair - I don't know. I haven't really thought it through.

It would be possible to cap the amount that can be gifted tax free

Thank you for your answer to my post Doodledog. I agree with the points you have made.

Barleyfields

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

But shrouds don't have pockets Barleyfields. You might have paid all your taxes, but you'll be gone. Your children and charities will have done nothing to earn the money.

MaizieD

David49

I’m not going to get involved with Pikety theories, successful business take opportunities offered by government. I started in 1970 times were good until 85 or so, the 90s not so good, 2000 to 2008 very good, since then OK.
I’ve been investing to expand the whole time successive governments have done very little, just a string of short term quick fixes neglecting the economy, the result was entirely predictable.

Oh, David.

Pikety isn't a 'theorist'. He's an economist with an interest in wealth and inequality. Nothing at all to do with businesses.

He has analysed data on wealth and taxation in several countries with 'advanced' economies. Some of the data (the French) goes back 300 years! Having analysed the data he can give a clearer picture of wealth distribution and the way it is affected by taxation (or non taxation) and can suggest ways of improving distribution to make it more equitable, if that is what is desired.

I'm not sure David recognises the distinction between micro- and macro- economics.

Barleyfields

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

But you are ignoring the fact that people's wealth is increasingly likely to have come from inheritance than from the money they have themselves earned. If they inherited more than the threshold, they will have paid IHT. If they earned interest on their capital, they will have paid tax. However, the capital (ie their wealth - assets, if you like) will not have been taxed. That capital can then be passed on to the next generation, who can interest on it without lifting a finger to do anything. Meanwhile, those who are less fortunate have to play catch-up by slogging their guts out to earn their money.

MaizieD

^We still have the rich getting richer, 100 yrs ago it was idle rich, now it’s the business rich and they're much cleverer^

It isn't only the 'business rich', though. There's a great deal of inherited wealth, too, we still have the 'idle rich'. But a large part of the problem is that the rich don't always invest in anything productive; they make very little contribution to society, to the extent of taking great pains to avoid taxation of their non productive wealth.

The old aristocracy that have still got the estates are very much working businesses these days, the great houses are either in trust or taken over by NT.
I’m not sure just who the idle rich are these days, those retired on fat pensions perhaps, or maybe Dyson or Ratcliffe who did “earn” their wealth.

Who?.

Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting or the punitive nature of IHT.

IGT has to be paid within a set time, before probate can be completed, which in many circumstances means bereaved families having to take out loans to pay taxes on money before they receive it.

IHT not IGT

But it isn't punitive, GG13. It's only 40% of what is left after the tax free allowance, which could be up to £1,000,000.

And if, as I believe you've said before, your heirs have also worked for that money then perhaps they should have had more of it while you were still alive?

I'm sorry, but I can't sympathise on this one.

I don't think I've read anything suggesting that the reason IHT is unfair is 'just because' others won't get an inheritance.

The reasons given have included societal unfairness, the risk of political extremism, the divisive nature of some having to work whilst others don't, the fact that those who inherit will often hang onto the inheritance rather than circulate it in the economy and more. Far fewer people base political judgements on envy than those who have money seem to think, and unless people on these threads disclose their own circumstances nobody knows what they are.

Because so few estates actually pay IHT there is a case for reducing the threshold so that some tax is paid from a lower level may be starting at 20% then increasing on higher amounts.

David49

Because so few estates actually pay IHT there is a case for reducing the threshold so that some tax is paid from a lower level may be starting at 20% then increasing on higher amounts.

Surely you meant raising threshold and increasing on higher amounts?

The 20 wealthiest people in the UK are here:

en.wikipedia.org/wiki/Sunday_Times_Rich_List_2024

Jim Ratcliffe and James Dyson stand out because they really did start from nothing. Almost all the rest come from wealthy families who already had successful businesses, which some of them took over, or (like the Duke of Westminster) inherited a vast amount of wealth.

Many of them have made money by buying up businesses and asset-stripping them. Some are investors/financiers. The Rausing Tetrapaks have possibly enhanced our lives, but looking at the rest of the list, very few of them are producing anything which benefits society or enhances our lives. As noted, Dyson is a possible exception. It's just a giant Monopoly game - money changes hands and some get richer, but the number of properties, houses and hotels doesn't increase.

Doodledog

I don't think I've read anything suggesting that the reason IHT is unfair is 'just because' others won't get an inheritance.

The reasons given have included societal unfairness, the risk of political extremism, the divisive nature of some having to work whilst others don't, the fact that those who inherit will often hang onto the inheritance rather than circulate it in the economy and more. Far fewer people base political judgements on envy than those who have money seem to think, and unless people on these threads disclose their own circumstances nobody knows what they are.

I think you're right. If nearly everybody has enough for a relatively comfortable lifestyle, without having to worry about paying essential bills and being able to afford a modest holiday and a newer car every so often, they can shrug their shoulders when they see that some people live a luxurious lifestyle without having to lift a finger.

It's not about envy. It's about desperation and wondering why life seems to have dealt so many people with a rubbish hand.

GrannyGravy13 Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting.

Agreed.

Perhaps unfair council tax could be addressed.

www.economist.com/britain/2024/01/25/britains-council-tax-is-arbitrary-regressive-and-needs-fixing