Surely we must pay more taxes!?

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

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 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.

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.

that was in answer to growstuff's post.

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.

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.

Doodledog

growstuff

Barleyfields

And who can say whether they have worked themselves into the ground to earn their money?

And who knows how many people have worked themselves into the ground, sometimes juggling more than one job, and still have very little left after paying for essential bills such as housing and food.?

That is the problem, as I see it.

These are the people who find that what little they can save takes them into means-test territory, and they are told they don't 'need' the WFA, or 'can afford' to pay for prescriptions or bus fares etc. I would much rather see higher taxation at higher levels than people just above the bottom being means-tested out of benefits or allowances that go to those who have never worked, or have never saved.

It's not just that Doodledog. I know somebody who has just retired and who now has money sitting in his current account (yes, really) which is earning more in interest (even in ordinary savings accounts) than I receive in pensions. That's in addition to his own state pension and pension income.

If he were to die suddenly (and I hope he doesn't because he's my partner), his children would inherit that money without having done anything at all to earn that money.

The point is that anybody with wealth can earn interest on the wealth which is more than many people can earn, even if they do slog their guts out for their whole lives. It's the same with property. When house prices were increasing by vast amounts every day, people's wealth was increasing at a rate more than the average person could earn. Yes, I know that doesn't really benefit owner occupiers because they have to live somewhere, but it does give them options which renters don't have and it will benefit any offspring when they die.

He actually suggests that the middle classes have done better than in the pre WW2 era when there was a stark difference between wealthy and poor.

From anecdotal evidence, I would say that's probably true. I sometimes read posts on GN about people's childhoods and they describe not having heating or an inside bathroom. The vast majority of people these days do have some form of heating and there aren't many without an inside loo. That would suggest that these days very few people are living in abject poverty and most would have been considered the "the middling sort". I would guess there are more people in the middle group and materially they have more than our parents and grandparents did. The NHS and various benefits schemes have lifted people out of abject poverty.

Nevertheless, there is still a small group at the top of the income and wealth pile who are getting wealthier, so the difference between the top and bottom is widening.

growstuff

Barleyfields

And who can say whether they have worked themselves into the ground to earn their money?

And who knows how many people have worked themselves into the ground, sometimes juggling more than one job, and still have very little left after paying for essential bills such as housing and food.?

That is the problem, as I see it.

These are the people who find that what little they can save takes them into means-test territory, and they are told they don't 'need' the WFA, or 'can afford' to pay for prescriptions or bus fares etc. I would much rather see higher taxation at higher levels than people just above the bottom being means-tested out of benefits or allowances that go to those who have never worked, or have never saved.

“Please let's not turn this into a discussion of housing wealth at the lower end of the wealth spectrum.”

I’m sure that ordinary householders don’t want more tax to affect them, nor a cut in public services but they are far easier to tax than the top 1%, who have the wealth tied up retrospectively in businesses, pensions, shares and a lot of other investments, that can’t be taxed until they are sold.

growstuff

Doodledog

It's true that an individual can use earned income to buy something (such as property) which will then be classified as an asset. That's not true for people who inherit a property (or other assets) for which they have not paid or contributed anything from "earned income".
Which is what I said, and is why I said that in many cases separating it all out is at best subjective.

I wasn't disputing what you wrote. I was trying to support your argument.

No, I know. It was David who was repeating what I said. I think I quoted the wrong post - sorry.

PoliticsNerd

Ah. I've had a couple of sleeps since then MaizieD

The article left me wondering whether it's a societal change or a blip. I think it could be the first if we keep swinging to the right but I live in hope - Canada brings some cheer. The article was what made me extra concerned about the hollowing out of the middle in society and resultant lack of churn in the economy - and how to solve it.

I don't want to upset you with my academia tendency, but if you go to p5 of this thread I did try to explain a bit about wealth distribution, using the distinction between labour (earned) wealth and capital worth set out by Thomas Pikety in his book Capital in the 21st Century. The whole objective of this (rather long) book is to look at wealth distribution and inequality. Using data over 2 -300 years.

Pikety's analysis over time shows that the high point of more equalised distribution was in the 3 decades post WW2 when countries followed Keynesian economics. It was particularly noticeable in the US and the UK, where Keynes was very influential.

But it all changed post 1980 when Regan and Thatcher embraced the free market, small state economic model of Freidman. Since then the wealthy have regained ground on the wealth they lost with post war tax policies and the equality gap has widened. He actually suggests that the middle classes have done better than in the pre WW2 era when there was a stark difference between wealthy and poor. But I'd have to read the article you referred to to see if it differs much from Pikety. I don't subscribe to the Economist, though...

I should perhaps say that Pikety is a very orthodox economist. Not a sniff of MMT about him

And the French apparently refer to the post WW2 economic period, 1945 -1975, as les Trente Glorieuses... I do like the French

Barleyfields

And who can say whether they have worked themselves into the ground to earn their money?

And who knows how many people have worked themselves into the ground, sometimes juggling more than one job, and still have very little left after paying for essential bills such as housing and food.?

David49

One of the big issues is gifts, where IHT can be avoided by lifetime gifts and gifts out of income. This way parents can help younger family members wit getting on the housing ladder and give education advantages.

I think it's natural that parents will try to support their children in whatever way they can, which is why wealthier parents can help their children more and the advantage tends to be perpetuated from one generation to the next.

However, it makes a mockery of meritocracy. I don't really have too much of an objection to people earning their own money, as long as it's taxed fairly and progressively. They've earned the money and can spend it as they wish, as far as I'm concerned. I do, however, have more of a problem with people who have inherited money and still claim they deserve the money on their own merit.

If anybody has read the link I posted before, they'll see that inherited advantage tends to increase with each generation and contributes massively to inequality.

Doodledog

*It's true that an individual can use earned income to buy something (such as property) which will then be classified as an asset. That's not true for people who inherit a property (or other assets) for which they have not paid or contributed anything from "earned income".*
Which is what I said, and is why I said that in many cases separating it all out is at best subjective.

I wasn't disputing what you wrote. I was trying to support your argument.

Ah. I've had a couple of sleeps since then MaizieD

The article left me wondering whether it's a societal change or a blip. I think it could be the first if we keep swinging to the right but I live in hope - Canada brings some cheer. The article was what made me extra concerned about the hollowing out of the middle in society and resultant lack of churn in the economy - and how to solve it.

And who can say whether they have worked themselves into the ground to earn their money?

Doodledog

*It's true that an individual can use earned income to buy something (such as property) which will then be classified as an asset. That's not true for people who inherit a property (or other assets) for which they have not paid or contributed anything from "earned income".*
Which is what I said, and is why I said that in many cases separating it all out is at best subjective.

But it isn't subjective for the purposes of taxation because however the 'wealth' is acquired it is still wealth and HMRI will have access to the detail.

Please let's not turn this into a discussion of housing wealth at the lower end of the wealth spectrum.

We are talking about taxing these people, who are quite likely to be the most lightly taxed:

If you are in the top 1% of households in the UK by net worth, you belong to an exclusive group that:

Represents approximately 263,000 households in Great Britain.
Holds a significant share of the nation’s total wealth.
Has more wealth than 70% of the rest of the population.
Benefits from pension wealth as the largest component, with pension assets of around £2 million.

The latest available data from the Office for National Statistics (ONS) Wealth and Assets Survey (2018-2020) found that households in the top 1% had a net worth over £3.6 million. This includes property, pensions, investments, and savings, minus any debts.

However, since 2020, rising property prices and stock market growth suggest, that the more realistic figure for the top 1 percent net worth in the UK is currently closer to £4 million or even higher.

moneymarshmallow.com/top-1-percent-net-worth-uk/

Whitewavemark2

I notice with no surprise whatsoever, that the VAT on school fees has made no discernible difference to state #school numbers.

It’s very early days.Parents won’t want to take children from a private school and put them in a state school, but those who were considering a private school for this September or next September for their child may well have to reconsider. I think this measure will take several years to know if it was actually worth doing or not.

I notice with no surprise whatsoever, that the VAT on school fees has made no discernible difference to state #school numbers.

One of the big issues is gifts, where IHT can be avoided by lifetime gifts and gifts out of income. This way parents can help younger family members wit getting on the housing ladder and give education advantages.

It's true that an individual can use earned income to buy something (such as property) which will then be classified as an asset. That's not true for people who inherit a property (or other assets) for which they have not paid or contributed anything from "earned income".
Which is what I said, and is why I said that in many cases separating it all out is at best subjective.

Maybe many of the children of better off parents have good jobs which enable them to buy houses and many of those with deprived backgrounds have parents who live off benefits, rent and have never demonstrated what a work ethic or aspiration to home ownership is?