In the UK, Capital Gains Tax (CGT) is generally not the same as Income Tax. Why not?

David49 Most, if not all of those people you describe, will not fall into the tax bands I, and others are talking about. They are the very people we need to maintain. This "middle income" group -often referred to as the middle class as a shorthand - is seen as important for both economic and social reasons.

Rosie51

MaizieD

Rosie51

MaizieD What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does....

A simple google search with the question "can AI be wrong?" brings up a page of links illustrating exactly how AI can indeed be wrong. That it may have been correct in your example does not guarantee reliability in everything. You are of course entitled to believe absolutely everything it says, I'll join others in a degree of scepticism.

Jeez. I'm perfectly well aware that AI can get it wrong, but do people seriously think that it can't manage a simple calculation? Maths can easily be checked. Real live humans have done just the same exercise and reached just the same conclusion.

I am still waiting for someone to tell me what was wrong with the exercise in question. Rubbishing AI isn't exactly debate, is it? It's just evading acknowledging that a result that some posters don't like could be correct. Or failing to state what could be wrong with it.

Goodness, I acknowledged AI was correct in your example, but your earlier post said AI has no biases. In a straightforward mathematical calculation that's true, as a blanket statement which is what yours appeared to be that's obviously untrue. Coupled with What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does.... your absolute faith in it seemed unquestioning. Don't shoot the messenger!

For clarification. I was responding with ‘what a sad pair’ to this extremely rude post from PN and the one agreeing with it.

Just in case anyone believes this silliness of course AI can be wrong. It basically depends on data used in the training, which may reflect historical inequalities, stereotypes, or incomplete information.

I will repeat, I am perfectly well aware of the deficiencies of AI. Far from having absolute faith in it I am deeply concerned about the enthusiastic and unquestioning reception it gets in many quarters. The ‘when AI rules the world’ comment was meant sarcastically, not seriously. A tool which (hallucinates) makes up events and citations is not one to be wholly trusted. I actually fear that it will be trusted too much.

However, it’s useful when asked a completely neutral question to which one already knows the answer, to summarise articles or to do a straightforward calculation… And I’m happy to declare when I’ve used it.

I expected you and most others on GN to defend their wealth, I agree that everyone should be taxed on UK assets.

It’s very attractive for a Labour government to be seen taxing the rich but I really don’t believe significant revenue is going to be gained from 0.01% of the population, or even 1% which brings the level down to around £2m. Over £2m most wealth is going to be small business related that are already under pressure

^I expected you and most others on GN to defend their wealth, ...^(David49)

When you find this mythical "wealth" would you let me know please!

Whether it raised huge amounts or not, I think that taxing wealth would introduce a sense of fairness that the UK has been lacking for a long time. Too many people work long hours for wages that have to be topped up with means-tested benefits that prevent them from being able to (eg) save for a house deposit or anything that costs over £6000, as as soon as they hit that amount of savings their benefits are clawed back. Their employers, OTOH, who are able to pay low wages because of those benefits, can spend and invest and save as much as they like, and their profits on investment are taxed at a lower rate, if at all.

The sort of education that can lift people out of low wage work costs more than many can afford, so people are trapped that way, too. Childcare is ruinously expensive, and rents on houses owned by private landlords are extortionately high, so it is very difficult for 20-35 year olds to start families, and the population as a whole continues to age.

I'm not surprised there is so much resentment of older people and of those who profit from the work of others, as so many people can't see a way out of dependency and a life of scraping by, even though they work hard. When they see others with good pensions they could draw at 60, houses that cost far less than their equivalents today and the gap between rich and poor rises year on year, resentment is to be expected. It's not about envy, before someone leaps to that conclusion - it's about basic unfairness.

I fear for democracy in the UK, as the resentments are leading to a swing to the right. People are easily persuaded that immigrants are responsible for lowering wages (and there is some truth in that, particularly at the lower-skilled end of the market), when taxing billionaires would affect very few people but bring in money that could be redistributed to make life fairer for all.

Whether it raised huge amounts or not, I think that taxing wealth would introduce a sense of fairness that the UK has been lacking for a long time.

The problem as I see it is that 'wealth' is something of a nebulous concept. For instance, suppose someone has a large holding of highly valued shares in a company. Their 'wealth' would appear to be appear to be high. But if the company went bust their shares would become worthless, or practically worthless. One day this individual is 'worth' a few £million, the next day, they're not. How would taxation of that 'wealth' be calculated? How would the taxation of any assets which could increase or fall in value be calculated?

On the other had, a tax on the means of acquisition of wealth would be based on a tangible amount which couldn't be disputed as it wouldn't fluctuate in value. So, capital gains tax, dividend tax, taxation of company profits, windfall taxes, IHT... Taxation that equalises the taxation of the wealthy and the rest of the population could lead to a more equable distribution without the difficulties inherent in the valuation of actual wealth.

Growstuff

You know very well that anyone with a mortgage paid off and a nice pension fund has considerable wealth, it’s this group that holds a major part of the wealth of the UK, 37% as Private Property, 43% as pensions.
The Average wealth of to top 20% in the UK is £1.2m currently, that wealth is unlikely to be taxed at all. There is little point in a wealth tax unless it taxes £1m and upwards.

David49

Growstuff

You know very well that anyone with a mortgage paid off and a nice pension fund has considerable wealth, it’s this group that holds a major part of the wealth of the UK, 37% as Private Property, 43% as pensions.
The Average wealth of to top 20% in the UK is £1.2m currently, that wealth is unlikely to be taxed at all. There is little point in a wealth tax unless it taxes £1m and upwards.

Sorry replied to PN

I have no problem with that, Maisie . As I have said, I don't have an Economics vocabulary. I just think that the constant reliance on 'working people' to support everyone else is deeply unfair, and people are getting sick of it, with potentially dangerous consequences.

David49

Growstuff

You know very well that anyone with a mortgage paid off and a nice pension fund has considerable wealth, it’s this group that holds a major part of the wealth of the UK, 37% as Private Property, 43% as pensions.
The Average wealth of to top 20% in the UK is £1.2m currently, that wealth is unlikely to be taxed at all. There is little point in a wealth tax unless it taxes £1m and upwards.

I have never advocated a wealth tax!!!

However, I see no earthy reason why interest or earnings on that wealth should not be taxed as income tax.

I think that people are working from a very narrow definition of 'income' when they are commenting on these sorts of threads.

The Collins Dictionary's definition of 'income' is:

A person's or organization's income is the money that they earn or receive, as opposed to the money that they have to spend or pay out.

I completely fail to understand why, for example, 'capital gains' is claimed to be 'not' income when it is plainly money that is received. No explanation is forthcoming.

Likewise, the word 'taxation' used in connection with taxing wealth, is always assumed to be income tax (which doesn't go anywhere near taxing their 'income') and other taxes and forms of taxation are ignored.

growstuff

David49

Growstuff

You know very well that anyone with a mortgage paid off and a nice pension fund has considerable wealth, it’s this group that holds a major part of the wealth of the UK, 37% as Private Property, 43% as pensions.
The Average wealth of to top 20% in the UK is £1.2m currently, that wealth is unlikely to be taxed at all. There is little point in a wealth tax unless it taxes £1m and upwards.

I have never advocated a wealth tax!!!

However, I see no earthy reason why interest or earnings on that wealth should not be taxed as income tax.

The suggestions made have been for tax on wealth above £10 million David49.

Are you seriously suggesting that this will include anyone with a mortgage paid off and a nice pension fund? You are talking about the fiscal middle and they need protecting as everyone I've heard talking about a weath tax agrees.

As I said, when you find my stash of over £10 million, please let me know!

I’m suggesting that to raise a worthwhile amount of revenue it has to be applied at below £1m. At the £10m level its a purely idealogical tax that won’t gain significant revenue, certainly not the tens of billions the economy needs.

I think it depends what you are hoping to achieve David.

We have been in this situation before in history. It took a long time to establish democracies rule over wealth. Around the world this has been being reversed for some time. Powerful groups of left or right will try to overturn democracy as power brings them wealth and excessive wealth brings power.

That rarely, if ever, works in favour of the average person.

The top rate of income tax in this country is 45%. I think this is fair as the wealthy will still keep the bulk of what they earn, while contributing a large chunk of tbeir earnings to society. Most Western countries now have at top rate of income tax of 40-50% and the sorts of income tax rates the UK and Sweden once had ( 80-90%) are long gone as they were seen to fail and led to tax evasion. The bash the rich mentality that still sadly exists among some socialists in this country doesn't work.

In the post WW2 period income tax on the wealthiest was 75%! There were also restrictions on the amount of capital which could be taken out of the country. It led to the greatest movement towards a more equitable distribution of the nation's money than before or since. And, to excellent growth.

This isn't 'bash the rich', this is government controlling the way that the money which it, the government, spends into the economy, to promote economic activity and a more equitable share of that money.

By all means have a wealth tax as a sop to the socialists, which still means revenue has to be raised from the rest of the population. It seems to me that those below average income are under pressure now which means that taxes should be increased for those above average income/wealth.

In the post WW2 period income tax on the wealthiest was 75%! There were also restrictions on the amount of capital which could be taken out of the country. It led to the greatest movement towards a more equitable distribution of the nation's money than before or since. And, to excellent growth.

Yeah Maizie!

This isn't 'bash the rich', this is government controlling the way that the money which it, the government, spends into the economy, to promote economic activity and a more equitable share of that money.

As you say, the extremely, and I would say excessively rich find it hard to spend their money so end up pushing up the price of assetts, leaving the poorest, then the government, then those in the middle unable to buy them. They do get use of some of them but that becomes an income making vehicle for one person and a deprivation of capital for another. To add to your "after the war" note, the rent protection and the security of tenure measures introduced during the war were also carried on well after it.

David49

By all means have a wealth tax as a sop to the socialists, which still means revenue has to be raised from the rest of the population. It seems to me that those below average income are under pressure now which means that taxes should be increased for those above average income/wealth.

I think you may find it's not only socialists who are suggesting this David49 although it may suit your own bias to think so.

Any well balanced Centrist will typically view sustaining the middle classes as a crucial component of economic stability and social cohesion. They believe that supporting the middle class helps promote a balanced economy, reduces inequality, and fosters social mobility.

This centrists would advocate for policies such as reasonable taxation, investments in education and healthcare, and economic reforms that enable middle-income families to thrive. I'm all for pragmatic solutions that balance market efficiency with social protections; those which aim to create an environment where the middle class can flourish and contribute to overall national prosperity.

If we had swung as far to the left as we are currently moving to the right I would be saying exactly the same things. Balance is everything.

In which case I’m an unbalanced centrist because I think the middle classes have had it too good, they have a lot of wealth AND they have a lot of free welfare services they can well afford to pay for

Probably something other than a centrist then David49.

David49

In which case I’m an unbalanced centrist because I think the middle classes have had it too good, they have a lot of wealth AND they have a lot of free welfare services they can well afford to pay for

When you say that the middle classes have had it too good what do you want governments to do about it? If you set a weath tax, say for the higher middle income - possibly in the next budget - you will just end up putting the super-rich in a position to buy even more of the countries assets.

There are areas where the middle-class scream too loudly, I agree. At this point in time I would personally want them to lean more towards helping those on the lowest incomes - balancing against what has happened under the Conservatives.

We grow our country through the existing middle-class and those from the working class who are given the opportunity to thrive and use their talent. If taxation is mainly on the middle incomes, all that will happen is more assetts will be gathered in by the very rich and super rich and the whole country becomes poorer. Why would you want that?

David49

By all means have a wealth tax as a sop to the socialists, which still means revenue has to be raised from the rest of the population. It seems to me that those below average income are under pressure now which means that taxes should be increased for those above average income/wealth.

Income is not the same as wealth David. Which do you mean?

Cumbrianmale56

The top rate of income tax in this country is 45%. I think this is fair as the wealthy will still keep the bulk of what they earn, while contributing a large chunk of tbeir earnings to society. Most Western countries now have at top rate of income tax of 40-50% and the sorts of income tax rates the UK and Sweden once had ( 80-90%) are long gone as they were seen to fail and led to tax evasion. The bash the rich mentality that still sadly exists among some socialists in this country doesn't work.

Maybe you could explain why those in the upper tax band should receive higher tax relief on their pension contributions. They are receiving a much bigger subsidy from the government than those paying basic rate tax and far more than the very lowest earners, who possibly aren't making any pension contributions.

How is that fair?

Incidentally, the Treasury would receive billions, if these people didn't receive their subsidies.

What kind of mentality do you think would work?