Should we be more open to a wealth tax?

That is so right Monica. I'm not at all rich but the fact is taxing the rich does not have the desired outcome which some might expect ie the poorer will be better off. The rich incomes trickle down to communities. You tax them big and they will leave which would not benefit this country.

Plevey08

That is so right Monica. I'm not at all rich but the fact is taxing the rich does not have the desired outcome which some might expect ie the poorer will be better off. The rich incomes trickle down to communities. You tax them big and they will leave which would not benefit this country.

In what way do "rich incomes trickle down to communities"?

If this were true, our roads would be well maintained and our schools and hospitals wouldn't be falling to pieces. The super rich make sure nothing "trickles down" by squirrelling most of their money away in offshore bank accounts so they can maintain their spot on the Sunday Times Rich List.

The suggested wealth tax is a tax on assets (land, property, stocks etc.), NOT on income. Working people are already taxed up to their eyeballs on their income. A high earner doctor or TV presenter pays almost half of their salary in tax and NI contributions. While the super rich typically earn little income; instead they borrow against their assets, being able to have a lavish lifestyle while paying minimal income tax.

The wealth tax suggested in the video is 2% on assets over £10 million. According to estimates, 99% of the UK population owns less than £3 million, the median being a couple of hundred thousand (including their home and depending on age, region etc.) A wealth tax like this would apply to about 0.1% of the population.

I think it's a no-brainer that we have to start closing the loopholes and make the super wealthy pay their fair share. The only question is how it can be done.

Hmmmm. People are very happy to tax other people's money or cut other people's benefits. It's not a straightforward situation

Rich incomes trickle down through structured philanthropy and Grants. Social enterprise, start up, microfinance institutions. Systemic change by financing grassroots. Policy research and economic systems...to name but a few MollyNew

Tomas Piketty, amongst other economists I think talks about 2% on total wealth. The level at which this starts is not clear to me at present.

But when consideration is given to the current level, of total tax paid by the ultra wealthy, 2% seems very generous.

Plevey08

Rich incomes trickle down through structured philanthropy and Grants. Social enterprise, start up, microfinance institutions. Systemic change by financing grassroots. Policy research and economic systems...to name but a few MollyNew

That idea was blown out of the window years ago.

This discussion has been had on GN multiple times.

Shares, gold, art works, properties and even jewellery along with other assets of the rich can down as well as up.

Are they going to fix a day every year and assets will be assessed for all?

This has more holes than your average colander, and would be unwieldy along with extremely expensive to implement in both time and money.

I suspect that for economists who have been studying this subject for 10s of years - it will all be a deal more complex than we realise.

MollyNew

I am not prejudiced towards the wealthiest in society. However, I do object to a tiny minority accruing extreme wealth whilst many live on the breadline.

According to Oxfam, the combined wealth of the richest 56 people in the UK is more than the total wealth of the poorest 27 million (roughly 39% of the population). This cannot be good for society as a whole.

If the wealthiest rely on the poorest to work for them, clean for them, operate public services etc then they should pay more tax. They would not miss it and the poorest would have a better quality of life and be less reliant on benefits to top up their low salaries.

Yes!

But say there is a vastly wealthy person who resides in the U.K. I would expect that he/she would put in a wealth declaration each year - much like company accounts to the revenue, and once it has been agreed tax would be levied.

Revenue officers would check and agree. The declaration prepared by the persons accountant.

That is it at the most simple level - but what do I know😊

I think people get alarmed about the idea of a wealth tax because it has connotations of a redistribution of wealth when it is nowhere near that. It is obvious to most of us that there is plenty of money sloshing around at the top. The average Premier League footballer earns around £60K a week which is nearly twice the annual UK salary and they are not considered to be super rich.

The truly wealthy could make a massive contribution to the wellbeing of the general population without having to sell a yacht or sack their private chef.

There is a plethora of accountants who dedicate their lives to finding tax loopholes for their clients. Maybe the Government should consult them?

Whitewavemark2

I suspect that for economists who have been studying this subject for 10s of years - it will all be a deal more complex than we realise.

The economic orthodoxy which has prevailed for the past 40plus years is one which considers wealth to be good and favours the acquisition of wealth. Orthodox economists don't look for ways to redistribute it.

The economists who have studied how to redistribute wealth more equitably are few and far between and have little influence because they are not mainstream orthodox. They do not get into positions where they are able to influence policy because they challenge the 'orthodoxy'.

Margaret Thatcher didn't find it in the least bit complex to completely change the balance of wealth distribution. She just cut taxation for the wealthy and for businesses, easy peasy, and here we are. I don't have to quote the figures again, starting with 20% of the population living in poverty, do I?

There would, of course, be great screeches emanating from the wealthy if any of what they have is taken from them, or they are prevented from acquiring more so rapidly. When the poor and 'middling sort' have more and more taxes imposed on them they don't screech anywhere near as loudly and, anyway, no-one listens to them.

Whitewavemark2

Tomas Piketty, amongst other economists I think talks about 2% on total wealth. The level at which this starts is not clear to me at present.

But when consideration is given to the current level, of total tax paid by the ultra wealthy, 2% seems very generous.

Pikety has written a great book (in both meanings of the word) detailing just how the wealth get wealthy and continue to do so at an alarming rate. I've read it, has anyone else?

He has no answers, though. He's excellent at research and analysis, and is deeply concerned about inequality but his 2% wealth tax is naive and won't work for reasons at leas two posters on here have given.

Plevey08

That is so right Monica. I'm not at all rich but the fact is taxing the rich does not have the desired outcome which some might expect ie the poorer will be better off. The rich incomes trickle down to communities. You tax them big and they will leave which would not benefit this country.

I think "trickle down" thinking has been largely discredited.

I think ithe idea also originated from those who it was supposed to trickle from as opposed to those who it was supposed to trickle to.

The wealthiest 1 percent give significant sums of money to charity £ 8 billion. Mostly to education and the arts. I'm not defending them...but if you increase their taxes too much they will go elsewhere. Governments know this hence they haven't followed through on their populist rhetoric. Unfortunately voters believe populism. At least Starmer didn't push absurd populist ideologies, but it seems that voters fall for each party.'s trickery of telling them what they want to hear and are then surprised when the promises don't materialize. That's why we have a revolving No 10 door.

MollyNew

I am not prejudiced towards the wealthiest in society. However, I do object to a tiny minority accruing extreme wealth whilst many live on the breadline.

According to Oxfam, the combined wealth of the richest 56 people in the UK is more than the total wealth of the poorest 27 million (roughly 39% of the population). This cannot be good for society as a whole.

If the wealthiest rely on the poorest to work for them, clean for them, operate public services etc then they should pay more tax. They would not miss it and the poorest would have a better quality of life and be less reliant on benefits to top up their low salaries.

But the wealthy also provide lots of jobs, not necessarily ill paid. In fact many domestic staff, like nannies can be paid very generous salaries indeed. They spend vast sums of money on their houses and estates, their clothes, furniture, cars etc, employ accountants. If the 56 richest individuals were to be deported their would be many hundreds of people, if not thousands would be left unemployed.

Many of those 56 will have built their fortunes by their own endeavours. Pop stars, footballers, people like Dyson (cannot remember his first name. Yes , it may well include foreign Oligarchs and those who made money by exploitation, but, as with everything, do not throw out the baby with the bathwater. 56 taxpayers in 35,450,000, is a very, very, very, very small percentage of the whole.

M0nica

MollyNew

I am not prejudiced towards the wealthiest in society. However, I do object to a tiny minority accruing extreme wealth whilst many live on the breadline.

According to Oxfam, the combined wealth of the richest 56 people in the UK is more than the total wealth of the poorest 27 million (roughly 39% of the population). This cannot be good for society as a whole.

If the wealthiest rely on the poorest to work for them, clean for them, operate public services etc then they should pay more tax. They would not miss it and the poorest would have a better quality of life and be less reliant on benefits to top up their low salaries.

But the wealthy also provide lots of jobs, not necessarily ill paid. In fact many domestic staff, like nannies can be paid very generous salaries indeed. They spend vast sums of money on their houses and estates, their clothes, furniture, cars etc, employ accountants. If the 56 richest individuals were to be deported their would be many hundreds of people, if not thousands would be left unemployed.

Many of those 56 will have built their fortunes by their own endeavours. Pop stars, footballers, people like Dyson (cannot remember his first name. Yes , it may well include foreign Oligarchs and those who made money by exploitation, but, as with everything, do not throw out the baby with the bathwater. 56 taxpayers in 35,450,000, is a very, very, very, very small percentage of the whole.

I think that MOnica is just trying to convince us that the trickle down theory is correct.

It has been observed that the wealthy have a 'marginal propensity to consume'

AI explains it

The observation is usually phrased in economics as the wealthy have a lower marginal propensity to consume (MPC)—that is, when they receive an extra pound or dollar of income, they tend to spend a smaller fraction of it and save or invest more. The converse is that lower-income households tend to have a higher MPC.

Several economists are closely associated with this idea:

John Maynard Keynes is the person most commonly credited with formalising it in The General Theory of Employment, Interest and Money (1936). Keynes argued that as income rises, consumption also rises, but by less than the increase in income. This became known as the "fundamental psychological law" of consumption.
Simon Kuznets later examined the relationship empirically using national income data, leading to refinements of Keynes's original consumption function.
Milton Friedman developed the Permanent Income Hypothesis, arguing that people base spending on expected long-term income rather than current income alone, though higher-wealth households still typically exhibit lower MPCs out of temporary income gains.
Franco Modigliani, through the Life-Cycle Hypothesis, likewise explained consumption patterns over a person's lifetime.

Today, the proposition is also strongly supported by empirical research. For example, economists such as Raj Chetty, Atif Mian, and Amir Sufi have found that lower-income households have substantially higher marginal propensities to consume than wealthier households, making transfers to lower-income groups more stimulative for aggregate demand.

In other words, the wealthy are able to devote much of their income to increasing their wealth whereas low income groups spend more and have less spare (if any) with which to accumulate more 'wealth'.

So 'trickle down' does little to redistribute wealth while the nature of wealth investment and lower taxation increases the amount of wealth they can remove from the economy.

We need to think about the flow of money. These employees of the wealthy will spend their wages in greater proportion than do the wealthy who have paid them spend from their incomes. And where does their money go? Apart from money spent in their local economy, which will benefit small and medium size businesses? They purchase from large corporations, they purchase from Amazon, they pay their utility bills to privately owned companies. Not only do the wealthy people who own these companies benefit from the profit they make from these employees, the wealthy shareholders do too. And the wealthy employers will inevitably have shares in other companies which pay them dividends out of their profits.

So much of this 'trickled down' money just flows back upwards towards the wealthy....

Plevey, I'm not sure that you can convince me that all wealthy people contribute to society in the way that you describe.
Michelle Mone and her wealthy husband live in the Isle of Man, which has tax advantages.
I saw a programme about their lifestyle ( with which they co operated) in which the husband was ordering a new yacht. He was discussing incorporating a helipad. The designer demurred, saying that it wasn't needed. The response was "well, you have to spend your money on something".
Ms Mone, you might recall, took huge sums from the taxpayers for defective PPE equipment, then took steps to ring fence the money in order to ensure that none of it was returned to us.
No philanthropy was risked during the acquisition of this wealth.

No, I am not defending 'trickledown'. I have never supported that Friedmanite theory, but far too much thinking on most subjects is so simplistic. You need to think around a subject.

You do not have to be a Friedmanite to be aware that the 100 richest people in this country between them employ thousands of people and driving them out of the country would have the effect of putting out of work at least as many people as worked in one of those huge car plants we used to have.

It is wise to remember that it is unforeseen consequences that scupper so many policies. In some cases the consequences are truly unforeseeable - the car crash that is the second Trump administration, the Ukraine war, US-Iran war, but other 'unforeseen ' consequences arise from poor and incompetent planning, which describes most Starmer administration failures, starting with the withdrawal and backtracking on the Winter Fuel Payment.

Where has anyone said anything about driving anyone out of the country, MOnica?

If 'trickle down' works, then why is there so much money locked away in offshore accounts?

MaizieD

Where has anyone said anything about driving anyone out of the country, MOnica?

To me, the assumption that higher taxation would drive people out of the country is simplistic thinking. Not everyone is driven purely by money, and living in the UK has a lot of other advantages.

Nevertheless, a lot of wealthy people do leave the country.

Plevey08

That is so right Monica. I'm not at all rich but the fact is taxing the rich does not have the desired outcome which some might expect ie the poorer will be better off. The rich incomes trickle down to communities. You tax them big and they will leave which would not benefit this country.

The ‘trickle down’ effect was a favourite of Tony Blair*, who was happy to encourage the rich/very rich, to live in the U.K. As far as I can see, the main effect they had was to whack up house prices, which has certainly not benefitted the less well off.
*and evidently he has not been averse to accruing very-rich status himself….