Should we be more open to a wealth tax?

MaizieD

That is why, NathanaelWest, it is better to use taxation to prevent such a large accumulation of wealth than to attempt to tax it once it has accumulated.

Agreed. But that would require an agreement with all nations around the world. There could always be one tiny little island that decides to turn their place into a tax haven in order to make money.

That is why, NathanaelWest, it is better to use taxation to prevent such a large accumulation of wealth than to attempt to tax it once it has accumulated.

Sorry to be negative, but I think this is impossible. Rich people have entire buildings filled with accountants whose responsibility is to ensure that the rich person's money is not seen or touched by anyone snooping around and trying to find out.

Opening an offshore bank account or company is very easy to do and there are agents in these places that can help you do this inside 24 hours.

And the rich have stayed rich for hundreds of years. Nothing can really touch them.

I know this may not be a popular opinion, but I think once we are aware that this is a hard and fast truth we can then think about creating other ways to try to improve the world.

Maizie you know perfectly well that those who lend us money use GDP and borrowings at indicators of a nations creditworthiness. Whether we like it or not money created is counted as borrowings that is not going to change so there is no point mentioning it.

The UK is creditworthy but the currency has lost a great deal of value over the years, lenders don't want to be repaid in currency of a lower value, they loose money if that happens. Despite the uncertainty of a change of leader exchange rate has been remarkably stable, Burnham has been very careful not to give any reason for investors loose confidence in his future policy.

Banks and investors dont care about the comfort of the population, they just want their investment back plus interest, Truss made the fatal mistake of announcing plans that did not add up. Burnham will suffer the same fate if he does not "Balance the Books"

Yes, and the private doctors and nurses are trained by the NHS, too.

When I read comments like “ I have saved for my health care, and see no reason to contribute towards society providing care for the most vulnerable and poor” I realise what an uphill battle we face. The exact same arguments were used when the NHS was proposed.

And when they go for their private treatment and it goes wrong it is the NHS which will pick up the pieces. Private hospitals don't have emergency facilities...

David. As GDP is not a particularly accurate figure, some of it being completely made up, e.g A rental figure is calculated on houses in private ownership when no rental ever takes place, the figure of 100% of GDP is a bit meaningless.

'Borrowing' is not the right term to apply to government bond sales. It's the safest investment that any individual or institution can make, because the government will always pay the interest on its bonds and the principle if the bond owner wants their investment back. But most bondholders don't want the principle back Just ask the folks on the Premium Bond threads if they want the government to repay them the money they've invested in them!

The UK government has never, in 300 years, reneged on payment of interest or principle. There's no reason why it should, it can always create the money to pay it.

The 'yield' is an artefact of the secondary bond market, which is just a vehicle for speculation, the same as stocks and shares. The interest payable on a bond is different; the government pays only whatever interest it put on the bond when it sold it.

Any attempt to cut the 'debt' is pointless.

Of course, the government, instead of issuing bonds 'could' just run up a theoretical overdraft at the BoE, but convention and practice (and when we were in it, the EU) doesn't allow it.

Farzanah

True MaizieD. The “household budget” analogy was employed with effect by Thatcher and has continued ever since.
Although false it means that the government can justify spending cuts, and manage public expectations.

The household budget is spending what you have, banks dont lend you money to feed the family, ( loan sharks might)

A government works like a business it can borrow or create money to meet whatever spending is needed if taxation does not produce enough revenue, it then has to repay borrowing with interest. It can NOT borrow/create unlimited money because lenders fear inflation and currency value losses, so increase interest rate.

At 100% of GDP we are already at that point, Burnham has already stated he aims to reduce the borrowing. If he can do that he reduces interest payments by £10 billion for each 10% reduction, a worthwhile aim. If he achieves a 10% reduction in lending while improving services it will be a major victory he can build on.

You notice lots of "Ifs" other PMs have ignored economic reality and spent too much and borrowing increased

AB has talked this week of rejecting Thatcher’s “no such thing as society” and individualism, which has brought us to the poor level of care, health care, education we are seeing now.

When I read comments like “ I have saved for my health care, and see no reason to contribute towards society providing care for the most vulnerable and poor” I realise what an uphill battle we face. The exact same arguments were used when the NHS was proposed.

True MaizieD. The “household budget” analogy was employed with effect by Thatcher and has continued ever since.
Although false it means that the government can justify spending cuts, and manage public expectations.

But the cost of my NHS care and treatment still has to be met. Currently the government does not have sufficient funds to fully meet the health and social care needs of the elder population.

That is completely untrue, whatever the government, the Treasury, some economists, journalists etc. etc. tell us.

The truth is that it is the state, via the government that issues our money. Some banks are allowed to do it, under licence, and control measures, from the government. Banks create money when they make loans, but the loans have to be repaid with interest, so, while the created money promotes economic activity, it isn't costless. The government, on the other hand, creates money when it spends into the economy and only ever takes back a proportion of it via taxation. The surplus which isn't taken back is the money we have to spend and save.

There have three notable episodes of government money creation in the last 20 years, a total of some £900billion was created to save the economy ,(and the banks), after the Global Financial Crisis (GFC), after the result of the EU referendum and during Covid through Quantitave Easing.

It's arguable that this money was not always well spent by the government, look at the £billions squandered on useless PPE, but on the other hand, if it hadn't been done after the GFC lots of people would have ended up with no money in their bank accounts, and during covid, lots of people wouldn't have had their wages paid and many businesses would have gone bust. This is not, as people will try to tell you, a 'debt' which has to be paid off by our children and grandchildren, nor was it, as people will also try to tell you, inflationary.

Treating the nation like a household or a business, with a finite amount of money, is completely wrong. Neither of those can create their own money.

Not funding public services is partly a political choice and partly a consequence of the Treasury perpetrating the 'household budget' delusion. Why it adheres to this view of the national finances, which is 40+ years or more out of date is anybody's guess, but it is a terrible drag on a government which actually creates money every time it spends.

Don't many most people already pay around £200 a month council tax (£2,400divided by 12 annual Land Value Tax ) f their house is valued at £500k? If their house is valued at £250k the annual LVT would be £100 a month, as proposed.

What it means if someone has a home valued at £2million they would be pay £800 a month LVT- ie more than current Council tax payment as they evidently are wealthy- seems fair to me.

Sounds fine to me too. We'd be paying more on an annual basis but we wouldn't mind that. I think it would also encourage more people to downsize although I think it would probably have to be phased in.

That all sounds fine to me. I hope he goes ahead with it.

AB is yet to start as PM, so speculative to a degree, and no formal plan has been officially published. However here is the A1 Overview, of early policy signals reflecting his core campaign platform.

Andy Burnham (AB) has proposed a major overhaul of the UK's wealth and property taxes, highlighted by plans to abolish inheritance tax (IHT), replace stamp duty with a land value tax, and implement a universal social care levy

⚖️ Inheritance Tax (IHT) & The Social Care Levy
Burnham has long advocated for a complete restructuring of how the state funds elderly care, aiming to create a system that is free at the point of use.
Abolishing IHT Burnham has proposed scrapping the current Inheritance Tax system, which charges 40% on estates above specific thresholds. He has noted that there is "great resentment" toward the tax in its current form.
The New Care Levy In its place, he plans to introduce a 10% flat-rate universal "social care levy" on all estates upon death.
How it Works Unlike traditional IHT, a universal levy means everyone would contribute from their assets, savings, and homes, though the wealthiest would still pay the most in absolute terms.
Agricultural Reliefs Burnham's team has also indicated he will "look again" at previous, highly unpopular government changes that squeezed inheritance tax reliefs for farmers.

🏡 Stamp Duty & Property Tax Reform
Burnham argues that the UK's current property taxation regime is outdated and acts as a barrier to social and economic mobility.
Scrapping Stamp Duty He plans to phase out Stamp Duty Land Tax (SDLT) alongside Council Tax.
Land Value Tax To replace these transaction and local taxes, Burnham backs a "proportional property tax" based on land valuations.
The Fairer Share Model He has heavily endorsed a model proposed by the campaign group Fairer Share, which would replace stamp duty and council tax with a continuous flat annual levy equivalent to 0.48% of a property's value. Under this plan, a home worth £500,000 would face a standard tax of £2,400 per year.
Targeting Wealth To prevent tax evasion and target wealth, the proposed levy would double to 0.96%for second homes, empty properties, and foreign buyers.

David49

A Care Supplement on IHT set at say 10% on all estates would raise a massive amount, on a modest estate £250k a modest £25k. On £1m a hefty £100k it's free money applied before IHT at the present rate, the existing rates are far to generous to the wealthy home owners, everyone should pay something.

This is what AB is suggesting, and I think it's a good idea.

As things stand, someone with (for round figures) a house worth £100k could easily spend 100% of it in a year or two in care, but someone with a £1M house would get the same care for 0.01% of their money. A simple cap on care is very unfair for that reason, but a percentage is fair to everyone, and might mollify those unwilling to have their heirs pay 40% of anything over a million pounds when they die.

I'm not sure I understand the second sentence - are you suggesting a 10% charge as well as IHT, and that 40% is too low a rate? My understanding is that Burnham's plan is to replace IHT and Stamp Duty with the 10% levy, not to have it as an additional tax.

A couple who have £1 million of property equity at death is wealthy enough surely. A couple currently has about £1 million IHT exemption* before* any IHT is payable. A single person about £500k if they pass inheritance so a descendant.

That is more than enough to hand on as an inheritance tax free gift in my opinion.

Not sure what is the definition of "the man/women on the street"?

MaizieD

^The cost of an aging population is high.^

But it's not as if the money is disappearing into a black hole, It pays for wages and goods and services and so circulates in the economy, attracting tax as it goes around.

If a nation believes that part of the duty of government is to care for all its citizens and we believe that to be only right, it/we must accept the cost of funding the care.

It must also recognise that many of its older citizens provide support to their families and their neighbourhoods in ways which, though they cannot be given any monetary value, can support the 'emotional health' and cohesion of their communities, in itself a valuable contribution.

It's true I am still contributing- still paying taxes on my earnings- still doing some work for the NHS, still supporting and advising teenagers and vulnerable adults in police custody, still a volunteer in my local community, still circulating money by way of my spending.

But the cost of my NHS care and treatment still has to be met. Currently the government does not have sufficient funds to fully meet the health and social care needs of the elder population. I am more than willing to fund the cost of my care whichever way the government of the day sees fit.

David49

The concept that everyone pays something on death according to their circumstances will do more to level wealth than anything else. If you are wealthy you have enjoyed whatthat brings, it's time to pay back to the health and care you have received. Maybe you have been luck and no long term care was needed, thats a lottery, Im sure the opposition will call it a Death Tax, regardless it's well overdue.

The wealthy (yet to have a definitive explanation of who these people actually are) use private health care, private schools are not likely to rock up at your local council care home.

Until I see an explanation of who will have to pay this so called wealth tax

Until I see an explanation of how much does one have to have to be classed as wealthy

Until I see a government who actually has a credible plan.

Until I see a government that goes after the big multinationals as opposed to the SME’s who are easy pickings

I remain against extra taxes for the man/women on the street

The concept that everyone pays something on death according to their circumstances will do more to level wealth than anything else. If you are wealthy you have enjoyed whatthat brings, it's time to pay back to the health and care you have received. Maybe you have been luck and no long term care was needed, thats a lottery, Im sure the opposition will call it a Death Tax, regardless it's well overdue.

I don't know though. I've always thought I should pay my taxes however, with our awful Scottish govt it's appalling to see them frittering away our money in doomed and pointless court cases and vanity projects. The sheer incompetence is staggering. However, that's not the point of this thread.
I agree with GrannyGravy13. Re care costs: how about a special insurance company? Annual subs based on actuarial estimate?

The cost of an aging population is high.

But it's not as if the money is disappearing into a black hole, It pays for wages and goods and services and so circulates in the economy, attracting tax as it goes around.

If a nation believes that part of the duty of government is to care for all its citizens and we believe that to be only right, it/we must accept the cost of funding the care.

It must also recognise that many of its older citizens provide support to their families and their neighbourhoods in ways which, though they cannot be given any monetary value, can support the 'emotional health' and cohesion of their communities, in itself a valuable contribution.

I think I'd far rather pay the care supplement on top of IHT at along the lines David49 suggests than pay £2k a week care home fees for an unknown period that could go on for several years.

Not everyone will go into a care home, thats true- but we don't know whether we will or will not. Even if we don't we need other care as we age to enable us to live independently as best we can in our laters years.

I'm in my 60s and my monthly osteoporosis medication costs the NHS £422 a month. I've had a dexa scan, 2 ultra sound scans, various X-rays and 2 CT scans in past months- each CT scan costing around £2k. Surgery to come- private costs of surgery around £4-5 k, if I can't tolerate NHS waiting times after investigations completed. I feel giddy and guilty thinking how much I'm costing the NHS- but remind myself up until the past year, apart from obstetrical care, I was fairly cheap!

The cost of an aging population is high.

Go after the £billionaires and £multi millionaires

Leave those who have worked (and are still working) and saved for their retirement and personal care, as successive governments have encouraged alone.

They have paid taxes throughout their lives, often at the higher levels, continue to pay taxes on pensions and any interest earned.

Taxing them more on death as suggested (care supplement) when they have provided for their own care is beyond the pale as far as I am concerned. Especially if it is in addition to IHT

It right that tax should be paid on unearned income.

There is already an IHT threshold allowing a significant amount of a couple's property inheritance ( circa £1million ) to be handed over tax free to their children. The IHT threshold should definitely not rise to £3-5 million as previously suggested.

I would also support a care supplement tax payable on death to the state along lines suggested by David49 to fund a National Care Service that provides regulated, safe care in older years when someone can no longer live independently.