IHT reveals unfairness of the severity of wealth inequality?
Discussion
In this video Richard Murphy rails against an FT article that talks about how inhabitants of 5 London boroughs pay more inheritance tax than the whole of Scotland and Wales.
His take is that this reveals the depth of wealth inequality as much as it signals an unfairness in the tax system.
I have a lot of sympathy with this idea. Although we’re not the USA with their massive estate tax exemptions of $15 million which leads to dynastic concentration of wealth and a divided society, we’re far from equal either.
However at a deeper level why should there be regional equality?
In previous times the industrial North was hugely wealthy, coal mining, textiles, steel production etc underpinned this.
Now these sectors have withered and industries more naturally concentrated in the South have flourished.
To try to distort markets to level down seems misguided
It would be like trying to equalise the per capita of Greece and Germany (which also reveals one of the main problems of the Eurozone even though I still favour membership for the U.K.)
So the paradox is how to reduce undesirable and unfair wealth inequality without killing the Golden Goose which is market forces?
With the number of people struggling just to make ends met despite working full time (sometimes more than one job) it’s clear something has to be done but what?
The ‘trickle down’ mantra is thoroughly discredited but the alternatives all seem TOO artificial to be fiscally wise.
https://youtube.com/watch?v=prkd9jasPYs&si=VSp...
His take is that this reveals the depth of wealth inequality as much as it signals an unfairness in the tax system.
I have a lot of sympathy with this idea. Although we’re not the USA with their massive estate tax exemptions of $15 million which leads to dynastic concentration of wealth and a divided society, we’re far from equal either.
However at a deeper level why should there be regional equality?
In previous times the industrial North was hugely wealthy, coal mining, textiles, steel production etc underpinned this.
Now these sectors have withered and industries more naturally concentrated in the South have flourished.
To try to distort markets to level down seems misguided
It would be like trying to equalise the per capita of Greece and Germany (which also reveals one of the main problems of the Eurozone even though I still favour membership for the U.K.)
So the paradox is how to reduce undesirable and unfair wealth inequality without killing the Golden Goose which is market forces?
With the number of people struggling just to make ends met despite working full time (sometimes more than one job) it’s clear something has to be done but what?
The ‘trickle down’ mantra is thoroughly discredited but the alternatives all seem TOO artificial to be fiscally wise.
https://youtube.com/watch?v=prkd9jasPYs&si=VSp...
Countdown said:
What is "unfair wealth inequality"?
You will ALWAYS have inequality - we don't all have the same looks, brains, work ethic etc. so we don't all get the same rewards. As long as there isn't any criminal reason for this I don't see why the State should need to get involved.
I agree with the concept here, but it is a bit more nuanced than that. You will ALWAYS have inequality - we don't all have the same looks, brains, work ethic etc. so we don't all get the same rewards. As long as there isn't any criminal reason for this I don't see why the State should need to get involved.
The unfortunate fact is that those formerly-thriving mining/manufacturing areas left to wither and die end up as social wastelands. They create new generations under the same conditions, completely unaligned on almost every level to affluent cities - and now you have a societal divide on top of a wealth one.
And then, and then, etc…
Ultimately you step in and prop bits up, or you end up with a much more American model. Pockets of affluence, and cities submerged in a level of poverty unseen elsewhere in the developed world.
It’s a hugely challenging topic. But the first step ought to be making the UK business-friendly again. Economic growth is the foundation.
Countdown said:
What is "unfair wealth inequality"?
You will ALWAYS have inequality - we don't all have the same looks, brains, work ethic etc. so we don't all get the same rewards. As long as there isn't any criminal reason for this I don't see why the State should need to get involved.
I think the point is the degree of inequality. Beyond a certain point it becomes counterproductive, rather than incentivising hard work it creates desperation and hopelessness as well as being socially divisive.You will ALWAYS have inequality - we don't all have the same looks, brains, work ethic etc. so we don't all get the same rewards. As long as there isn't any criminal reason for this I don't see why the State should need to get involved.
It feels like we are close to this point in some areas in the UK at present.
king idiot. Penalising people for working hard and being successful is a road to nowhere. How many people reading this thread have adjusted their work/earning behaviour because they are running up against the next tax/benefits cliff edge? How many people reading this know someone who can’t be bothered to work for what they can take home and have declared themselves mentally ill so they can get enough free money from the government to live on?
I can’t solve all the country’s economic problems in a forum post. However, I can say without any doubt that we need less government handouts, less government borrowing and an economy that rewards investors/businesspeople who take risks but create jobs and wealth. If that means we have more billionaires then great because that economic activity generates taxes which can be fed back into the parts of the economy that really need it.
Unfortunately that doesn’t translate into a manifesto that will get anyone elected so instead the country will continue along the path to bankruptcy which will be 100 times worse for the most vulnerable people in our society.
I can’t solve all the country’s economic problems in a forum post. However, I can say without any doubt that we need less government handouts, less government borrowing and an economy that rewards investors/businesspeople who take risks but create jobs and wealth. If that means we have more billionaires then great because that economic activity generates taxes which can be fed back into the parts of the economy that really need it.
Unfortunately that doesn’t translate into a manifesto that will get anyone elected so instead the country will continue along the path to bankruptcy which will be 100 times worse for the most vulnerable people in our society.
SonicHedgeHog said:
Penalising people for working hard and being successful is a road to nowhere. How many people reading this thread have adjusted their work/earning behaviour because they are running up against the next tax/benefits cliff edge? How many people reading this know someone who can t be bothered to work for what they can take home and have declared themselves mentally ill so they can get enough free money from the government to live on?
I can t solve all the country s economic problems in a forum post. However, I can say without any doubt that we need less government handouts, less government borrowing and an economy that rewards investors/businesspeople who take risks but create jobs and wealth. If that means we have more billionaires then great because that economic activity generates taxes which can be fed back into the parts of the economy that really need it.
Unfortunately that doesn t translate into a manifesto that will get anyone elected so instead the country will continue along the path to bankruptcy which will be 100 times worse for the most vulnerable people in our society.
Yes, these are the kind of things that merit debate rather than the usual knee jerk rejection of any change in taxation.I can t solve all the country s economic problems in a forum post. However, I can say without any doubt that we need less government handouts, less government borrowing and an economy that rewards investors/businesspeople who take risks but create jobs and wealth. If that means we have more billionaires then great because that economic activity generates taxes which can be fed back into the parts of the economy that really need it.
Unfortunately that doesn t translate into a manifesto that will get anyone elected so instead the country will continue along the path to bankruptcy which will be 100 times worse for the most vulnerable people in our society.
I've actually reduced my private work as the tax means that the time is more valuable to me than the income, so I well understand the concept of disincentives (having said that I'm 100% sure that its the best thing I could do, much better to have more time than money you can't spend).
cracking down on idleness and abuse of the system, 100% I am for it. I don't know how much scrounging goes on, probably less than the Daily Mail claims and more than the Guardian, though that's a wide band.
But it can't be right for so many people to require universal credit on top of two salaries simply to afford a a basic lifestyle.
A 2% wealth tax on assets above £10million would be enough to reverse the recent NI rise (both coming to around £24billion per year), even accounting for behavioural changes.
Would anyone on here really oppose that?
If it was couched as a 2% tax cut for the ultra wealthy paid for by a rise in National Insurance I'm quite sure most people would be outraged by contrast.
The trouble is that it's always portrayed as more taxes on 'ordinary' reasonable well off but still hard working people (ie you and me) and that's a misdirection I feel.
Inlineonline said:
A 2% wealth tax on assets above £10million would be enough to reverse the recent NI rise (both coming to around £24billion per year), even accounting for behavioural changes.
Would anyone on here really oppose that?
If somebody said I had to sell 2% of my hard-won/risked assets every year for an incompetent government to squander, yes.Would anyone on here really oppose that?
Like a starving man starts metabolising protein when the fat is gone, I get the distinct impression this country is now starting to eat itself.
Simpo Two said:
Inlineonline said:
A 2% wealth tax on assets above £10million would be enough to reverse the recent NI rise (both coming to around £24billion per year), even accounting for behavioural changes.
Would anyone on here really oppose that?
If somebody said I had to sell 2% of my hard-won/risked assets every year for an incompetent government to squander, yes.Would anyone on here really oppose that?
Like a starving man starts metabolising protein when the fat is gone, I get the distinct impression this country is now eating itself.
Simpo Two said:
If somebody said I had to sell 2% of my hard-won/risked assets every year for an incompetent government to squander, yes.
I don't think anyone is daft enough to word it like that.Sadly some people are daft enough yo hear it like that.
Why would you have to sell anything? With £10M in assets you'd probably have a fairly hefty income.
Simpo Two said:
Inlineonline said:
A 2% wealth tax on assets above £10million would be enough to reverse the recent NI rise (both coming to around £24billion per year), even accounting for behavioural changes.
Would anyone on here really oppose that?
If somebody said I had to sell 2% of my hard-won/risked assets every year for an incompetent government to squander, yes.Would anyone on here really oppose that?
Like a starving man starts metabolising protein when the fat is gone, I get the distinct impression this country is now starting to eat itself.
Why don’t they establish economic zones so in deprived areas if you employ a certain number of individuals you have a lower corporation tax figure.
The issue with introduction of any new Wealth tax is thinking it will buck what history says about them not working in the way they were first thought of and not raising anywhere near the money that is stated.
Once there the attachment point can be dipped down.
What constitutes an asset too ?
If cars , houses , fine art and the like are all discounted and it just represents equities and cash then what happens when year 2 there is a slump in the market - do you get a refund ?
Obviously should the attachment point be very serious wealth - say £ 50m for the purposes of this conversation and with the caveats above it would still need to be introduced hand in glove with changes then to CGT and the like which is don’t forget already in place as a wealth tax.
Once there the attachment point can be dipped down.
What constitutes an asset too ?
If cars , houses , fine art and the like are all discounted and it just represents equities and cash then what happens when year 2 there is a slump in the market - do you get a refund ?
Obviously should the attachment point be very serious wealth - say £ 50m for the purposes of this conversation and with the caveats above it would still need to be introduced hand in glove with changes then to CGT and the like which is don’t forget already in place as a wealth tax.
CMTMB said:
These things often make sense on paper. In reality most people would just move their assets >£10m elsewhere and the country will be worse off overall.
People say this, but I've yet to see evidence that it actually happens to any significant extent. Yes, that Rod Stewart impersonator plumber went, but that's one weirdo. Never mind IHT, I'll bet cash money that ALL personal taxes raise massively bore money in the south east than in the rest of the country put together.
Stamp Duty - pretty much a South of England tax.
VAT - things are more expensive down south so more VAT is paid.
Income Tax - earnings are higher down south so more tax is paid.
National Insurance - earnings are higher down south so more tax is paid.
Council Tax - I don't know the figures but I'll be astounded if it's not higher in the south.
Capital Gains tax - properties are more expensive down south so much more CGT will be paid on BTLs and second homes.
Unfair? Yes, it's unfair that the south east carries such a heavy tax burden
Stamp Duty - pretty much a South of England tax.
VAT - things are more expensive down south so more VAT is paid.
Income Tax - earnings are higher down south so more tax is paid.
National Insurance - earnings are higher down south so more tax is paid.
Council Tax - I don't know the figures but I'll be astounded if it's not higher in the south.
Capital Gains tax - properties are more expensive down south so much more CGT will be paid on BTLs and second homes.
Unfair? Yes, it's unfair that the south east carries such a heavy tax burden
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