Wealth tax and the rich

[ayshfm1]

I think a lot left, the UK is not a low tax country, however in the specific case of non dom's it was. When the rules changed (and further changes are promised), it became a lot less advantageous.

https://www.youtube.com/watch?v=3D_DPAXn2iY&t=113s

I'm sure we did lose some money when this happened (mostly indirectly as they spent money), but probably not much as they were here specifically here to avoid taxes so by definition weren't paying any, beyond consumption based ones.

[Lootman]

I think a lot left, the UK is not a low tax country, however in the specific case of non dom's it was. When the rules changed (and further changes are promised), it became a lot less advantageous.

https://www.youtube.com/watch?v=3D_DPAXn2iY&t=113s

I'm sure we did lose some money when this happened (mostly indirectly as they spent money), but probably not much as they were here specifically here to avoid taxes so by definition weren't paying any, beyond consumption based ones.

Non-doms would often pay a lot of indirect taxes. For instance buying an expensive London home would result in up to 17% in stamp duty, and a council tax bill of thousands a year.

They probably employ housekeeping staff, a driver, a gardener, nannies and tutors for their kids, maybe some security and so on, all leading to income tax, NICs and second-order spend.

I think it is short-sighted to drive away billionaires who love Britain whilst letting in droves of penniless migrants who do not. But it would appear that debate has been lost.

There will be a tipping point as more wealthies leave and the burden on the remaining ones grows. At some point the trend becomes a stampede and the key may then be to get out before an ever more desperate UK government reintroduces exchange controls in a futile attempt to stop the exodus.

1978 anyone?

[ayshfm1]

The left doesn't like to admit to itself that the truly wealthy only pay tax if they want to and only small virtue signalling proportion are so inclined.

The choice is really indirect tax or no tax at all on these people. Which is why it often transpires that changes made to tax the nomadic wealthy end up being a net loss.

As an aside Labour does tend to have a flexible definition of what rich actually is, when shadow chancellor, John McDonnell defined rich as anyone who earned a little more than he did, which made me chuckle and is probably a good rule of thumb going forward.

[gryffron]

As an aside Labour does tend to have a flexible definition of what rich actually is, when shadow chancellor, John McDonnell defined rich as anyone who earned a little more than he did, which made me chuckle and is probably a good rule of thumb going forward.

I actually think that's a decent definition. If the threshold for high rate tax was locked at an MPs salary, they would have a personal interest in the value.

[1nvest]

As an aside Labour does tend to have a flexible definition of what rich actually is, when shadow chancellor, John McDonnell defined rich as anyone who earned a little more than he did, which made me chuckle and is probably a good rule of thumb going forward.

I actually think that's a decent definition. If the threshold for high rate tax was locked at an MPs salary, they would have a personal interest in the value.

When voting is opened up to one and all, the majority poor will define who is rich and where from the public purse is loaded/spent. Anyone that owns/buying a house for one. Or that owns a iPhone for another.

[1nvest]

I think a lot left, the UK is not a low tax country, however in the specific case of non dom's it was. When the rules changed (and further changes are promised), it became a lot less advantageous.

https://www.youtube.com/watch?v=3D_DPAXn2iY&t=113s

I'm sure we did lose some money when this happened (mostly indirectly as they spent money), but probably not much as they were here specifically here to avoid taxes so by definition weren't paying any, beyond consumption based ones.

Non-doms would often pay a lot of indirect taxes. For instance buying an expensive London home would result in up to 17% in stamp duty, and a council tax bill of thousands a year.

They probably employ housekeeping staff, a driver, a gardener, nannies and tutors for their kids, maybe some security and so on, all leading to income tax, NICs and second-order spend.

I think it is short-sighted to drive away billionaires who love Britain whilst letting in droves of penniless migrants who do not. But it would appear that debate has been lost.

There will be a tipping point as more wealthies leave and the burden on the remaining ones grows. At some point the trend becomes a stampede and the key may then be to get out before an ever more desperate UK government reintroduces exchange controls in a futile attempt to stop the exodus.

1978 anyone?

Would you rather live in a country where 1% pay a third of the total tax take (UK as is), or in another country where your existing 1% are increased three-fold due to the migration of the 1% from two other countries as a result of tax changes? Or in a country where the 1% have opted to migrate (UK under Labour)?

In a country with many billionaires paying relatively little in percentage terms of their wealth, that can amount to multiples more than what the rest pay in total. Good for all. Lose those billionaires and the rest have to pay much higher taxes to fill that hole. Labour is always a repellent, the rich opt to move/live elsewhere. LT/KK looked to attract such billionaires, but Remainers didn't like that and had them replaced with a closet Remainer/socialist (Sunak).

[Gilgongo]

Labour is always a repellent, the rich opt to move/live elsewhere.

Do you have evidence for that assertion? For I can find little:

https://arunadvani.com/papers/AdvaniBur ... erRich.pdf

We find that emigration responses were modest: our central estimate is that the emigration rate increases by 0.26 percentage points
for a 1% decline in the net-of-tax rate, and we can rule out increases larger than 0.4 percentage points. Dispelling fears that the targeted taxpayers were able to circumvent the tax hike, we find large average increases in income reported and tax paid in the UK of more than 150%.

https://www.theguardian.com/money/2024/ ... ons-survey

Researchers at the LSE interviewed 35 members of the UK’s richest 1% – by wealth or income – and found that none said they would leave the UK for tax reasons.

(Props for calling Sunak a socialist BTW)

[1nvest]

Labour is always a repellent, the rich opt to move/live elsewhere.

Do you have evidence for that assertion? For I can find little:

https://arunadvani.com/papers/AdvaniBur ... erRich.pdf

We find that emigration responses were modest: our central estimate is that the emigration rate increases by 0.26 percentage points
for a 1% decline in the net-of-tax rate, and we can rule out increases larger than 0.4 percentage points. Dispelling fears that the targeted taxpayers were able to circumvent the tax hike, we find large average increases in income reported and tax paid in the UK of more than 150%.

https://www.theguardian.com/money/2024/ ... ons-survey

Researchers at the LSE interviewed 35 members of the UK’s richest 1% – by wealth or income – and found that none said they would leave the UK for tax reasons.

(Props for calling Sunak a socialist BTW)

David Bowie, Rolling Stones ... etc.

Labour has a history of having set tax rates to 130% (1968), speaks for itself (and well known names) as to how that can be a repellent. Fundamental basic concept, those with wealth move that (and themselves) around in reflection of geopolitical risk-reduction, the risk of a Labour government will automatically induce such movements. That 35 out of a 650,000 number set were interviewed and identified as being in a particular set (wouldn't leave the UK) is perhaps more a indication of a contrived result poll.

[Lootman]

David Bowie, Rolling Stones ... etc.

Labour has a history of having set tax rates to 130% (1968), speaks for itself (and well known names) as to how that can be a repellent. Fundamental basic concept, those with wealth move that (and themselves) around in reflection of geopolitical risk-reduction, the risk of a Labour government will automatically induce such movements. That 35 out of a 650,000 number set were interviewed and identified as being in a particular set (wouldn't leave the UK) is perhaps more a indication of a contrived result poll.

I don't think the question can be answered without knowing which taxes are going up and by how much.

Non-doms are an obvious group to leave as the marginal effect of suddenly having to pay UK income tax on all your income is very high. And such people typically have homes elsewhere and can adjust their lifestyles to spend less time in the UK.

A wealth tax would drive a lot of rich people out, as it did when France tried it. A 1% wealth tax on a billionaire would be an extra ten million a year in tax. Even with a more modest household such as mine that could mean over a grand a week more in tax. Those are amounts that could motivate a relocation.

But if the tax increases are spread around so that it is more like tinkering with CGT or VAT rates, then the effect might be a lot less disruptive. And in fact IHT is already very punitive and yet a lot of people seem sanguine about it even though relocation could facilitate avoiding it.

[1nvest]

David Bowie, Rolling Stones ... etc.

Labour has a history of having set tax rates to 130% (1968), speaks for itself (and well known names) as to how that can be a repellent. Fundamental basic concept, those with wealth move that (and themselves) around in reflection of geopolitical risk-reduction, the risk of a Labour government will automatically induce such movements. That 35 out of a 650,000 number set were interviewed and identified as being in a particular set (wouldn't leave the UK) is perhaps more a indication of a contrived result poll.

I don't think the question can be answered without knowing which taxes are going up and by how much.

Non-doms are an obvious group to leave as the marginal effect of suddenly having to pay UK income tax on all your income is very high. And such people typically have homes elsewhere and can adjust their lifestyles to spend less time in the UK.

A wealth tax would drive a lot of rich people out, as it did when France tried it. A 1% wealth tax on a billionaire would be an extra ten million a year in tax. Even with a more modest household such as mine that could mean over a grand a week more in tax. Those are amounts that could motivate a relocation.

But if the tax increases are spread around so that it is more like tinkering with CGT or VAT rates, then the effect might be a lot less disruptive. And in fact IHT is already very punitive and yet a lot of people seem sanguine about it even though relocation could facilitate avoiding it.

HIT THE RICH .... yeah! (Who are the rich? .... Anyone rich enough to own a iPhone).

[1nvest]

David Bowie, Rolling Stones ... etc.

Labour has a history of having set tax rates to 130% (1968), speaks for itself (and well known names) as to how that can be a repellent. Fundamental basic concept, those with wealth move that (and themselves) around in reflection of geopolitical risk-reduction, the risk of a Labour government will automatically induce such movements. That 35 out of a 650,000 number set were interviewed and identified as being in a particular set (wouldn't leave the UK) is perhaps more a indication of a contrived result poll.

I don't think the question can be answered without knowing which taxes are going up and by how much.

Non-doms are an obvious group to leave as the marginal effect of suddenly having to pay UK income tax on all your income is very high. And such people typically have homes elsewhere and can adjust their lifestyles to spend less time in the UK.

A wealth tax would drive a lot of rich people out, as it did when France tried it. A 1% wealth tax on a billionaire would be an extra ten million a year in tax. Even with a more modest household such as mine that could mean over a grand a week more in tax. Those are amounts that could motivate a relocation.

But if the tax increases are spread around so that it is more like tinkering with CGT or VAT rates, then the effect might be a lot less disruptive. And in fact IHT is already very punitive and yet a lot of people seem sanguine about it even though relocation could facilitate avoiding it.

Labour knows exactly where it will target first, has had years to plan. First close down potential loopholes, and then release the punches. And likely quickly too. Vote for us first, then we'll tell once elected - isn't representative. But that's just a simple consequence of there being no real contest, a government formed despite 4 out of 5 of the population NOT having voted for it.

[csearle]

Moderator Message:
Guys, this discussion is about Wealth tax and the rich. Clearly it is very tempting for it to be moved into the political realm as it is highly dependent upon the politics of the ruling party, especially with the upcoming election. However The Economy board is not for arguing politics, but rather for concentrating more on the subject matter itself. If you cannot refrain from attempting to score political points within this discussion then please continue your contributions over on Current Affairs and News where you can thrash it out (politely) without intervention. Thanks - Chris

[Adamski]

Reading between the lines, looks like we won't be getting a wealth tax per se. But the other taxes on wealth - capital gains, inheritance tax, stamp duty - will be going up.

The reaction from farmers will be interesting, because one idea being mooted in scrapping agricultural relief on farm land, which would devastate agriculture. Another idea is compulsory purchase orders of farm land by local councils to be build social housing. To encourage house building and bail out labour run bankrupt councils.

These "reforms" if they were enacted would cause a meltdown by farmers and maybe protests. However can see it happening with Labour political class now being a largely metropolitan and not connected to the countryside.

[AndrewInDevon]

These "reforms" if they were enacted would cause a meltdown by farmers and maybe protests. However can see it happening with Labour political class now being a largely metropolitan and not connected to the countryside.

Farmers voted for Brexit, despite EU friendly agricultural polices and free labour movement. So they shafted themselves and caused their own meltdown.

[1nvest]

Reading between the lines, looks like we won't be getting a wealth tax per se. But the other taxes on wealth - capital gains, inheritance tax, stamp duty - will be going up.

Reasonable tax is fair, unreasonable tax is confiscation (theft)

There is already a wealth tax ... via print and spend. Benefits the 'counterfeiter' at the expense of all other Pounds in circulation being devalued. Currency debasement is otherwise known as 'inflation'.

Why even borrow money (sell Gilts) when you have a money printing press?

Post 2008/9 financial crisis and the Bank of England printed enough to buy up all of the then £500Bn of Gilts - that were paying something like 5% interest, returning all the interest the Treasury paid on those Gilts ... back to the Treasury. The Treasury then sold (created) another £1Tn of Gilts, with the maturity dates spread out over a longer time period and sold at a lower interest rate (around 2.5%).

Taxes wouldn't (and shouldn't) have to be increased if the wasteful public sector was addressed. Labour will just bloat that inefficiency even further. Over more recent years the NHS budget has gone from 100Bn to 180Bn/year .... in return for even worse service. They'll just continue to pay six digit salaries to council desk clerks and maintain their golden pensions etc. at the expense to others. But that is what the majority seemingly prefer, perhaps because there are more relatively poor and more in the public sector who'll benefit from Labour policies. In any situation where a majority poorer get to define where the purse should be loaded from and spent ... that's a guaranteed leveling-down. Nice for those in the short term, a overall mid to longer term disaster. As ever by the time the mid term has arrived Labour will be thrown out to leave it to others to pick up the mess.

[Spet0789]

Non-doms would often pay a lot of indirect taxes. For instance buying an expensive London home would result in up to 17% in stamp duty, and a council tax bill of thousands a year.

They probably employ housekeeping staff, a driver, a gardener, nannies and tutors for their kids, maybe some security and so on, all leading to income tax, NICs and second-order spend.

I think it is short-sighted to drive away billionaires who love Britain whilst letting in droves of penniless migrants who do not. But it would appear that debate has been lost.

There will be a tipping point as more wealthies leave and the burden on the remaining ones grows. At some point the trend becomes a stampede and the key may then be to get out before an ever more desperate UK government reintroduces exchange controls in a futile attempt to stop the exodus.

1978 anyone?

Would you rather live in a country where 1% pay a third of the total tax take (UK as is), or in another country where your existing 1% are increased three-fold due to the migration of the 1% from two other countries as a result of tax changes? Or in a country where the 1% have opted to migrate (UK under Labour)?

In a country with many billionaires paying relatively little in percentage terms of their wealth, that can amount to multiples more than what the rest pay in total. Good for all. Lose those billionaires and the rest have to pay much higher taxes to fill that hole. Labour is always a repellent, the rich opt to move/live elsewhere. LT/KK looked to attract such billionaires, but Remainers didn't like that and had them replaced with a closet Remainer/socialist (Sunak).

The last sentence is a really odd rant. Truss was a Remainer. Sunak was always a Brexiteer.

[Steveam]

Reading between the lines, looks like we won't be getting a wealth tax per se. But the other taxes on wealth - capital gains, inheritance tax, stamp duty - will be going up.

Reasonable tax is fair, unreasonable tax is confiscation (theft)

There is already a wealth tax ... via print and spend. Benefits the 'counterfeiter' at the expense of all other Pounds in circulation being devalued. Currency debasement is otherwise known as 'inflation'.

Why even borrow money (sell Gilts) when you have a money printing press?

Post 2008/9 financial crisis and the Bank of England printed enough to buy up all of the then £500Bn of Gilts - that were paying something like 5% interest, returning all the interest the Treasury paid on those Gilts ... back to the Treasury. The Treasury then sold (created) another £1Tn of Gilts, with the maturity dates spread out over a longer time period and sold at a lower interest rate (around 2.5%).

Taxes wouldn't (and shouldn't) have to be increased if the wasteful public sector was addressed. Labour will just bloat that inefficiency even further. Over more recent years the NHS budget has gone from 100Bn to 180Bn/year .... in return for even worse service. They'll just continue to pay six digit salaries to council desk clerks and maintain their golden pensions etc. at the expense to others. But that is what the majority seemingly prefer, perhaps because there are more relatively poor and more in the public sector who'll benefit from Labour policies. In any situation where a majority poorer get to define where the purse should be loaded from and spent ... that's a guaranteed leveling-down. Nice for those in the short term, a overall mid to longer term disaster. As ever by the time the mid term has arrived Labour will be thrown out to leave it to others to pick up the mess.

In my opinion this is a political rant rather than part of a sensible discussion about “Wealth tax and the rich” - I raised it as a report but it has been left here so I feel free to respond (hopefully, not in kind).
You said: “Reasonable tax is fair, unreasonable tax is confiscation (theft)” a) what is reasonable? People often quote Laffer with no knowledge or understanding of his own comments of its misuse - it is not a guide to tax levels, unreasonable tax is what? Tax at a level you don’t like? Tax which is demotivating to those taxed?
I might rephrase your dictum as: Reasonable wealth is fair, unreasonable wealth is excessive (obscene)
What does a billion £ mean? It’s not just a large number, it’s 1,000 million £. For me this is gold plated taps nonsense - obscene, and the desire for same is a misplaced (and pathological) desire.

If, as I think you’re saying, you are concerned about the debasement of the currency I’d probably agree with your concern. I don’t understand extraordinary monetary measures such as you describe but the U.K. doesn’t seem to be alone in these extraordinary measures. The rich (and I’m pretty well off) have many ways of protecting real wealth. There is no way that poor people can protect themselves from inflation.

You talk about Labour in derogatory terms; I’ll take my chances with Labour rather than the corrupt acquisition of wealth from the public purse. I’m sure I don’t need to mention Covid fast tracks, carried interest, the many IHT wriggles which help the rich.

Best wishes, Steve

[the0ni0nking]

I'd be interested to see stats for other European countries as to the "who pays what" percentages - is the UK unique or is it actually broadly in line with what we see elsewhere?

[Nimrod103]

There is no way that poor people can protect themselves from inflation.

This surely is not correct.
The minimum wage has been increased more than inflation by the Tory government.
Poor pensioners deriving most of their income from the state pension have been totally protected against inflation.

The people who have lost out to inflation have been those on "fixed" or "almost fixed" incomes, such as those who receive private pensions, capped at zero, 2.5% or if they are very lucky a maximum of 5%. This includes a lot of "Boomer" retirees who are the target of considerable envy by younger generations.

[UkFIREcheese]

only thing they need to get rid of is inheritance tax