Truly great

But so too is it by another simple fact. Over 80% of UK personal wealth is made up of tax incentivised assets, either in the form of people’s homes or pension funds or ISAs. That is a staggering fact that makes clear it is the UK tax system that does help create the wealth inequality that we suffer in this country. In that case to tax the resulting imbalances in society makes complete sense.

So, 80% of UK wealth is in pretty mainstream savings schemes and pensions. Belonging to pretty mainstream people too.

This is thus evidence of vast inequality that must be taxed?

I am not saying we need start with a tax on wealth as such, although I see little reason why we should not on the wealth of the top 0.1%, with the sole justification being that they are exceptionally wealthy and that the imbalance this creates society requires redress for no other reason than that.

Well, there’s only the entirety of optimal taxation theory to tell us that we shouldn’t tax wealth. But then that would mean having to know about bits of economics that they awarded the Nobel for.

26 comments on “Truly great

  1. There are limits on the amount any individual can have in ISAs or a pension fund. A significant proportion of personal wealth comprises jewellery, farmland, vehicles (from tractors to Rolls), non-owner-occupied property (ranging from Mayfair, owned by Grosvenor, to the two-up-two-down buy-to-let), privately-owned companies (Dyson, JCB …), fine art, household goods.

    Where does he get 80% as tax-incentivised? Is he including the State Pension in the 80%?

  2. Announce a tax on the top 1% and they’ll leave. To make up the revenue a tax will have to be raised in the top 10%. Some will leave, some will be unable to. So to make up the desired revenue tax the top 30%. These are the most influential people in the country (any country). So either get voted into oblivion or abolish democracy. Which would mean much revenue diverted to maintaining power.
    Even in Venezuela with the income supplemented from a massive oil industry this hasn’t worked. I’n a more diversified economy it would fail before the apparatus of control could be built.

  3. But Richard…

    Wealth inequality could work for you. Think of it this way: The more money there is in the hands of the few, the more money they have to buy Coca Cola. The more Coca Cola they buy and consume, the greater the chance they’ll die of heart attacks, diabetes and other medical conditions linked to obesity. Once they die – or are at least incapacitated by illness – you can step in and take power.

    You should be demanding more wealth inequality, rather than less. And you should also be urging folks to drink as much Coke as they can… after you go long in the stock, of course.

  4. Murphy has excluded the State Pension from the denominator, but reduced it by the “negative net assets of those with student debts larger than their reported assets, deducted all debts from assets that he didn’t want to highlight and included all buy-to-let property in his figure for owner-occupied. 33% of property is rented.
    So he is either incompetent or a liar (or both)

  5. I recently stumbled onto this blog and remembered reading it in the late 00’s and obviously remembered this Ritchie character too. I think he was referenced and ridiculed a few times at the motley fool finance forums.

    He is a pillock, isn’t he?

    One reason ISAs have been promoted until now is that they bring a lot of Trust money back on-shore. Come Corbyn, oy gevalt!

  6. “…exempting the first £1,000 of savings income from all tax liability in the UK, which should then have ended the need for ISAs, which did not happen.”

    My ISA is stuffed full of shares and receives dividends. Any CGT will be tax free too.

    And there are known to be a few £1m+ shares ISAs and well as a large number in the £100k+ mark.

    How would a £1k a year tax on interest break influence them?

    The man really is a financial moron.

  7. I supposed tax incentive assets are those that aren’t taxed unless sold. All those selfish people who live in their houses for years and years and don’t get taxed on the appreciation as compared to those generous souls who regular sell and move to a new place paying taxes along the way.

    One of the things progressives are trying to do with their emphasis on inequality is to change the argument that government should tax more so that it can provide more services to an argument that government should tax more so as to limit what people might accumulate over their lives.

  8. @ TD
    No, what they are doing is trying to increase the amount of tax money that is transferred from “the rich” to public sector workers who are overpaid relative to private sector workers. ONS (a public sector organisation) reckons that public sector workers are EXCLUDING THEIR PENSIONS overpaid by 10% compared to those in the private sector.

  9. I guess he thinks it too much to have to wait for someone to die so you can slap inheritance tax on their estate and wants the money earlier

  10. John 77. Yeah, fair point. I should have included that. You might find this old article by Willie Brown, former mayor of San Francisco and Speaker of the California Assembly interesting.

    https://www.sfgate.com/bayarea/article/Homeland-security-chief-takes-responsibility-3276937.php#ixzz0dgrLoD23

    If we as a state want to make a New Year’s resolution, I suggest taking a good look at the California we have created. From our out-of-sync tax system to our out-of-control civil service, it’s time for politicians to begin an honest dialogue about what we’ve become.

    Take the civil service. The system was set up so politicians like me couldn’t come in and fire the people (relatives) hired by the guy they beat and replace them with their own friends and relatives.

    Over the years, however, the civil service system has changed from one that protects jobs to one that runs the show.
    The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life.

    But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.

    Talking about this is politically unpopular and potentially even career suicide for most officeholders. But at some point, someone is going to have to get honest about the fact that 80 percent of the state, county and city budget deficits are due to employee costs.

    Either we do something about it at the ballot box, or a judge will do something about in Bankruptcy Court. And if you think I’m kidding, just look at Vallejo.

  11. A lot of allowances at the low end are because it just isn’t worth the effort collecting. Try getting 25% tax off £1 of savings interest.

  12. ‘the wealth inequality that we suffer in this country’

    Suffer? WTF?

    My neighbor has more than me. It produces no suffering for me.

  13. @ jgh
    Yeah (except its 10%).
    The cost of collecting the tax on interest on <£10k of savings is going to exceed the tax collected. Nowadays the taxpayer has to pay for the stamp on letters he sends but HMRC's stamps will exceed the <£1 collectable

  14. Truly great

    Proving that revenge really is a dish best served cold, Marines of 42 Commando, acting on a request from the Royal Gibraltar Police, have seized a tanker full of Iranian crude oil thought to be destined for Syria- in breach of an EU trade ban!
    Apparently Iran are furious.
    Gibraltar Seizes Syria-Bound Tanker Thought to Be Carrying Iranian Oil

    In other, and I’m sure completely unrelated news, pop chanteuse Joss Stone has been expelled from Iran

  15. The stupid thing here is that wealth is not a useful concept. Owning the Mona Lisa makes you, in theory, wealthy. But it does not help your finances unless you either sell it or charge people to view it.

    Do you want to tax streams of income or wealth?

    Murphy doesn’t understand that taxing objects is not easy. It is easier to tax flows of money. The land tax people need to think about that too, although their thoughts about rolling it up and taxing on death are at least credible

  16. Doesn’t Spud have it arse about face (as usual)? If you have some spare cash that you’re saving for a rainy day, it makes sense to put it into something that’s more lightly taxed. Presumably that’s what the government want to influence you to do, by creating these incentives.

  17. Chris, Spud doesn’t want us to have any spare cash for a rainy day. That would mean that we could make a choice instead of obeying Big Brother.

  18. Pcar. The epicenter was out in the desert. I only small towns nearby. I believe God might have been mad at the coyotes and rattlers for some reason.

  19. Chris,

    IIRC part of the reason for ISAs was because of lots of stories about Britain’s very low saving rates.

  20. IIRC part of the reason for ISAs was because of lots of stories about Britain’s very low saving rates.

    Exactly, they were created for a reason, but the obese spud chooses to ignore it, instead convincing themselves they are the means by which top-hatted capitalists are stealing the bread off the workers’ plates.

  21. I am not saying we need start with a tax on wealth as such,……

    There’s a very large unspoken YET hovering in the background.

    The original US tax rate was 1% on incomes up to $400,000 rising to 7%
    at income above $7.5M.
    Look where we are now.

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