The bit that Michael Meacher misses

What, then, should be done? In the short term, the most feasible approach is to impose a capital gains tax charge at the current rate of 28% on the topmost layers of wealth, the £155bn gains amassed by the 0.003% over the last three years.

This is a tax on unrealised gains you understand.

So, they must liquidate some portion of their holdings in order to raise the cash to pay the tax.

So, err, who do they sell it to? All other rich people face the same problem and not rich people, by definition, don\’t have the cash.

26 thoughts on “The bit that Michael Meacher misses”

  1. I’m not sure I’d like my CGT liability calculated on the basis of the Rich List’s guesses either…

  2. The government could allow the tax to be payable using whatever assets it is being levied on. So if it calculates that you’ve made GBP100m capital gain on bank shares, you can either give it GBP28m cash, or you can transfer shares that are worth GBP28m according to the same valuation process used to calculate the tax.

    (I’m not saying this is a good idea, just an obvious possible way round the problem you identify…)

    Tim adds: So the government now has £28 million in bank shares. And 28% of Mayfair mansions.

    So, who do they sell them to to get the cash?

  3. When I read it, I said, Timmy’s going to have a field day.

    This guy was a minister? Which party? Oh, yeah, right!

    I loved the lie about no cost!

  4. I suppose we could ask Roman Abramovitch and Laksmi Mittal to give 28% of their global wealth to the UK Treasury but I suspect they might say no.

  5. Has it not occurred to him that even if you could make it work for one year, you’d get a lot less of all other taxes the next, as everyone who could shifted all their money (and themselves most likely) out of the country? No-one is going to watch nearly a third of their wealth expropriated and then stay put for another bite to be taken in a few years time when they’ve spent the last lot.

    As a way to plunge the country into a capital flight nightmare it’s spot on. As a way of ‘kickstarting’ the economy it lacks a little something………………….

  6. Not necessarily overlooked – a fire sale habitually provides opportunities for bargain-hunters, so there could be bargains to be snapped up by Goldman Sachs, Citibank, JP Morgan, various non-domiciled Hedge Funds and, in Russia, certain friends of “United Russia” who may also be friendly with Michael Meacher.
    Secondly, his numbers are fake by comparing the value of assets of one group of people in 1997 with a second group in 2010 and a third group in 2008 with a fourth group in 2011/2, ignoring the the tens of billions Abramovitch, Deripaska etc had when they arrived.

  7. @SE
    You obviously have n’t read Meacher’s article which recommends land value tax throughout, (yet another instance that its back on the agenda after so many years of disrepect by dullards).
    He pretty clearly means the Henry George version too, which would put rich landowners out of business .Pity nobody backed the gentler JS Mill version ,which taxes future inflationary increases rather than past gains in land values,when they had the chance.Such, though, is the price of a lack of intellectual curiosity.

  8. john77,
    The likely outcome of this proposal strikes me as rather like the effects of death duties on landed estates in the period from 1914 onwards. A great deal had to be sold off and many tenant farmers became owner-occupiers. Most of them,like my ancestors, were good Tories who hated Lloyd George who had created the opportunity
    It was a bit unfair because there were no tax exemptions for deaths on active service and the landed gentry were getting killed in proportionately large numbers.

    Mind you, hasn’t Meacher built up quite a substantial property empire of his own? I bet he’s calculated that he won’t have any liability to this tax.

    I seem to recall that he lost a libel action. If I am right, he had claimed that his origins were much more humble than they really were and he sued the newspaper which revealed the truth. At the time he had to be bailed out by his chums. I hope he paid them back.

  9. @ Edward Spalton
    A good point although something lost the “dis” in “disproportionately”. Certainly Mayfair could become owner-occupied.
    However the RBS Rights Issue shows there just isn’t enough available cash for the HNW and “mass affluent” investors to buy £40-odd billion of investments if the ultra-rich have to sell them.

  10. Imagine the outcry if you could claim back your unrealised losses…Mr Zuckerberg if only he was resident here he would pay so dearly…he should pay something no as he probably has 30 M plus users here…What’s that? He has lost 5B USD in the last week and wants an advance tax refund on his losses??? Shick shock [email protected] Guess it must be only a one way street…s\let us see how that goes down.

  11. @ dbc reed
    Yes, I have read Meacher’s article before commenting on it and it does NOT recommend LVT throughout. It recommends Wealth Tax and LVT as a follow-on *after* its Capital Gains Tax on unrealised gains plus the net *after-tax* amount of realised gains that have already been taxed.

  12. You obviously have n’t read Meacher’s article which recommends land value tax throughout

    You’re an LVTer and you are, allegorically, dancing in the blog. My point is made.

    The man’s a yet another communist in social democrat clothing. Like Ritchie, there’s no tax he doesn’t like. LVT, on its own, is an arguable thing. Capital un-gains tax, plus LVT, plus all we’ve currently got at the moment, is cretinous.

  13. the effects of death duties on landed estates in the period from 1914 onwards.

    This would be the best ever subject for econometrics EVER.

    “We conclude that the imposition of death duties on younger family members deterred older family members from marrying, and… actually, this is Downtown s2. Just, wow.

  14. Doesn’t he own about 8 houses? Let’s seize, say, five and well them. It leaves him with three which is still more than the 99% own.

  15. “I seem to recall that he lost a libel action. If I am right, he had claimed that his origins were much more humble than they really were and he sued the newspaper which revealed the truth. At the time he had to be bailed out by his chums. I hope he paid them back.”

    He claimed he was born to a farm labourer, who was actually a stockbroker who retired to a hobby farm.

    Like most Truthers, he’s quite comfortable with fabricating his own life, so expects everything else in the world to also be a fabrication.

  16. I made the mistake of not just reading the article but some of the comments. This one just takes the biscuit:

    We’re not getting any investment right now from the wealthy – they’re hoarding cash by the truckload and plenty of it in government gilts.

    Now, it would be perfectly reasonable to argue that increased capital investment in SMEs would be a much more effective way for “the rich” to boost growth than increased taxation but this is in support of an article demanding that we (well, not me actually – although I’m probably a 1%er if you just measure Jocks) pay the gubermint much more tax. Fuckwits. Really.

  17. @SE
    “Dancing in the blog?” “Allegory?”???

    Getting back to the point: if the tax on the house is too much for the rich fuckers to bear they can sell it for something like the price they paid for it, to the younger generation who are Priced Out by continued Goverment (of all shades) policies of House Price Inflation.
    (NB German house prices have n’t risen much since the 1970’s, contrary to the English delusion that House Price Inflation is a force of nature.)
    BTW I do not really go along with this hard Henry George line on LVT,preferring the tax on future land- price rises only,where the Georgists would start unloading past capital gains but I can well understand those like Mark Wadsworth
    who appreciate the JS Mill or Sentinel LVT but go instead for the full Georgist monte ,because nobody cuts you any slack for taking the more moderate line. Or can be bothered to see any difference. Or can get their heads round the simplest tax mechanism going, which is
    is glaringly obvious we need.

  18. Getting back to the point: if the tax on the house is too much for the rich fuckers to bear they can sell it for something like the price they paid for it, to the younger generation who are Priced Out by continued Goverment (of all shades) policies of House Price Inflation.

    And there, ladies and gentlemen, we have the politics of envy. The bottom-feeding force for socialist whiners throughout the centuries.

  19. @SE: I’ve always said the LVT crowd are communists who don’t have the guts to come out and admit it. Or are quite happy to see the redistribution of land/property (because they don’t have any/much of it) but don’t want to see the redistribution of everything else (goods/income – everything according to need etc) because they do have that, and don’t want to lose it. Pure envy of what someone else has that they haven’t, IMO.

  20. @SE&J
    Very far from being communistic or motivated by material envy,LVT is very entrepreneurial seeking to deal with business start-up problems of high business rents and potential customers deprived of spending-money by high residential rents and mortgages.
    I should imagine this is why Adam Smith advocated it,most eloquently as Irecollect.
    From the ad hominem nature of the comments,I suspect the influence of the private education system.

  21. Very far from being communistic or motivated by material envy …

    Take money from people dbc reed hates. Give money to people dbc reed likes. Waffle about how that’s all “fair”.

    Statist. Socialist. Possibly communist. And fix the space bar on your keyboard, please. Unless that’s a demarcated job, of course.

  22. @SE
    Gosh this level of argument has really made me think.You’re right: I must have been all of these dreadful things without realising it (Though is n’t taxation always a bit Statist?) Income tax which LVT aims to replace in some systems must ,by inference, be much less Statist.

    From henceforward I’ll support ferocious rates of Income Tax on what people earn by hard work and not bother with small taxes on things like land which increase in value with no work from the owner.

    Many thanks : I truly believe you have turned my life round.

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