Wealth and income are different, but flows (I.e. increase) in wealth are absolutely economically equivalent. Try spotting the difference when both end up in the same bank account: you can’t

An increase in wealth is not economically equivalent to an increase in income. For by definition income is a receipt. A change in wealth may be a receipt – if you cash in – but it could be simply a change in valuation. And thus something that doesn’t arrive in a bank account because it has not been cashed in.

And, amazingly, we do have a tax system which taxes increases in wealth which have been cashed in. What we do not have is what The Tuberousness is suggesting, one which taxes wealth not cashed in, that economically different thing.

6 thoughts on “Eeejit”

  1. The way to do this is for the state to roll up the wealth tax against the security of the assets with the amount payable upon realisation or death.

    The amount of tax due (at 45%) will exceed the value of the asset at realisation after a short lapse of time so, realistically, it’s at death that the state seizes the assets.

    The estate of the deceased is of negative value and it may be for the heirs to meet the shortfall – a bit like having to pay for the executioner’s bullet.

  2. People will take care to die without assets. Asset values will be decreased thereby, who wants to buy something that is going to be taxed. This would change a lot of things, but increasing the state’s income is not one of them.

  3. So the curajus state will levy a charge each year on the notional increase in the price (not value) of your house, some of which is a change in the real level of house prices due to the shortage and some of which is simply “inflation” (debasement of the currency). Meanwhile those living in Council houses will continue to have their rents subsidised out of the council tax that you pay.

  4. The Pedant-General

    What Rowdy said. If they’re going to tax a notional increase in wealth when asset prices rise, then they’re going to have to set it off against notional decreases in wealth when asset prices fall. What’s that you say, Timmy? FTSE100 fell 30% this month?

    To think he raised this issue right now. Jeepers.

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