Timmy Giving evidence to HoC Treasury Committee on Wealth Tax. No prisoners were taken.
Its two hours long, give it a watch if you have nothing better to do.
Timmy Giving evidence to HoC Treasury Committee on Wealth Tax. No prisoners were taken.
Its two hours long, give it a watch if you have nothing better to do.
Well argued! They didn’t seem to address deadweight loss.
@16:48
“Putting up VAT is so easy: you just turn the tap and the money comes in”
Fuck me but he’s never been near a business – scheduling all the changes to all of your accounting and invoicing for frikkin 1 point change in VAT. He just has no idea of the _millions_ of wasted man-hours of rework in the real world.
Listening to the section on other countries’ experiences of not raising much from wealth taxes by having lots of exclusions etc reminded me of something I was listening to recently.
Apparently the US Federal government always raises about 18% of GDP through their taxes, no matter which party is setting the rates and the rates they set. They always allow allowances or people change their behaviour.
The conclusion was that the American people are happy to pay that rate and politicians just design their preferred tax system around it.
Another point was that politicians set tax rates, not taxes. Subtle gets to the point about avoidance through changes of behaviour.
PS I’ve been reading your blog and arguments far too long, I could have scripted your response to the idea of a retroactive wealth tax (and yes that’s what I heard despite the denial) 🙂
@ The Pedant General – to be fair he did say “easy for HMRC!”
wealth tax is retrospective by definition. Tim’s shock horror was the same reaction to all retrospective law. It equates to if you wore kipper ties at any point give us an extra 10 p.c today. The Chair tried to tamp it down saying that’s just a valuation timing thing, but deciding to value it last year because it’s easier for us, is neither here nor there.
@Hallowed Be
“wealth tax is retrospective by definition” – I think Timmy’s particular disgust was that if we were told we would have to pay a wealth tax based on our net wealth at the end of next year, we would have some time to spend it all, or emigrate. Whereas if we are told we will be judged on our net wealth at a time that has already passed by, we have no capability to change our behaviour so as to avoid it (and we’re also stuffed if we have already spent it or lost it, before we got the warning we’d be taxed on it!).
Horrifying video. Be afraid. Be very afraid. Now to make avoidance plans. Politicians never ask questions unless they’ve already decided the answers. They’re never looking for information. They’re looking for justification.
Incidentally, beats me how you can raise any money from a retrospective wealth tax. To pay the tax it would be necessary to sell assets. Who do you sell them to when everyone else is a seller? Surely you send the market price of assets into a death spiral?
‘Another lesson was that you should never commit yourself in Opposition to new taxes unless you have a very good idea how they will operate in practice. We had committed ourselves to a Wealth Tax: but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.’ Dennis Healey, writing in 1989.
Fascinating viewing. As BinS notes, a frightening prospect – though I remain sceptical as to whether a Conservative government could pull it off. 90pct of people assume a wealth tax won’t affect them as they’re not ‘wealthy’, and are enthusiastic about more ‘free stuff’ aka public services.
Andrew C- I recall reading in some memoir probably Alan Clarke’s diary that a few young bowler hatted city types used to walk through downing street after a few and ritually shout “resign! resign!” as they passed under no.11 healey’s window and continue their way.
MBE – yes agree. They were happy with the premise of a wealth tax valued year end but when pointed out that would yield less than valuing in prior year it becomes a just a timing thing. no the timing is the breach of rights. But so too is the premise of taxing years,decades of accumulation of the remainder after tax.
@bis
“Incidentally, beats me how you can raise any money from a retrospective wealth tax. To pay the tax it would be necessary to sell assets. Who do you sell them to when everyone else is a seller? Surely you send the market price of assets into a death spiral?”
Depends how hefty the bill is and what the payment period is – if, like the Germans once tried, you have thirty years (from memory) to pay up, it’s not so bad.
See also the liquidity problem for the asset-rich, cash-poor – widows, farmers, small business owners etc. https://www.wealthandpolicy.com/wp/110.html
Actually lots of the papers at https://www.ukwealth.tax/evidencepapers are quite interesting. There seems to be some consensus that just doing the admin for the tax will cost up to 0.5%-1% of the value of the estate, at which point it only becomes worth doing if the tax rate charged is pretty high.
Absolute field day for lawyers and accountants.
I sent a link to this video to a mate would be in the firing line & we’ve been discussing it, this morning. His take was if they can consider this shit they’re capable of anything. The UK becomes not a place you want to be or do business. Best to start looking for somewhere else.
@bis
How much hassle do your Spanish acquaintances find the Spanish wealth tax?
Dunno, MBE. I expect it adds to the Spanish pleasure in avoiding taxes & keeps their accountants sleek & well fed.
My phone conversation was with someone your end, not this. The people I know here, would be above the threshold, are mainly Russians. Probably not good for the health to enquire.
Aren’t you supposed to have a beard?
You are making Owen look old.
Aha.
Somebody else.
What an absolute train wreck. A past chairman of HMRC denying that CGT has a laffer curve (CGT FFS!) and using laffer curve effects to make his point. At least you got a chance to make a comeback on that.
They never quite nailed the liquidity thing though. Owner of family business dies: bereaved family has to hand over 40% of the net equity to HMG. That’s what this means. No-one even tried to confront that reality.
I’d like to watch this but I’m getting
Media error: Format(s) not supported or source(s) not found
Download File: https://www.timworstall.com/video/Treasury_Committee_18-11-20_14-32-00.mp4?_=1
Anyone else?
Anywhere else to see it? I suppose I could google.