Sigh:
On Sunday Reeves said Labour could raise up to £440m a year by closing the carried interest loophole.
1) Close the loophole and you change the number of people getting paid that way. You’ll not raise that amount.
2) The “loophole” is that sweat equity gets taxed differently from labour income. OK, cool, how do you close the loophole without taxing, as labour income, all those shares in start ups?
Twat.
Typical politician inability to consider second order effects. X is happening, if we tax it at rate Y we get Z revenue. Without even considering if you raise taxes on X then you will probably get a lot less X occurring, if any.
Apart from which it raises £400m at best, which is a drop in the ocean. Thats not even a rounding error in UK government spending. Its utterly irrelevant to the state of the UK budget. I bet HS2 has spent that much on PPE and stationary.
Maybe you should stick it in an article so more people know of the illiteracy
“how do you close the loophole without taxing, as labour income, all those shares in start ups?”
We already have tax relief on Venture Capital Trusts, and Entrepreneur’s Relief. Isn’t that sufficient?
Answer 1: she’ll do it retrospectively (taxing at income tax rates capital gains received in past years).
Answer 2: depends on how you define “£400m a year” – maybe she makes the phrase mean £400m in the first year and a trickle thereafter
Answer 3: progressively increasing the tax rate on the shrinking portfolio of carried interest schemes until it exceeds 100% on receipts (as disctinct from profits).
Take your pick
Are we all sure we are ready to dispense with the economic activity that carried interest supports?