So here’s an interesting point about wealth taxes

The opening to this question comes from their own phrasing:

Net wealth encapsulates someone’s control over economic resources

They then go on to propose a wealth tax:

Household wealth between £3.4m and £5.7m would be taxed at 1%; between £5.7m and £18.2m at 5%; and above £18.2m at 10%.

Of course, they rather skate over the fact that 30 seconds before this tax starts there will be no UK households worth more than £18 million and very few above £6 million. Which is why wealth taxes only get that one bite at the cherry, they’re not useful as repeating sources of revenue.

But let’s run with that definition they’re using of wealth there. Which is indeed correct. Average wage in the UK is about £14 an hour. Ignore the detailed difficulties and just run with this for a moment. If you’ve £14 you can command the labour of one person for one hour. If you’ve £14 million then you can get 1 million hours of labour. That’s the command over economic resources that wealth gives you.

Such a calculation runs both ways though. If you can command 1 million hours of labour then you’ve got £14 million in wealth. This is also true and valid.

So, the NHS disposes of what is it, £180 billion a year? So, what’s the tax rate on the Secretary of State for Health?

No, that is a serious question. Wealth is control over economic resources. So, what is that tax rate on someone who is by far the wealthiest person in the country?

9 thoughts on “So here’s an interesting point about wealth taxes”

  1. Ignore the detailed difficulties and just run with this for a moment.

    This is often the point the train jumps the tracks.
    .

    So, the NHS disposes of what is it, £180 billion a year? So, what’s the tax rate on the Secretary of State for Health?

    No, that is a serious question. Wealth is control over economic resources. So, what is that tax rate on someone who is by far the wealthiest person in the country?

    The Secretary of State for Health is just the CEO hired by the actual owner. As it’s the National Health Service, the owner (ignore the detailed difficulties here) is the nation. And I do believe that owner is pretty well taxed.

  2. He doesn’t really have that much control over those resources though does he? Can’t ask them to wash his dishes, paint his house, and start working in his new textiles factory…

    Anyway, 10% annual wealth tax?! Would love to know how that struck them as a feasible, sensible level to levy. Suspect that ensuring nobody in Britain is richer than a multi-millionaire is actually the point of the measure.

  3. This is the Guardian, set up as a huge tax dodge by the establishment of the Scott Trust, and then re-dodged by converting it into the Scott Trust Ltd. That Guardian?

    “Net wealth encapsulates someone’s control over economic resources: this combines financial, property, pension and business assets, minus debts.” Ah, they’re coming for your pension and your housing equity. That will presumably include pension money you can’t yet access because of your age, property wealth that’s illiquid, and a business the value of which might be destroyed if you had to break it up to release funds.

    Tell you what: how about an experiment that applied the idea just to Defined Benefit pensions, with their capital value being assessed using commercial annuity rates? Let’s start there. The second experiment would be to impose a wealth tax on all property owned abroad – the “hideaway” in Umbria, that sort of thing. These two experiments should hit Guardian readers and writers hard. Good.

  4. It’s not clear if he expects to include house value in this calculation, but even without it, an inflation-protected pension of £85,000pa would take you over the lower limit. Many doctors (among others) might be upset to learn this.

  5. I have the same problem in Texas – property tax is quite high, because they don’t have an income tax.

    It’s round and about $10K a year – based on the value that the taxing authority places on it. Prices have sorta doubled because of frenzied Californians fleeing CA and moving to TX, so suddenly I could – in principle – be faced with a doubling of my tax bill, while all the while inflation is about to rage and my revenues are fixed. In practice, they can’t hoist the rates by more than x% per annum, so the horror would be spread over several years; and if you’re old or dilapidated you can have the amount you pay in tax frozen, provided you make no taxable improvements to your property. But not all the property tax is frozen, of course.

    Bad idea.

  6. Ooh, ooh, please Sir?

    The SSfH has a notional control right, but no economic rights, although notionally the economic rights would be some claim over the additional revenues flowing to the Treasury in excess of the cost of running and maintaining the public health system in it’s entirety, which would be a proxy for dividends out of some sort of notional national profit rate.

    Alternatively, the tax rate paid away is the coupon rate on sovereign debt attributable to running the system. Going further, you could say that the tax rate is that part of wealth generated but not actually (thus far) claimed by the state as tax, or tax foregone.

    But then things start getting a bit silly.

  7. Isn’t that wealth owned by the disgusting rich already distributed throughout the economy making people wealthier in the form of bank deposits, investments, property for rent or buy, as well as that spent on consumption providing the ever important jobs?

  8. John B

    Hate has no need to look at reality. It’s enough that there are people richer than [idiot left winger] that the idea that essentially all their wealth should be taken from them in as little as 20-30 years (too lazy to do the compound interest thing] at 10% per year should be promulgated.

    Of course, even if the idiot idea didn’t immediately mean rearrangement of existing wealth, it would pretty much guarantee no more being accumulated, so the tax take would plummet off a cliff for all sorts of reasons.

    But you can’t get [idiot left winger] to look at reality. It’s of zero interest, while destroying other people is of great interest.

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