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Polly really doesn’t get it, does she?

Paying their bills was their top concern, so what do they make of Sunak paying an effective tax rate of only 23% on his vast capital gains? Income of the same amount gained through work would be taxed about twice as much as sitting back and letting rewards flow effortlessly in from rents, shares or self-inflating valuables.

Rents are taxed as income, of course. So too are dividends from shares (with allowances for the corporation tax already paid).

Sigh.

Dan Neidle of Tax Policy Associates lays out the yo-yo history of capital gains tax (CGT), where the pay of private equity executives expressed as “carried interest” attracts only 28% tax, avoiding the 45% top income tax rate. Another affront: the first £6,000 of capital gains attracts no tax. Add that to the basic £12,570 personal tax allowance and CGT payers get an £18,570 starting point. Who are the gainers?

In 1988, the Thatcherite chancellor Nigel Lawson equalised capital gains tax and income tax, rightly declaring: “There is little economic difference between income and capital gains.” This dismisses the handy myth that low CGT encourages investment: it doesn’t, the IFS proves.

Neatly missing Dan Neidle’s point that if CGT rate is to be equalised then there must be an inflation allowance as well.

Another uncosted CGT gift to the rich is mocked by Paul Johnson in his book Follow the Money: any capital gains you owe on your death dies with you. Your shares, property or antiques may have swollen 1,000-fold in value in your lifetime: don’t sell and your heirs take it all without paying any CGT you owe, HMRC’s loss unknown.

And that’s cretinous. Because you pay 40% inheritance tax, of course.

8 thoughts on “Polly really doesn’t get it, does she?”

  1. The tax rate on capital gains is far higher than that since Gordon Brown abolished the inflation asdjustment so that you are now paying tax on your capital gain *plus* the debasement of the currency since the date of purchase. Frequently one has to pay tax despite suffering a loss in real terms.

  2. Bloke in North Dorset

    Why would she suddenly start getting it when her whole schtick these long years has been based on studiously not getting it?

  3. “Dan Neidle…where the pay of private equity executives expressed as “carried interest” attracts only 28% tax”

    HMRC demolished Neidle’s claim that this should be taxed as income, as well as his claims of ‘sweetheart deals’.

    “CGT payers get an £18,570 starting point.”

    Only if they have zero other income – how likely is that among the “super rich” Polly thinks we should be going after?

    “the Thatcherite chancellor Nigel Lawson equalised capital gains tax and income tax”

    As mentioned, there was indexation and also a raft of reliefs.

    “any capital gains you owe on your death dies with you.”

    Yep, the most cretinous of her comments.

  4. “HMRC’s loss unknown.”

    So? When did that historic folk villian, the Tax Collector, become the good guy? Fuck ’em. Apparently Pol takes the Sheriff of Nottingham’s side against that great tax rebel Robin Hood. Wealth taxes are all iniquitous. It’s like a bloke coming round to your house every year and sawing a leg off the kitchen table just because you have the audacity to own one.

    And then, as we all know from Public Choice Theory, out trot all the useful idiots whining, “What about the NHS? What about the schools?” Per-capita public spending has more than doubled, in real terms, since 1990. Are the hospitals twice as good? Are kids twice as smart? We do have nearly twice as many Members of assorted Parliaments, I do know that. And presumably twice as many Assistants, Advisors, and sundry other hangers-on. When the government learns to tighten its belt and stop spending my money on stupid useless pish, I might find it within myself to shed a tear for the poor bureaucrat. But not before.

    “Only” 23%, indeed. Piss off, Pol.

  5. ““CGT payers get an £18,570 starting point.”

    Only if they have zero other income – how likely is that among the “super rich” Polly thinks we should be going after?”

    And even that’s not true. the personal allowance does not translate to CGT – they’re compleetly separate.

  6. that’s cretinous

    Of course it is, the entire argument is designed to persuade cretins of the need for MOAR TAX.

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