The wealthy love the national debt in the UK.
There is nothing that suits their purpose better than having the UK government in debt to them, and that’s why they love the national debt.
Let’s be clear what the national debt is. This supposed debt is simply the total amount of money that the government has spent into the UK economy that it has yet to reclaim by way of tax.
The national debt is created by government spending. There is no other way that it can come into existence. The government spends, and it doesn’t tax back enough. It creates a deficit in a year, and that adds to the national debt.
So government spending does not pay for itself, multipliers are too low for that to happen. Good to know, good to know.
This is fun too:
And that’s because capital gains, and inheritances, and other forms of income derived from wealth in the UK are heavily undertaxed, rarely, in net terms, paying more than about 4% per year.
The risk free return is about 5%. Inflation is 2 to 3% at present. If there’s a 4% tax on wealth then that means that the tax rate upon wealth is well over 100% of the risk free return on wealth.
Y’know, mebbe there’s not much room for taxing wealth more then?
And what happens if the government spending has a negative RoI?
Like maternity wards that kill mothers & babies, border enforcement that does nothing of the sort or police forces that don’t bother investigating crime that has the most impact on people’s lives?
How much under taxation happens because of the above?
The left never, ever seek to reduce spending do they? It’s always MOAR tax, but not taxes they themselves will pay, it’s always ‘the rich’ or ‘big corporations’.
Government are still spending £152 billion a year more than they get in revenue, and according to Grok, to eradicate just that deficit, the basic rate of Income Tax would have to increase to 46 – 49%*.
Then we just have the small matter of the £2.7 trillion National Debt left to deal with……….
*It states there are other methods of dealing with the deficit (VAT, growth etc), and that if there is any change in behaviour this goes out of the window…..
If NHS productivity increased in line with increase in the number of doctors and nurses we might have less debt, or at least shorter queues.
https://x.com/PJTheEconomist/status/1932053562894299435
Let’s be clear what the national debt is. This supposed debt is simply the total amount of money that the government has spent into the UK economy that it has yet to reclaim by way of tax.
Well of course they have reclaimed the tax yet, for most of us our great grand children have been born yet let alone started paying tax.
Alternatively it could also meant that they haven’t inflated it away.
NHS productivity…
My wife is in Japan at the mo and called to make an appointment for her free over-60s medical health check. The human who quickly answered said (in Japanese): “Certainly, madam. Would tomorrow suit? When would you like to come in?”
Japan lost its Covid mind every bit as much as the UK did, and yet…
My daughter has received her schedule for the first 6 months of her FY1 ab initio year as a doctor. It’s pretty brutal. Whatever is going on with NHS productivity it’s not because junior doctors are not putting in the hours.
Half the battle with Spud is understanding the crazed definitions of terms he uses. What does he mean “wealthy” for example? Someone with £1 more than him?
Aren’t we over 100% of GDP in debt now? We’re on the edge of a debt spiral. Only a lunatic like Mad Jock Mc Mad, the winner of the Mr Madman contest would advocate for more state spending. Oh, I see.
@ BiND
Labour have inflated it away with inflation and negative real interest rates twice in my lifetime (and a couple of partial attempts), but they keep replacing it with overspending (often on stuff that gives a negative return in “welfare of inhabitants” terms)
Norman
I have had the misfortune to be in an A&E a few times over the years and I don’t think Junior Doctors aren’t working hard. The ‘diversity co- ordination’ unit on the other hand – and myriad other jobs created under Gordon Brown to create a Labour voting bloc, probably rather less so.
The wealthy love the national debt in the UK.
Contentious generalisation number 1
There is nothing that suits their purpose better than having the UK government in debt to them, and that’s why they love the national debt.
Anyone owning a government bond via any medium is by definition ‘the wealthy’ – interesting assumption
Let’s be clear what the national debt is. This supposed debt is simply the total amount of money that the government has spent into the UK economy that it has yet to reclaim by way of tax.
But what about the multiplier. I thought shelling out money paid for itself, or was that On Monday?
The national debt is created by government spending. There is no other way that it can come into existence. The government spends, and it doesn’t tax back enough. It creates a deficit in a year, and that adds to the national debt.
That’s before reparations start coming in for slavery….
And ever since 1694, when the UK national debt began, in most years, there’s been a deficit. And in most years, therefore, the national debt has gone up, because in most years, the government hasn’t taxed enough.
We have been overspending for three centuries and that’s of course no issue.
So, who is the greatest beneficiary of the government not taxing enough? The answer is very simple, and it’s very straightforward. It’s the wealthy.
Maybe those that wear skullcaps or have long beards, I am thinking? Go to synagogues or suchlike (Genuinely this passage could have been lifted near word for word from Der Starmer)
Just have a look at this chart that I prepared for the Taxing Wealth Report.
A publication proven to be among the most idiotic ever written
The chart shows the effective tax rate paid on income and wealth depending upon which group in society a person falls into, and I divided taxpayers into 10 groups of equal size to create this chart, so the bottom 10% of earners are in the lowest group, which is on the left hand side of the chart, and those on the right hand side of the chart are the highest group of earners. And as you’ll see from the orange line on the chart, the tax rate paid on income drops heavily once you cease to be in the bottom group in society. It’s then flat for a bit, and then sort of creeps up towards the end so that it looks as though we have a slightly progressive tax system.
On the other hand, when we combine that data on the tax rate on income with the tax rate paid on wealth, we get the blue line, and what you’ll see there is that actually over every single income range, almost with that exception, the rate of tax falls as your income rises. And that’s because capital gains, and inheritances, and other forms of income derived from wealth in the UK are heavily undertaxed, rarely, in net terms, paying more than about 4% per year. And who owns most of the wealth in the UK and who therefore gets most of the advantage from this under taxation? Well, that’s the wealthy.
Blah, blah, blah – apologies but the analysis is half baked, unoriginal and so profoundly misguided that one almost doesn’t have the energy to challenge it. Just deranged rankings of someone, who as the great Norman says is an eternal loser envious of people who merit more pay than he does.
And that’s the point that this chart is drawing out into the open. We shouldn’t be taken in by the idea that the wealthy are paying a bit more tax on income than everybody else because, overall, they’re paying a lot less tax on their overall net increase in financial well-being each year than almost everybody else in society is. So, as a consequence, as their wealth goes up, their effective tax rate actually goes down.
Legions of people are leaving the UK even for places like Italy because they are over taxed. As you are such a genius perhaps you can advise the return on taxing 100% of fuck all?
And that’s why they love the national debt, because they, by and large, own most of the national debt. They do so either via the companies that they have stakes in as shareholders, or they do so through the pension funds which they own, because most pension fund money in the UK is owned by wealthy people. And the consequence is that as the national debt goes up, because not enough tax is being charged, and most of that tax not charged will have not been paid by wealthy people, they’re actually compensated for the fact they’re not paying enough tax by being paid interest on the amount of money they then save with the government.
Every private sector worker with pension fund post compulsory enrolment is ‘wealthy’? You’re aware of tax on savers interests? Every other tax that people pay? You proclaim to be a ‘tax expert’ but you appear utterly ignorant of how much the state is taking.
We end up with this quite absurd situation that by not charging the wealthy enough in tax, the government then has to pay them for the fact that they haven’t been charged enough in tax.
It’s just absurd. Why are we compensating the wealthy for not charging them tax? And I just want to make that point very strongly when you hear the wealthy talking about the fact that the national debt is a threat to us all, and our grandchildren will have to repay it – all of which, by the way, is complete and utter nonsense – what they actually don’t mention is the fact that they’re very pleased with that situation because the fact that the national debt exists is only because we haven’t charged the wealthy enough tax with regard to the income and gains that they’ve made in our society, which have made them so much wealthier than everybody else.
I refer once more to Norman – talk about the politics of envy. He is skint and in his eyes should not be. Evil with no redemption
If only we charged more tax on wealth, we would pay a lot less in interest on the national debt, and everybody will be a lot better off
I agree – we can start by charging public sector pensioners hefty premiums for those schemes and go from there there.
Wasn’t the point of QE to counter stagflation by making it so there wasn’t a risk-free return on wealth and wealth-holders would have to pursue riskier (but more economically-useful) returns?
Where can I obtain a risk-free 5% return net of tax on my ‘wealth’? (Asking for a friend)
Maybe gilts, if held to maturity (otherwise they’re not risk-free).
V_P @ 11:45: yes, I’ve had a few sojourns in A&E over the past few years and my experience is of almost all the junior doctors and some of the nurses being alert, bright-eyed bunnies going at a clip. Consultants: variable. The rest of the nurses, the porters and the admin staff: I’ve seen faster sloths. And the barge-arsed diversity has that added layer of suspicious, resentful entitlement.
Yes, quite, Gilts currently yield 5%. That’s why the risk free – nominal – rate is 5%.
Yep.
@ Chris Miller
Just to get a 0% real return on investment, money poured into residential property under every Labour government since I could read house prices. Under Tony Blair house prices rose more in ten years than in the previous thousand years. Under Wilson house prices soared by 40-ish% in his first six years and then 60+% in his next four, followed by another 20% under Jim Callaghan (so New Labour was slightly worse than old Labour’s 1974-9 but not nearly as bad as the two Wilson terms combined).
If you could get a risk-adjusted 5% RoI, Labour would probably outlaw it
@Norman
I attribute a lot of NHS productivity problems down to having to expend more effort protecting themselves from being sued by patients than the effort of treating them.
Andyf, and in that way we become more and more like the American health system, which apparently we all wish to avoid.
Lawyers, eh? Where would we be without ’em?
inheritances, … are heavily undertaxed, rarely, in net terms, paying more than about 4% per year.
Last time I looked, Inheritance tax was 40%. And of course it doesn’t pay per year, because people don’t die repeatedly every year.
>Last time I looked, Inheritance tax was 40%.
Well it’s 40% of everything over £500,000 you inherit from each parent that wasn’t already given to you seven years ago as a tax-free gift, so for most of the UK it’s 0%.
@ Bathroom Moose
There are plans to tax the recipients of inheritance on a sliding scale as you suggest but currently the tax is levied on *estates* over £325,000. There are concessions, the largest is that anything left to the spouse is excluded, the value of an owner-occupied house or flat left to a direct descendent is partially excluded up to a limit of £175k, unspent personal pension funds are currently excluded but will be included for IHT purposes from 2027, and HMRC will calculate tax on the Estate PLUS any gifts made in the seven years preceding date of death with a few complicated exceptions
Don’t forget that the allowance is per-person, and the allowance transfers to the surviving spouse, so if you’re one of the children of a married [or civilly-partnered] couple then no matter what order anyone dies in, that’s an allowance of £750,000; and if the estate includes the family home, that’s another £250,000 tax-free.
The majority of the UK population leave behind less than a million pounds when they die: a nuclear family with a blue-collar job will possibly own the family home (which is certainly worth less than £1M), a car or two, and that’s basically it. So the entire estate is tax-free.
No-one’s getting taxed anywhere near 40%, and if the Telegraph is to be believed, the average rates are something like:
95% of the population: 0-4%
£10M estates: 10%
Whether this is intended or not is a different matter.
https://www.telegraph.co.uk/money/tax/inheritance/how-much-inheritance-tax-pay-uk-reduce-bill/
less-than-10M estates: 20-25%
(I’m sure I typed that, so probably using the less-than symbol at the start of the line made it look like a malformed HTML tag!)
@ Bathroom Moose
£325k for husband and £325k for wife makes £650k; £175k for husband plus £175k for wife makes £350k, not £750k or £250k.
If you’re quoting your accountant or tax adviser sack him/her and read the HMRC website.
The (two-bedroom, one living room, one bathroom) flat in which I lived before I got married, but no longer own is currently priced at around £1m so most of the children/heirs of my former neighbours are going be stung heavily for IHT far in excess of their available cash. My current “four-bedroom” house is priced at *a lot* less, although it cost a little more than the selling price of the flat, but I am still being asked to jump through hoops to avoid being liable to IHT.
When I was young the overwhelmimg majority of UK workers were working-class, but now it’s less than half, and several million live in London with ridiculous house prices, so your 95% is vastly over-optimistic.
“I attribute a lot of NHS productivity problems down to having to expend more effort protecting themselves from being sued by patients than the effort of treating them.”
Perhaps they should try not killing or crippling their patients as well then…..
>The (two-bedroom, one living room, one bathroom) flat in which I lived before I got married, but no longer own is currently priced at around £1m
You’re saying the owners of this flat are poor because they only have a two-bedroom flat, but you then say they’re going to get taxed because their estate is worth over a million pounds.
Without exaggeration, if you took your million pounds to a former council estate in a niceish gentrifying area in the North, it could buy an entire mini-block of four-to-six two-bedroom flats. Paint them all Magnolia and furnish them from IKEA, and that’s an small landlord business right there just ready to go. Your flat in London is essentially priced at ~£175k for the property, and ~£825k for it being in London, and if you rented it out, it would be at a price reflective of the £1M value of the package, not the £175k value of the masonry and wood making up the living room and two bedrooms.
So this is an actual real asset with real value, and I’m not following why it should be taxed differently just because it would lead to inconvenience for people who’ve made no plans to address how the property bubble has enriched them.
>£325k for husband and £325k for wife makes £650k; £175k for husband plus £175k for wife makes £350k, not £750k or £250k.
You’re correct.
But 650+350 adds up to 1000, and 750+250 also adds up to 1000. Could you help me understand why this is worth so much attention?
>your 95% is vastly over-optimistic.
I got the figure from HMRC though…
https://www.gov.uk/government/statistics/inheritance-tax-liabilities-statistics