Wealth Tax in the UK

[acnumber9]

It's also the fact that the property was in effect part-subsidised by his parents through 'living at home' and not paying market-rate housing costs. Nothing against it, but that's not what I class as hard work, more a lucky privilege.

And by somebody else paying him rent. Not sure where the hard work came in.

 

[TrustInJanuzaj]

The thing we should remember is that there is a finite amount of wealth in the world (within reason). People talking about the "COVID black hole" - that money has to have gone somewhere. It doesnt just disappear. Even in a massive recession, that doesnt mean that money has simply ceased to exist - it is more about where it is located, how it is being spent, and general consumer confidence.

I am pretty big on wealth redistribution in a general sense. I am far less convinced that going after the middle class is the way to do it. You only have to read some of the stats and comparisons around Bezos' wealth to start to understand the real extent of wealth inequality. People who have a house arent the problem. Massive corporations and billionaires are the problem. At the risk of sounding like a filthy commie, what we are seeing at the moment is the issue with unregulated capitalism and a society where greed and wealth reign supreme (to clarify, unregulated communism has its own issues and is probably worse). Hell, look at the football industry and the disgusting amount of money that players are paid, which fundamentally is taken from the average (often working class) consumer in the form of extortionate subscription fees for Sky and the likes.

Ever increasing proportions of global wealth are being consolidated by the top ~1%. Until this is addressed, we cannot affect real change. Kudos to the likes of Bezos who have managed to benefit so enormously from the system, but its time we recognised that the system itself is flawed and needs reform.

Couldn't agree more but what really blows my mind are the people saying they have earnt that money fair and square. Sorry but no one is worth a billion pounds I don't care what you've done, it's more than anyone can or should ever need to spend.

 

[TrustInJanuzaj]

I disagree, its all about context. Earning £150k living in Cornwall is completely different to earning £150k and living in London.
I don't think you could amend the wealth tax (if there is to be one) to take into account where someone lives though.

Its a fair point but at the end of the day they could simply move elsewhere and remain in the top 5% of the wealth. Perhaps if people actually did that there would be less of a north/south divide.

 

[Dumbstar]

And by somebody else paying him rent. Not sure where the hard work came in.

Just wondering how many Brits would suggest doing that with their parents? I'd hazard a guess of: 'feck off are they living with me'.

 

[F-Red]

I disagree, its all about context. Earning £150k living in Cornwall is completely different to earning £150k and living in London.

At that salary bracket there is no significant difference, cost of living back in 2018 only see's an average of £10k between the cheapest/most expensive areas.

 

[esmufc07]

 

[acnumber9]

Hell, look at the football industry and the disgusting amount of money that players are paid, which fundamentally is taken from the average (often working class) consumer in the form of extortionate subscription fees for Sky and the likes.

I think you’re as guilty of picking the wrong target there as you’re accusing others of doing. What about the billionaire owners paying their wages? Football remains one of the few avenues for working class people to join that elite. And yet unless you’re Messi or Ronaldo, you’ll never be a billionaire. Footballers become an easy target.

 

[The Purley King]

At that salary bracket there is no significant difference, cost of living back in 2018 only see's an average of £10k between the cheapest/most expensive areas.

An unremarkable four bed house in some parts of London would be well over a million quid. Would be less than half that in Cornwall, so that is the major difference.

 

[balaks]

Yes. Don't get me wrong I'd give my left nut to be on 150K and you'd have a very nice life.... You're not in extreme wealth though. Not in the South Anyway.

150K after current tax is 90K. You can easily spend 5K a month on rent in London = 60K per year.... So yea. I don't think 150K is extreme.

So... in your example you think having £30k to live off after tax after paying for your rent in London isn't wealthy? You realise that 30k after tax is way more than the median UK wage? £150k per year is without doubt wealthy and extremely well off. Maybe not compared to the billionaires and multi-millionaires of this world - but compared to the average Joe it most certainly is.

 

[balaks]

An unremarkable four bed house in some parts of London would be well over a million quid. Would be less than half that in Cornwall, so that is the major difference.

The vast majority of people in the UK do not live in London though (over 75%).

 

[Jippy]

Sorry, I meant property tax in my post! That was a stupid 'typo'... Income tax is also paid at source over here of course. But you answered the question about assessing property values as well anyway.

What's this council tax about then? It's some kind of equivalent of property tax I take it? Property tax is really our main contribution as inhabitants to our municipality's revenue. (Although I suppose municipalities get additional funds from the province; not sure how that works exactly.)

Yeah it sounds like the same thing tbh, with ours loosely based on property and funding local services. I say loosely because even with the age of the data aside, some councils keep it low as a vote winner, eg Westminster, which is one of the most expensive boroughs in London (and where a lot of MPs live, given its proximity to parliament).

Apparently...

Your Council Tax is your contribution to the many services the council provides such as schools, roads, libraries, support for vulnerable children and adults, and rubbish collections. Council Tax also pays for the police, the fire service and many other local services.

 

[Maticmaker]

"Death and Taxes, the only certainties in life".... see if you can get a bet on with BetFred!

 

[TrustInJanuzaj]

An unremarkable four bed house in some parts of London would be well over a million quid. Would be less than half that in Cornwall, so that is the major difference.

If not more, a 2 bed flat can set you back 500k easily in London.

 

[MikeUpNorth]

The thing we should remember is that there is a finite amount of wealth in the world (within reason). People talking about the "COVID black hole" - that money has to have gone somewhere. It doesnt just disappear. Even in a massive recession, that doesnt mean that money has simply ceased to exist - it is more about where it is located, how it is being spent, and general consumer confidence.

I think this is just false - wealth held in assets can just disappear. If my stock portfolio is worth £1m, and then the market crashes so it's now worth £500k, that difference in implied value hasn't been transferred from me to someone else, it's just gone, sadly.

Robert Shiller, an economist at Yale, puts it bluntly: The notion that you lose a pile of money whenever the stock market tanks is a "fallacy." He says the price of a stock has never been the same thing as money — it's simply the "best guess" of what the stock is worth.

"It's in people's minds," Shiller explains. "We're just recording a measure of what people think the stock market is worth. What the people who are willing to trade today — who are very, very few people — are actually trading at. So we're just extrapolating that and thinking, well, maybe that's what everyone thinks it's worth."

Shiller uses the example of an appraiser who values a house at $350,000, a week after saying it was worth $400,000.

"In a sense, $50,000 just disappeared when he said that," he said. "But it's all in the mind."

To take a super simple example... let's say I'm a famous artist and I paint a new picture. My last painting sold for £100k and this one is valued at the same price by art collectors. The painting is worth £100k. Now, a little while later, it turns out that I'm somehow a fraud and no one likes my paintings any more (). No one will buy my painting. It is worth zero. Value/wealth was created when I painted the painting, and destroyed later on when new information was revealed.

Similarly, if a tornado destroys your house, it hasn't transferred the value of your home to someone else, it's destroyed it. Now, instead of a tornado imagine a pandemic, and instead of a house imagine the whole economy.

 

[Dante]

Wealth and power needs to be decentralised from London anyway. If the wealth tax helps to achieve that, let the feckers go without their jellied eels. Then they can sell up and move to the far superior north.

 

[Norman Brownbutter]

You're not expected to have sympathy, but it's about what is fair. A wealth tax should tax the genuinely wealthy and 500k does not do that.



You can't possibly know that.

Consumer growth in the 1920s
Post war investment in the 1950s and 60s
Modernisation in the 1980s
Housing in the 2000s

Every generation has its boom period.

My mother bought a house in the ok part of the posh area of Glasgow for £64 grand in 1994. In 2002 she sold it for £143k and bought a house in the actual posh area for £146k. She sold that in 2013 for £260k. That same house today is worth upwards of £350k

Meanwhile, I bought I house for £90k that has gone up in value by just 25k in the 7 years Ive owned it. My mother was able to get onto the property ladder because of that right to by shit done by thatcher. Without that, she would have found it much harder to get on the ladder. How many generations since then have had the opportunity to get on the ladder with the ease that my mother and her generation did? My mother bought her 2 bedroom council flat in the 89/90 for just 15k. She sold it for 32k in 94. She went from the not that shitty part of town to the not quite toff part of town in one easy go. With no help from anyone but that right to buy thing and easy access to a mortgage with decent interest rates. Who can do the same today? I dont even live in a shit area and I cant see the gains that were made in 90s for the shit holes of Glasgow. Places like Ruchhill and Castlemilk wanting 150k for housing is a joke if you knew the areas and the people in them. Hell, theres flats in the junkie capital of Glasgow(Possil) that command 120/130k.

My mother retired in her early 60s.

 

[Cheimoon]

Yeah it sounds like the same thing tbh, with ours loosely based on property and funding local services. I say loosely because even with the age of the data aside, some councils keep it low as a vote winner, eg Westminster, which is one of the most expensive boroughs in London (and where a lot of MPs live, given its proximity to parliament).

Apparently...

Yeah, same idea then. Our tax also doesn't just consist of the amount we pay based on the value of the house, but also school board tax, contributions for essential services like fire fighting, and so on.

 

[RedRover]

My mother bought a house in the ok part of the posh area of Glasgow for £64 grand in 1994. In 2002 she sold it for £143k and bought a house in the actual posh area for £146k. She sold that in 2013 for £260k. That same house today is worth upwards of £350k

Meanwhile, I bought I house for £90k that has gone up in value by just 25k in the 7 years Ive owned it. My mother was able to get onto the property ladder because of that right to by shit done by thatcher. Without that, she would have found it much harder to get on the ladder. How many generations since then have had the opportunity to get on the ladder with the ease that my mother and her generation did? My mother bought her 2 bedroom council flat in the 89/90 for just 15k. She sold it for 32k in 94. She went from the not that shitty part of town to the not quite toff part of town in one easy go. With no help from anyone but that right to buy thing and easy access to a mortgage with decent interest rates. Who can do the same today? I dont even live in a shit area and I cant see the gains that were made in 90s for the shit holes of Glasgow. Places like Ruchhill and Castlemilk wanting 150k for housing is a joke if you knew the areas and the people in them. Hell, theres flats in the junkie capital of Glasgow(Possil) that command 120/130k.

My mother retired in her early 60s.

I live in the North East. My parents bought a house for £95k when I was about 7. When I was 18 they sold that house for £125k and bought another for £180k. In two years it had doubled in value and is still worth in excess of £360k. I know of people who bought houses in the best part of our town for £50k in the 80's and they're worth £500k plus.

I have nothing against people being fortunate, but a lot of people, however hard they have worked have been and don't understand how hard it is for younger generations to get onto the property ladder. There are millions of people in the UK who will never own a house, simply because they'll never earn enough to be able to buy one and pay rent. How does someone save for a deposit when they're spending a large percentage of their wage on rent and bills?

 

[Conor]

Yes. Don't get me wrong I'd give my left nut to be on 150K and you'd have a very nice life.... You're not in extreme wealth though. Not in the South Anyway.

150K after current tax is 90K. You can easily spend 5K a month on rent in London = 60K per year.... So yea. I don't think 150K is extreme.

If you are earning 150k a year, you have the means to be extremely wealthy. It doesn't matter if you decide to spend 5k a month on rent to live in some ridiculous apartment in central London making you cash 'poor', you are still earning more than 99% of the country.

 

[MikeUpNorth]

I live in the North East. My parents bought a house for £95k when I was about 7. When I was 18 they sold that house for £125k and bought another for £180k. In two years it had doubled in value and is still worth in excess of £360k. I know of people who bought houses in the best part of our town for £50k in the 80's and they're worth £500k plus.

I have nothing against people being fortunate, but a lot of people, however hard they have worked have been and don't understand how hard it is for younger generations to get onto the property ladder. There are millions of people in the UK who will never own a house, simply because they'll never earn enough to be able to buy one and pay rent. How does someone save for a deposit when they're spending a large percentage of their wage on rent and bills?

To be slightly contrarian here, there is plenty of compelling evidence that high rates of home ownership are bad for society. Excessive rates of home ownership are linked to higher unemployment, lower wages, and less business formation. This seems to be primarily due to reduced geographic mobility, lower productivity (longer commute times), and misallocation of capital in bidding up house prices rather than being directed to the productive economy.

While the effects are primarily on society in the aggregate, there are negatives for home owners themselves. It's known that frequently changing employer and progressing up the career ladder in the early stages of your career is important in raising your lifetime earnings - premature home ownership can impede that mobility. It's also the case that young people saving for a house deposit tend to keep that in cash (with good reason as they expect to need it in under 10 years), however this contributes to young people underinvesting in the stock market and missing out of the massive boost from long term compound returns.

If I were designing society, I would stop incentivising home ownership and further strengthen renter protections.

 

[Grinner]

To be slightly contrarian here, there is plenty of compelling evidence that high rates of home ownership are bad for society. Excessive rates of home ownership are linked to higher unemployment, lower wages, and less business formation. This seems to be primarily due to reduced geographic mobility, lower productivity (longer commute times), and misallocation of capital in bidding up house prices rather than being directed to the productive economy.

While the effects are primarily on society in the aggregate, there are negatives for home owners themselves. It's known that frequently changing employer and progressing up the career ladder in the early stages of your career is important in raising your lifetime earnings - premature home ownership can impede that mobility. It's also the case that young people saving for a house deposit tend to keep that in cash (with good reason as they expect to need it in under 10 years), however this contributes to young people underinvesting in the stock market and missing out of the massive boost from long term compound returns.

If I were designing society, I would stop incentivising home ownership and further strengthen renter protections.

My experience makes me agree with you. I constantly drove up my wages by moving around over a ten year period. Had I been a house owner it would have been too risky to do that.

As for your last sentence I think maybe the state providing cheap starter accomodation for everybody might be better than enriching renters. Homes that suit a need but aren't good enough to aspire to living in long-term.

 

[Cheimoon]

My experience makes me agree with you. I constantly drove up my wages by moving around over a ten year period. Had I been a house owner it would have been too risky to do that.

As for your last sentence I think maybe the state providing cheap starter accomodation for everybody might be better than enriching renters. Homes that suit a need but aren't good enough to aspire to living in long-term.

Or just two small for full-size families (which most starters don't have either). But that's basically apartments and those are often only for sale as well.

It's interesting how local attitudes to house ownership are. In place like the UK, US, and Canada, owning a house seems like the most natural thing there is and something that everybody very obviously aspires to. But house ownership isn't the gold standard in Germany, and they have their own good arguments. For basically any policy, I wish countries would look internationally more and don't argue as much from their history and status quo.

 

[F-Red]

To be slightly contrarian here, there is plenty of compelling evidence that high rates of home ownership are bad for society. Excessive rates of home ownership are linked to higher unemployment, lower wages, and less business formation. This seems to be primarily due to reduced geographic mobility, lower productivity (longer commute times), and misallocation of capital in bidding up house prices rather than being directed to the productive economy.

While the effects are primarily on society in the aggregate, there are negatives for home owners themselves. It's known that frequently changing employer and progressing up the career ladder in the early stages of your career is important in raising your lifetime earnings - premature home ownership can impede that mobility. It's also the case that young people saving for a house deposit tend to keep that in cash (with good reason as they expect to need it in under 10 years), however this contributes to young people underinvesting in the stock market and missing out of the massive boost from long term compound returns.

If I were designing society, I would stop incentivising home ownership and further strengthen renter protections.

Interesting take on it, I think the above is compounded further in the UK with the current housing shortage. Supply and demand at its finest.

 

[Pexbo]

Dont worry. Its the tories, theyll go after the poor, the sick and disabled and Scotland before theyll come for you.

The fact they’re even discussing the wealth tax is a clear sign they’ve killed most of them off over the last year.

 

[Walrus]

I think you’re as guilty of picking the wrong target there as you’re accusing others of doing. What about the billionaire owners paying their wages? Football remains one of the few avenues for working class people to join that elite. And yet unless you’re Messi or Ronaldo, you’ll never be a billionaire. Footballers become an easy target.

“that elite” shouldn’t exist, regardless of who may or may not have opportunities to join it.

Furthermore, how can anyone genuinely suggest that kicking a football around merits thousands of pounds per week? The answer of course is supply and demand, but that doesn’t really work here as it is not a free market. Economically, football exists as a monopoly by FIFA/FA etc - the barriers to entry into the market are simply far too large for some rival football association to try to set up. The beneficiaries of this are sky, players and others involved in the industry. The consumer is massively out of pocket compared with what a fair market value for the services rendered would be.

I think this is just false - wealth held in assets can just disappear. If my stock portfolio is worth £1m, and then the market crashes so it's now worth £500k, that difference in implied value hasn't been transferred from me to someone else, it's just gone, sadly.

To take a super simple example... let's say I'm a famous artist and I paint a new picture. My last painting sold for £100k and this one is valued at the same price by art collectors. The painting is worth £100k. Now, a little while later, it turns out that I'm somehow a fraud and no one likes my paintings any more (). No one will buy my painting. It is worth zero. Value/wealth was created when I painted the painting, and destroyed later on when new information was revealed.

Similarly, if a tornado destroys your house, it hasn't transferred the value of your home to someone else, it's destroyed it. Now, instead of a tornado imagine a pandemic, and instead of a house imagine the whole economy.

I take your point although I don’t fully agree with it. As with most things, I think the truth lies somewhere in the middle ground. To provide some sort of response to your points though;

If a tornado destroys houses, it creates demand for more houses, which means the construction sector effectively gains wealth/value. Not at a 1:1 ratio by any means, but we have seen this occur throughout COVID with certain industries (pharmaceuticals, online shopping services, video conferencing software) suddenly get a major spike of demand compared with the norm.
Realistically though when we are talking about wealth in the sense of money and, this has not been truly depleted due to COVID - the same amount of money is in circulation. If anything, the crash of asset value elsewhere should arguably cause deflation and an increase in the relative value of currency. Unfortunately when so much of the currency is controlled by the top 1%, the regular market forces for the really tend to apply as well as they should.

As with most things, I think the truth lies somewhere in the middle ground.

 

[acnumber9]

“that elite” shouldn’t exist, regardless of who may or may not have opportunities to join it.

Furthermore, how can anyone genuinely suggest that kicking a football around merits thousands of pounds per week? The answer of course is supply and demand, but that doesn’t really work here as it is not a free market. Economically, football exists as a monopoly by FIFA/FA etc - the barriers to entry into the market are simply far too large for some rival football association to try to set up. The beneficiaries of this are sky, players and others involved in the industry. The consumer is massively out of pocket compared with what a fair market value for the services rendered would be.



I take your point although I don’t fully agree with it. As with most things, I think the truth lies somewhere in the middle ground. To provide some sort of response to your points though;

If a tornado destroys houses, it creates demand for more houses, which means the construction sector effectively gains wealth/value. Not at a 1:1 ratio by any means, but we have seen this occur throughout COVID with certain industries (pharmaceuticals, online shopping services, video conferencing software) suddenly get a major spike of demand compared with the norm.
Realistically though when we are talking about wealth in the sense of money and, this has not been truly depleted due to COVID - the same amount of money is in circulation. If anything, the crash of asset value elsewhere should arguably cause deflation and an increase in the relative value of currency. Unfortunately when so much of the currency is controlled by the top 1%, the regular market forces for the really tend to apply as well as they should.

As with most things, I think the truth lies somewhere in the middle ground.

Yeah but it does exist. And like I said, the players aren’t the richest people in football. Footballers wealth is no more obscene than an actor or pop stars but they’re brought up in these discussions. Footballers are specifically held up as the examples of obscene salaries because of where they come from.

 

[11101]

My mother bought a house in the ok part of the posh area of Glasgow for £64 grand in 1994. In 2002 she sold it for £143k and bought a house in the actual posh area for £146k. She sold that in 2013 for £260k. That same house today is worth upwards of £350k

Meanwhile, I bought I house for £90k that has gone up in value by just 25k in the 7 years Ive owned it. My mother was able to get onto the property ladder because of that right to by shit done by thatcher. Without that, she would have found it much harder to get on the ladder. How many generations since then have had the opportunity to get on the ladder with the ease that my mother and her generation did? My mother bought her 2 bedroom council flat in the 89/90 for just 15k. She sold it for 32k in 94. She went from the not that shitty part of town to the not quite toff part of town in one easy go. With no help from anyone but that right to buy thing and easy access to a mortgage with decent interest rates. Who can do the same today? I dont even live in a shit area and I cant see the gains that were made in 90s for the shit holes of Glasgow. Places like Ruchhill and Castlemilk wanting 150k for housing is a joke if you knew the areas and the people in them. Hell, theres flats in the junkie capital of Glasgow(Possil) that command 120/130k.

My mother retired in her early 60s.

If your mother had invested that money in a bog standard S&P500 tracker it would be worth over 400k by now. If you had done that instead of buying your house you would have about 250k now.

There will always be opportunities but you have to find them and take the risk, the current generation cant just expect to do the same thing the previous generation did and have the same thing happen. The boomer generation didnt know houses were going to go up the way they did, they still had to take the risk of buying them, with interest rates over 10% at times.

 

[Pexbo]

If your mother had invested that money in a bog standard S&P500 tracker it would be worth over 400k by now. If you had done that instead of buying your house you would have about 250k now.

There will always be opportunities but you have to find them and take the risk, the current generation cant just expect to do the same thing the previous generation did and have the same thing happen. The boomer generation didnt know houses were going to go up the way they did, they still had to take the risk of buying them, with interest rates over 10% at times.

Personally I’d rather have all my money invested in stocks and be homeless.

 

[Cassidy]

Very wealthy then

Not even very. You have to remember the sort of numbers some people earn there is a scale.

 

[Cassidy]

Course you are. You’d be in the top 0.2% I imagine

Yet I know people who earn that amount a month.

I also know some who earn around that a year and struggle to buy a house in London. Its definately not extreme wealth and you wouldn't know it till you’re there.

 

[Wumminator]

Yet I know people who earn that amount a month.

I also know some who earn around that a year and struggle to buy a house in London. Its definately not extreme wealth and you wouldn't know it till you’re there.

What on Earth do you mean.
If you have that much money you are extremely wealthy.

 

[Cassidy]

What on Earth do you mean.
If you have that much money you are extremely wealthy.

I disagree thats what I mean. An 150k a year salary doesnt make you EXTREMELY wealthy. Wealthy yes but not extremely.

What then do you call a CEO of a fortune 500?

What then do you call Marcus Rashford

What then do you call Jeff Bezos?

 

[entropy]

Personally I’d rather have all my money invested in stocks and be homeless.

Webistics is our pick of the week.

 

[africanspur]

Yet I know people who earn that amount a month.

I also know some who earn around that a year and struggle to buy a house in London. Its definately not extreme wealth and you wouldn't know it till you’re there.

What on earth are they spending their money on that they are struggling to buy a house in London on 150k/year?

 

[Cassidy]

What on earth are they spending their money on that they are struggling to buy a house in London on 150k/year?

You have to save for a deposit. Just because you bagged a job with a salary doesnt mean you have cash immediately sitting in your bank account. Its not rocket science. It takes a few years to save that, easier for them though yes

For instance me personally it took me a few 3 years of living back with my mum (because I literally came from property and had a lot of family debt) I only managed to buy a house last year and that was in Essex not London due to the prices

I would say I am wealthy sure but definitely not extremely. Maybe in 5-10 years ok sure

 

[Rado_N]

Webistics is our pick of the week.

 

[sullydnl]

As of 2019 there were only 321,000 people in the UK earning more than £150,000 a year, according to HMRC.

 

[Wumminator]

I disagree thats what I mean. An 150k a year salary doesnt make you EXTREMELY wealthy. Wealthy yes but not extremely.

What then do you call a CEO of a fortune 500?

What then do you call Marcus Rashford

What then do you call Jeff Bezos?

A wanker

A legend

A knobhead.

 

[Cassidy]

A wanker

A legend

A knobhead.

Hahaha touche

 

[Cassidy]

As of 2019 there were only 321,000 people in the UK earning more than £150,000 a year, according to HMRC.

Yup and how many earned over 1m...

i guess a quesrion would be what do you then call wealthy (not extreme) 100k? 80k?. Also wealth isnt just your salary. There are people who earn say 50k a year but inherited 2m worth of assests....

Real wealth is usually asset based