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Politics 2023 (Read 465981 times)

ali k

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#3475 Re: Politics 2023
January 25, 2023, 05:54:29 pm
Re Zahawi, I hadn't been fully aware of his use of SLAPPs against journalists especially Dan Neidle. That's just as bad as the taxes in my book, particularly as the journalists were correct.
Yep, which is why Sunak deferring to an ethics adviser to tell him if this is bad enough to resign/get sacked over is pathetic. The letters from Zahawi's legal team are in the public domain - 2 minutes spent reading these would tell Sunak all he needs to know.

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#3476 Re: Politics 2023
January 26, 2023, 01:48:53 am
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"Inheritance is a very good way of increasing inequality - I've seen a paper suggesting that the massive reduction in estate taxes in the US is a key driver in the increasing wealth gap there (though it doesn't seem to have an effect on consumption and income inequality). The question is, do we want wealthy households to have wealthy descendents? Given that in the UK we hold our wealth in property this has a lot of knock on effects in terms of overall economic performance as well as individual life chances (it gets hard to move to where the good jobs are as the wealthy households bid up property prices there). Or do we want a more equal society? In which case IHT has a role to play." - seankenny

Agreed.
Only I'd go much, much further and say that the left should IMO be making the case for 100% inheritance tax (above a pretty small threshold) and enforcing it rigorously to stop people using trusts etc to get around it.  I'd even say that the right should make the same case if they genuinely believe in the meritocracy that so many of them bang on about.  100% inheritance tax is what a meritocracy looks like.  (Of course the right don't actually want that, they just talk about meritocracy without having any real intent to create one).

Kids of rich parents will still have a massive advantage.  In general, they'll have better education, more contacts, have seen more of the world on holidays, and no doubt have more money when they are young etc etc.  They don't need to also be handed multi million pound homes, or millions in shares when their parents die.  In particular, with housing, what has happened to house prices since the mid 90s is utterly, utterly appalling and has been actively promoted (disgracefully) by governments from both main parties for the last 25 years.  This country has essentially gone back hundreds of years in the last 25 in terms of opportunities - if you're young and your parents don't own a house, then your chances of ever having a decent life are extremely poor (unless you emigrate, which is increasingly the best option for young people in the UK).

For either party this should have been an utter tragedy that they should have been fighting against.  Sadly, both parties simply care more about getting elected than having decent policies.  As a result, both parties realised that young people don't tend to vote, and so to keep the people that do vote (the older, property owning folks) happy, they needed to just let house prices keep increasing.  Both parties knew perfectly well that in the end this would be disastrous, both did precisely nothing about it (and often fanned the flames). The Tory party increasing the inheritance tax threshold as soon as they were in government was the final ridiculous straw.  We've gone back centuries to effectively being an aristocracy again, just with a larger number of property owners.

Massively increasing inheritance tax would be a great start to resolving this.  Obviously, building more houses pretty much everywhere would also help (the fact that the Lib Dems are currently blocking this, and frightening the Tories into blocking this pretty much everywhere is also a disgrace).  And so would adjusting various other taxes so that owning second homes and rental income (particularly of the short term airbnb type) was taxed far more.  But inheritance tax could and should be a crucial factor in starting to undo the tragedy of UK housing policy for the last 25 years.

That being said, JB is right that if you want the above policy to actually be intellectually coherent, then you need to obviously abolish the monarchy, and turn over a lot of land owned by massive estates to National Parks etc.  All of which is fine by me. Although if that was politically a problem, you could just massively increase inheritance tax anyway.  Would hardly be the first government policy that wasn't exactly coherent.

Certainly if the left want to spend more on various things, that is how I'd raise revenue, rather than by raising income tax or doing what Corbyn, Truss and Johnson wanted to do and just borrow loads more, which was always a terrible idea, even if the bond markets allowed it without destroying the economy.  Lots of people earning 50K are not wealthy.  In various parts of the country people earning 50K may never be able to buy a decent home, if their parents aren't well off.  Raising income tax for people already getting less than half of any increase in their salary (after pension, tax at 40% and NI are taken out) significantly reduces the incentives for people to progress in their careers which just isn't a good idea.

Of course, any party coming out and saying they'd make inheritance tax 100% overnight wouldn't get elected, as most people that vote own property and want to give it to their kids.  But IMO the left should be making the case for raising that tax (as opposed to income tax), perhaps modestly to start with and then keep increasing it over time.

« Last Edit: January 26, 2023, 02:18:46 am by Nemo »

Johnny Brown

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#3477 Re: Politics 2023
January 26, 2023, 10:47:28 am
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I'm surprised the green party want to abolish it - do they want a wealth tax instead that includes lifetime gifts of wealth?

Green party policy is to replace the tax on the (dead) donor with tax on the recipient. So if it was split between poor siblings they'd pay less. If it went to the already wealthy heir he'd get hammered. This is of course as part of a broad swathe of reforms including UBI. I'll continue to vote for them, it all makes sense to me, though I doubt we'll see it all get tried out any with any more conviction than Corbyn or Truss's ideas were.

Quote
the left should IMO be making the case for 100% inheritance tax (above a pretty small threshold)

This has been tried before. In the sixties and seventies estate duty hit 80/85%. The National Trust was very nearly bankrupted by the number of unsaleable decrepit stately homes they were gifted by families who unsurprisingly didn't have 80% of the value in cash. I have no beef with this, but I doubt the electorate as a while would stand for it (as they didn't then), given the popularity of Downton and the 'King etc. Such estates are a big part of England's landscape and it would be great to see a landscape-scale rewilding open access approach to their future, although my local estate growing up was gifted to the NT then passed to the council, is now a park with free public access (good) but an overgrazed eco wasteland (bad) as grazing rights are presumably a key source of income. The NT have quite a good track record of balancing the eco with the Jane Austen theme park but it's not to everyone's taste.

It can also be instructive to examine edge cases when formulating this sort of policy. You'd presumably want some sort of age limit? Or is the 12 year old whose parents die in a car crash left destitute? I think the Greens approach is more sensible.




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#3478 Re: Politics 2023
January 26, 2023, 11:07:19 am
Would significant increases on inheritance tax affect behavior? I can picture a lot of pensioners trying to get rid of their wealth before they die, and I imagine there would be semi-legal ways in which it can effectively be passed to their families without it ending up back in the economy in a helpful way? Legal or illegal, I doubt many people near the end would care if it meant avoiding further taxes after death! (I'm not saying that's right but it's probably how a lot of people would think)

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#3479 Re: Politics 2023
January 26, 2023, 11:23:22 am
 I think the reason the IHT issue sticks in people's craw is that it seems so unfair (I've been taxed on this money once already), we set a lot of store in property ownership and not being able hand that property down to children makes us feel cheated and it's all topped off by the fact we know it isn't an issue for the rich/super rich.

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#3480 Re: Politics 2023
January 26, 2023, 12:25:34 pm
Re: tax in general. One thing I’ve often wondered is whether there’s something in the name that could be changed to alter the framing / psychology of how taxes are thought of. Clearly it’s never gonna happen, but I always feel there’s a disconnect in a lot of minds between paying into a societal fund and then that fund paying out to society (redistributed by govt).

Too often they’re talked about in isolation. Nasty tax man stealing all my money, and benevolent govt paying for things. Would it be different if tax had a cuddly sounding name that linked the two and made it clearer govt just redistributed the money? Public Welfare Payment?? I’m sure you could focus group some punchy name for it. Then people might not feel so bad about paying into the fund, or leaving money to it through IHT when they die instead of giving away to cat charities or whatever. Might be more of a stigma attached to cash in hand tax dodgers too? Like I say, never gonna happen but I do wonder.

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#3481 Re: Politics 2023
January 26, 2023, 12:32:52 pm
Thanks JB - the greens policy seems much fairer to me to. Sadly nothing will change as it's electoral suicide to discuss even though the majority of the people frothing at the mouth with anger at the 'death tax' will never have to pay any. It's the same with council tax - it makes no sense to base it on what your house was worth in 1991 but current politicians of both parties don't want to look at it. It's difficult to see any Tory as decent and competent when there are so many things they could have been doing to make things better rather than pissing around with Brexit and culture wars.

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#3482 Re: Politics 2023
January 26, 2023, 12:36:25 pm
I think the reason the IHT issue sticks in people's craw is that it seems so unfair (I've been taxed on this money once already), we set a lot of store in property ownership and not being able hand that property down to children makes us feel cheated and it's all topped off by the fact we know it isn't an issue for the rich/super rich.

Judging by a lot of the views on here it seems like lots of people have a very visceral reaction to inheritance tax - if a forum as generally leftish leaning as this feels like this how does the average Daily Telepgraph or Mail reader feel!?

My feelings on this lean much more those expressed by the likes of Alex - IHT is only levied at a pretty high level (approx £1,000,000 for average house owning couple, £500,000 for a single person assuming passing majority on to direct descendants), a lot of the value of an estate hasn't been previously taxed (significant (majority?) of most estates is housing and increase in value of main residence isn't taxed) and inheritance in general can be strong driver of inequality so taxing it to some extent seems to make sense to me.

Examples here regarding how much might be paid:

https://www.drewberryinsurance.co.uk/inheritance-tax-advice

Example 2 , a £1.300,000 estate from a married couple would owe £120,000 IHT - doesn't feel like the the state is gouging all peoples hard earned money to me. 

I do think the mechanisms and level of IHT (including controlling avoidance of it) could probably benefit from change but given how emotive it seems it's probably very unlikely to happen.




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#3483 Re: Politics 2023
January 26, 2023, 12:43:48 pm
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Too often they’re talked about in isolation. Nasty tax man stealing all my money, and benevolent govt paying for things. Would it be different if tax had a cuddly sounding name that linked the two and made it clearer govt just redistributed the money? Public Welfare Payment?? I’m sure you could focus group some punchy name for it.

Like National Insurance? Not sure people care that much when they're moaning about the deduction. Making the employer pay the tax direct on top of pay rather than framing it as a deduction on the payslip might help.

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#3484 Re: Politics 2023
January 26, 2023, 12:56:04 pm
Yep, which is why Sunak deferring to an ethics adviser to tell him if this is bad enough to resign/get sacked over is pathetic. The letters from Zahawi's legal team are in the public domain - 2 minutes spent reading these would tell Sunak all he needs to know.

Latest news on "innocent mistakes" from the head of HMRC:
https://www.theguardian.com/politics/2023/jan/26/hmrc-boss-tells-mps-innocent-errors-dont-attract-penalties-after-nadhim-zahawi-tax-row

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#3485 Re: Politics 2023
January 26, 2023, 01:36:19 pm
Re: tax in general. One thing I’ve often wondered is whether there’s something in the name that could be changed to alter the framing / psychology of how taxes are thought of. Clearly it’s never gonna happen, but I always feel there’s a disconnect in a lot of minds between paying into a societal fund and then that fund paying out to society (redistributed by govt).

Too often they’re talked about in isolation. Nasty tax man stealing all my money, and benevolent govt paying for things. Would it be different if tax had a cuddly sounding name that linked the two and made it clearer govt just redistributed the money? Public Welfare Payment?? I’m sure you could focus group some punchy name for it. Then people might not feel so bad about paying into the fund, or leaving money to it through IHT when they die instead of giving away to cat charities or whatever. Might be more of a stigma attached to cash in hand tax dodgers too? Like I say, never gonna happen but I do wonder.

I think you're quite right that there's a psychological element. Intellectually, I understand that tax is a positive thing that I agree with, but unfortunately this isn't often the first reaction to deductions on my pay slip, and I think that social/environmental conditioning has played a large role.

As stated earlier, I grew up in Doncaster, in an ex-mining village. Fortunately, I had a relatively good upbringing as my dad was one of the lucky few who managed to get a factory job after the pits closed. Most families weren't so lucky, and the area has declined significantly alongside generations of unemployment. People who live here are often brought up hating the government - there were literally street parties and burning effigies when Thatcher died!  They have the impression that the government doesn't care about them and their home towns will never see adequate support/investment. Considering that those who do work are predominantly in manual jobs, amazon warehouses or call centres, possibly struggling to make ends meet, there's no wonder that the thought of having more taken away to be squandered doesn't sit well. It's likely my upbringing still affects my psychology, despite now being an educated, middle-class (*shudder*) engineer living in a city.

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#3486 Re: Politics 2023
January 26, 2023, 02:34:03 pm
Green party policy is to replace the tax on the (dead) donor with tax on the recipient. So if it was split between poor siblings they'd pay less. If it went to the already wealthy heir he'd get hammered. This is of course as part of a broad swathe of reforms including UBI. I'll continue to vote for them, it all makes sense to me, though I doubt we'll see it all get tried out any with any more conviction than Corbyn or Truss's ideas were.

The problem with including an estate as part of the annual income is that the typical estate is much larger than the typical annual salary, eg if someone dies still in their home and has a couple of kids, the estate could easily be worth £150k or more to each child, which is roughly five times an average salary. Combine that with a reduction in personal allowances (due to the Green's universal basic income policy) and a progressive taxation system means that realistically much of nearly all estates are going to be taxed at 40% or whatever the higher rates of tax are. It then incentivises minimising income if you think your parents are about to die, or generally having a distortionary effect on behaviour which could have unintended negative consequences. Given that income does change year-on-year, it makes what you'd actually receive in inheritance really opaque, hard to plan for and hard to collect.

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#3487 Re: Politics 2023
January 26, 2023, 02:45:50 pm
The man who accused police of "spaffing money up the wall" by investigating child sex abuse is now spending well over £200,000 of taxpayer cash on legal fees to defend his lockdown parties. When the fee from just one of his speeches in the US could've easily covered this. There are no words to describe what a vile human being he is.

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#3488 Re: Politics 2023
January 26, 2023, 04:45:29 pm
https://www.bbc.co.uk/news/uk-politics-64410490

Reading between the lines, it appears the head of HMRC is saying "I can't comment on individual cases, but he's definitely guilty as sin".

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#3489 Re: Politics 2023
January 26, 2023, 05:43:24 pm
Re Zahawi, I hadn't been fully aware of his use of SLAPPs against journalists especially Dan Neidle. That's just as bad as the taxes in my book, particularly as the journalists were correct.
Yep, which is why Sunak deferring to an ethics adviser to tell him if this is bad enough to resign/get sacked over is pathetic. The letters from Zahawi's legal team are in the public domain - 2 minutes spent reading these would tell Sunak all he needs to know.

I think your point of view is entirely reasonable, but another way to look at it would be that Sunak has a flimsy base of support in his party, so he can't purge out all the people he would really rather weren't there (reliably reported by several sources that he hated the fact that he had to give Braverman a top job). Therefore getting a needless justification for sacking Zahawi from an ethics advisor is useful for him as he can say that there was no choice.

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#3490 Re: Politics 2023
January 27, 2023, 07:26:23 am
I think you are both right. I expect Sunak wants a way to deflect heat within the party  for removing Zahawi. Equally, the situation is so cut and dried that he looks impossibly weak for not firing him pronto. He says he’s waiting on the report, yet could ask him for clarification on any detail he wants. He is Zaharwi’s boss, just summon him to the office.

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#3491 Re: Politics 2023
January 27, 2023, 09:47:45 am
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The problem with including an estate as part of the annual income is that the typical estate is much larger than the typical annual salary

Good point, although I'm not sure they're necessarily saying that it must be treated simply  as income. I suppose the answer would be a separate tax rate on inheritance to income, ramping up from say 10% at £100,000 to 80% at >£2 million. But it still seems fairer to me to tax the recipients not the estate.

Quote
Reading between the lines, it appears the head of HMRC is saying "I can't comment on individual cases, but he's definitely guilty as sin".

Indeed. Presumably the decision not to prosecute was influenced by his coming forward and agreeing to pay the fine, rather than political pressure. But it does make you wonder how many similar cases are missed due to them not being in the public eye.

ali k

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#3492 Re: Politics 2023
January 27, 2023, 10:06:34 am
Presumably the decision not to prosecute was influenced by his coming forward and agreeing to pay the fine, rather than political pressure. But it does make you wonder how many similar cases are missed due to them not being in the public eye.

Estimates from HMRC for 2020-2021 were that 'Failure to take reasonable care', 'Avoidance', and 'Legal interpretation' account for £11bn of lost revenue.

https://www.gov.uk/government/statistics/measuring-tax-gaps/7-tax-gaps-illustrative-tax-gap-by-behaviour

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#3493 Re: Politics 2023
January 27, 2023, 10:19:22 am
Presumably the decision not to prosecute was influenced by his coming forward and agreeing to pay the fine, rather than political pressure. But it does make you wonder how many similar cases are missed due to them not being in the public eye.

Estimates from HMRC for 2020-2021 were that 'Failure to take reasonable care', 'Avoidance', and 'Legal interpretation' account for £11bn of lost revenue.

https://www.gov.uk/government/statistics/measuring-tax-gaps/7-tax-gaps-illustrative-tax-gap-by-behaviour

Crikey, that's horrendous. Still not quite as much as the government wasted on completely useless PPE during the same period.

Here's a cheerful piece of news though: BBC News - Andrew Bridgen threatens to sue Matt Hancock in Covid vaccine row
https://www.bbc.co.uk/news/uk-politics-64414637

Insane MP threatening to sue disgraced MP; Andrew Bridgen is absolutely crazy, nearly weird enough to be a Republican party congressman. 

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#3494 Re: Politics 2023
February 01, 2023, 01:40:53 pm
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The problem with including an estate as part of the annual income is that the typical estate is much larger than the typical annual salary

Good point, although I'm not sure they're necessarily saying that it must be treated simply  as income. I suppose the answer would be a separate tax rate on inheritance to income, ramping up from say 10% at £100,000 to 80% at >£2 million. But it still seems fairer to me to tax the recipients not the estate.

I also think property sellers should be paying tax, not the buyers. For every other asset you pay tax on gains - why is there a different regime for property? This also benefits the 'haves' higher up the housing ladder more than anyone else. This would also inhibit property being seen as the best way of making money in this country, which must contribute to loads of other societal/economic ills lack of innovation, lack of productivity, continuing lifeline for a 'landowning' class who sit over the top of the rest of society etc.

We need much stricter regulation and taxing of landlords too.

I read this earlier and thought it was quite good: https://www.vice.com/en/article/dy8qav/how-to-fix-the-uk-housing-crisis

Vienna apparently has a good housing market with about 25 percent owner occupancy, 25 percent social housing and cooperatives, 25 percent council housing and 25 percent private renting - which is strictly regulated.


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#3495 Re: Politics 2023
February 01, 2023, 02:02:05 pm
I don't disagree from a fairness point of view although if the seller pays it is a disincentive to sell and I'd say the biggest problem with housing is the shortage of supply. On stamp duty if you want a good example of the nonsense rich people will argue to avoid paying the tax we all pay Google Gu and getting just desserts. It's a classic case of having to defend against tax avoidance from greedy rich people and their  tax advisors!

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#3496 Re: Politics 2023
February 02, 2023, 08:34:10 am
https://twitter.com/ianbremmer/status/1620949369561419777?t=l_1ofIvr2D5Y4tV8YS658g&s=19

An interesting look at inequality across Europe which isn't necessarily what you might expect. 

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#3497 Re: Politics 2023
February 02, 2023, 09:01:01 am
Actually quite surprising. For me, less the big black bogies and more the anaemic pinks. Coupled with a mild surprise at how the UK stacks up, um, so well(?)
Ireland too. I would have expected it to be better than the UK. Obviously my un examined impressions of Irish egalitarianism are skewed.
I am, but should not be, surprised by the flat nature of Dutch society. I’ve been getting a crash course in Dutch business practices and culture, over the last six months. Partly (not least) because my co-director (and in fact former (still?) mentor (74 now and GM to my Engineering manager during my first Shipyard employment, some 23 years ago)) is Dutch and partly because the vast majority of my current suppliers, consultants and designers, are Dutch (even the two based in Taiwan).
I think they’re a bunch of Pirates.
Not Disney caricatures. Much more the democratic, equal opportunity, societies in microcosm I’ve read about.
They’ll rob you blind, and yet I can’t help but admire them…

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#3498 Re: Politics 2023
February 02, 2023, 09:45:22 am
I don't disagree from a fairness point of view although if the seller pays it is a disincentive to sell and I'd say the biggest problem with housing is the shortage of supply. On stamp duty if you want a good example of the nonsense rich people will argue to avoid paying the tax we all pay Google Gu and getting just desserts. It's a classic case of having to defend against tax avoidance from greedy rich people and their  tax advisors!

Tax dodging isn't a trait particular to 'the rich' (whatever that nebulous category includes  - presumably 'them', not 'us'). I lost count of the number of people I know in construction determinedly evading tax. (yeah but they're 'poor' so it doesn't count etc.). I think it just grates with people more when a millionaire is a scrooge or a tax-dodger. When it's a climbing bum doing it, the trait is more cuddly.

I posted years ago on IHT should be somewhere around 90%, with loopholes closed. And to counter the disincentive, income tax should be super-low for wealth creators during life. The system is full of perverse incentive and plain inequality. Property don't get me started, it's an area of capitalism I think needs strong protection from profiteering. It's the commodification of property into a speculative asset that has imo led to the creation of such a skewed market. Welsh gov are actually hitting it hard - watch what starts to happen to the market from April this year as they've brought in new planning laws, closed loopholes and made it extremely difficult to run a second home as an airbnb profitably (or even get planning permission in the first place).


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#3499 Re: Politics 2023
February 02, 2023, 10:19:00 am
I don't disagree from a fairness point of view although if the seller pays it is a disincentive to sell and I'd say the biggest problem with housing is the shortage of supply. On stamp duty if you want a good example of the nonsense rich people will argue to avoid paying the tax we all pay Google Gu and getting just desserts. It's a classic case of having to defend against tax avoidance from greedy rich people and their  tax advisors!

Tax dodging isn't a trait particular to 'the rich' (whatever that nebulous category includes  - presumably 'them', not 'us'). I lost count of the number of people I know in construction determinedly evading tax. (yeah but they're 'poor' so it doesn't count etc.). I think it just grates with people more when a millionaire is a scrooge or a tax-dodger. When it's a climbing bum doing it, the trait is more cuddly.

I posted years ago on IHT should be somewhere around 90%, with loopholes closed. And to counter the disincentive, income tax should be super-low for wealth creators during life. The system is full of perverse incentive and plain inequality. Property don't get me started, it's an area of capitalism I think needs strong protection from profiteering. It's the commodification of property into a speculative asset that has imo led to the creation of such a skewed market. Welsh gov are actually hitting it hard - watch what starts to happen to the market from April this year as they've brought in new planning laws, closed loopholes and made it extremely difficult to run a second home as an airbnb profitably (or even get planning permission in the first place).

I think we are getting 'tax efficient' confused with determined tax avoidance and evasion arent we? one is perfectly legal and wouldn't result in you getting pulled up by the revenue, the other will and has in the case of Zahawi.

You will know more than me Pete, but aren't many people in construction often paying themselves by dividend to avoid NI contributions; a system set up to encourage people setting up on their own? Do you have a moral objection to this or am I misreading? To me thats not avoidance, thats analogous to using a tax free ISA.


Property don't get me started, it's an area of capitalism I think needs strong protection from profiteering. It's the commodification of property into a speculative asset that has imo led to the creation of such a skewed market. Welsh gov are actually hitting it hard - watch what starts to happen to the market from April this year as they've brought in new planning laws, closed loopholes and made it extremely difficult to run a second home as an airbnb profitably (or even get planning permission in the first place).

This I fully agree with. I can't blame anyone for investing in property as its simply so obviously a good investment. It needs much better regulation.

 

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