There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money.
It's a loophole the mega-rich are using to avoid tax.
The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
And one of the big things they've got? No capital gains on those stocks when passed to children.
So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
Not just rich people. Here in estonia small startups like mine pay minimum tax, and reinvest the rest in company.
> There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money.
They have a stockholding in a firm, and the firm pays CIT on income earned. That sounds fair.
> The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
Why should my kids be liable to pay a tax when they inherit my house? That house was bought by my income on which PIT was duty fully paid. Again sounds very fair to me.
> And one of the big things they've got? No capital gains on those stocks when passed to children.
If you just think it's the government stealing your stuff, then it seems very unfair to have your stuff taxed after you die.
But what tax is, under another lens, is a way to divert the capacity of a state to social ends. Everything from the military to the police to prisons and the justice system is what enables you to live in peace and accumulate stuff in the first place. Those are social goods.
So how do you fund this spending? How do you incentivize other people to protect your house? Well, the solution of tax is they take a little bit of your stuff over time, in a predictable way, according to rules that are pre-agreed and can be changed with consensus.
The really really tricky part is when taxes are used to penalize you - for instance used to fund agencies that even actively harass you (ICE recently).
Or go to fund programs that only your political opponents benefit from.
Also, anyone living in the bay area can attest how terrible the roads are for how much tax money clearly gets spent on them.
I think taxing assets is a horrible idea, but the simple solution to all of this is simply not having any step up in basis when assets are transferred to heirs - that way the tax eventually gets paid even if it’s deferred.
The underlying problem is the UK is reverting back to a system where you have property and can then therefore build wealth, or you don't have property, and somewhere to live costs over 50% of your net income.
This isn't to say taxing wealth is actually the solution, but it's the catch all that people like to scream about.
30% of pensioners are millionaires in the UK, and they recieve a state pension. Fixing that would probably immediately turn a massive budget surplus ( albeit a nasty suprise for financial planning ).
However, suddenly if you find pensioners releasing funds from their property, you affect what's going to be inherited and that's a no go area. There's no real concept of fairness in the debate, just the politics of it all.
An issue with this is that even if pensioners are millionaires and getting state pension, they’re definitely the right people to trickle it down to where it’s most needed.
I think “30% of pensioners are millionaires” is also a bit moot given the majority of those are living in properties that they didn’t buy for millions and have lived in while house prices have gone up. My parents for example are probably close to your millionaire threshold and it seems unfair that they’d have to sell their home they’ve lived in for decades and want to continue living in just because the housing market has pushed its value past the point where it seems like it should be taxed. They’d have to sell it just to pay that tax and move somewhere smaller, which seems unfair to force on people approaching 80yo.
Like you're talking about fairness, but you're also arguing that other people should pay taxes to give your parents money, in order for them to keep their property, whilst many of those paying their taxes, will never get on the ladder, and if they do, will never afford such a lovely house.
Where's the fairness in that?
Further, most folks are aware of equity release and your parents could borrow against the house and not move. The main outcome is you wouldn't get it. Now I've bought such a house but I didn't get it from my parents, I got it by earning the money which I've paid income tax on, so it's literally required 2-3x in earnings to get there.
What's fair in that?
For the record, I have a kid in private school and will try my best to pass on as much as possible, so I totally get both your parents and your own position. I'm just poking fun on "fairness" because fairness in politics never seems to consider the person the money comes from and when you consider all angles, it's rarely fair.
You realize both the US and Uk’s national pension schemes are very progressive (low earners revive a larger share of their contributions than high earners and I don’t think anyone really gets back what they put in adjusting for longevity
It's a loophole the mega-rich are using to avoid tax.
The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
And one of the big things they've got? No capital gains on those stocks when passed to children.
So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.