Wealth tax and the rich

[mc2fool]

Despite all of these heinous redistributive taxes, rich people tend to stay rich and poor people tend to stay poor. The economy would appear to be redistributive the other way and is the larger proportion.

W.

The way out of being poor is to have a job, yet:

Yet indeed...

"Employment rates have been at or near record highs, the number of workless households has halved since the mid-1990s, and the fraction of lone parents in work has pretty much doubled. Worklessness and associated poverty have by no means gone away, but they are a smaller problem than they once were. Today’s big problems are different — not so much the number of jobs, but the quality of those jobs, and the rates of poverty now faced by people in work.

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working." https://ifs.org.uk/articles/lots-more-people-are-working-jobs-keep-them-poverty

[Nimrod103]

and at the top specialist skills are over-rewarded.

How would you see this applied to the NHS? Obviously you think consultants and top surgeons are paid too much. It's difficult enough to see a consultant or doctor already, do you think paying them less will make them more readily accessible? You must do. What about MPs, do they deserve their latest pay rise?

[JohnB]

Remember the oncologist

He works 48 hours a week for the NHS, and is paid at a guess about £180000 a year.

Sounds fine to me as an hourly rate for someone doing a difficult job at the top of his profession. I'm sure he pays his taxes, and if he spends on the finer things in life, he won't be getting rich enough for a wealth tax.

I guess his post tax income is 5 times that of the hospital porter, and that's fine too. But if you tell me the porter has savings of £10k, and the oncologist £5m, that's another matter.

[Nimrod103]

The way out of being poor is to have a job, yet:

Yet indeed...

"Employment rates have been at or near record highs, the number of workless households has halved since the mid-1990s, and the fraction of lone parents in work has pretty much doubled. Worklessness and associated poverty have by no means gone away, but they are a smaller problem than they once were. Today’s big problems are different — not so much the number of jobs, but the quality of those jobs, and the rates of poverty now faced by people in work.

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working." https://ifs.org.uk/articles/lots-more-people-are-working-jobs-keep-them-poverty

That article is nearly a year old.
I suspect the conclusion suffers from the usual definition of poverty in the UK being a relative not absolute term. i.e. poverty can only ever be reduced by incomes becoming more equal. Yet today's technological and information dominated society requires incomes to become more unequal in order to incentivise people to acquire skills and work productively. America is perhaps the most productive society today and is also one of the most unequal. Probably a connection there.

[scrumpyjack]

Yet indeed...

"Employment rates have been at or near record highs, the number of workless households has halved since the mid-1990s, and the fraction of lone parents in work has pretty much doubled. Worklessness and associated poverty have by no means gone away, but they are a smaller problem than they once were. Today’s big problems are different — not so much the number of jobs, but the quality of those jobs, and the rates of poverty now faced by people in work.

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working." https://ifs.org.uk/articles/lots-more-people-are-working-jobs-keep-them-poverty

That article is nearly a year old.
I suspect the conclusion suffers from the usual definition of poverty in the UK being a relative not absolute term. i.e. poverty can only ever be reduced by incomes becoming more equal. Yet today's technological and information dominated society requires incomes to become more unequal in order to incentivise people to acquire skills and work productively. America is perhaps the most productive society today and is also one of the most unequal. Probably a connection there.

Yes it is absurd to measure poverty relatively rather than absolutely.
Relatively poor Richard Branson is very impoverished compared to Elon Musk , Bezos and Gates!

[Nimrod103]

Remember the oncologist

He works 48 hours a week for the NHS, and is paid at a guess about £180000 a year.

Sounds fine to me as an hourly rate for someone doing a difficult job at the top of his profession. I'm sure he pays his taxes, and if he spends on the finer things in life, he won't be getting rich enough for a wealth tax.

I guess his post tax income is 5 times that of the hospital porter, and that's fine too. But if you tell me the porter has savings of £10k, and the oncologist £5m, that's another matter.

Depends what threshold the wealth tax is set at. You HAVE to define a figure and defend it. The likelihood is that it will be set at say £1 million, a figure which would encompass a large proportion of the house owners in SE England. Any higher threshold, and it really isn't likely to bring in much extra tax, after all the paperwork. There are a lot with £1 million of assets, but probably few with £5 million.

From the figures you cite, I presume you are happy with the availability of oncologists in the NHS. Speaking from the experience of a near relative, the availability is woeful. They are usually unavailable because of private practice commitments. Same with dentistry, though obviously that is not so life affecting.

[JohnB]

You complain about the NHS, yet you don't want to raise the taxes to fund it!

[scrumpyjack]

You complain about the NHS, yet you don't want to raise the taxes to fund it!

Well I'd rather they spent it on oncology consultants rather than vast number of diversity officers on £47,000 each!

ps being still treated for cancer by the NHS, I have the utmost respect for all the staff involved at all levels!

[mc2fool]

Yet indeed...

"Employment rates have been at or near record highs, the number of workless households has halved since the mid-1990s, and the fraction of lone parents in work has pretty much doubled. Worklessness and associated poverty have by no means gone away, but they are a smaller problem than they once were. Today’s big problems are different — not so much the number of jobs, but the quality of those jobs, and the rates of poverty now faced by people in work.

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working." https://ifs.org.uk/articles/lots-more-people-are-working-jobs-keep-them-poverty

That article is nearly a year old.

You believe that statistic has changed notably in the last 10 months? Evidence?

I suspect the conclusion suffers from the usual definition of poverty in the UK being a relative not absolute term.

Yeah, from that famously loony left wing outfit, the IFS.

America is perhaps the most productive society today ...

You'll be surprised. https://en.wikipedia.org/wiki/List_of_countries_by_labour_productivity

And it doesn't seem to have helped the average US household much: https://fred.stlouisfed.org/graph/?graph_id=195323

But your claim was "The way out of being poor is to have a job" but that isn't the reality for a lot of people.

[JohnB]

Of course poverty is a relative measure. Within Maslow's Hierarchy of Needs, which could be applied throughout history, what can be delivered is based on technological progress. Napoleon and flush toilets and all that.

Economies need entrepreneurs who can build vast business empires, but they don't need to become vastly rich, as they are merely using their wealth to keep count against other billionaires. Of course we can name some of the rich who believe in philanthropy at village to global scale, but why not tax the rest. I notice some of the people here don't believe in charity.

https://en.wikipedia.org/wiki/Maslow's_ ... y_of_needs

[Nimrod103]

Of course poverty is a relative measure. Within Maslow's Hierarchy of Needs, which could be applied throughout history, what can be delivered is based on technological progress. Napoleon and flush toilets and all that.

Economies need entrepreneurs who can build vast business empires, but they don't need to become vastly rich, as they are merely using their wealth to keep count against other billionaires. Of course we can name some of the rich who believe in philanthropy at village to global scale, but why not tax the rest. I notice some of the people here don't believe in charity.

https://en.wikipedia.org/wiki/Maslow's_ ... y_of_needs

One aspect of all these sorts of discussions is that people start off from different assumptions. You see wealth and wealth tax as being defined in terms of billionaires. Whereas I see wealth on a UK basis and the likelihood that an incoming Labour government will heavily tax anyone with assets of over a million, and/or an income over about £100,000/year. Gordon Brown already showed this with his departing gesture of the 50% tax rate. Billionaires are largely beyond the reach of ordinary tax measures and can only be targetted by joint inter-governmental strategies. Branson is tax resident on his own tax sheltered island, while joint tax crackdown efforts are difficult while for instance Ireland remains an international tax minimizing entity (and has the highest Worldwide GDP per hour worked due to tax laundering).

[scrumpyjack]

The rich are already heavily taxed. According to the LSE the top 1% of income tax payers pay 30% of the total raised by income tax.

Anyway I don't think a wealth tax will come in. It won't work and is very impractical. Better to carry on fleecing the fattest geese by skimming taxes in a way that generates the minimum hissing. A wealth tax is the tax 'crossing of the Rubicon' which will cause many rich to leave the country and leave us all poorer as a result.

[Nimrod103]

The rich are already heavily taxed. According to the LSE the top 1% of income tax payers pay 30% of the total raised by income tax.

Anyway I don't think a wealth tax will come in. It won't work and is very impractical. Better to carry on fleecing the fattest geese by skimming taxes in a way that generates the minimum hissing. A wealth tax is the tax 'crossing of the Rubicon' which will cause many rich to leave the country and leave us all poorer as a result.

Indeed, and we already have a wealth tax in IHT, which I note Sunak's parents in law will not be paying when they die.

[Lootman]

if you tell me the porter has savings of £10k, and the oncologist £5m, that's another matter.

But why is it any business of yours (or mine) how much they get paid? Isn't that solely up to management and, more generally, the people who pay the salaries and know what it costs to attract those skills?

In private companies pay is effectively set by shareholders and senior managers. Not sure that changes just because healthcare is public, and of course many healthcare workers and service providers are private anyway.

[Hallucigenia]

The rich are already heavily taxed. According to the LSE the top 1% of income tax payers pay 30% of the total raised by income tax.

But what percentage of the income do they receive? For those wanting a more USian approach, according to this the top 1% in the US pay 45.8% of all federal income tax. They also pay more in property taxes, as their equivalent of council tax is a %age of the value of the house, so Buck House would be paying several million in local property tax if it was in the US, rather than <£2k under council tax.

https://taxfoundation.org/data/all/fede ... data-2024/

[Nimrod103]

The rich are already heavily taxed. According to the LSE the top 1% of income tax payers pay 30% of the total raised by income tax.

But what percentage of the income do they receive? For those wanting a more USian approach, according to this the top 1% in the US pay 45.8% of all federal income tax. They also pay more in property taxes, as their equivalent of council tax is a %age of the value of the house, so Buck House would be paying several million in local property tax if it was in the US, rather than <£2k under council tax.

https://taxfoundation.org/data/all/fede ... data-2024/

I know there are areas of the USA where residents regard property taxes as being onerous, but AIUI the tax is not comparable to that in the UK. e.g. US property taxes pay for local schools.

[tjh290633]

The way out of being poor is to have a job, yet:

Yet indeed...

"Employment rates have been at or near record highs, the number of workless households has halved since the mid-1990s, and the fraction of lone parents in work has pretty much doubled. Worklessness and associated poverty have by no means gone away, but they are a smaller problem than they once were. Today’s big problems are different — not so much the number of jobs, but the quality of those jobs, and the rates of poverty now faced by people in work.

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working." https://ifs.org.uk/articles/lots-more-people-are-working-jobs-keep-them-poverty

That strikes me as being a good thing. Perhaps they are trying to work their way out of so-called poverty? Since the definition of poor is a defined proportion of households, or people, without regard to the actual income, it's not surprising if many of those working part time fall into that category.

TJH

[Lootman]

The rich are already heavily taxed. According to the LSE the top 1% of income tax payers pay 30% of the total raised by income tax.

But what percentage of the income do they receive? For those wanting a more USian approach, according to this the top 1% in the US pay 45.8% of all federal income tax. They also pay more in property taxes, as their equivalent of council tax is a %age of the value of the house, so Buck House would be paying several million in local property tax if it was in the US, rather than <£2k under council tax.

https://taxfoundation.org/data/all/fede ... data-2024/

Your analogy of US property taxes has a few flaws:

1) US property tax payments are tax-deductible on federal income tax returns. UK council tax is not. So no element of double taxation.

2) US property tax is only paid by owners and not by tenants or residents as in the UK

3) US property taxes are capped in various states e.g. by California's Proposition 13 which is 1.2% of last purchase price plus 2% a year increases.

[mc2fool]

Yet indeed...

"Employment rates have been at or near record highs, the number of workless households has halved since the mid-1990s, and the fraction of lone parents in work has pretty much doubled. Worklessness and associated poverty have by no means gone away, but they are a smaller problem than they once were. Today’s big problems are different — not so much the number of jobs, but the quality of those jobs, and the rates of poverty now faced by people in work.

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working." https://ifs.org.uk/articles/lots-more-people-are-working-jobs-keep-them-poverty

That strikes me as being a good thing. Perhaps they are trying to work their way out of so-called poverty? Since the definition of poor is a defined proportion of households, or people, without regard to the actual income, it's not surprising if many of those working part time fall into that category.

TJH

A good thing that they're in work or a good thing that they'd poor?

Actually the definitions of poverty used are:

How is poverty measured?

The focus in this briefing is on poverty defined in terms of disposable household income (income after adding on benefits and deducting direct taxes). However poverty may be defined in different ways and there is no single, universally accepted definition.

Two commonly used measures of poverty based on disposable income are:

• Relative low income: This refers to people living in households with income below 60% of the median in that year.
  
• Absolute low income: This refers to people living in households with income below 60% of median income in a base year, usually 2010/11. This measurement is adjusted for inflation

Median income is the point at which half of households have lower income and half have higher income.

Income can be measured before or after housing costs are deducted.

https://commonslibrary.parliament.uk/research-briefings/sn07096/

[Hallucigenia]

Your analogy of US property taxes has a few flaws

Did I claim it was a perfect analogy, or indeed an analogy at all? All tax systems work slightly differently, but the difference between Buck House paying less than £2k, and less than Band B properties in other parts of the UK, compared to the millions that it would be liable for in New York say, is a glaring anomaly.

Converting Band H to a property tax would go some way to removing that anomaly, even if it was only levied at say 0.5%.