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That report on wealth. Am i right in assuming that that 280k is based on total assets, and not savings?
those things generally include everything so savings and investments as well as property value and pensions. In general terms this wealth tends to be concentrated in the older generations (although there is variation here too) as a result of not only having had more time to accumulate wealth but also having the benefits of house price rises and more generous pensions than is the case now. You don't have to have a particularly brilliant pension to be work 280k. Retiring on that today would only get you the equivalent of around £7k pa for an annuity that rises with inflation and has spousal benefits.
As someone involved in a successful family business I’d disagree entirely with the scrapping of inheritance.
My father in law owns the businesses, the children all work for the business and will be inheriting a mix of property and business ownership. They’ve all worked in the family business since they were children. They have each been through the hardships of getting the business of the floor and deserve to inherit what they have worked towards.
When they receive their inheritance they will each pay the full tax on it. If Inheritance was to be abolished and the funds or the proceeds given to the state, I can imagine there will be a lot of people looking for even more ways to avoid paying tax.
It would have been ideal to receive inheritance when we were first buying a house and it would be great to give my children a house when they are buying their first house. But pragmatism says that isn’t possible. My children’s inheritance will likely pay for their pensions when it comes to that time.
They have each been through the hardships of getting the business of the floor and deserve to inherit what they have worked towards.
That really seems like an argument that they should have appropriate shares of the business *now*, rather than at some point in the future.
That report on wealth. Am i right in assuming that that 280k is based on total assets, and not savings?
A nice table showing where it all is (for the whole UK):
[url= https://live.staticflickr.com/65535/50159813462_0c6083cf39_z.jp g" target="_blank">https://live.staticflickr.com/65535/50159813462_0c6083cf39_z.jp g"/> [/img][/url][url= https://flic.kr/p/2jqsa13 ]Wealth[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
and getting slightly less evenly spread as well...
[url= https://live.staticflickr.com/65535/50159822912_dc2b54baa1_z.jp g" target="_blank">https://live.staticflickr.com/65535/50159822912_dc2b54baa1_z.jp g"/> [/img][/url][url= https://flic.kr/p/2jqscNY ]Wealth 2[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
intesting one, as expected if you can't afford a house property wealth isn't very significant, whereas if you bought one in the 70s for 6d, you're minted..
[url= https://live.staticflickr.com/65535/50159589451_a24f457b5f_z.jp g" target="_blank">https://live.staticflickr.com/65535/50159589451_a24f457b5f_z.jp g"/> [/img][/url][url= https://flic.kr/p/2jqr1pM ]Wealth 3[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
and unsuprisingly older people tend to be wealthier than younger people...
[url= https://live.staticflickr.com/65535/50159838532_1e47350c7e_z.jp g" target="_blank">https://live.staticflickr.com/65535/50159838532_1e47350c7e_z.jp g"/> [/img][/url][url= https://flic.kr/p/2jqshsh ]Wealth 4[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
It’s great the way society has to pay because successive governments have ****ed it up.
On the plus side great way to make independence sound even better.
. I also hope I can leave a nest egg for them to help reduce financial stress.
Is it too much to hope for a future where this would be utterly unnecessary?
As pointed out before, the way to give your children a head start in life is early on, not on your deathbed.
That really seems like an argument that they should have appropriate shares of the business *now*, rather than at some point in the future.
It does sound like that. And then when they pass on the inheritance the people who receive it then keep hold of it and then pass it to their children upon death and on it goes.
Sort of sums up exactly what is wrong with inheritance...
Index-linked, final salary pensions (unaffordable)
Not necessarily. I have such a pension; my employer and I both put a percentage of my earnings into a fund, that fund is invested and my pension is paid from it. Nobody else is paying for it. I chose to work for that employer partly for that reason; I could have been paid more had I worked for a different employer.
Similarly, I've never been a big spender, I've saved (from my taxed income) to pay for me and my wife in retirement (and possible ill health care). Why should I pay a wealth tax on those savings?
They never had this problem in Logans run!!
Just saying.
Not necessarily. I have such a pension; my employer and I both put a percentage of my earnings into a fund, that fund is invested and my pension is paid from it.
Unless I misunderstand, that's not a final salary (defined benefit) pension.
They never had this problem in Logans run!!
I'd accept 30 years as long as I could spend them with a young Jenny Agutter 😉
Not necessarily. I have such a pension; my employer and I both put a percentage of my earnings into a fund, that fund is invested and my pension is paid from it. Nobody else is paying for it. I chose to work for that employer partly for that reason; I could have been paid more had I worked for a different employer.
You sure? Final salary? How could that possibly work? Who makes up the short fall if the fund tanks or you live to 110? Or is the final salary guarantee pitifully low so it can be afforded regardless of events?
Final salary pensions are always (normally) for huge numbers of employees to even out the ups and downs and normally paid for by the next generation whilst you pay for the previous one.
You do know what a final salary pension is don't you (roughly....it will pay you X times an index linked fraction of your final salary in your last year of service where X is the number of years served regardless of how the money you paid in to the fund was invested and what it is worth now)
EDIT - Post deleted as I think there was just a confusion about what "fund" meant. Sorry.
Index-linked, final salary pensions (unaffordable)
Not necessarily. I have such a pension; my employer and I both put a percentage of my earnings into a fund, that fund is invested and my pension is paid from it.
Nope, it was all a big Ponzi scheme, for many years employers stopped making their contributions and yet it is today's employee contributions are paying for yesterday's retirees. Likewise, today's taxpayer is paying for public sector pensions because governments never bothered to invest the money. Check out the deficit on the likes of the BT pension scheme - closed to new entrants and yet even few years the re-evaluation means the deficit gets bigger and bigger.
Does anyone remember when you could go to uni for free, park in a hospital for free, get pescriptions for free, have a dental checkup for free, save money while renting, buy a house in your 20s, have unlimited water for next to nothing, heat your home in line with wholesale prices, pay off a mortgage before you retire?
The cost of living is the problem, we have sold our country to private companies and created a generation of amateur landlords that profit of the misery of youth.
yet people keep voting tory... the f do you expect? 😆
Their only raison d'etre is to rob the country!
Nope, it was all a big Ponzi scheme, for many years employers stopped making their contributions and yet it is today’s employee contributions are paying for yesterday’s retirees.
You know nothing about it, unless you know who I worked for, whereas I have evidence (reports from the pension fund trustee) to say that the fund is adequate.
Likewise, today’s taxpayer is paying for public sector pensions because governments never bothered to invest the money.
That is correct (apart from the 'Likewise'). Unless you consider that using the money to reduce Government debt was investing it. Government spending is not generally hypothecated so it can be argued either way.
Does anyone remember when you could go to uni for free, park in a hospital for free, get pescriptions for free, have a dental checkup for free, save money while renting, buy a house in your 20s, have unlimited water for next to nothing, heat your home in line with wholesale prices, pay off a mortgage before you retire?
Almost like Scotland TBH.
I have two final salery pensions. One is the NHS which despite the propaganda is perfectly affordable and indeed is in huge surplus and the other is the pensions trust from which is fully funded but private
Mrs TJ also has two final salery pensions - both of which are fully funded and private.
There were loads of defined benefit private pensions - the tories allowed the companies to stop paying into the funds when there was a surplus which caused in the lean times a shortfall which lead to those funds closing to future beneficiaries
Its Government policy that has lead to the poor pensions most of you get and government propaganda that has lead to the myth of "unnaffordable" NHS pensions.
Also - if everything I had paid in pension contributions in the NHS had been invested instead of spent by governments I would have a huge pot of wealth there. But the government spent it.
If WFH becomes a regular thing then moving 60 miles North looks very appealing!
An extra tax doesn't seem like the answer. There are already many tax vehicles and ten times as many ways to avoid paying. I would sooner see the tax system simplified (universal basic income, one form of income tax etc.) but I don't think this suits governments that want to obfuscate tax and their actions.
As a 37 year old on a good wage I say if we need more money to pay for old age care then raise tax on income so those that earn more, pay more.
I don't think income tax changes are the answer. I agree with some of the ideologies that have been discussed but it is politically toxic so unlikely to change.
Index-linked, final salary pensions (unaffordable)
Final salary schemes were perfectly affordable and still are they just cost the employer more than a defined benefit scheme. In the 70s companies would pay a reasonable % of an employees salary into the final salary scheme as that was what was needed to provide the benefit. Then in the 80s when we had booming stock markets, employers argued that they should be allowed to have payment holidays when the fund investments were doing well. In the 90s, when they needed to start contributing again as funds weren't doing so well (10% pa gains were no longer guaranteed) they baulked at having to make contributions so just deemed them too expensive (expect for the executive team), so culled them for the majority of workers.
They are only unaffordable in the sense that given the choice between paying massive executive bonuses & dividends or funding the pension schemes for employees, the directors / owners picked the former. Look at BHS, £1b divided to Green's wife, but only a several hundred million pension deficit in the scheme - it was always affordable unless you took all the money out of the business first.
This article is a bit old but is still interesting and for me quite enlightening.
https://www.lovemoney.com/news/amp/14711/we-all-hate-these-hidden-taxes
I've tried to have a search to find out how much I actually pay in tax once you add all the hidden taxes to you income tax, national insurance, council tax and vat.
Could it be as high as £2 out of every £3?
I just wish that we had a simpler more open tax system as I feel that it's complexity only helps blind poorer people to how much tax they pay and for wealthier people to exploit any grey areas so they pay less overall tax.
As for the comparison between two elderly people both needing care, where one has spent all their money during their life and not saved who now gets their care for free.
Compared to the one who was frugal and saved but now needs to sell their home to fund their care.
I'd argue that the total amount of tax they paid over their lifetimes would be similar once you add in all the hidden taxes on booze, fags, fuel etc.
You sure? Final salary? How could that possibly work? Who makes up the short fall if the fund tanks or you live to 110? Or is the final salary guarantee pitifully low so it can be afforded regardless of events?
That's exactly how my final salary scheme works, he never said anything about how many other employees there were either. Ours is also profitable too, it was only when our business was taken over by another entity that the pots were combined and suddenly there were shortfalls. Ours closed to new members roughly six years ago.
Final salary schemes were perfectly affordable and still are they just cost the employer more than a defined benefit scheme.
I take it you actually meant defined contribution (average contributions)? By their nature a final salary scheme is defined benefit. But yes, they work and have done for years.
Final salary pensions are always (normally) for huge numbers of employees to even out the ups and downs and normally paid for by the next generation whilst you pay for the previous one.
Apologies if you misunderstood, it is a large scheme, when I wrote "nobody else is paying for it" I meant nobody except the employer and the employees in the scheme - and the scheme is closed, no current employees can possibly be paying for it.
You do know what a final salary pension is don’t you
Of course I do, I did write "my pension is paid from it".
I take it you actually meant defined contribution (average contributions)
yes, my bad...
On the OP's original point I don't think taxation based on age is a good idea. It has the whiff of letting a very divisive genie out of the bottle.
On that reasoning, why should people with adult independent children have to contribute to things like child tax credits, child benefit etc?
Perhaps the focus should be on ensuring corporations and the super wealthy pay their fair share of tax before targeting the private citizen.
Basically, as a 44 year old, I'd be paying tax and pension contributions to prop up the current pensioner populations (who have been pointed out already have significant wealth) whilst at same time having to pay extra to fund the same for me when I eventually retire..
Basically, as a 44 year old, I’d be paying tax and pension contributions to prop up the current pensioner populations (who have been pointed out already have significant wealth) whilst at same time having to pay extra to fund the same for me when I eventually retire..
That is pretty much how the system works now, current pensions are paid from tax intake that year. Whilst there are a lot of wealthy pensioners, there are a lot of poor ones too, hence some form of wealth based tax system would help even things up a bit.
For far too long our taxation and benefits system has been too much tinkering around the edges making it ridiculously complex.
for me the answer is positive / negative income tax or universal basic income along with a much quicker ramp up of income tax and a wealth tax.
Basically, as a 44 year old, I’d be paying tax and pension contributions to prop up the current pensioner populations (who have been pointed out already have significant wealth) whilst at same time having to pay extra to fund the same for me when I eventually retire..
by your forties, you are probably thinking about/planning for your retirement/care, and likely your parents will be in need of said care.
Actual wealth, income, and assets aside, you are more likely to be receptive of this tax than a twenty-something who thinks he is going to live for ever.
Have the tories thoght about how this would apply in scotland social care being a devolved issue?
Dont people generally pay more tax as they get older anyway?
Incomes generally grow with age, so 40 years olds will on average be earning more than someone in their 20's and therefore paying more tax be default?
The tax system needs to be made simpler not more complicated.
Dont people generally pay more tax as they get older anyway?
Incomes generally grow with age, so 40 years olds will on average be earning more than someone in their 20’s and therefore paying more tax be default?
very crudely....
Depends on the type of career, some jobs eg traditional graduate jobs your salary increases with experience / skills, probably peaking in early 50s.
For traditional non graduate jobs eg barwork / stacking shelves etc, your pay probably just about keeps track with inflation if you're lucky.
The tax system needs to be made simpler not more complicated.
Yep, we have the most complicated tax book in the world IIRC, I vaguely recall 20,000 pages of rules.
we have the most complicated tax book in the world IIRC, I vaguely recall 20,000 pages of rules.
The extra cost of managing that system cannot be small, and it's dead money, it has no benefit to society. If the tax system (including NI) was simplified, the people employed could be doing something useful, like collecting tax from tax evaders.
It’s a problem that needs sorting and I’ll pay my bit. However, where I work we could easily end up with a 3 tier system all on the same basic.
onzadog
So it’s just another way to cream the silent middle class masses rather than upset their rich donors?
These are just examples of how the real rich are sat laughing.
It's like the Dilbert Blame consultant thing.. for example bankers making million pound bonus's are basically being paid shit to be demonised. Even if every million pound bankers bonus got paid to one person they would still not be rich... it takes a thousand of those to even get to a billion.
Typically we are directed to Gini scores that are a means to draw attention away from the reality that most (well over 50%) of the wealth is owned by a few thousand individuals and all the millionaires and bankers and football players are just small fries at the top end of the middle class scale.
One might save up for a yacht... the truly rich don't even blink buying a new jet.
Add in corporations and the majority of taxable income and wealth is simply not even on the books.
Instead we have this battle between the very poorly off and the comfortably off.
Taxing those that pay tax already more will do sod all in terms of actual ££££.
Inheritance tax is only paid by the poor... the truly wealthy have money offshore and in trust funds. (hence the real reason for Brexit)
In the same way taxing DrP for wanting to provide for his kids and because he gets older is simply going to lead to him and people like him thinking why earn the money in the first place.
Also remove the concept of inheritance. When you die all money left goes to the state. That would lead to people realising that if they need to spend money late in life it is not a problem and would also put the money back into the economy during their life as they would be holding onto to it because they feel their kids have a right to it.
So yoou're saying when my wife passed away I would have had to sell my house and send a cheque for half of it to the government. Presumably the same arrangement would happen to my young daughter if I died so she'd be homeless and unable to cover costs?
Utterly bonkers IMO.
At 40 we were spending pretty much every pennny we had on keeping afloat. Mortgage, car, life in general. Very rarely had spare money for saving or investment.
And now? It's that age where many people might just be able get out of rental properties and start paying their own mortgages.
Can we just fix the tax sysytem, so that those who do have the most, bear the greatest burden? close the loopholes that allow the vastly rich to hide their money away in clever investments and offshore.
Can we just fix the tax sysytem, so that those who do have the most, bear the greatest burden? close the loopholes that allow the vastly rich to hide their money away in clever investments and offshore.
Two issues here.
The first would require a tax on wealth, which is being discussed apparently.
The second requires international cooperation as its perfectly legal to relocate companies / individuals eg Ireland does very well with a low corporation tax, which is why you find your Amazon purchases etc being routed via Amazon IE and not Amazon UK. Whilst countries vie for businesses and individuals by undercutting each other on tax, you'll always have wealth moving to lower tax jurisdictions.
footflaps - there is an easy answer to that. companies pay either 20% on profits or 10% on turnover if they export the profits. The UK is the biggest enabler of tax evasion / avoidence in the world
What the likes of starbucks do is to pay huge licensing fees to the parent company outside of the UK so they apparently make no profit. So tax 'em on turnover instead if they try this trick
Its obvious starbucks are profitable in the UK its just thy hide the profits in these bogus licensing fees
Even if every million pound bankers bonus got paid to one person they would still not be rich… it takes a thousand of those to even get to a billion.
Ok, sort of, for some values of ‘rich’.
But really, give me just one of those millions and I’ll be fine. Forever.
How much more do you need? I don’t want a billion.
And while I am strongly against inheritance tax being 100% (as is so popular a concept on here atm) I’d be more than happy for no-one in the world to be able to hold onto a billion either.
Whilst countries vie for businesses and individuals by undercutting each other on tax
Hmmm.. if we were part of some kind of economic union between neighbouring countries, we might be able to do something about that. But the influential rich would probably invent reasons why it wasn't a good idea.
companies pay either 20% on profits or 10% on turnover if they export the profits
That wouldn't work as described. A lot of companies are genuinely global. I work for a global financial company, the systems within it our global and so costs are central. There would be no way of measuring profit and loss on a single market, so you would have to apply the 'exporting profit' rule, yet the profit margin on a given transaction is something like 0.1%. There is no way you can tax flatly on turnover, so then you need different rules depending on the industry, and then you need some rules defining what an industry is, and then things get really complex and end up with loopholes.
Similarly amazon and Google, they probably are optimising their taxes, but you can't effectively measure the costs of doing business in one market when their assets cover the globe
Of course you can 5lab.
What you do is look for the creative accounting / tax evasion like starbucks use and if you deem them to be doing that you tax at a % of turnover. Make that higher than their tax would be if the reported profits in the country they make them and immediately they start reporting profits properly to minimise tax.
VAT is effectivly a turnover tax!
VAT isn't on turnover. If you sell something on for the price you paid, your net VAT would be zero. It's a very inefficient sales tax.
The current tax system would work if it was enforced. Too many at the top avoid tax, and too many trade with cash so there is no record of their actual income.
sock puppet
Ok, sort of, for some values of ‘rich’.
But really, give me just one of those millions and I’ll be fine. Forever.
How much more do you need? I don’t want a billion.
And while I am strongly against inheritance tax being 100% (as is so popular a concept on here atm) I’d be more than happy for no-one in the world to be able to hold onto a billion either.
That's my point.
The truly rich have created a situation where whilst they pay no tax or some nominal fee 99.9% of the people are at each others throats over <50% of the wealth. That number is vague as noone really knows how much wealth they squirrelled away only the bits they can't hide.
The point is you and I can imagine what we could do with a million... how comfortable we would be but a billion is simply not imaginable. Some football player or stock broker etc. buys a Bentley we see it as pointless... yet billionaires send someone to an auction for them to bid on some faberge egg or piece of art costing more than that Bentley they lock in a secret room.
The "millionaires" are I assume comfortable and don't worry where their next meal is coming from but a million is also quite finite...
People say the trickle down effect doesn't work but it is the superrich that really bypass it. I live in Woking which benefits from McClaren for example, it employs a large amount of people on decent wages if nothing else... so our bubble benefits at least.
Hmmm.. if we were part of some kind of economic union between neighbouring countries, we might be able to do something about that. But the influential rich would probably invent reasons why it wasn’t a good idea.
Ireland and Luxembourg have been doing this for years inside the EU, offering very generous tax deals to get companies to locate there. There was a court case recently about Apple and Ireland, the EU lost the argument that it was in effect state aid and unlawful under EU laws.
That wouldn’t work as described. A lot of companies are genuinely global.
yep, gets very complex very quickly.
Lets say our South African office books a $5m order.
The product was design in the UK, so all R&D costs are there. It's made in China and exported direct to SA. The SA office is just a sales office, all the back end processes eg accounts / CRM etc are in the UK. Where does the profit live for that sale? It might be sold at 50% gross margin looking solely at unit build cost, but the R&D costs needs to be recouped, the back end services need to be paid for, so the real profit is a lot less than 50%.