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How can the tax system help to reduce inequality | accountingweb
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How can the tax system help to reduce inequality?

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Looking at the UK tax system, Rebecca Cave finds that some taxpayers are more equal than others. Here she considers what could be done to treat people equally for tax.

9th Feb 2023
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I was inspired by this interview with Torsten Bell (CEO of the Resolution Foundation) to think about what changes could be made to the UK tax system to reduce inequality. 

The UK tax system treats certain taxpayers differently to others, which leads to inequality in terms of the amount of tax paid on similar levels of funds.

Capital vs income 

Capital gains are taxed at lower rates than income in every tax band, with the exception of tax due on dividends.

The tax that Zahawi allegedly paid late arose from a gain of £27m, on which he was ultimately liable to pay capital gains tax (CGT) of £3.7m, amounting to around 14% of the gain. The top rate for CGT at the time of the disposal was 20%. The discount in the effective rate was likely due to entrepreneurs’ relief, which applied a rate of 10% on gains of up to £10m in the lifetime of the taxpayer. That lifetime cap has since been reduced to £1m. 

There is no solid evidence that having a lower tax rate on gains stimulates growth or employment. A study by the CAGE group at Warwick university has found that half of all taxable gains are received by just 5,000 people in the UK, who each receive more than £1.5m in gains, mostly from the disposal of businesses or business assets. 

In 1988 Chancellor Lawson aligned the tax rates that applied to income and capital gains, while at the same time introducing indexation allowance to relieve the effect of inflation on the value of assets. A similar rate alignment could be made today, as suggested by the Office of Tax Simplification

Earnings vs dividends

Income from employment and trading suffers tax at higher tax rates than dividend income, which is also exempt from national insurance contributions (NIC). 

The favourable tax treatment of dividends, and the ease of operating through a company since the audit requirement for small companies was removed, has encouraged the growth of personal service companies (PSC). The pressure on workers to operate through a PSC also comes from engagers who seek to avoid employer’s NIC, the costs of pension contributions, holiday pay, sick pay and parental pay due for employees.

This imbalance led to the IR35 rules enacted in 2000, which did little to solve the problem, as the underlying tax advantages of the PSC structure for both the individual and the engager remain strong. Off-payroll working has tipped the scales again, but there is still an exemption for small and medium-sized engagers. 

The solution to the gordian knot of employee/self-employed tax differentials must involve tackling the issue of employer’s NIC. But this won’t be easy as HMRC statistics show the amount of employer’s class 1 NIC paid in 2021/22 was around £89.5bn. This amounted to 12.5% of all HMRC receipts and was 40% more than the total corporation tax collected in that year (£63.5bn). 

If employer’s NIC were to be abolished and the tax burden shifted to corporation tax, the main rate of corporation tax would have to rise to around 35% to make up for the loss in NIC revenue. The advantage gained by non-corporate employers by the abolition of employer’s NIC would also have to be addressed. 

Property owners vs renters

Landlords pay no NIC on their property income, unless the property is held by a corporate vehicle and the ultimate owner extracts funds as a salary. 

Where the individual landlord doesn’t pay sufficient class 1 or 2 NIC in a tax year, they won’t build up an entitlement to the state retirement pension. But that may not worry certain landlords who view their let properties as a pension fund, with a plan to sell up on retirement. 

On disposal the increase in the value of the properties will be taxed at 18% or 28%, which is significantly lower than the tax due on regular pensions at 20%, 40% or 45% (higher tax rates apply in Scotland). 

Individuals who own their own homes also benefit from the rise in property values over time, particularly for homes located in the south of England. The CGT exemption for the taxpayer’s only or main home means that this increase in value is completely free of tax, a relief worth £30.2bn per year according to HMRC statistics

Renters by comparison will never benefit from the growth in property values, and generally pay tax and NIC on their income at 32%, 42% or 47% (higher rates in Scotland), plus student loan repayments in many cases.

To equalise tax treatment between homeowners and renters the CGT exemption for main homes could be restricted or removed, and the rates of CGT could be aligned with those of income tax, as Tax Policy Associates have suggested

Older vs younger 

I discussed the advantages of the older generation in my article on boomers’ tax breaks

Charging NIC on pension income would be a step towards equalising the tax rates between the generations, but the incredible burden of student loan repayments would aslo need to be addressed. 

UK domicile vs non-domicile 

The tax advantage that Zahawi was attempting to exploit was based in the UK’s non-domicile rules, which are peculiar to this country.

Dan Neidle has argued that the non-dom regime should be removed, along with excluded property trusts that provide non-doms with an inheritance tax shelter, and I agree with him.

Replies (84)

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By AndyC555
09th Feb 2023 13:31

So to summarise.

Put tax up
Put tax up
Put tax and NIC up
Put tax up
Put tax up. And NIC up just in case.

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Replying to AndyC555:
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By Hugo Fair
09th Feb 2023 20:33

And not always from a foundation of (unstated) assumptions that stand up when a light is shone on them. For instance:
"Income from employment and trading suffers tax at higher tax rates than dividend income, which is also exempt from national insurance contributions (NIC)."

I'll be happy to be corrected but there appears to be an assumption underpinning this statement that 'dividend income' is the result of a choice to take that rather than what used to be known as 'earned income'.
Which may well often be true (in the case of the smaller clients of many Aweb members), but by no means in all (or even the majority) of taxpayer cases.

The parsimoniously minded (at least of my generation) had no great faith that the State would always be able to provide for our old age - or in some cases simply felt that it was encumbent upon them to look after themselves to the best of their abilities without burdening the state (and their own dependents).
And those with a religious component to their upbringing (any religion, they are remarkably consistent in their views on this topic) may regard any form of IFA as akin to the devil.

So the relevance of all this?
Such people scrimped on luxuries during their working lives in order to save for their future. And, seeing as how mere deposit accounts have always paid far below any current inflation rate, sought alternative havens with a balanced risk between being safe and providing inflation-proofing ... in many cases, shares.

These shares are bought from income that has already been subject to Tax and NICs (and is not a discretionary alternative to employment pay) ... so, if this article is all about 'fairness', then why should it have NICs levied on it all over again?

One doesn't have to accumulate much in the way of these savings over 40+ years to generate a small amount of annual dividends ... which in turn make the person ineligible for the vast raft of state benefits (and fair enough). But to say that those who have gone without AND are saving the State from unnecessary current costs should be penalised doesn't tick any obvious categories of 'fairness'.

So ... you introduce new legislation to apply NICs to dividends, but exempt those who are receiving dividends from shares purchased by taxed income?
Or introduce new thresholds (as you suggest) for free-of-NICs, but only apply this to dividends from a company where the shareholder is not also a Director?
Or ... you can see where this is heading (the antithesis of simplification and likely to lead to further unintended unfair circumstances)!

You might as well suggest that a person who is an employee (including a Director) is forbidden from taking an amount in dividends that is greater than the amount they are paid as salary. Actually ...

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Replying to Hugo Fair:
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By lionofludesch
10th Feb 2023 13:32

Hugo Fair wrote:

So ... you introduce new legislation to apply NICs to dividends, but exempt those who are receiving dividends from shares purchased by taxed income?
Or introduce new thresholds (as you suggest) for free-of-NICs, but only apply this to dividends from a company where the shareholder is not also a Director?
Or ... you can see where this is heading (the antithesis of simplification and likely to lead to further unintended unfair circumstances)!

Anybody else remember the close company rules - particularly prior to the imputation system ?

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Replying to lionofludesch:
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By Hugo Fair
10th Feb 2023 13:47

Which is the problem when the 'same old same old' concepts just keep on being recycled.

Did you not like my final sentence 'suggestion' then? :=)

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Replying to Hugo Fair:
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By lionofludesch
10th Feb 2023 13:57

Hugo Fair wrote:

Which is the problem when the 'same old same old' concepts just keep on being recycled.

Did you not like my final sentence 'suggestion' then? :=)

It has merit. But what's a working director ? Or are you suggesting that small savers are payrolled on their dividends?

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Replying to lionofludesch:
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By Hugo Fair
10th Feb 2023 16:00

"Or are you suggesting that small savers are payrolled on their dividends?"

No - I was suggesting that anyone who is in a position to split taking their earnings (from one company) between salary and dividends could be legally prevented from having a dividend component exceeding their salary component.

But like all 'simple' ideas (and whatever others might think of it 'morally'), it would end up swamped in the legislation of definitions (your one about "what's a working director" being just the start of a long line of them).

It was just my (slightly tongue-in-cheek) attempt to try placating the eons old earned vs unearned diatribes (whilst maintaining serious contributions to the national coffers and yet allowing entrepreneurs to set their remuneration).

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Replying to Hugo Fair:
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By philrob
10th Feb 2023 18:11

There are myriad businesses where ownership is wider family (aunts, cousins, siblings etc. especially if The business is 70 plus years old.)

Typically one poor family member is 'stuck' with running it. It would be a huge distortion (for everyone) if salary must >= dividend.

Every owner director has three hats:
* Investor (shareholder)
* Director - with statutory duties to ALL stakeholders
* Employee

The roles are very different.

The vast majority of wealth (and employment) in this country is created by people taking real risks to start and run a business.

The (potential) rewards have to match the risk or the whole pile of cards falls down.

That said, if the problem is personal service companies with 100% shares owned by one person and no real risk (or potential for growth) - that is another problem that needs a far better solution than IR35.

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Replying to philrob:
By Kentwillumsen
12th Feb 2023 14:01

Obvious you don't know about running a PSC?
You pay your own sick pay.
You pay for your own training.
You pay your own holiday leave.
You pay for IT equipment; software; and other tools needed in your work.
You pay your own pension.
You pay yourself out of the PSC, when there is no work.
You pay for the marketing; PSC agents and websites.
You pay for accountants and legal costs.
You pay for required indemnity insurance; liability insurance; and many more.
To do these things is impossible if you cannot build-up equity in the PSC due to IR35 and other ways to make a PSC being employment and therefore taxed at source.

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By AndyC555
09th Feb 2023 13:44

"On disposal the increase in the value of the properties will be taxed at 18% or 28%, which is significantly lower than the tax due on regular pensions at 20%, 40% or 45% (higher tax rates apply in Scotland). "

That's pretty disingenuous. The clients I have are looking for BTL rents to provide their retirement income, not disposals of the properties.

The tax rates on rental profits are 20%, 40% or 45% (higher tax rates apply in Scotland), if you want a comparison with regular pensions.

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By Justin Bryant
09th Feb 2023 14:37

Forget all that. You can start with council tax. It's totally ridiculous how someone living in a £40m Mayfair mansion pays more or less the same as little ol' me. (There needs to be higher council tax bands for homes of the super rich basically.)

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Replying to Justin Bryant:
By Kentwillumsen
10th Feb 2023 09:50

Council tax was supposed to pay for a fixed service, a bit like NI tax used to be.
Why should some people pay more for the same service than you should?
Also remember you pay the council tax with money you already paid a progressive income tax for.
Best would be, if we all only paid tax once of the same money; that would make it much more transparent how our money is wasted.

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Replying to Kentwillumsen:
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By Justin Bryant
10th Feb 2023 11:09

"Why should some people pay more for the same service than you should?"

Why don't you have a long hard think about that to see why it's a pretty dumb argument, as you could equally say the same for someone paying c£450m IT on £1bn income who I doubt gets orders of magnitude more value than the average taxpayer from public services such as schools, hospitals and all the rest of it.

Also, Maggie thought along the same lines as you re the doomed, infamous community charge and look what happened to that and her.

As for paying tax on after tax income, so what? That's nothing new. Just look at VAT, IHT, SDLT, ATED* and so on and so forth.

*Also if you think about it, there's not much difference in substance between high ATED for £5m+, £10m+ and £20m+ properties and my council tax idea.

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Replying to Justin Bryant:
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By Trethi Teg
11th Feb 2023 08:28

I agree with Kentwillumsen.

If you consume the same services from the council as someone with a larger house then you should pay the same council tax.

Based on your logic we should all carry around our tax rey=turns or statmetns of assets when we go to buy a loaf of bread. Those who have less pay £1 per loaf and those with assets pay £3 per loaf.

The masses who have less want those with more to pay their bills for them. You then have "democratic" elections where the 95% of those with less take control and then, via the tax system, steal money from those with more.

Socialism will take us all to the bottom.

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Replying to Trethi Teg:
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By Justin Bryant
13th Feb 2023 09:02

Just to indulge you re superficial labels (if you think that makes all the difference, which it doesn't - just look at IT and NIC), you needn't call it council tax. You can just call it "annual house price tax" or ATNED (you can work that acronym out for yourself) and have it paid direct to central government (who can then allocate it accordingly).

The fact is council tax is highly regressive in percentage terms once your house gets over c£2m and that should be addressed with higher value bands at least.

But we should first tackle wasteful HMG expenditure. See: https://www.bbc.co.uk/news/uk-politics-64615936

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Replying to Justin Bryant:
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By Justin Bryant
08th Jun 2023 14:31

DN also agrees with me that the double tax or tax on after tax income point is a bad one. See: https://www.taxpolicy.org.uk/2023/06/03/iht_terrible/

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Replying to Kentwillumsen:
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By lionofludesch
11th Feb 2023 12:56

Kentwillumsen wrote:

Council tax was supposed to pay for a fixed service, a bit like NI tax used to be.
Why should some people pay more for the same service than you should?
Also remember you pay the council tax with money you already paid a progressive income tax for.
Best would be, if we all only paid tax once of the same money; that would make it much more transparent how our money is wasted.

A poll tax! That's what we need !

Because they've always worked well.......

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Replying to Justin Bryant:
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By Justin Bryant
12th Apr 2023 11:14
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Replying to Justin Bryant:
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By lionofludesch
12th Apr 2023 11:31

Who's going to value every house in the country ? On an annual basis.

Last time it was done by kerb-crawling estate agents on a best guess basis with no real inspection of the house.

Then there are the appeals to deal with........

It'll end up costing more than it raises.

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Replying to Justin Bryant:
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By Justin Bryant
26th May 2023 13:00
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Replying to Justin Bryant:
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By Justin Bryant
26th Jan 2024 12:38
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By rememberscarborough
09th Feb 2023 15:13

Bet those (and their "friends") who make tax law pay far less than anyone else. It's why the tax system is so complicated so they can look after themselves whilst making others pay more to provide the services they require.

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Ivor Windybottom
By Ivor Windybottom
09th Feb 2023 15:50

My clouded memory seems to recall that the CGT harmonisation with Income Tax was ended as it was having a negative effect, with transactions being deferred/avoided, as often gains are discretionary (i.e. you can choose to sell an asset or you can delay that decision).

I recall (probably incorrectly) that they did some research that 28% was about as high as they could push CGT before people chose to stop selling property, with any higher tax rate resulting in a worse outcome for the economy.

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Ivor Windybottom
By Ivor Windybottom
09th Feb 2023 16:06

If you look at the difference between salary and dividend for a business owner, the tax cost of either route is not significantly different, as the gap has closed in recent years.

Yes there is a small difference, but perhaps not worth closing due to the negative impact that would have on everyone's pension funds.

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By RFL H
10th Feb 2023 05:19

Torsten Bell has foisted his agenda on you here, Rebecca.
Increasing taxes on the wealth creators has consequences.

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By JD
10th Feb 2023 09:28

Are you really suggesting that those that work hard, save and invest (things that should be encouraged) should in fact be attacked through some misguided/misuse of the lens of equality, and taxed as a form of punishment, for making an effort - woke and broke here we come.

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By listerramjet
10th Feb 2023 10:01

Domicile and residence are fairly straightforward rules and in many ways are very equitable. More so than the US for example. There are some who would argue strongly that to be equitable tax should be paid in the correct jurisdiction, and personally I can see no valid reason for changing it.
The other point about fairness is surely that the law has to be simple to understand, easy to administer, and applied equally to all. Tax itself can never be "fair" but much of what you describe results from the complexity in our system. It would be easy to make the case for getting rid of most of our current taxes, which would solve most of these issues at a stroke. And personally I think we might accept that income tax is here to stay, so perhaps get rid of the rule going back to when it was first imposed, that it has to be reimposed every year

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By Marlinman
10th Feb 2023 10:29

Scrap council tax and all the stealth taxes and just have 1 flat rate of tax on all income and gains after the personal allowance. Why should a higher earner pay a higher percentage when he is getting nothing in return? This would simplify the system and you would be able to see at a glance how much tax you will have to pay. If you were to add up all the different taxes under the current system it comes to over half your income which is ridiculous.

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Replying to Marlinman:
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By lionofludesch
11th Feb 2023 12:59

Marlinman wrote:

Scrap council tax and all the stealth taxes and just have 1 flat rate of tax on all income and gains after the personal allowance. Why should a higher earner pay a higher percentage when he is getting nothing in return? This would simplify the system and you would be able to see at a glance how much tax you will have to pay. If you were to add up all the different taxes under the current system it comes to over half your income which is ridiculous.

Not sure that a 50+% income tax rate is going to be all that popular.

And a 70% reduction in the cost of fuel would be very unpopular with the Greens.

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Kevin
By capex53
10th Feb 2023 10:30

The rich avoid around £20 billion a year in taxation. OECD research suggests that where there is less inequality of income economic performance is better. The top 1% of income takers receive around 15% of the total up from 8% in 2008.
There are comments in other posts where BTL landlords are using houses as a pension fund but that's not included in the life time savings allowance. The whole shoddy mess needs simplification towards a system that treats everyone the same.

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Replying to capex53:
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By AndyC555
10th Feb 2023 11:06

"The top 1% of income takers receive around 15% of the total"

And pay not 15% of all income tax but 30% of all income tax.

So it could be argued that's twice their 'fair share'.

"OECD research suggests that where there is less inequality of income economic performance is better."

Going down that 'Spirit Level' approach where simplistic analysis arrives at conclusions such as "Inequality is lower in Japan. Japanese people live longer. Therefore in a more equal society we'd all live longer". A similarly simplistic analysis could lead us to argue that "Japan has a reputation for misogyny and xenophobia. It is also has a far higher ethnic homogeneity than the UK. The Japanese live longer. If only we were more misogynistic, xenophobic and had greater ethnic homogeneity in the UK, we'd all live longer". Personally I don't agree with either of those arguments.

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JD Portrait
By John Downes
10th Feb 2023 10:36

Nobody reading this article would guess that the levels of taxation in this country are the highest they have ever been in peacetime.

It would have been more useful in the weeks preceeding the budget to have highlighted areas where it might be reduced. To point out the inherent unfairness of the IR35 rules would be a start.

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By chrisowen
10th Feb 2023 10:41

The headline asks how to use the tax system to reduce inequality. The best way would be to increase IHT rates, but this is not mentioned.
Talking to estate agents, they tell me the biggest reason for house price growth, is large inheritances (for some). The result is that the 'have nots' will never be able to afford to buy a home.

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Replying to chrisowen:
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By Justin Bryant
10th Feb 2023 11:18

Yes (see ES story from yesterday in link below) and my council tax idea should at least put a lid on property prices.

https://www.standard.co.uk/insider/london-housing-bank-of-mum-and-dad-de...

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Replying to Justin Bryant:
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By RFL H
10th Feb 2023 13:03

Tax gains on PPRs.
(After allowing reinvestment relief to ensure mobility and fairness.)

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Replying to RFL H:
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By Justin Bryant
10th Feb 2023 16:11

But that's just political suicide (even with reinvestment relief), so will never happen.

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By Swimmingagainstthe Tide
10th Feb 2023 11:42

Rebecca's articles are great but she has missed the mark here.

Firstly, the assumption that inequality is a bad thing is highly contentious. Complete equality, or the attempt to create such a situation, has been shown by history to be massively unpleasant. So the first question should be how much inequality is desirable in a society? Rebecca has been sucked in by The Resolution Foundation's philosophical premise.

Secondly, some of the comparisons are way too simplistic. Stating that dividends are favourably taxed when compared with earnings is a monstrous oversimplification. Dividends are paid after Corporation Tax but this is just ignored.

I think a more approriate approach would be to consider the distortions caused by our overly complicated tax system. Many of the issues arise from the plethera of different taxes that exist without good reason. My particular bugbear is National Insurance which in reality is at least four different taxes (a flat tax on the self employed, a tax on employers related to staff pay, a tax on self employed profits, a tax on employees) hiding under a single name. We could reduce complexity, increase transparency and reduce the ability of taxpayers to manipulate the system to reduce their tax burden by scrapping National Insurance and increasing other taxes to compensate. I am sure there are plenty of other examples.

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By ireallyshouldknowthisbut
10th Feb 2023 12:01

When i talk to my millionare a year club clients, its all about what is being put away where. its usually about after tax income, pre tax is not interesting.

When I talk to my "in the middle folk" clients on say £60k, its all about affording a holiday or replacing the car or perhaps putting some in a pension.

I dont act for any poor clients, but I know when my mum was bringing us up solo for a few years, if she got some unexpected cash, it would have been new shoes or a coat or something for the kids the food cupboard stocked up with bulk non-perishables she couldn't normally afford, and anything left over in the Emergency Tin which doubled as Xmas savings.

Three completely different worlds, but I know which one I would tax and which one i would boost to boost the economy.

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By ROBERT12
10th Feb 2023 12:53

There is also an assumption that Equality is the goal, or even a holy grail of such sublime divinity that it must be the goal. and no counter position is worthy of being entertained. Whether or not entirely tending to equality there are some realities of life and the human condition that are completely ignored in this piece. So in no particular order:
1. A progressive tax system is inherently unequal, since those who earn more, pay more. And I wholeheartedly agree with that. It is just not "equal".
2. This is further skewed by higher rate bands - to which I have no objection in principle. Just don't pretend that they promote "equality".
3. Entrepreneurs and wealth creators ought to be actively encouraged. They provide employment to some (maybe a small number, but more than might otherwise be the case) of the feckless and indolent - who really do exist Rebecca.
4. Some very wealthy have a choice of whether to contribute here, elsewhere or not at all. There is inevitably some trickle-down of having them here by having for example non-dom rules. There is no rational objection to that, ie one not based on self-destructive resentment. Objecting to it flat out is like turkeys voting for Christmas. This is not to say that abuses should not be punished.
5. Higher payers are less likely to tap into the benefits system and even use the public services for health and education. Quite right, but it is also not equal.
6. The comment about a Mayfair mansion and council tax illustrates this resentment. Council tax is mainly about having your bins collected, which can not on any view be in direct proportion to the value of the property.
7. The fact is that the high earners/gainers pay a massively disproportionate share of the nation's bills. Which ought to be the case but the question is where are the lines to be drawn so as also to motivate and retain these people, and encourage others to strive to join them.
8. Try some other systems of wealth re-distribution. It has been done before and the general impoverishment of everybody (except a very small elite) was only overshadowed by the genocide that resulted. It is a very bad idea.
It is all about the art of the possible. The current burden is very high by historical standards. The issue that higher rate payers have is with the value for money in public services, and a failure to adopt personal responsibility and do some work, by a significant portion of the net beneficiaries of our largesse. If anyone thinks this is the opinion of someone who is not happy to give back and contribute to the needy and vulnerable, they are mistaken.

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Replying to ROBERT12:
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By Justin Bryant
10th Feb 2023 16:05

"6. The comment about a Mayfair mansion and council tax illustrates this resentment. Council tax is mainly about having your bins collected, which can not on any view be in direct proportion to the value of the property."

This is a totally dumb comment for the reason explained by me above. If you were correct, a multi billionaire living in that mansion could just as well say the ginormous IT he pays is not in proportion to the benefit he gets from pubic services etc.

Even ignoring all that, why shouldn't there be some new higher value bands (like for ATED) to reflect crazily high relative property price increases since the last (original) council tax value bands were introduced?

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Replying to Justin Bryant:
By Ruddles
10th Feb 2023 16:35

Whether or not you agree with the view, it is dumb to say that it is incorrect. It is an unquestionable fact that the level of service provided by a Council has little or no correlation with the property value. It is simply the case that the value of the property is used to determine the amount of Council Tax to be paid by the householder. Whether one considers that to be fair or unfair is a matter of opinion - but opinions are neither correct nor incorrect.

Your comment about income tax is equally valid of course - it just so happens that the level of one's income is used as a convenient measure as to how much tax each of us should pay.

But FWIW I agree that there should be higher value bands for the most expensive properties.

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Replying to Ruddles:
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By Justin Bryant
13th Feb 2023 09:04

Trust me, it's dumb - see my latest "tax labels" comment above.

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Replying to Justin Bryant:
By Ruddles
13th Feb 2023 09:47

That is exactly what I said.

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Replying to Ruddles:
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By Justin Bryant
13th Feb 2023 10:30

Let's try argue about something else then! In a similar vein, second homeowners need much higher council (or call it what you like) taxes too. See: https://www.bbc.co.uk/news/uk-england-norfolk-64303486

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Replying to Justin Bryant:
By Ruddles
13th Feb 2023 11:26

But what if the second home is a BTL?

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Replying to Ruddles:
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By Justin Bryant
13th Feb 2023 11:38

Second home = second home (obviously)

i.e. by definition it's (obviously) not a BTL (as per BBC story). BTL are already taxed enough (just look at what's happening with landlords in Scotland under their Marxist government).

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Replying to Justin Bryant:
By Ruddles
13th Feb 2023 11:54

It isn't obvious to some, who use the term loosely to describe any form of second property. I agree that if we are talking specifically about second homes, as defined, then yes I would not have a problem with a greater financial disincentive. That said, it would be a bit of a practical nightmare for the charging authority to distinguish between a BTL and a second home.
And as I have said elsewhere, I don't have a problem with some BTL owners (in holiday areas) being hit with additional charges due to the impact they have on such areas (although the ADS is perhaps not the way to go about it, since it does not directly benefit the communities in question).

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Replying to Ruddles:
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By lionofludesch
13th Feb 2023 12:03

Ruddles wrote:

That said, it would be a bit of a practical nightmare for the charging authority to distinguish between a BTL and a second home.

Council tax is paid by the tenant. It seems to work well at the moment. No reason to think that that would change.

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Replying to lionofludesch:
By Ruddles
13th Feb 2023 12:09

I am guilty of the same loose wording ;¬). When talking about BTLs, I had short-term (eg holiday) lets in mind. Long-term lets are not the problem(s) here.

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Replying to Ruddles:
RLI
By lionofludesch
13th Feb 2023 12:19

Ruddles wrote:

I am guilty of the same loose wording ;¬). When talking about BTLs, I had short-term (eg holiday) lets in mind. Long-term lets are not the problem(s) here.

Thanks.

Depends on the scale, I suppose. I'm not convinced that adding a few quid onto the price of a holiday would kill the trade off. Especially if your competitors had to do the same.

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Replying to Ruddles:
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By Justin Bryant
13th Feb 2023 12:56

Never mind all that.

My "homes (not BTLs) of the super rich (plus second homes)" council tax idea would be far simpler than this popular (but difficult to administer) wealth tax idea: https://www.tax.org.uk/survey-finds-strong-support-for-a-high-threshold-...

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