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Middle-class pensioners to lose benefits under Tory plan to fund social care

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kzb   
13 hours ago, DrBuyToLeech said:

When you sell a house, to fund your retirement, the money you collect to pay for nurses and such is real wealth.  It must really be earned, over a lifetime, by the buyer or their tenants.  

They are paying your 100k care costs - future homeowners and tenants.

Housing wealth is a claim on future incomes.  It isn't earned by the homeowner at all, not in any sense, it is a tax extracted from the next occupant. 

My suggestion?  Fix the ******ing economy.  Take the wealth out of houses, and put it back into the productive assets. 

Instead of 400k houses, how about 40k houses and 360k to spend on building a business, getting an education and raising your kids? Or, if you prefer, spent on hospitals, schools, and cruise missiles.

Miraculously you'd find that care was no longer unaffordable because we wouldn't be wasting our money supporting idle landlords, lazy baby boomers, Londoners and the lower echelons of the Chinese communist party.  

We need a million nurses, we've got a million landlords, it seems to me that the solution is pretty obvious.

Well yes on a deep level you are correct.  Going forward this should be where we want to end up.

What we want however is a solution that fixes things given our present situation.

That present situation is that we have a large hole in the social care budget and a lot of unearned equity in houses.

That equity is a lottery.  Persons bought into the London property bubble decades ago have become millionaires simply by being where they are.  It was never earned, it was made up as quantitative easing.  Some of this money should be clawed back for the social care budget.

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kzb   
1 hour ago, pig said:

I'm not sure that's the plan.

To expand a little, we have the problem of bubbly housing 'wealth' apparently inspiring a cack-handed redistribution of housing 'wealth' from people suffering from dementia.

If you suffer from cancer on the other hand your family gets to inherit the house.

It seems a lot more civilised that we simply share the cost of caring for all our sick and elderly but if we are serious about housing inequality and think property tax is the way to go then tax it across the board - not just people suffering from dementia.

+2

It should be a graduated estate tax across the board.  Not capped, but taxed as a percentage, with a personal allowance to cover legal fees and funeral costs.

If it was universal like this, the starting tax band could probably be quite low, maybe 10%, but increasing to say 30% over half a million.  Something like that.

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51 minutes ago, kzb said:

Well yes on a deep level you are correct.  Going forward this should be where we want to end up.

What we want however is a solution that fixes things given our present situation.

That present situation is that we have a large hole in the social care budget and a lot of unearned equity in houses.

That equity is a lottery.  Persons bought into the London property bubble decades ago have become millionaires simply by being where they are.  It was never earned, it was made up as quantitative easing.  Some of this money should be clawed back for the social care budget.

I wouldn't object to that, but it's a short-termist approach.

Long-term, we probably shouldn't  rely on a permanent housing crisis in order to look after our retirement. 

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kzb   
1 minute ago, DrBuyToLeech said:

I wouldn't object to that, but it's a short-termist approach.

Long-term, we probably shouldn't  rely on a permanent housing crisis in order to look after our retirement. 

Agreed, but there is little sign of the fundamental shift in the nature of our economy that is required. 

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Nabby81   
16 hours ago, DrBuyToLeech said:

When you sell a house, to fund your retirement, the money you collect to pay for nurses and such is real wealth.  It must really be earned, over a lifetime, by the buyer or their tenants.  

They are paying your 100k care costs - future homeowners and tenants.

Housing wealth is a claim on future incomes.  It isn't earned by the homeowner at all, not in any sense, it is a tax extracted from the next occupant. 

My suggestion?  Fix the ******ing economy.  Take the wealth out of houses, and put it back into the productive assets. 

Instead of 400k houses, how about 40k houses and 360k to spend on building a business, getting an education and raising your kids? Or, if you prefer, spent on hospitals, schools, and cruise missiles.

Miraculously you'd find that care was no longer unaffordable because we wouldn't be wasting our money supporting idle landlords, lazy baby boomers, Londoners and the lower echelons of the Chinese communist party.  

We need a million nurses, we've got a million landlords, it seems to me that the solution is pretty obvious.

The idea that people who MIGHT get demetria and MIGHT have to use some of their house wealth to cover it is enough to get a policy ridiculed and changed .How would any government pass a policy that would guarantee people lost their housing wealth ?

 

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kzb   
10 minutes ago, Nabby81 said:

The idea that people who MIGHT get demetria and MIGHT have to use some of their house wealth to cover it is enough to get a policy ridiculed and changed .How would any government pass a policy that would guarantee people lost their housing wealth ?

 

This is the same party that gave us the Poll Tax and the Child Support Agency !

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Nabby81   
6 minutes ago, kzb said:

This is the same party that gave us the Poll Tax and the Child Support Agency !

Fair point , in power something they could do ...as an election campaign though it would be toxic . 

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kzb   
On ‎24‎/‎05‎/‎2017 at 2:20 PM, Nabby81 said:

Fair point , in power something they could do ...as an election campaign though it would be toxic . 

The point I was making is that these were vindictive and unjust pieces of legislation.  Anyone remotely in the same universe as the general population could see how unjust these schemes were and how they would blow up in their face.

NOT that they were fundamentally correct and they should've snuck them in more carefully.

All those Oxbridge educated government ministers and civil service, those same experts again.  Utterly incompetent.

And here we go again with the dementia tax.  Something fair and reasonable could be put in place, but they won't.

The cap is unjust.  Someone with an estate worth £170k has 100% marginal tax rate.  Someone who bought a semi in Richmond decades ago, now worth £3m, they are hardly affected.

 

 

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kzb   

According to Radio 4 the other day:

1 in 14 of the population aged 65+ currently gets social care.  Contrary to the impression given, this has reduced greatly in recent years due to councils raising the criteria.

1 in 10 males and 1 in 4 females will end up needing council-funded care.  The average bill is £90k.

So that works out at an average of £16k per person. 

This is far from an unsurmountable problem given the HPI we have seen in recent decades.  It's rather easy to fix this problem, it would be a few per cent estate or equity tax.

But this is exactly what they won't do.

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winkie   

Sure, not everyone will need to use social care, like not everyone with a pet will require use of a vet, or everyone that gets married will need use of a divorce lawyer......therefore individuals who require it pay for it or make their own family arrangements, those who can't pay for it the social system should help them fully or partly.....not in favour of any kind of compulsory insurance policy, that will only inflate costs for all and inflate the costs of caring.......vet fees used to be reasonable and affordable for all before insurance became wide spread.....;)

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kzb   
2 minutes ago, winkie said:

Sure, not everyone will need to use social care, like not everyone with a pet will require use of a vet, or everyone that gets married will need use of a divorce lawyer......therefore individuals who require it pay for it or make their own family arrangements, those who can't pay for it the social system should help them fully or partly.....not in favour of any kind of compulsory insurance policy, that will only inflate costs for all and inflate the costs of caring.......vet fees used to be reasonable and affordable for all before insurance became wide spread.....;)

It's not really a lifestyle choice if you know what I mean..

Just like with the NHS, the care cost should be socialised, and I was suggesting quite a reasonable way of doing it.

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winkie   
10 minutes ago, kzb said:

It's not really a lifestyle choice if you know what I mean..

Just like with the NHS, the care cost should be socialised, and I was suggesting quite a reasonable way of doing it.

What is a lifestyle choice.....does anyone get the choice of being born into a certain family, a certain place, a certain time, being born with certain geans, intelligence, health......in the case of health much, but not all, we all have the power to do something about it to improve it......that is a lifestyle choice.;)

Edited by winkie

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On 5/22/2017 at 4:59 PM, kzb said:

The other thing that would help is to stop erstwhile employees being classed as self-employed.

All those delivery drivers, Uber et al.  Those people are employees, and it's been proved in court.

Get them classed as employees so their employers have to pay the employers' NI contribution.

Or abolish Employers NI - which is literally a tax on jobs - altogether, and replace with a higher level of Corporation Tax. This would remove perverse incentives such as these, and business owner/managers like myself paying themselves in Dividends rather than PAYE.

With Employers NI currently at 13.8% a business could afford to take on 1 extra employee for every seven they already have.

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Just now, billy budd said:

Or abolish Employers NI - which is literally a tax on jobs - altogether, and replace with a higher level of Corporation Tax. This would remove perverse incentives such as these, and business owner/managers like myself paying themselves in Dividends rather than PAYE.

With Employers NI currently at 13.8% a business could afford to take on 1 extra employee for every seven they already have.

A good start but why not abolish corporation tax as well and make dividends/interest taxed the same as PAYE?  I have a friend who can live off the interest on his savings, why not tax him as if he were working?  He costs the state the same as if he were working (apart from possibly his pension in the future).

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1 minute ago, iamnumerate said:

A good start but why not abolish corporation tax as well and make dividends/interest taxed the same as PAYE?  I have a friend who can live off the interest on his savings, why not tax him as if he were working?  He costs the state the same as if he were working (apart from possibly his pension in the future).

I tend to agree. It was politically quite brave of Osborne to introduce the 7.5% Dividend Tax, and it's going to be an easy target for any Government to raise this rate in future.

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Just now, billy budd said:

I tend to agree. It was politically quite brave of Osborne to introduce the 7.5% Dividend Tax, and it's going to be an easy target for any Government to raise this rate in future.

True - although it is adding complexity - which is not good.  Why not just abolish NI and Corporation tax and treat all income the same.  It would let people realize exactly how much tax they pay - which would be a shock for many people.

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kzb   

All reasonable suggestions, but bear in mind corporation tax, NI, and other taxes are paid to central government.

Social care comes out of local authority budgets, and is means tested.

If you need nursing care, that is NHS budget.

The estate tax could easily be ring-fenced and doled out to LA's depending on a formula.  Other taxes are just lost in the system.

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4 hours ago, kzb said:

The point I was making is that these were vindictive and unjust pieces of legislation.  Anyone remotely in the same universe as the general population could see how unjust these schemes were and how they would blow up in their face.

NOT that they were fundamentally correct and they should've snuck them in more carefully.

All those Oxbridge educated government ministers and civil service, those same experts again.  Utterly incompetent.

And here we go again with the dementia tax.  Something fair and reasonable could be put in place, but they won't.

The cap is unjust.  Someone with an estate worth £170k has 100% marginal tax rate.  Someone who bought a semi in Richmond decades ago, now worth £3m, they are hardly affected.


 


 

Yes but - currently someone without a house but £300k in cash could lose all but £23k of it.

Someone with a £300k house but no cash will pay nothing.

This discourages downsizing, as well as clearly being unfair.
 

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kzb   
1 minute ago, CunningPlan said:

Yes but - currently someone without a house but £300k in cash could lose all but £23k of it.

Someone with a £300k house but no cash will pay nothing.

This discourages downsizing, as well as clearly being unfair.
 

You also want to incentivise saving and home ownership.

However I am not disagreeing.  The current system is unfair in the way you state.  Something ought to be done, but not what TM is suggesting.

My suggestion was a universal estate tax, with a personal allowance and bands like income tax.   Ringfenced for social care budget.

Although I think the tax rates could be much lower than income tax rates, because we are after only about £16k per person on average.

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kzb   

This is something I heard in the pub over the weekend.

Doctors are being paid £55 for each dementia diagnosis.  Why is this?

It's because once you have this diagnosis you cannot transfer your property.  The state will get it if you need social care.

If you have transferred your property after a diagnosis of dementia, they will chase the recipients for the money to pay any social care bills.

So basically, the system is now highly incentivised to diagnose you with dementia at the earliest possible stage.

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4 hours ago, kzb said:

The point I was making is that these were vindictive and unjust pieces of legislation.  Anyone remotely in the same universe as the general population could see how unjust these schemes were and how they would blow up in their face.

NOT that they were fundamentally correct and they should've snuck them in more carefully.

All those Oxbridge educated government ministers and civil service, those same experts again.  Utterly incompetent.

And here we go again with the dementia tax.  Something fair and reasonable could be put in place, but they won't.

The cap is unjust.  Someone with an estate worth £170k has 100% marginal tax rate.  Someone who bought a semi in Richmond decades ago, now worth £3m, they are hardly affected.

 

 

Agree re the unfairness of a nominal arbitrary cap.  If the consultation recommends a cap in % terms, this should be more progressive.

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7 hours ago, kzb said:

You also want to incentivise saving and home ownership.

However I am not disagreeing.  The current system is unfair in the way you state.  Something ought to be done, but not what TM is suggesting.

My suggestion was a universal estate tax, with a personal allowance and bands like income tax.   Ringfenced for social care budget.

Although I think the tax rates could be much lower than income tax rates, because we are after only about £16k per person on average.

I wonder if rolling NI into income tax so that wealthier pensioners still pay it would do the job?

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kzb   
10 hours ago, CunningPlan said:

I wonder if rolling NI into income tax so that wealthier pensioners still pay it would do the job?

Maybe it would, but I do not think it is a good idea.

Firstly, you do not need to be "wealthier" to come above the personal allowance ( £11k p.a. I think it is now).  Your state pension is taxable income, and, in fact, is subtracted from your tax code automatically when you reach pension age.  There will be lots of poor pensioners with a small employers pension which takes them a few k above the personal allowance who would be disadvantaged by having NI imposed on their measly pension.

Secondly, the separate status of NI compared to income tax must be maintained.  Yes, we will now get people saying it all comes out the same pot, but the point is, it shouldn't.

NI benefits should be enhanced relative to persons without a good NIC record.  The clue is in the name, National INSURANCE.

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