Optobear Posted July 21, 2009 Share Posted July 21, 2009 I've been thinking about how / whether the country can conceivably ever repay the £799bn (and that is only the on-balance-sheet part). It is so vast a sum, that the only thing of comparable "value" that I can think of is the UK housing stock. So wouldn't it make sense to reinstate 40% IHT on estates over £250k? It would raise (over the next 30 years or so) figures that could make a serious dent in the £799bn, and I simply can't think of anything else of the right magnitude. Taxing pensions won't work because it will just transfer back onto the government if people can't feed themselves in their old ages. Selling off infrastructure? Well nothing serious left. North Sea Oil - gone... You see what I mean, only the houses are valuable enough. So it would be politically suicidal at the moment to consider it, but what are the alternatives? As an additional thought, I do find myself wondering whether the government didn't partly allow the bubble over the last 12 years partly with that in mind? Allowing prices to rise dramatically - and having 40% over £250k would have gone a good way to paying off the decades of government overspend. Quote Link to comment Share on other sites More sharing options...
newbie Posted July 21, 2009 Share Posted July 21, 2009 One alternative is to hike VAT to about 25%. Quote Link to comment Share on other sites More sharing options...
STRLondon Posted July 21, 2009 Share Posted July 21, 2009 all the profits for the next 5 years have already been made - thats the problem with pulling forward demand. Quote Link to comment Share on other sites More sharing options...
Optobear Posted July 21, 2009 Author Share Posted July 21, 2009 (edited) One alternative is to hike VAT to about 25%. Not even close. Data is here http://www.hm-treasury.gov.uk/d/Budget2009...report_2520.pdf The current 15% VAT rate will raise (according to the 2009 budget) an estimated £64bn, and that is over-optimistic. So let us say £60bn, so taking VAT up from 15% to 25% would raise a further £40bn assuming spending stays constant (which it wouldn't). Chart 1.2 So raising VAT to 25% might raise an additional £30bn, and it would take 20 years to make a dent in the £799bn. So no, VAT at 25% wouldn't do it - not by a country mile. Any other thoughts out there? If not, then I'd suggest that the dead are going to have to pay! edited for spelling Edited July 21, 2009 by Optobear Quote Link to comment Share on other sites More sharing options...
cells Posted July 21, 2009 Share Posted July 21, 2009 The debt is not meant to be paid off. Either way the only real way to pay it off would be to inflate it away. If you truly and honestly wanted to pay it off you’re looking at a lot of hardship as a country. Firstly we would need to increase taxes by 20% to get the budget into line. Secondly we would need to increase it again by some 10% to pay off the debt slowly. So think of every tax you know, add 30% to it. Your looking at 200-250B in more tax or less spending. Income tax brings in about £130B in comparison!!! Inheritance tax would never work because it is the easiest to dodge and if they made it difficult to dodge then most people would just leave the country. If your leaving your kids £1m after a lifetime of hard work your better off emigrating than Gordon taking £500k of it. Plus thinking of it there are an infinite number of ways of getting around it. Bets are tax free so you and your son could flip a coin, heads he gets £1m from you, tails he gets nothing. Double or nothing until your son wins. Tax free transfer of money and no inheritance tax to pay. Quote Link to comment Share on other sites More sharing options...
Vested Disinterest Posted July 21, 2009 Share Posted July 21, 2009 (edited) Simple, just keep stoking the HPI flames and rake in the Stamp Duty! (Being careful not to change the thresholds.) edit: stoke flames or embers? Edited July 21, 2009 by Farjer Quote Link to comment Share on other sites More sharing options...
newbie Posted July 21, 2009 Share Posted July 21, 2009 Income tax rises? (Company tax is precious so they won't touch that, only wage-slaves are fair game.) Quote Link to comment Share on other sites More sharing options...
moneyscam Posted July 21, 2009 Share Posted July 21, 2009 No way, seriously bad idea. IHT is just plain wrong, theft in my book, taxing people on accumulated wealth from after tax legitimately earned income is double taxation. You'll never convince me otherwise and all IHT should be abolished. It would also be some sort of perverse reward to the architects of this fiasco for their monumental failures and cronyism. Quote Link to comment Share on other sites More sharing options...
cells Posted July 21, 2009 Share Posted July 21, 2009 Not even close. Data is here http://www.hm-treasury.gov.uk/d/Budget2009...report_2520.pdf The current 15% VAT rate will raise (according to the 2009 budget) an estimated �64bn, and that is over-optimistic. So let us say �60bn, so taking VAT up from 15% to 25% would raise a further �40bn assuming spending stays constant (which it wouldn't). Chart 1.2 So raising VAT to 25% might raise an additional �30bn, and it would take 20 years to make a dent in the �799bn. So no, VAT at 25% wouldn't do it - not by a country mile. Any other thoughts out there? If not, then I'd suggest that the dead are going to have to pay! edited for spelling well first and foremost we are currently borrowing 150-200B so you need to stop that by increases taxes before you can start paying down the national debt. then your looking at a surplus of say £20B a year to pay it off in 40 years. so either about £200B more tax or £200B less spending. the only realistic way is to hyper inflate it away. no other real option. government debt is the pure definition of ponzi Quote Link to comment Share on other sites More sharing options...
cells Posted July 21, 2009 Share Posted July 21, 2009 Income tax rises? (Company tax is precious so they won't touch that, only wage-slaves are fair game.) Every single tax is a tax on the citizen. They call it corporation tax, business rates, duties, etc but it is just passed onto you. Every tax you pay no matter its name. Quote Link to comment Share on other sites More sharing options...
wealthy Posted July 21, 2009 Share Posted July 21, 2009 The way I see it is that the Tories will come in and raise income tax significantly - we will end up taxed like the Germans. Quote Link to comment Share on other sites More sharing options...
Ah-so Posted July 21, 2009 Share Posted July 21, 2009 We need to reduce the size of the state. It has grown so much, so fast, that we need to make dramatic cuts. Cuts have to be made whatever the government spins. Quote Link to comment Share on other sites More sharing options...
foa4 Posted July 21, 2009 Share Posted July 21, 2009 ..or cut the deadwood from the civil service....starting with the local councils....save billions Quote Link to comment Share on other sites More sharing options...
cells Posted July 21, 2009 Share Posted July 21, 2009 The way I see it is that the Tories will come in and raise income tax significantly - we will end up taxed like the Germans. afaik the difference is Conservatives: lower taxes equal better and fairer economy Labour: higher taxes equal better and fairer economy. So hopefully they will be cutting spending and taxes. Quote Link to comment Share on other sites More sharing options...
newbie Posted July 21, 2009 Share Posted July 21, 2009 Every single tax is a tax on the citizen.They call it corporation tax, business rates, duties, etc but it is just passed onto you. Every tax you pay no matter its name. Yes, but different taxes hit different people differently. That's the inherent unfairness in the system. The simpler it is, the better. Quote Link to comment Share on other sites More sharing options...
worzel Posted July 21, 2009 Share Posted July 21, 2009 Plus thinking of it there are an infinite number of ways of getting around it.Bets are tax free so you and your son could flip a coin, heads he gets £1m from you, tails he gets nothing. Double or nothing until your son wins. Tax free transfer of money and no inheritance tax to pay. I had never thought of that as a way round IHT before, but its very simple and clever. I think you may have to do through a third party so it looks like a regular open market transaction. Quote Link to comment Share on other sites More sharing options...
scottbeard Posted July 21, 2009 Share Posted July 21, 2009 afaik the difference isConservatives: lower taxes equal better and fairer economy Labour: higher taxes equal better and fairer economy. So hopefully they will be cutting spending and taxes. Unfortunately they will have no choice but to cut spending AND increase taxes. Nothing else will balance the books. Quote Link to comment Share on other sites More sharing options...
Optobear Posted July 21, 2009 Author Share Posted July 21, 2009 No way, seriously bad idea. IHT is just plain wrong, theft in my book, taxing people on accumulated wealth from after tax legitimately earned income is double taxation. You'll never convince me otherwise and all IHT should be abolished. It would also be some sort of perverse reward to the architects of this fiasco for their monumental failures and cronyism. I'm not saying I like it, or that it isn't wrong. But where else can you find £799bn? ALso, to an extent, one could argue that the reason the £799bn debt is there is because all of us people currently alive have been living the life of Riley on the never-never, and so we ought to pay (once we are dead!). Quote Link to comment Share on other sites More sharing options...
Yoss Posted July 21, 2009 Share Posted July 21, 2009 (edited) Not even close. Data is here http://www.hm-treasury.gov.uk/d/Budget2009...report_2520.pdf The current 15% VAT rate will raise (according to the 2009 budget) an estimated �64bn, and that is over-optimistic. So let us say �60bn, so taking VAT up from 15% to 25% would raise a further �40bn assuming spending stays constant (which it wouldn't). Chart 1.2 So raising VAT to 25% might raise an additional �30bn, and it would take 20 years to make a dent in the �799bn. So no, VAT at 25% wouldn't do it - not by a country mile. Any other thoughts out there? If not, then I'd suggest that the dead are going to have to pay! edited for spelling A VAT rise that steep would kill retail stone dead and thus more jobs losses. IHT makes sense, given the avg number of children per family post baby boom. However avoiding much of it currently is simple if you can plan 7 years ahead I think working family tax credits will be first for the chopping block. Only families earning sub 25K joint income will get that benefit in future. Hell why not just simplify the tax codes and wipe out the Vogons that administer the corrupt beast, hell you could adjust tax codes for farther's paying maintenance to and get rid of the CSA Vogons at the same time. Hand back power to regulating financial service to the BOE and can the (Historical failure) FSA can go all in the same legislation. 3 pointless departments cut in one motion, simplify taxes and eradicate massive public sector waste. (I can but dream!) Then cut employers NI on young workers they are willing to train to address the unemployment problem (properly policed of course to avoid companies taking the piss) Re-assess those OAP's in council houses, a lonely widow doesn't need a 4 bed house, ask them to move to more suitable housing and re-allocate the house to a family that need space...It is SOCIAL housing after all, it should benefit the community as a whole. Crank up the use of EDMO (Empty Dwelling Management Orders) if the house has been empty more than 6 months get it back on the rental market at a realistic rental price or the council will take control of it. This saves a bucket load on the price of evicting squatter/police time. Edited July 21, 2009 by Yoss Quote Link to comment Share on other sites More sharing options...
wealthy Posted July 21, 2009 Share Posted July 21, 2009 afaik the difference isConservatives: lower taxes equal better and fairer economy Labour: higher taxes equal better and fairer economy. So hopefully they will be cutting spending and taxes. I agree with scott, they don't have a choice as an incoming party but to raise taxes. Quote Link to comment Share on other sites More sharing options...
R K Posted July 21, 2009 Share Posted July 21, 2009 Better not to pay it back. As soon as you do the socialists in league with the banksters will simply come along and take it off you again. Better to keep it as a reminder for everyone to never vote labour again and to spit on banksters and politicians in the street. Quote Link to comment Share on other sites More sharing options...
Optobear Posted July 21, 2009 Author Share Posted July 21, 2009 I agree with scott, they don't have a choice as an incoming party but to raise taxes. VAT, income tax, NI, council tax, all chicken feed compared to denting £799bn. Has to be 40% IHT and no exclusions, no seven year period, no transfer to spouse, etc. In fact, even the suggestion that someone is selling a house to reduce IHT by giving away the proceeds or by planning to go abroad should attract the 40% immediately. Quote Link to comment Share on other sites More sharing options...
cells Posted July 21, 2009 Share Posted July 21, 2009 I had never thought of that as a way round IHT before, but its very simple and clever. I think you may have to do through a third party so it looks like a regular open market transaction. your car is CGT free. you buy a banger for £500 and sell it to your father for £1m same can be done with your main house. already said bets are tax free then the legal way, transfer assets/money 7 years before you die. emigrate. perhaps loaning the money and writing off the debt would work too. cash..... you can also do it with the stock market via a small cap stock. son buys 10 shares in a tiny company for £10 in his isa. he puts those shares up for sale at £100k each. because the company is tiny, there isn’t many sell orders. say there are 100 shares at £10, 100 shares at £11 200 shares at 15 etc until you get to your sons 10 shares at £100k each. before you get to your sons shares you might have to buy 1000 shares at an average of say £20 meaning £20k you then buy your sons shares for £100k a piece you have effectively transferred £1m tax free to the kid and avoided inheritance tax. cant see how the tax man could say anything about that. Quote Link to comment Share on other sites More sharing options...
Optobear Posted July 21, 2009 Author Share Posted July 21, 2009 your car is CGT free.you buy a banger for £500 and sell it to your father for £1m same can be done with your main house. already said bets are tax free then the legal way, transfer assets/money 7 years before you die. emigrate. perhaps loaning the money and writing off the debt would work too. cash..... you can also do it with the stock market via a small cap stock. son buys 10 shares in a tiny company for £10 in his isa. he puts those shares up for sale at £100k each. because the company is tiny, there isn’t many sell orders. say there are 100 shares at £10, 100 shares at £11 200 shares at 15 etc until you get to your sons 10 shares at £100k each. before you get to your sons shares you might have to buy 1000 shares at an average of say £20 meaning £20k you then buy your sons shares for £100k a piece you have effectively transferred £1m tax free to the kid and avoided inheritance tax. cant see how the tax man could say anything about that. Not saying it is easy to implement the tax, but where else do you find £799bn and rising? Quote Link to comment Share on other sites More sharing options...
cells Posted July 21, 2009 Share Posted July 21, 2009 VAT, income tax, NI, council tax, all chicken feed compared to denting £799bn. Has to be 40% IHT and no exclusions, no seven year period, no transfer to spouse, etc. In fact, even the suggestion that someone is selling a house to reduce IHT by giving away the proceeds or by planning to go abroad should attract the 40% immediately. Anyone with any decent assets would just leave. If you have £1B in assets you’re not going to risk £400m for the lovely UK. You will emigrate and so will your kids. Most people who could make a dent would do that. The poor and lower middle will pay nothing. The middle will pay some but nowhere near enough. Plus you’re still pulling money out of the economy. Quote Link to comment Share on other sites More sharing options...
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