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Toto deVeer

Mish On Cameron, Osborne, Uh Oh...

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I thought this was interesting.

http://globaleconomicanalysis.blogspot.com/2010/05/legalized-theft-uk-proposes-50-tax-on.html

50% Tax on Capital Gains is Insane

How anyone can call themselves a Conservative while proposing a 50% tax on capital gains is beyond me. Note how the party did not make it part of their platform but now says it was "pretty clear" this would happen.

Excuse me, but a hike in capital gains from 18% to 50% or even 40% was not clear to anyone, especially conservatives.

This policy proposal, if enacted, will wreck UK investment opportunities. It puts a firm sell on property and the UK stock index FTSE as well.

Good luck with that David Cameron. You coalition may be burnt toast already.

Whilst I find Mish an interesting pundit on likely market direction, sometimes I think his political/economic views are completely destructive.

The comments to this article are worth reading. Funny how the Yanks want to go back to the pre-FED days, yet they don't seem to have a clue what that was like.

Prior to the FED, there was no income tax, but capital gains tax and tariffs on imports were the major sources of government revenue under the US constitution.

Personally, I think that the ConDems are going in the right direction, and the States haven't got a clue. Any thoughts?

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I thought this was interesting.

http://globaleconomicanalysis.blogspot.com/2010/05/legalized-theft-uk-proposes-50-tax-on.html

Whilst I find Mish an interesting pundit on likely market direction, sometimes I think his political/economic views are completely destructive.

The comments to this article are worth reading. Funny how the Yanks want to go back to the pre-FED days, yet they don't seem to have a clue what that was like.

Prior to the FED, there was no income tax, but capital gains tax and tariffs on imports were the major sources of government revenue under the US constitution.

Personally, I think that the ConDems are going in the right direction, and the States haven't got a clue. Any thoughts?

I agree. Mish is a madman, a ranting wignut, along with a good portion of teenage libertarians in his comments section who as you say get all their economic nouce from zerohedge and have no actual idea what the banking system or state revenue collection was like pre FED.

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Must admit I am of two minds on capital gains taxes.

But one point I agree with Mish is how can a government claim to be conservative while raising taxes so hard? I bet a lot of businessmen will be wishing Labour was back if some of these policies actually happen. The bad old days of Labour when businessmen were making tons of money, and capital gains was at 18%.

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The bad old days of Labour when businessmen were making tons of money, and capital gains was at 18%.

The bad old days of Labour were completely unsustainable. They were on a path where, within a decade, debt interest would take up every penny raised by income tax.

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On the one hand I detest the increase in CGT; to have to hand over 50% of your gains when they have been earned through your wit and judgement is obscene. On the other hand the relative lower rate of CGT has provided a massive advantage to capital over work, the most relevent example to this site being property speculation. I DO NOT agree with increasing CGT in principle, but I certainly don't agree with a difference in these rates.

I must declare an interest here; I am a free-trader earning 100% of my income from adding value to materials and none whatsoever from Capital gain. Nor do I ever expect to even in retirement so I could be said to be a VI in pushing pain onto Capital Gain. However, it's my belief that what my colleagues and I do benefits the general good because it creates new value whereas sitting on your fat **** and squeezing rent from people is parasitic. Anything which shifts the incentives from parasitic activity and back towards creating true value has got to be good.

The other issue is that IF this government is going to carry people with it then it absolutely has to rid itself of any sense that it is governing for one sector; being a Coalition is a start, but Camerons comment that people owning 2nd homes isn't actually a terribly good investment for the country was revealing.

Frankly, we all on here have bemoaned the asset bubble economy and this change might be a significant step. Sure, popping a bubble could be nasty but as this is the forum generally in favour of changing the constitution of the economy I can't see why anyone would be negative about this, consequences and all.

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Must admit I am of two minds on capital gains taxes.

But one point I agree with Mish is how can a government claim to be conservative while raising taxes so hard? I bet a lot of businessmen will be wishing Labour was back if some of these policies actually happen. The bad old days of Labour when businessmen were making tons of money, and capital gains was at 18%.

you are making the common mistake of confusing social and political conservatism with free market ideology (Thatcher made the same error)

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Must admit I am of two minds on capital gains taxes.

But one point I agree with Mish is how can a government claim to be conservative while raising taxes so hard? I bet a lot of businessmen will be wishing Labour was back if some of these policies actually happen. The bad old days of Labour when businessmen were making tons of money, and capital gains was at 18%.

Well, according to the US Constitution, labour was considered a barter activity, with no gain, so it could not be taxed. That means no income tax. However capital gains are taxable, and tariffs could be levied.

There are gross imbalances in the UK economy. The first is the finance sector. The second is the property sector. Short term there will be pain, but long term the country will be better for it. This is what Mish just cannot see.

You are seeing the elimination of tax for a large group of lower income persons. There, I expect, be a corresponding elimination of many government benefits programs in that sector as well. This will encourage productive activity.

Secondly, you are seeing the closing of major loopholes for the hedge fund industry. This industry does nothing to create wealth in the UK. It is a wealth destruction mechanism.

Thirdly, you will see the purchase and ownership of multiple homes, which has decimated many small communities in the UK, decrease and hopefully disappear. I think these are all good policies for the future of the UK.

Nonetheless there's a lot more that needs to be done.

And, from what I've read, this is not a blanket tax; there will be exceptions associated with start-up businesses etc.

The FIRE economy must be dismantled and replaced with a real economy that is connected to the physical world. This is the true source of wealth creation.

Edited by Toto deVeer

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you are making the common mistake of confusing social and political conservatism with free market ideology (Thatcher made the same error)

Excellent point.

This error is frequently made on HPC.

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Well, according to the US Constitution, labour was considered a barter activity, with no gain, so it could not be taxed. That means no income tax. However capital gains are taxable, and tariffs could be levied.

There are gross imbalances in the UK economy. The first is the finance sector. The second is the property sector. Short term there will be pain, but long term the country will be better for it. This is what Mish just cannot see.

You are seeing the elimination of tax for a large group of lower income persons. There, I expect, be a corresponding elimination of many government benefits programs in that sector as well. This will encourage productive activity.

Secondly, you are seeing the closing of major loopholes for the hedge fund industry. This industry does nothing to create wealth in the UK. It is a wealth destruction mechanism.

Thirdly, you will see the purchase and ownership of multiple homes, which has decimated many small communities in the UK, decrease and hopefully disappear. I think these are all good policies for the future of the UK.

Nonetheless there's a lot more that needs to be done.

And, from what I've read, this is not a blanket tax; there will be exceptions associated with start-up businesses etc.

The FIRE economy must be dismantled and replaced with a real economy that is connected to the physical world. This is the true source of wealth creation.

It does seem it has some advantages harmonizing income and capital gains tax.

I think the original rational for different rates was to encourage the investment in capital by business, instead of dividend income. But maybe that no longer makes sense, when we have overcapacity?

I also agree the second and third home phenomenon was negative but I look at other mechanisms to deal with it. The one I like is regulating a 50% downpayment for second homes.

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But one point I agree with Mish is how can a government claim to be conservative while raising taxes so hard?

They don't have a choice in the matter ?

Would be the same for a Government in power that was 'Anti-War'. If the French decided to invade they would suddenly have little option but to become 'Pro-war'.

No offence to the French.

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Secondly, you are seeing the closing of major loopholes for the hedge fund industry. This industry does nothing to create wealth in the UK. It is a wealth destruction mechanism

+1

There is also the question of how to stop private equity (aka post modern asset stripping) using capital gains created by loading debt onto a company as a means of tax avoidance.

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you are making the common mistake of confusing social and political conservatism with free market ideology (Thatcher made the same error)

True that.. in all honesty the free market is mainly a classical liberal thought. It has deeply revolutionary aspects to it.

The very word conservative implies conserving what exists. Which the free market is constantly tearing down the existing order.

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I thought this was interesting.

http://globaleconomi...-50-tax-on.html

Whilst I find Mish an interesting pundit on likely market direction, sometimes I think his political/economic views are completely destructive.

The comments to this article are worth reading. Funny how the Yanks want to go back to the pre-FED days, yet they don't seem to have a clue what that was like.

Prior to the FED, there was no income tax, but capital gains tax and tariffs on imports were the major sources of government revenue under the US constitution.

Personally, I think that the ConDems are going in the right direction, and the States haven't got a clue. Any thoughts?

Well, in my opinion his views are consistent with what

I would say is the standard small state good, big state bad view of a fiscal conservative.

Even if you do not agree with him you have to respect his beliefs.

The asset bubble of the last 2-3 decades has created a huge disparity between the asset rich and asset poor which for many ordinary families is now an intergenerational gap: those born before 1975 and those afterwards. This was based on financial speculation which was sold as 'wealth generation' . The last couple of years have shown that it was basically a huge lie. There was precious little wealth creation going on here in the UK; similarly but less so in the US. The current UK economy is too heavily dependent on speculation, either in the stock market, "world class finance" or in property, "homes". For the sake of future generations, this economy needs some serious rebalancing with more emphasis on making things and adding value.

There is an interesting debate to be had among fiscal conservatives about how they imagine this can be done.

So far I haven't seen any really intellectually honest discussions on this or other internet fori. Natural, since many of

the most vocal participants (Mish, Peter Schiff) make their living from speculation in the stock market either by themselves or others (day traders, professional financial workers) and so have a clear conflict of interest.

I must say that I find it a bit disturbing that these days so many enterpreneurial people try to get rich by speculating in stocks, shares, precious metals, houses (BTL) rather than founding businesses. I know it is a natural result of the growth of the financial sector over the last 30 years but it seems to me that this is just not sustainable. In that case I would view this CGT hike as less a tax increase and more as an incentive for people to invest their money in more economically productive ways.

I think that whoever won the election was going to have to do something similar but of course they wouldn't say it before because it would be widely unpopular. The population is addicted to speculation - getting addicts to go cold turkey was always going to be hard. This coalition just keeps giving to the Tories- the Libdems have given them the cover to do the right thing for the economy which would be really unpopular among their base.

DTM

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In that case I would view this CGT hike as less a tax increase and more as an incentive for people to invest their money in more economically productive ways.

I agree with you. I tried to express something along these lines on the Mish comments yesterday and basically got lynched. I usually agree with a lot Mish has to say but in this instance I think given the context of the raise he is wrong.

Edited by Fraccy

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I must say that I find it a bit disturbing that these days so many enterpreneurial people try to get rich by speculating in stocks, shares, precious metals, houses (BTL) rather than founding businesses. I know it is a natural result of the growth of the financial sector over the last 30 years but it seems to me that this is just not sustainable. In that case I would view this CGT hike as less a tax increase and more as an incentive for people to invest their money in more economically productive ways.

I think that whoever won the election was going to have to do something similar but of course they wouldn't say it before because it would be widely unpopular. The population is addicted to speculation - getting addicts to go cold turkey was always going to be hard. This coalition just keeps giving to the Tories- the Libdems have given them the cover to do the right thing for the economy which would be really unpopular among their base.

Spot on. Indeed, to rig the tax system as it has been is insane. Now they've done the right thing here, but perhaps rigging it the other way would be even more interesting; let's try upping the tax allowances on work even more, and funding those by upping the taxes on rent and CG.

Before I get slaughtered for talking about taxing, can I stress I am talking within the paradigm of a currently functioning (?) State with a massive debt problem.

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Well, in my opinion his views are consistent with what I would say is the standard small state good, big state bad view of a fiscal conservative. Even if you do not agree with him you have to respect his beliefs.

I think we all agree that a smaller, fairer state is the ideal, but not the reality.

There is an interesting debate to be had among fiscal conservatives about how they imagine this can be done.

So far I haven't seen any really intellectually honest discussions on this or other internet fori. Natural, since many of

the most vocal participants (Mish, Peter Schiff) make their living from speculation in the stock market either by themselves or others (day traders, professional financial workers) and so have a clear conflict of interest.

Exactly. Their words must be taken in context.

I must say that I find it a bit disturbing that these days so many enterpreneurial people try to get rich by speculating in stocks, shares, precious metals, houses (BTL) rather than founding businesses. I know it is a natural result of the growth of the financial sector over the last 30 years but it seems to me that this is just not sustainable. In that case I would view this CGT hike as less a tax increase and more as an incentive for people to invest their money in more economically productive ways.

These policies are targeted to structural change. Mish didn't get this, I don't think. Running a real business that creates value, as compared to just speculation, is hard, grinding work. And to top this off, the current tax regime subsidises the income of financial speculators, to the detriment of real enterprise. That's the truly irreconcilable aspect of Mish's view.

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you are making the common mistake of confusing social and political conservatism with free market ideology (Thatcher made the same error)

The confusion is indeed widespread, but I deny that Thatcher shared it.

Consider what she did, or more pointedly, refused to do:

- implacably opposed to electoral reform or Lords reform;

- no devolution (let alone today's lop-sided devolution) to Scotland and Wales;

- passed Section 28;

- above all, her increasingly prominent euro-scepticism, for which she ultimately paid with her job.

I submit that all the above are examples of social/political conservatism which hitherto (with exception of the Lords issue) had been shared with many, perhaps most in the old Labour Party too.

However, it's true that the free-market-ism she preached became associated with conservatism on her watch simply because she drew such a strong contrast between it and state socialism, i.e. the economic doctrines of Old Labour. And it has to be said that there's no question of confusing THAT with conservatism old or new!

Meanwhile we're left wondering who in today's Commons is actually promoting or defending social/political conservatism? E.g. how has Stonewall come to stitch up all three party leaderships?

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I repeat my point made many times on here that there are two types of people in the world - those who want a greater share of the fruits of their own productivity, and those who want a greater share of someone else's .

However, I agree with Bogbrush - There needs to be at least a levelling of taxation on work, and taxation on money-begets-money.

Higher tax is fine, provided it is targeted explicitly at the creation of a budget surplus and the paying down of this country's debt. Otherwise, hands off and let the current system fail. The public sector unionites will 'get it' when their entitlements will not buy them a loaf of bread.

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you are making the common mistake of confusing social and political conservatism with free market ideology (Thatcher made the same error)

I don't truly understand what you are saying, but feel that I need to. Could you please expand a little?

Thanks.

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Two things I've learnt under a Labour government are:

1. That you don't truly own anything produced by the fruits of your own labour.

2. There will never be a free-market in the true sense of the word.

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Two things I've learnt under a Labour government are:

1. That you don't truly own anything produced by the fruits of your own labour.

2. There will never be a free-market in the true sense of the word.

The third one was:

3. We will corrupt your children with cheap booze, sleazy nightclubs and celebrity culture...

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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