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The Politics Of Envy: Capital Gains Tax

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If a CGT increase is brought in, without any tapered relief based on length of asset ownership, then the economy will be dealt a potentially fatal blow. I've always held the view that if the state wishes to share the spoils of an investors success, then it must also be prepared to share the burden of failure; allowing any capital losses to be written off against tax liability for the year. A high CGT rate simply forces businesses to take greater risks as their investor base will demand greater returns to offset money lost due to the higher tax. This is the an absurd tax rise to even contemplate given the state of the UK economy and seems to me to be more about kowtowing to the working class vote than it is about raising revenue.

Edited by Boom Boom

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If a CGT increase is brought in, without any tapered relief based on length if asset ownership, then the economy will be dealt a potentially fatal blow. I've always held the view that if the state wishes to share the spoils of an investors success, then it must also be prepared to share the burden of failure; allowing any capital losses to be written off against tax liability for the year. A high CGT rate simply forces businesses to take greater risks as their investor base will demand greater returns to offset money lost due to the higher tax. This is the an absurd tax rise to even contemplate given the state of the UK economy and seems to me to be more about kowtowing to the working class vote than it is about raising revenue.

Sorry, but this is a case of special pleading.

If the less well-off have to endure sacrifices with cuts in public spending, the better off can endure a sacrifice through CGT increases. There's a deficit to pare back, you know. :rolleyes::rolleyes:

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If a CGT increase is brought in, without any tapered relief based on length if asset ownership, then the economy will be dealt a potentially fatal blow. I've always held the view that if the state wishes to share the spoils of an investors success, then it must also be prepared to share the burden of failure; allowing any capital losses to be written off against tax liability for the year. A high CGT rate simply forces businesses to take greater risks as their investor base will demand greater returns to offset money lost due to the higher tax. This is the an absurd tax rise to even contemplate given the state of the UK economy and seems to me to be more about kowtowing to the working class vote than it is about raising revenue.

Yes. 40% without taper relief is just a tax on inflation and hence a further disincentive for holding capital assets long term.

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Anyone worrying about CGT doesn't need to worry about money period!!!

The wealthy are the ones with money to invest, and in this economic climate we should not be discouraging investment activity. By all means impose a very punitive CGT rate on gains derived from 2nd homes, but to do so to real investment is foolish. As far as CGT on gains from company shares, al lthe evidence shows a lower rate would actually raise more revenue.

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( I decided to poke a feather up the snouts at Swinging Pig, and started a new thread there ):

Comment : elsewhere about the PIGG* Campaign in the Telegraph:

I think R4 today had various VI types saying how this change will kill off entrepeneurs and small businesses. Yeah right!

It seems it will affect swathes of middle classes who bought second properties as their pension (so they say). Personally, I think sellers should have to pay CGT on their principle home too if it is sold for more than £150K. That ought to put a few more properties into my price bracket. :lol:

= =

Reaction:

What about all the Savers who are being robbed to bail out their reckless property speculations?

When (temporary) ultra-low rates are ended, and rates put back to normal levels, house prices are going to fall.

They should grab their windfalls while they can, and be grateful for the excess profits, and be happy to pay a

40% tax as thanks for the government policy that dropped rates down to such levels.

If they wait, the profits are going to melt away (as they should have months ago), and they will have no profit

on which to pay tax.

This is inevitable, but most BTL "investors" may fail to see it. The really sad thing is how so many

thoughtless people, just following a property investing fashion, were enriched by the reckless policies of the

Blair/Brown regime. Now they are being asked to pay a fair share of their profits, and they are squealing

like pigs.

*PIGG - Protect Ill Gotten Gains

You seem fixated upon punishing house market speculators (fair enough), but disregard entirely the fact that this tax also impacts share ownership.

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You seem fixated upon punishing house market speculators (fair enough), but disregard entirely the fact that this tax also impacts share ownership.

And you get to offset any losses against tax. I don't think anyone has suggested changing that.

Normal shareholders won't be affected. I have a decent six-figure sum in shares, and I'm nowhere near so rich that I'll ever in my life have to pay CGT - and I'm not even contemplating games like bed-and-breakfast to use the annual £10k tax-free allowance.

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You seem fixated upon punishing house market speculators (fair enough), but disregard entirely the fact that this tax also impacts share ownership.

eh? Bubba is a property speculator, a short-term one at that.

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The anti CGT people on here areq uite happy to punish people by spending cuts on the basis that there's a budget deficit, and won't accept that cutting spending is going to rein back the economy by deflating demand.

They are either economically illiterate or humbugs or both. :rolleyes:

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And you get to offset any losses against tax. I don't think anyone has suggested changing that.

Normal shareholders won't be affected. I have a decent six-figure sum in shares, and I'm nowhere near so rich that I'll ever in my life have to pay CGT - and I'm not even contemplating games like bed-and-breakfast to use the annual £10k tax-free allowance.

And if my losses exceed my tax liability will the state be reimbursing me? Or will I be allowed to roll over my losses to ffset income tax for however long it takes to get back to parity? Like I said if the state wants the rewards it should shoulder the burden of any losses, otherwise they should bugger off out of it.

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Guest The Relaxation Suite

If a CGT increase is brought in, without any tapered relief based on length of asset ownership, then the economy will be dealt a potentially fatal blow. I've always held the view that if the state wishes to share the spoils of an investors success, then it must also be prepared to share the burden of failure; allowing any capital losses to be written off against tax liability for the year. A high CGT rate simply forces businesses to take greater risks as their investor base will demand greater returns to offset money lost due to the higher tax. This is the an absurd tax rise to even contemplate given the state of the UK economy and seems to me to be more about kowtowing to the working class vote than it is about raising revenue.

Before Darling lowered it to 18% it was 40% with taper relief. Funny how fast people get used to a tax break. Even funnier will be watching the stampeed to sell House No. 2 should they make this 40% applicable in April 2011.

Edited by Tecumseh

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The anti CGT people on here areq uite happy to punish people by spending cuts on the basis that there's a budget deficit, and won't accept that cutting spending is going to rein back the economy by deflating demand.

They are either economically illiterate or humbugs or both. :rolleyes:

Do you think it is wise to give investors yet another reason to keep their capital out of the markets? We need to grow the private sector to get out of this mess, that means privately held capital must be invested; this CGT rise simply adds as deterrent to this end. The spending cuts are not punishing anyone, in what sense is reigning on our ridiculously large state punishment?

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Guest The Relaxation Suite

Do you think it is wise to give investors yet another reason to keep their capital out of the markets? We need to grow the private sector to get out of this mess, that means privately held capital must be invested; this CGT rise simply adds as deterrent to this end. The spending cuts are not punishing anyone, in what sense is reigning on our ridiculously large state punishment?

They seemed happy enough to invest before Darling reduced it to 18%.

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Before Darling lowered it to 18% it was 40% with taper relief. Funny how fast people get used to a tax break. Even funnier will be watching the stampeed to sell House No. 2 should they make this 40% applicable in April 2011.

Which is not too bad. My concern is we're going to see a higher rate with no tapered relief, just a 40% flat tax on all profits realised from the sale of shares. Should such a move be made the FTSE is going to take an enormous blow as investors redeploy capital elsewhere.

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Do you think it is wise to give investors yet another reason to keep their capital out of the markets? We need to grow the private sector to get out of this mess, that means privately held capital must be invested; this CGT rise simply adds as deterrent to this end. The spending cuts are not punishing anyone, in what sense is reigning on our ridiculously large state punishment?

You idiot - how will you grow the private sector by cutting back on demand?

Even the government have admitted that the cuts will be painful. Are you saying that they were lying?

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Guest The Relaxation Suite

Which is not too bad. My concern is we're going to see a higher rate with no tapered relief, just a 40% flat tax on all profits realised from the sale of shares. Should such a move be made the FTSE is going to take an enormous blow as investors redeploy capital elsewhere.

It should be higher on second properties, but not on share ownsership, in my view. I do not think they will go higher than 40%.

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Before Darling lowered it to 18% it was 40% with taper relief. Funny how fast people get used to a tax break. Even funnier will be watching the stampeed to sell House No. 2 should they make this 40% applicable in April 2011.

There won't be a great rush: most of them genuinely want to hold long-term, and just a handful will really bring a sale forward. There's just a much-exaggerated meeja-campaign trying to tell us there's a rush.

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You idiot - how will you grow the private sector by cutting back on demand?

Even the government have admitted that the cuts will be painful. Are you saying that they were lying?

Painful in the sense that a lot of people employed by the state will lose their jobs. All the more reason the private sector needs to grow to create employment opportunities for these people. You seem to suffer from the same delusion as Brown, namely that the public sector=the economy.

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Painful in the sense that a lot of people employed by the state will lose their jobs. All the more reason the private sector needs to grow to create employment opportunities for these people. You seem to suffer from the same delusion as Brown, namely that the public sector=the economy.

No, but it is an important part of the economy and without it the private sector would not function.

But you still haven't explained why there would be an increase in demand for goods and services from the private sector if the level of aggregate demand is reduced.

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No, but it is an important part of the economy and without it the private sector would not function.

But you still haven't explained why there would be an increase in demand for goods and services from the private sector if the level of aggregate demand is reduced.

Here's a novel thought, we could try trading with other countries. Even if demand at home atrophies as a result of public sector downsizing, we can grow our private sector by offering products that are in demand elsewhere. That's how our economy used to work, and that's how it should work again. The plain truth is the public sector is far too large and an axe must be taken to it, there is no getting away from that reality. We can only have a public sector as large as our private sector can afford, and we simply cannot afford the public sector as it exists now, not by a large margin.

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Guest The Relaxation Suite

There won't be a great rush: most of them genuinely want to hold long-term, and just a handful will really bring a sale forward. There's just a much-exaggerated meeja-campaign trying to tell us there's a rush.

I disagree. Pro landlords will behave as you describe. The Managing Directors of the Bank of Mum and Dad however, who own hundreds of thousands of houses as second homes, will be keen to unload them before prices collapse (which they know is now inevitable). They will do this because the rental yield is not as good as they thought, there is far more effort and trouble involved in letting than they thought, and now the last thing keeping it going (outrageously disproportionate reward/risk ratio capital gains) is now being threatened.

As has been noted on other threads, there is an appreciable increase in the number of properties entering the market, and from the towns that I monitor on Rightmove I would argue that most of the new places popping up look like the classic FTB/BTL/Second homes type.

But, none of us is Nostradamus so my hat is sitting a plate with some salt and pepper.

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Here's a novel thought, we could try trading with other countries. Even if demand at home atrophies as a result of public sector downsizing, we can grow our private sector by offering products that are in demand elsewhere. That's how our economy used to work, and that's how it should work again. The plain truth is the public sector is far too large and an axe must be taken to it, there is no getting away from that reality. We can only have a public sector as large as our private sector can afford, and we simply cannot afford the public sector as it exists now, not by a large margin.

But other countries, like the US and the Eurozone, are as screwed up as we are. Or haven't you noticed? :)

Nice dodge to my question - reminds me of Yvette Cooper. ;)

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But other countries, like the US and the Eurozone, are as screwed up as we are. Or haven't you noticed? :)

Nice dodge to my question - reminds me of Yvette Cooper. ;)

I did answer, demand does not necessarily have to exist at home, there is a massive market out there, we just need to get involved to a much greater extent than we do now. What's you solution exactly, to keep paying for a bloated public sector that we cannot afford?

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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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