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What do Elon, Jeff and Bill have in common?

Buffer Bear

By Buffer Bear,
in House prices and the economy

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Young Turk

Young Turk

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Do they have significant income though?

Musk apparently doesn't earn a salary, Bezos' annual salary is $81,840 and I don't think Gates works any more.

Musk has avoided California's 13.3% additional capital gains tax by moving to Texas.

Otherwise all three pay the same rate on capital gains and dividends as they would in any other state.

Do you see why some are advocating a wealth tax on the super-rich?

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Buffer Bear

Buffer Bear

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Tbh, I don't like paying 40% tax so I'm not sure if I support higher tax rates. How we tax wealth fairly where so many options exist to reduce tax liabilities is not something I have the answer to.  

Any ideas @Unmoderated?  If I recall correctly you are in this game.  Let me clarify, I mean accounting rather than tax 'evasion'!

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Unmoderated

Unmoderated

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Tbh, I don't like paying 40% tax so I'm not sure if I support higher tax rates. How we tax wealth fairly where so many options exist to reduce tax liabilities is not something I have the answer to.  

Any ideas @Unmoderated?  If I recall correctly you are in this game.  Let me clarify, I mean accounting rather than tax 'evasion'!

Hi BB,

Yes sort of in the game - I was very much in it a few years ago but moved to be more commercial of late. Nonetheless - wealth taxes in the UK are all but unheard of. Possibly the only thing that comes close is council tax (and that's not really wealth since two identical houses my have very different levels of equity).

In the UK a tax liability is created upon a transfer of wealth either between individuals, entities or a combination. 

To tax wealth I think the fairest way is to slap inheritance tax up a notch, or switch the tax free limits from the estate to the individuals (in other words an estate of 4 beneficiaries each beneficiary would get the same tax free allowance as the single person inheriting a large estate. The point here is it would be possibly to increase the tax take while giving the majority of inheritees a lower tax burden. 

For an outright wealth tax though I think it's just not and never going to happen. 

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winkie

winkie

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Very many people's income is derived from taxes, no taxes no income....other individuals have more power and influence than some governments......it is in government interests to keep them sweet......old well known sayings......too big to fail, and private gains, public losses.......;)

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Buffer Bear

Buffer Bear

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Hi BB,

Yes sort of in the game - I was very much in it a few years ago but moved to be more commercial of late. Nonetheless - wealth taxes in the UK are all but unheard of. Possibly the only thing that comes close is council tax (and that's not really wealth since two identical houses my have very different levels of equity).

In the UK a tax liability is created upon a transfer of wealth either between individuals, entities or a combination. 

To tax wealth I think the fairest way is to slap inheritance tax up a notch, or switch the tax free limits from the estate to the individuals (in other words an estate of 4 beneficiaries each beneficiary would get the same tax free allowance as the single person inheriting a large estate. The point here is it would be possibly to increase the tax take while giving the majority of inheritees a lower tax burden. 

For an outright wealth tax though I think it's just not and never going to happen. 

@Unmoderated, thank you for your views.  CT is an interesting one especially as there has been no re-valuation for about 30 years (or is that my imagination) and of course we have the asset rich, cash poor debate to contend with.  Do we really have the desire to 'force' people to sell their homes to pay their tax? I'm not on this page but I do like to believe that if I ever owned a house that attracted a high poll tax (am I allowed to say this? 😯), I would be rational enough to downsize and enjoy the lottery rather win that came my way rather than live hand to mouth and suffer the cold through not being able to heat my home!

Regarding inheritance tax, I thought there was some appetite previously to increase the tax free limits or even bin it as its original purpose has meant that many in London/SE (I like to think I'm not Londoncentric but it's all relative) are now pulled into paying 40% tax - I know, I was one of them.  I wasn't too impressed as HMRC received more in total than individual beneficiaries but I shouldn't complain as we've been very fortunate albeit through very sad circumstance and we were also entitled to double tax relief.  Still couldn't afford a place mind you and as a non-homeowner, I still find it a bit of a struggle understanding why I paid such a massive amount of tax yet homeowners on selling don't get clobbered in this way.  

The idea of a lower tax burden is desirable but money is needed to fund public spending so it has to come from somewhere although we should avoid discussions about PPE/testing etc as this makes me want to explore tax evasion strategies. 

I'm kidding btw should anyone be snooping!

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Young Turk

Young Turk

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Each of their names consist of 4 characters. Do I win a prize?  

Only Elon is four characters. The others are short for Jeffrey and William.

 

 

Regarding inheritance tax, I thought there was some appetite previously to increase the tax free limits or even bin it as its original purpose has meant that many in London/SE (I like to think I'm not Londoncentric but it's all relative) are now pulled into paying 40% tax

What's the argument here? Is it that children will tend to stay in the same area, so it's harder for southerners to receive a heavily taxed big inheritance than it is for a northerner to receive a small untaxed inheritance?

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MonsieurCopperCrutch

MonsieurCopperCrutch

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Only Elon is four characters. The others are short for Jeffrey and William.

 

What's the argument here? Is it that children will tend to stay in the same area, so it's harder for southerners to receive a heavily taxed big inheritance than it is for a northerner to receive a small untaxed inheritance?

That wasn't the question. 

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Huggy

Huggy

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Only Elon is four characters. The others are short for Jeffrey and William.

 

What's the argument here? Is it that children will tend to stay in the same area, so it's harder for southerners to receive a heavily taxed big inheritance than it is for a northerner to receive a small untaxed inheritance?

Elon's short for Elongates, William's half brother.

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A17

A17

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@Unmoderated, thank you for your views.  CT is an interesting one especially as there has been no re-valuation for about 30 years (or is that my imagination) and of course we have the asset rich, cash poor debate to contend with.  Do we really have the desire to 'force' people to sell their homes to pay their tax? I'm not on this page but I do like to believe that if I ever owned a house that attracted a high poll tax (am I allowed to say this? 😯), I would be rational enough to downsize and enjoy the lottery rather win that came my way rather than live hand to mouth and suffer the cold through not being able to heat my home!

I live in Illinois - a very high property tax state. The high property taxes act as a check on the property values; we are reaching the stage where property taxes can quite easily be the same as your mortgage payments. High council tax in the UK is still at the "annoyance" stage rather than a major consideration in house buying. The high taxes do force people to sell their homes, either when they retire, or when the area gentrifies increasing the property values and hence the taxes. Regular revaluation sounds good in practice, but in reality it is another cost to pay. The municipalities have to hire people to revalue, homeowners hire somebody to revalue at a lower price, it passes through the government bureaucracy. All of this costs money.

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Young Turk

Young Turk

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I live in Illinois - a very high property tax state. The high property taxes act as a check on the property values; we are reaching the stage where property taxes can quite easily be the same as your mortgage payments. High council tax in the UK is still at the "annoyance" stage rather than a major consideration in house buying. The high taxes do force people to sell their homes, either when they retire, or when the area gentrifies increasing the property values and hence the taxes.

Do sellers tend to downsize or rent? I would assume there wouldn't be many properties available to let as it would be unattractive for both landlords and renters. Rents would have to be significantly more than the property tax to provide a decent return to landlords, but if rents were much higher than the tax, wouldn't owners be better off not selling?

 

Regular revaluation sounds good in practice, but in reality it is another cost to pay. The municipalities have to hire people to revalue, homeowners hire somebody to revalue at a lower price, it passes through the government bureaucracy. All of this costs money.

Good point. But I wonder if this is improved somewhat - or could be - by valuations on zoopla and zillow. 

Edited by Young Turk
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A17

A17

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Do sellers tend to downsize or rent? I would assume there wouldn't be many properties available to let as it would be unattractive for both landlords and renters. Rents would have to be significantly more than the property tax to provide a decent return to landlords, but if rents were much higher than the tax, wouldn't owners be better off not selling?

Not so much renting. If people are forced to move, they tend to move to a cheaper state (which more often than not has better weather) - hence the cliche of old people moving to Florida. As an anecdote, the property tax for my apartment in Chicago is 25% of the rent.

High property taxes only really affect a few parts of the country in retirement though. In most places it is only a few thousand dollars a year.

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