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OECD calls for higher inheritance tax after Covid pandemic


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20 minutes ago, Young Turk said:

But you said it was "just jealousy!" That requires that nothing could be achieved through taxation.

That seems ludicrous.

e.g. Consider a person saving to buy a flat, has an income of £30k, can borrow £150k, doesn't have enough savings to put down a deposit to afford anything. Student loan repayments are deducted from his salary. If tuition fees had been eliminated, he would have saved enough. If the elimination of tuition fees had been funded by a tax increase on the wealthy, would that tax only be because he is envious of the rich? If it actually allowed him to buy a flat, how could that have anything to do with envy? Could it be the case that if he weren't envious of the rich, he wouldn't want to own a flat?

And if additional taxes on the wealthy are bad, how are current levels of taxation justifiable? Or should all progressive taxation be eliminated? 

 

I don't think you're wrong to acknowledge that envy is a factor, but I think that probably mainly applies to a narrow section of the middle class. A certain type of left-wing politician, academic and some professionals are probably particularly likely to be envious of the rich (they feel they are better educated, more clever and do more good than most rich people), but that has no bearing on whether a tax is good or bad. That depends on its consequences and not the motivations of the people who advocate for it.

Note that I also said that to achieve anything it has to bring the bottom up, not the top down. Arguments that seem to angle for the latter get the "just jealousy" label. It doesn't apply when the money from that also helps push the bottom up; your example is of that. Although there often seems to be a bit of "tax the rich, that'll solve all our problems." I've no problem with the wealthy paying their fair share but sometimes there seems to be a bit of "let someone else pay all the tax for stuff for me."

The fundamentals of inequality are more deep rooted than the taxation regime.

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Should we assume the oecd want higher IHT anyway and using covid as the way to bring it it in? 

While it's emotive an issue, the higher tax doesn't affect the deceased really but the survivors who benefit but quite why in post covid world it now becomes an issue I don't see 🤔.

It's easier than grappling with deep lying problems with the economies of the west I suspect.

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2 hours ago, longgone said:

So southerners paid the same for property say 40 to 50 years back as those in blackpool ?

Or did they have to work harder in the first place then also.

 

I'd guess London was about 10-20% dearer than Blackpool back then.  The "South" was likely about the same.

Now it's an order of magnitude between Blackpool and London.

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14 minutes ago, Riedquat said:

Note that I also said that to achieve anything it has to bring the bottom up, not the top down.

What constitutes bringing the top down?

Once people have a fortune of hundreds of millions they tend to consume quite a small proportion of their wealth. The real value of their wealth, after deducting what they consume, tends to increase.

 

This means that they could be taxed significantly more without affecting their ability to life an opulent lifestyle and leave a fortune to their children. Elizabeth Warren proposed an annual wealth tax of 2% on the portion of wealth over $50m and 3% on the portion above $1bn. I think most people with a fortune exceeding $50m would continue to enjoy their current standard of living and get richer, but the worst case scenario would entail falling slowly towards $50m at which point the amount of tax owed would be negligible.

Yet such tax increases are bitterly opposed by the rich.

 

But I would argue that taxes infringing on the consumption of the wealthy might arguably be required to achieve other objectives. For example, a lot of rich people own very big houses, sometimes several very big houses. This leads to a lot of demand for new building, which could be removed if properties which aren't used or are very under-utilised were redistributed to be used more efficiently. If you want fewer new developments, wouldn't you favour a policy if it had this impact? 

 

57 minutes ago, Riedquat said:

The fundamentals of inequality are more deep rooted than the taxation regime.

I can see that more than just money transfers are required in some cases. There are lots of gambling shops in poor areas, so clearly a lot of poor people gamble a lot. If you give them a small fortune, many they will gamble until they are poor again. But doesn't that just mean resources need to be deployed in different ways?

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8 minutes ago, Young Turk said:

I can see that more than just money transfers are required in some cases. There are lots of gambling shops in poor areas, so clearly a lot of poor people gamble a lot. If you give them a small fortune, many they will gamble until they are poor again. But doesn't that just mean resources need to be deployed in different ways?

Possibly a bit of that but you need to use it to addres the problems rather than just chuck money there and hope for the best. All too often it's "fling some money that way" and "find some new whizzy high-tech something" to deal with social issues.

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2 hours ago, Young Turk said:

Which firms and which products are you referring to? A typical pensions provider has several types of service. 

Annuities, protection and savings.

Hang on how many pensioners with annuities also have massive life insurance policies?  My feeling is the annuities will way outweigh the life insurance.

Also we've not mentioned the infamous DB pensions yet.  The providers will make a saving on their liabilities due to Covid.

 

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51 minutes ago, nightowl said:

Should we assume the oecd want higher IHT anyway and using covid as the way to bring it it in? 

While it's emotive an issue, the higher tax doesn't affect the deceased really but the survivors who benefit but quite why in post covid world it now becomes an issue I don't see 🤔.

It's easier than grappling with deep lying problems with the economies of the west I suspect.

I'm not sure whether there is an argument for IHT in particular. I would have thought a wealth tax makes more sense. 

The argument for covid prompting higher taxes on wealthy people (higher or more progressive CGT, wealth taxes, inheritance taxes) are that the wealthy have become a lot wealthier as a result of covid. It has accelerated the growth of big tech, which has led to an increasing concentration of wealth. Poorer people find themselves in more precarious employment, with ever less affordable shelter. 

There have been many years of growing wealth inequality as a result of the pre 2008 bubble and the policy response to it. It's hard to see how you would think taxing the wealthy isn't part of grappling with the underlying economics problems of the west.

Which other underlying problems do you think they ignore?

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11 minutes ago, kzb said:

Hang on how many pensioners with annuities also have massive life insurance policies?  My feeling is the annuities will way outweigh the life insurance.

Some pensioners or people of pension age will have whole of life policies. Some will have term assurance though that is perhaps. Some younger people died from covid.

I don't claim they offset exactly.

I do think the negative impact to other areas of their business have been more significant (fewer people starting new policies, lower contributions, more lapses, lower management charges due to lower asset prices, reserves worth less due to lower interest rates). 

13 minutes ago, kzb said:

Also we've not mentioned the infamous DB pensions yet.  The providers will make a saving on their liabilities due to Covid.

A lot of businesses have made significant savings - there have been much lower costs in hospitality and travel 🤣.

But this will be offset by lower interest rates and lower asset prices. I don't know if they are better off or worse off overall.

But the companies do appear to be slightly worse off overall.

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8 hours ago, Sprrite said:

If we are to get serious about the debt and deficit, we need to have a one off wealth tax that generates hundreds of billions in tax revenues. I don't think we have the political will to pull this off though.

Easiest scheme for a wealth tax is NIRP.

Despite its apparently toxic effect on voters, its actually extremely fair, easy to apply and progressive:

  1. People with no money (the poor) are basically entirely untouched, and with no means testing.
  2. people with crap loads of money are automatically targetted, again with no means testing.
  3. As long as the proceeds to the government BOE are purely used to pay down gov debt, the money taken never re-enters the economy. 
  4. paying down government debt that is not re-issued reduces the national debt.
  5. paying down government debt that is not re-issued reduces the net nominal wealth of the private sector, this acting as a strong anti-inflationary tool.
  6. anyone has the legal option to avoid the tax by simply not sitting on a hoard of money. They can buy something real instead. While this may sound inflationary, this is mitigated by points 3, 4 and 5.

The key to it is that NIRP receipts are never spent by government, they just extinguish public debt.

I really struggle to see why rational working people who are not rich and just getting by would rather an income tax than a NIRP tax. 

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34 minutes ago, Young Turk said:

I'm not sure whether there is an argument for IHT in particular. I would have thought a wealth tax makes more sense. 

The argument for covid prompting higher taxes on wealthy people (higher or more progressive CGT, wealth taxes, inheritance taxes) are that the wealthy have become a lot wealthier as a result of covid. It has accelerated the growth of big tech, which has led to an increasing concentration of wealth. Poorer people find themselves in more precarious employment, with ever less affordable shelter. 

There have been many years of growing wealth inequality as a result of the pre 2008 bubble and the policy response to it. It's hard to see how you would think taxing the wealthy isn't part of grappling with the underlying economics problems of the west.

Which other underlying problems do you think they ignore?

The concentration of corporate power, protecting employment rights, withdraw help to buy etc etc as you say. Can be done by legal and policy changes rather than tax.  

It's not that taxation has its role in the world but often it becomes emotive based on ideology, and the other causes then ignored.

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Can't we just reduce the size of the state? They ruin everything the stick their nose into. We could try something radical like letting people make their own decisions and spend their own money. 

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24 minutes ago, doomed said:

Can't we just reduce the size of the state? They ruin everything the stick their nose into. We could try something radical like letting people make their own decisions and spend their own money. 

Do you just want the state to do less, or do you also want it to tax and transfer less?

I think the state has two roles. The provision of public goods and redistribution. The bulk of it is redistribution, so if your primary concern is the inefficiency of education and health, you could advocate privatising hospitals, schools, etc. and provide vouchers for people to pay for these services.

 

If you want a much smaller state and no transfer payments, you have a much harder task. Well over half of the population receive government services that cost a lot more than the amount of tax they pay. You would have to either convince them to be worse off, or that the private sector is so much more efficient than the government that they are actually made worse off by the government's attempts to redistribute to them.

For example, what proportion of parents would be able to send their children to school if they had to pay the full cost? A small proportion would be better off as the cost would be less than the tax they would otherwise have paid. But the vast majority would be worse off.

How much more cheaper do you think private schools would be? Do you think they would be cheap enough that a lot of middle and low income parents could afford them? Do you think you could persuade them in advance that things would work out better for them?

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22 minutes ago, Young Turk said:

Do you just want the state to do less, or do you also want it to tax and transfer less?

I think the state has two roles. The provision of public goods and redistribution. The bulk of it is redistribution, so if your primary concern is the inefficiency of education and health, you could advocate privatising hospitals, schools, etc. and provide vouchers for people to pay for these services.

 

If you want a much smaller state and no transfer payments, you have a much harder task. Well over half of the population receive government services that cost a lot more than the amount of tax they pay. You would have to either convince them to be worse off, or that the private sector is so much more efficient than the government that they are actually made worse off by the government's attempts to redistribute to them.

For example, what proportion of parents would be able to send their children to school if they had to pay the full cost? A small proportion would be better off as the cost would be less than the tax they would otherwise have paid. But the vast majority would be worse off.

How much more cheaper do you think private schools would be? Do you think they would be cheap enough that a lot of middle and low income parents could afford them? Do you think you could persuade them in advance that things would work out better for them?

I would love to see a voucher system implemented where private companies where free to compete alongside state run services. 

We are too far down whatever road we are on to bring about any sort of change to fix things imo. The state is failing whilst having an absolute bonfire with tax payer's cash. The sort of reforms required would never be voted through so we just have muddle along until there is no other option. 

The benefit system has created an underclass whilst all decent jobs for the low skilled now take place in 3rd world sweatshops. I have no idea how to unpick the mess created but certainly have no intention to make my own or children's lives more difficult paying for the clowns that created the mess to try and fix it.

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14 minutes ago, doomed said:

I would love to see a voucher system implemented where private companies where free to compete alongside state run services.

The problem here is that state run services were run better than the Private equivalents - examples being US companies pulling out of GP and hospital services and the whole schools academy fiasco.  The only way private sector providers got an edge is when they were idemnified in providing a worse service or the Public sector is hamstung by chronic funding and meddling (see the Tory MO here?)

 

The cost per capita of the NHS is one of the most efficient in the world, despite the drooling of the right wing press.  The only way the Government gets private sectors in is to cripple the NHS with unnecessary meddling and creating artificial waiting list, then let private companies 'cherry pick' the easiest work at inflated 'internal market' costs.  Hardly a ringing endorsement of Private sector efficiency.

 

If you want to look at Government spending, have a look at the £700M loss incurred from the NatWest sale, or the £38B on the Track n Trace, PPE contracts, Br*xit shipping, etc etc.

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22 minutes ago, doomed said:

We are too far down whatever road we are on to bring about any sort of change to fix things imo. The state is failing whilst having an absolute bonfire with tax payer's cash. The sort of reforms required would never be voted through so we just have muddle along until there is no other option.

Standard drooling by the Right wing press. The state is failing and there is no 'magic money tree' until the Tories find there is and sp*nk it all on their mates.  The state needs clear accountability - the lack of it on PPE, Track n Trace etc shows where the rot is.  Be careful of the general 'whataboutism'

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24 minutes ago, doomed said:

The benefit system has created an underclass whilst all decent jobs for the low skilled now take place in 3rd world sweatshops. I have no idea how to unpick the mess created but certainly have no intention to make my own or children's lives more difficult paying for the clowns that created the mess to try and fix it.

Are you implying the benefit system was responsible for offshoring, oh please!   

 

To unpick the mess you need to study it and see where the rot is, not just what is spouted by those already in the trough to divert your attention.

 

If you stay in the UK, you will pay for it like it or not. 

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1 minute ago, msi said:

Are you implying the benefit system was responsible for offshoring, oh please!   

 

To unpick the mess you need to study it and see where the rot is, not just what is spouted by those already in the trough to divert your attention.

 

If you stay in the UK, you will pay for it like it or not. 

You keep trying to paint me into some political corner that I am not from. Why oh why do people insist on creating caricatures of anyone that holds different opinion than themselves. I am in full agreement that our current government is the worst we have had probably in living memory.

 

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13 minutes ago, doomed said:

You keep trying to paint me into some political corner that I am not from. Why oh why do people insist on creating caricatures of anyone that holds different opinion than themselves. I am in full agreement that our current government is the worst we have had probably in living memory.

 

It often happens here and beyond.

In general it makes it easier for your 'opponent' to have their argument they want to have with nearest someone (you), on their terms so they feel more confident about winning it.  It's irrelevant whether you hold those exact views or not, so they are assigned to you for convenience.

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21 minutes ago, doomed said:

You keep trying to paint me into some political corner that I am not from. Why oh why do people insist on creating caricatures of anyone that holds different opinion than themselves. I am in full agreement that our current government is the worst we have had probably in living memory.

 

because you are having an encounter with a zealot/extremist/partisan. Don't give them the oxygen of rational debate, regardless of their viewpoint.

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2 hours ago, doomed said:

Can't we just reduce the size of the state? They ruin everything the stick their nose into. We could try something radical like letting people make their own decisions and spend their own money. 

 

Public sector debt is 100% of GDP, replacement cost ~0%.

Private sector debt is 200% of GDP, replacement cost ~4%.

Now do you get it?

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2 hours ago, doomed said:

I would love to see a voucher system implemented where private companies where free to compete alongside state run services. 

The private sector does well innovating and responding to diverse and changing consumer demands. I'm not sure it is as useful when the people mostly want the same thing and there doesn't appear to be much prospect of innovation.

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2 hours ago, doomed said:

You keep trying to paint me into some political corner that I am not from. Why oh why do people insist on creating caricatures of anyone that holds different opinion than themselves. I am in full agreement that our current government is the worst we have had probably in living memory.

 

Your statement "The benefit system has created an underclass whilst all decent jobs for the low skilled now take place in 3rd world sweatshops."  implies this.  If you didn't, use correct grammar and split the statement into 2 parts

The only caricature you paint is someone who posts on a train of thought basis without setting forward a decent argument - something that the right (and I make no assumption to your politics) a has degraded too.  I do care for considered argument beyond drooling sound bites and trope statements.

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2 hours ago, scepticus said:

because you are having an encounter with a zealot/extremist/partisan. Don't give them the oxygen of rational debate, regardless of their viewpoint.

oh dear, have I hit a nerve?  Perhaps if you didn't try to use false straw men and bait-n-switch we could talk.

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