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Stevo_666

Rick Chasey wrote:

Set inheritance tax to 100% & close offshore loopholes.

Its easy when you (think you) know how...

rick_chasey

which bit, the loopholes or inheritance tax to 100%?

narbs

Stevo 666 wrote:

narbs wrote:

Stevo 666 wrote:

Well, looks like New Old Labour have finally decided that £80k pa is the level at which you are deemed to be rich and need to be punished. Bet they would have gone for a lower threshold if they thought they could get away with it.

Trouble is, it probably won't raise much if the last effort at being spiteful and raising the top rate to 50 % is anything to go by.

Given that almost half the adult population pay no income tax whatsoever, where's the money supposed to come from?

Forget this proposal - what would be a fair and effective system in your view?

Depends how much you want to raise.

Its less about fairness as effectiveness while maintaining incentives to create wealth. You also need to look at taxation overall rather than looking at income tax alone.

So what's an effective way of doing it then? Looking at all taxation.

Stevo_666

Rick Chasey wrote:

which bit, the loopholes or inheritance tax to 100%?

Generally.

Do you think they are both good ideas and realistic ?

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

which bit, the loopholes or inheritance tax to 100%?

Generally.

Do you think they are both good ideas and realistic ?

100% inheritance tax wouldn't be as bad as everyone makes out, assuming everyone would be subject to it, rather than just the poor who can't afford send their money offshore.

tangled_metal

If you pay 20% tax on £2000 and say 20% on £5000 the latter pays more I thought. So if two 40% taxpayers are paying at the same percentage rate then the higher paid taxpayer is paying more. Assuming they are paye and both are taking full advantage of any tax efficient devices that are available to them, plus no doubt other proviso's I've got no idea about.

My point being richer are paying more than the poorer. It's just not as high a figure compared to disposable income I guess.

Stevo_666

narbs wrote:

Stevo 666 wrote:

narbs wrote:

Stevo 666 wrote:

Well, looks like New Old Labour have finally decided that £80k pa is the level at which you are deemed to be rich and need to be punished. Bet they would have gone for a lower threshold if they thought they could get away with it.

Trouble is, it probably won't raise much if the last effort at being spiteful and raising the top rate to 50 % is anything to go by.

Given that almost half the adult population pay no income tax whatsoever, where's the money supposed to come from?

Forget this proposal - what would be a fair and effective system in your view?

Depends how much you want to raise.

Its less about fairness as effectiveness while maintaining incentives to create wealth. You also need to look at taxation overall rather than looking at income tax alone.

So what's an effective way of doing it then? Looking at all taxation.

It would take a bit of time which I don't have but general principles are:
1. Don't kill the goose that lays the golden egg/encourage economic activity and investment.
2. Don't give in to the politics of envy.

Not easy for some I know.

Stevo_666

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

which bit, the loopholes or inheritance tax to 100%?

Generally.

Do you think they are both good ideas and realistic ?

100% inheritance tax wouldn't be as bad as everyone makes out, assuming everyone would be subject to it, rather than just the poor who can't afford send their money offshore.

Not realistic as easily avoided especially when there is the incentive as when the rate is 100%.


Or will just encourage the retired to piss their money up the wall and rely on the state when they need care.

PS you don't avoid it by 'sending your money offshore'.

narbs

Stevo 666 wrote:

narbs wrote:

Stevo 666 wrote:

narbs wrote:

Stevo 666 wrote:

Well, looks like New Old Labour have finally decided that £80k pa is the level at which you are deemed to be rich and need to be punished. Bet they would have gone for a lower threshold if they thought they could get away with it.

Trouble is, it probably won't raise much if the last effort at being spiteful and raising the top rate to 50 % is anything to go by.

Given that almost half the adult population pay no income tax whatsoever, where's the money supposed to come from?

Forget this proposal - what would be a fair and effective system in your view?

Depends how much you want to raise.

Its less about fairness as effectiveness while maintaining incentives to create wealth. You also need to look at taxation overall rather than looking at income tax alone.

So what's an effective way of doing it then? Looking at all taxation.

It would take a bit of time which I don't have but general principles are:
1. Don't kill the goose that lays the golden egg/encourage economic activity and investment.
2. Don't give in to the politics of envy.

Not easy for some I know.

It's a serious question. Specifically, what does an effective taxation system look like?

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

which bit, the loopholes or inheritance tax to 100%?

Generally.

Do you think they are both good ideas and realistic ?

100% inheritance tax wouldn't be as bad as everyone makes out, assuming everyone would be subject to it, rather than just the poor who can't afford send their money offshore.

Not realistic as easily avoided especially when there is the incentive as when the rate is 100%.


Or will just encourage the retired to wee-wee their money up the wall and rely on the state when they need care.

PS you don't avoid it by 'sending your money offshore'.

Whatever, it's shorthand.

What do you see as the problems of 100% inheritance tax - rather than it's enforceability?

Stevo_666

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

which bit, the loopholes or inheritance tax to 100%?

Generally.

Do you think they are both good ideas and realistic ?

100% inheritance tax wouldn't be as bad as everyone makes out, assuming everyone would be subject to it, rather than just the poor who can't afford send their money offshore.

Not realistic as easily avoided especially when there is the incentive as when the rate is 100%.


Or will just encourage the retired to wee-wee their money up the wall and rely on the state when they need care.

PS you don't avoid it by 'sending your money offshore'.

Whatever, it's shorthand.

What do you see as the problems of 100% inheritance tax - rather than it's enforceability?

It won't work. Try setting any tax at 100% and you remove all incentive to create the value that is subject to the tax. So self defeating.

Penalises hard work, saving and the basic human desire to do the best for your children.

That's apart your point about enforcing. And as mentioned above, too easy to avoid as all you need to do is minimise what you are worth when you die.

Also the income has already been taxed, or is tax free in any other situation (mainly the family home). Nobody pays tax on the sale of their main home so why should you pay tax on disposing of it jut because you are unlucky enough to die?

tangled_metal

There's already a form of inheritance tax. It's when social care for the elderly and infirm coming out of their hard earned savings. Die at home before you need care. It's a scary prospect seeing a nursing home taking £4k a month from your bank account until you get near to running out then you get shoved into a back room with a tiny window when the state takes over paying. Oh and you're subsidizing state funded residents by 40% as well. BTW there's a limit where you no longer have to pay so you can keep some of your money. Except reality is the nursing home sends you or your family a bill to top up the state payments or they'll kick you out or move you into that back room.

Seriously there's likely to be no inheritance for most people when they get old. Apart from the truly rich who can hide it and afford to pay for good social care for them and theirs.

Stevo_666

Tangled Metal wrote:

There's already a form of inheritance tax. It's when social care for the elderly and infirm coming out of their hard earned savings. Die at home before you need care. It's a scary prospect seeing a nursing home taking £4k a month from your bank account until you get near to running out then you get shoved into a back room with a tiny window when the state takes over paying. Oh and you're subsidizing state funded residents by 40% as well. BTW there's a limit where you no longer have to pay so you can keep some of your money. Except reality is the nursing home sends you or your family a bill to top up the state payments or they'll kick you out or move you into that back room.

Seriously there's likely to be no inheritance for most people when they get old. Apart from the truly rich who can hide it and afford to pay for good social care for them and theirs.

If any of you have both parents still alive (especially if they own their own home), do the following if you want to maximise your chances of getting get some inheritance - which most parents will naturally want to do for their kids:
1. Change their ownership from joint tenants to tenants in common.
2. Change their will so that their half of the house and any other savings/valuable assets they have go to their children (and/or grand children) and not their surviving spouse.

If one dies and the other needs care, the state can only take the assets of the survivor to pay for care, which excludes what the children have inherited.

Used to help with inheritance tax also but with the transferability of the unused IHT allowance to a surviving spouse, the main benefit is for care fees.

Clearly does not work if both need care etc. As I am currently dealing with my fathers estate and my mother in a care home this is a very current issue for me. Thankfully we made the necessary arrangements nearly 15 years ago.

tangled_metal

My gran did the same way back so half the house isn't hers anymore. Still it doesn't stop the other half and her savings go. My grandparents worked so very hard, saved every penny they could and retired with a nest egg I can only dream of. That nest grew because you never get over old habits of saving. Now? If it carries on much longer she'll be no different than someone who pi$$ed it up the wall on beer and fags and cars and holidays only to rely on state aid at the end.

Their focus, before dementia and cancer took them, was to leave their grandkids and great grandkids set up when they pass on. We're more bothered by their wishes for the results of their life going where they wanted than actually receiving it. If that makes sense. Fortunately IHT isn't a factor, it's the stealth tax that is unfunded social care that's the biggest problem.

kingstongraham

Someone has to pay for care. I don't have a problem with that being me, when my time comes.

Stevo_666

Tangled Metal wrote:

My gran did the same way back so half the house isn't hers anymore. Still it doesn't stop the other half and her savings go. My grandparents worked so very hard, saved every penny they could and retired with a nest egg I can only dream of. That nest grew because you never get over old habits of saving. Now? If it carries on much longer she'll be no different than someone who pi$$ed it up the wall on beer and fags and cars and holidays only to rely on state aid at the end.

Their focus, before dementia and cancer took them, was to leave their grandkids and great grandkids set up when they pass on. We're more bothered by their wishes for the results of their life going where they wanted than actually receiving it. If that makes sense. Fortunately IHT isn't a factor, it's the stealth tax that is unfunded social care that's the biggest problem.

Better to pass on half than none at all. We all try to do the best for our children.

tangled_metal

KingstonGraham wrote:

Someone has to pay for care. I don't have a problem with that being me, when my time comes.

General taxation pot. It's about the priorities. Social care of the elderly isn't a big winner on that stakes. Imagine if you had to pay for all you NHS treatment when you retired. Would you be happy to pay for that?

We are talking about people who are vulnerable, who cannot look after themselves and probably need round the clock care. Certainly a secure establishment. It's not much different to healthcare in many ways. Dementia is a health condition but it goes under social care until a point it becomes too bad. That is when it becomes a health issue and gets funded. That takes a subjective decision by a social worker and we all know they're under stress.

The social care of adults is underfunded. Simple fact. If you are happy to self fund then can I suggest you start going private with your healthcare too? IMHO there's a very grey line between healthcare and social care of the elderly. One you get free the other you don't if you have money or your family have money. Don't forget the reality is that even if funded your elderly relative's next of kin will before asked for top ups by the care provider if under state funding.

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

which bit, the loopholes or inheritance tax to 100%?

Generally.

Do you think they are both good ideas and realistic ?

100% inheritance tax wouldn't be as bad as everyone makes out, assuming everyone would be subject to it, rather than just the poor who can't afford send their money offshore.

Not realistic as easily avoided especially when there is the incentive as when the rate is 100%.


Or will just encourage the retired to wee-wee their money up the wall and rely on the state when they need care.

PS you don't avoid it by 'sending your money offshore'.

Whatever, it's shorthand.

What do you see as the problems of 100% inheritance tax - rather than it's enforceability?

It won't work. Try setting any tax at 100% and you remove all incentive to create the value that is subject to the tax. So self defeating.

Penalises hard work, saving and the basic human desire to do the best for your children.

That's apart your point about enforcing. And as mentioned above, too easy to avoid as all you need to do is minimise what you are worth when you die.

Also the income has already been taxed, or is tax free in any other situation (mainly the family home). Nobody pays tax on the sale of their main home so why should you pay tax on disposing of it jut because you are unlucky enough to die?

We all die.

We're all incentivised to work during our lives - I don't save particularly to give a good inheritance - I save for many other reasons. Quick ask around my family and my wife's and they say the same. It's not about the inheritance - it's about the quality of life while you're still alive.

That's all fine.

I'm not necessarily interested in the actual tax revenue that results from a 100% inheritance tax, but more about transferring the wealth sooner to people who are likely to be more productive with the capital.

If it also forces people to p!ss it up the wall, the better.

Do you honestly think people will work less hard because they know it will be taken away when they die? Or will they just transfer the money to younger people a lot sooner?

bompington

You don't have kids, do you.

rick_chasey

bompington wrote:

You don't have kids, do you.

No.

I had the discussion with my parents, who were the first to float the idea - which is how I got thinking about it. I'm pretty sure they have children.

But let's hear the arguments? As in, rational, economic arguments.

Not 'oh but I want Tarquin to be able to have money when he's already middle aged and is towards the end of his earning cycle'.

surrey_commuter

narbs wrote:

Stevo 666 wrote:

narbs wrote:

Stevo 666 wrote:

narbs wrote:

Stevo 666 wrote:

Well, looks like New Old Labour have finally decided that £80k pa is the level at which you are deemed to be rich and need to be punished. Bet they would have gone for a lower threshold if they thought they could get away with it.

Trouble is, it probably won't raise much if the last effort at being spiteful and raising the top rate to 50 % is anything to go by.

Given that almost half the adult population pay no income tax whatsoever, where's the money supposed to come from?

Forget this proposal - what would be a fair and effective system in your view?

Depends how much you want to raise.

Its less about fairness as effectiveness while maintaining incentives to create wealth. You also need to look at taxation overall rather than looking at income tax alone.

So what's an effective way of doing it then? Looking at all taxation.

It would take a bit of time which I don't have but general principles are:
1. Don't kill the goose that lays the golden egg/encourage economic activity and investment.
2. Don't give in to the politics of envy.

Not easy for some I know.

It's a serious question. Specifically, what does an effective taxation system look like?

Leaving the politics out of it I would say that Steve answered the question with point one. Put another way maximise revenue with the least distortion to the market.

My own broad brushstroke answer would be to remove (as far as possible) all tax breaks and incentives and concentrate on raising the threshold and keeping the rates as low as possible. I would also make income tax honest by incorporating NI.

rick_chasey

Ja but I'm not after tax revenue.

It's transferring the capital to people who might make better use of it.

Most people get their inheritance now in their middle age where, chances are, you've already earned a bit.

Making people transfer it sooner, I reckon, would be beneficial.

tangled_metal

Interesting thing about inheritance, it doesn't have to go to the kids but can go to those who have more need for it. In my gran's case it switched from children to grandchildren when the financial security of offspring was assured. Now my generation will benefit from inheritance from last grandparent. If we were further down the financial security road it would change to great grandkids.

All that idea would not happen with 100% taxation on inheritance.

rick_chasey

Tangled Metal wrote:

Interesting thing about inheritance, it doesn't have to go to the kids but can go to those who have more need for it. In my gran's case it switched from children to grandchildren when the financial security of offspring was assured. Now my generation will benefit from inheritance from last grandparent. If we were further down the financial security road it would change to great grandkids.

All that idea would not happen with 100% taxation on inheritance.

It would, it'd just happen sooner...!

tangled_metal

How? I inherit or my kid inherits from grandparent and it goes to help financial situation. Clears part of mortgage or pays for university costs.

Grandparent dies and all their wealth goes into state pot. It doesn't mean it gets anywhere quickly. There's certainly no sense from the recipients (all the nation) of any direct benefit.

Why not take all savings too above a set monthly expenditure whilst you're at it? You don't need your excess money do you? You'll only buy more cycling clobber or other frivolous stuff.

surrey_commuter

Rick Chasey wrote:

Tangled Metal wrote:

Interesting thing about inheritance, it doesn't have to go to the kids but can go to those who have more need for it. In my gran's case it switched from children to grandchildren when the financial security of offspring was assured. Now my generation will benefit from inheritance from last grandparent. If we were further down the financial security road it would change to great grandkids.

All that idea would not happen with 100% taxation on inheritance.

It would, it'd just happen sooner...!

so you would let people transfer unlimited amounts of money tax free?

rick_chasey

Surrey Commuter wrote:

Rick Chasey wrote:

Tangled Metal wrote:

Interesting thing about inheritance, it doesn't have to go to the kids but can go to those who have more need for it. In my gran's case it switched from children to grandchildren when the financial security of offspring was assured. Now my generation will benefit from inheritance from last grandparent. If we were further down the financial security road it would change to great grandkids.

All that idea would not happen with 100% taxation on inheritance.

It would, it'd just happen sooner...!

so you would let people transfer unlimited amounts of money tax free?

No, same rules, only % when you snuff it is 100%.

surrey_commuter

Rick Chasey wrote:

Surrey Commuter wrote:

Rick Chasey wrote:

Tangled Metal wrote:

Interesting thing about inheritance, it doesn't have to go to the kids but can go to those who have more need for it. In my gran's case it switched from children to grandchildren when the financial security of offspring was assured. Now my generation will benefit from inheritance from last grandparent. If we were further down the financial security road it would change to great grandkids.

All that idea would not happen with 100% taxation on inheritance.

It would, it'd just happen sooner...!

so you would let people transfer unlimited amounts of money tax free?

No, same rules, only % when you snuff it is 100%.

so what rate would you use for transfers?

rick_chasey

Well anything gifted within 7 years of death, assuming the giver was say, over, 57.

The rest you tax like you would any normal transfer right now.

bompington

Rick Chasey wrote:

But let's hear the arguments? As in, rational, economic arguments.

Economic arguments are one thing, but expropriation by the state of 100% of people's assets is something that went out of fashion over 30 years ago even in China .