LDV readers say: Tax Capital Gains and Income at the same level

LDV posed the question last month (even before the Osborne/Alexander austerity emergency budget): Do you believe that as a matter of principle capital gains should generally be taxed at the same level as income?

Here’s what you told us:

    68% (946 votes) – Yes
    27% (371) – No
    6% (80) – Don’t know
    Total Votes: 1397, Poll ran: 10th June – 31st July, 2010

If you missed it at the time, it’s well worth having a read of the comments thread.

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11 Comments

  • But Tory backbenchers say no. So whose voice carries the greater weight? I’m pretty sure most LDV readers are against VAT rises, the pushing through of Gove’s education policy, tuition fees, AV as opposed to PR. But that’s the price of entering a coalition, I suppose.

  • But without any adjustment for inflation the long term effective tax rate for someone who hold on to an asset for some years would be much higher than the income tax rate. Seems a perverse effect.

  • Cllr Mark Wright 1st Aug '10 - 8:12pm

    Stephen W: Hold on, you cant just say “wealth creation (i.e. capital gains)” and get away with it! A lot of capital gain has absolutely nothing at all to do with wealth generation by the owner. For example, people who buy property in an area that later gets chosen as a location for a new public transport node, thus driving up the property price (a well known effect near tube stations in London). Those people have a windfall stimulated purely by public spend. Likewise those who buy houses and then ride the wave of a housing boom.

  • Income – eg you work and raise GDP – are just as important as capital gains. Economically the best answer is equal rates, with indexation relief, and the ability to rollover losses. Basically the system Nigel Lawson had created and Brown mucked up. I am pretty sure that this is what the Mirlees tax efficiency commission recommended.

  • Andrea Gill 2nd Aug '10 - 11:49am

    If finances weren’t tight right now AND tax loopholes were closed, then I’d support this, however the 28% level was calculated as the optimal income level for the treasury.

  • Matthew Huntbach 2nd Aug '10 - 10:30pm

    Stephen W

    wealth creation is capital gains

    Most capital gains is not “wealth creation” at all, if by that you mean something which is tangible benefit to society. It is a by-product of wealth creation. For example, when house prices rise, no real wealth in terms of tangible benefit has been created. If anything, society is damaged by it due to the greater difficulties in obtaining housing. All that has happened when house prices rise is that wealth created ELSEWHERE has been fed into the housing system and so puffed up house prices.

    You say you have limited knowledge of economics, and that shows. You might as well say it would be good to have 25% inflation as we did in the 1970s as that too would be “wealth creation”. Here we are, sitting in an economic crisis due largely to this confusion between asset price rises and real tangible wealth creation, and yet still people like you don’t get it and go on with the old lines that got us into this mess. What a shambles.

    Stephen W, I know where you come from – you’re one of those people taken in by the super-rich in our society who are pumping out this rubbishy propaganda in defence of what they’re really about i.e. getting even more rich because you are already rich and doing nothing of any use in society to get even more rich. Oh, they claim they are all about entrepeneurialism and the like, and they use their control of the press to make out that’s what it’s about. But it isn’t – it’s about the opposite – being rich and getting richer without working for it.

    Anyone who really supported reward for hard work would see right away why taxing capital gains at the same rate as income was the right thing to do.

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