Take less from the rich

According to The Equality Trust the UK has the 7th most unequal distribution of income amongst OECD countries. Earlier this year The Resolution Foundation estimated that the richest 1% of the UK population owns 14% of the nation’s assets (some £11 trillion worth), while the poorest the 15%, or nearly 7.3 million people, own no assets or are in debt.

Understandably given this massive inequality in the distribution of wealth there are often calls for the rich to be taxed more. After all, clearly they can afford it, right? And yet the richest 1% of taxpayers already generate nearly 30% of all the income tax raised, while only 10% comes from the poorer half of the population. Clearly it is only right that those who have more contribute more, but it is also true that simply pursuing the cause of demanding more from them does less for us as individuals than raising more from the rest of the population by increasing household income.

The problem is the real-term stagnation in household income since the 2007 crash. As Mark Carney, Governor of the  Bank of England, observed:

Real income growth has not been as weak in the UK since the middle of the 19th century.” In fact average earnings are not forecast to return to their pre-crisis peak of 2007 until 2022, until then average working households will continue to have less disposable income than they did in before the crash.

 

Research now suggests Millennials will be the first generation to be poorer than their parents, and homeownership has slumped to 63.5%, it’s lowest since 1987.

Based on the government’s own definition some 13 million people in the UK are living in poverty, at a cost to the public purse (according to The Joseph Rowntree Foundation) of around £78bn a year.   To paraphrase one wit – It is very difficult to believe in capitalism if you don’t have any capital, or at the very least believe one day you might.

It is easy to talk in economic terms of “growing the tax base” but there is a real-world reality to the exercise, in human terms it means increasing household income, raising people out of poverty, getting people off benefits and into work. More people earning more is good for the country’s balance sheet, but it is also good for households. It means more disposable income, less debt, more personal freedom. Doing so demands policies focused on individuals; such as an actual living wage, support to return to work, an end to zero hour contracts, building more affordable housing, as well as improving literacy and basic maths skills.

Demanding more of the people at the top does little to resolve the underlying problems of income inequality, or to reduce the resentment many feel to those who are more fortunate. Rather as Liberal Democrats we should aim to raise up those currently trapped in the bottom percentages, while demanding less from those at the top, as a way to build a fairer and more equal society for all.

* Edward Morello is a Liberal Democrat member from Milton Keynes, and approved candidate currently seeking a seat

Read more by .
This entry was posted in News.
Advert

50 Comments

  • Peter Martin 3rd Nov '17 - 4:59pm

    Primarily, taxation is for controlling inflation in the economy. Secondly it can be used to minimise inequality. In addition it can have other roles such as reducing anti-social activities like reducing pollution emissions, stopping people smoking and drinking too much etc.

    Just apply your taxes accordingly. Don’t think that by taxing the wealthy that it will necessarily provide ‘more money to spend’. The wealthy aren’t that likely to have spent it themselves in any case. But it may be a good thing to do if your goal is to reduce inequality.

    Taxing those who would have otherwise been likely to spend it themselves can give the Govt more fiscal space. It depends on what’s happening with inflation. If inflation is low the Government can safely spend more without resorting to increased taxation.

  • Here we go again, Orangeitis lives.

    It’s not just the potential for tax revenue from the super rich that’s the issue, it’s the impact that the super rich have and will have on society that needs to be examined.

    I’m disappointed Mr Morello seems to be falling for the old ‘trickle down’ discredited Laffer Curve nonsense first pursued by Mrs Thatcher. He would do well to watch Jacques Perett’s programmes currently available on BBC 2 Iplayer : “BBC Two – The Super-Rich and Us http://www.bbc.co.uk

    “The Laffer Curve with a Human Face” isn’t a promising Lib Dem policy to me.

    I suggest a good look at “Capital in the Twenty-First Century” by Thomas Piketty

  • Myles Arnott 3rd Nov '17 - 6:07pm

    @David Raw – it seems a deliberate misunderstanding to read the analysis put forward by Mr Morello as advocating trickle down theory. Policy changes to break poverty cycles, and encourage full employment in fulfilling and well paid work strikes me as much more progressive approach to society’s inequality issues than the divisive “blame and tax the rich” alternative.

    Might I add that (in my view) an even more progressive approach would be to change our whole narrative around taxation, as per this proposal:
    http://www.thebookoflife.org/governments-should-charm-rather-than-terrify-people-into-paying-tax/

  • Simon McGrath 3rd Nov '17 - 6:08pm

    Good article
    @peter – taxation isnt about controlling inflation -its about rasing money for the Govt to spend .

  • Tristan Ward 3rd Nov '17 - 6:16pm

    As Gladstone said: “money should be left to fructify in the pockets of the people”.

    Money does mot belong to the government: it must have a good reason and a mandate to take any citizen’s possessions from them. And limiting money available helps control government’s powers too- always a desirable liberal result.

    And yet – society must be at ease with itself. Too much inequality is simply unsustainable. How is this circle squared?

    Ps I lack the expertise to have an informed view, but I understand Picetty’s work is contentious.

  • @ Tristan Ward The best bit of Gladstone’s comment is his use of the word ‘fructify’ – a word to roll off the tongue.

    However, if we followed that principle to the full, and if you were living on the minimum wage with very little to fructify or to be fructificacious about, how would you feel if you were seriously ill and had to pay for a visit from your doctor ? The Grand Old Man was a man of his time and departed this earth almost 120 years ago.

    Incidentally, sad to say, much of Gladstone’s fructified personal wealth (and it was considerable) was inherited from the proceeds of his father’s slave plantations.

    As for Piketty, how about readinghim and deciding whether he is contentious or not ?

  • Nonconformistradical 3rd Nov '17 - 7:53pm

    @David Raw
    “I’m disappointed Mr Morello seems to be falling for the old ‘trickle down’ discredited Laffer Curve nonsense first pursued by Mrs Thatcher. He would do well to watch Jacques Perett’s programmes currently available on BBC 2 Iplayer : “BBC Two – The Super-Rich and Us http://www.bbc.co.uk”

    I saw only part of the BBC Super-Rich and Us but what I saw made me very concerned.

    The Super-Rich are NOT making the rest of us better off. They appear to be living on some other planet. My heart bleeds for them – NOT!

  • Steve Trevethan 3rd Nov '17 - 7:54pm

    Part of the inequality problem is millions, billions or trillions being kept off the accounts and so hidden from measurement and taxation.

    This level of tax avoidance removes the money due which would provide efficient infrastructures and an effective level of aggregate demand.
    https://www.thenation.com/article/agents-of-inequality-how-wealth-managers-to-the-super-rich-undermine-society-and-what-we-can-do-about-it/

    Money and power correlate.

    Those with little or no wealth have far less power than those with wealth enough to purchase indirect power.
    Contributions to political parties show this.

    A society where needed workers starve, and so use food banks and survival debt, is deceiving itself, and us, when it calls itself a functioning democracy.

  • Matters little to me if you take money of the super rich by taxation or making them pay more for the goods and services they consume. Either way the money needs to be used to build infrastructure, houses and services for the majority. What you can’t do is ask them to pay less and expect the money to rise up the many to magically appear. David Raw mentions the Laffer curve they tried that in Kansas, it failed

    Why Sam Brownback’s tax cuts failed to make Kansas thrive

    http://www.chicagotribune.com/news/opinion/commentary/ct-kansas-sam-brownback-tax-cuts-20170321-story.html

    The Great Kansas Tax Cut Experiment Crashes And Burns

    Just as President Trump is ramping up his push for a major tax cut that he believes will pay for itself through faster economic growth, the Kansas template for that approach has crashed and burned. After four years of below-average growth, deepening budget deficits, and steep spending reductions, the GOP-dominated Kansas legislature has repealed many of the tax cuts at the heart of Governor Sam Brownback fiscal agenda.

    https://www.forbes.com/sites/beltway/2017/06/07/the-great-kansas-tax-cut-experiment-crashes-and-burns/#18ee81b5508f

    Just a point telling those at the bottom they need to make sacrifices while rewarding people at the top is unlikely to play well. A fact the Yellow Bookers seem oblivious too, but their lack of political antenna may help explain why there as so few of them left in the House of Commons.

  • Andrew McCaig 3rd Nov '17 - 9:21pm

    It is not so much income as inherited wealth ( usually unearned) which divides our society so corrosively.

    Taking less from the rich is definitely not the answer, even if it were to raise less tax revenue. There is a societal cost from the idle rich as well, as their activities are celebrated in the gutter Press.

  • Money is power and influence. Taking money from the super rich means they have less it to use to win influence. And anyway no one really becomes super rich by their efforts alone. Wealth is basically reliant on other people being compelled to work to create it for you or its about having your hands on the old money tap thus controlling how much you can hoard and then its about drafting laws to ensure no one can take the accumulated wealth of centuries away. Ultimately capitalism is a bit horrid really, still sort of like feudalism when you think about it.

  • ……………………….Rather as Liberal Democrats we should aim to raise up those currently trapped in the bottom percentages, while demanding less from those at the top, as a way to build a fairer and more equal society for all……………

    I’m still trying to work that out??????????

  • nigel hunter 3rd Nov '17 - 11:13pm

    Inherited income should be taxed and the rich could pay more. It is a matter of what level the rich pay more tax that needs to be worked out .. The money obtained should be redirected to raise lower wage positions to encourage it to be spent on the economy by raising their standard of living.

  • “And yet the richest 1% of taxpayers already generate nearly 30% of all the income tax raised

    Research now suggests Millennials will be the first generation to be poorer than their parent”

    These two points taken together should be setting off alarm bells!
    Particularly as it was an over-reliance on tax revenues from the Financial Services sector that caused UK government expenditure to be so badly hit in the 2008 Financial Crisis.

    So looking at the current situation: is relying on the top 1% to provide a disproportionate income tax revenue really a good idea in the coming decades? Because in this period, the current members of the 1% will need to be replaced by Millenials. Which if they as a generation are going to be poorer than their parents means that fewer will join the 1%.

  • Lorenzo Cherin 4th Nov '17 - 1:17am

    I support the views of David, nonconformist and Steve, nice try Edward, lots of good commentary, wrong conclusion.

    Too much tax even from the rich is detrimental to the economy.

    Nobody can really convince the uk rich pay too little tax!

    President Kennedy is claimed as a conservative today by wishful thinkers or fantasists on the centre right, for cutting taxes.

    He did try to do so.From top rate 91 percent to 65 !

    We can raise more revenue by the charm offensive mentioned, which would be far from offensive to the bank balance of those absconding irresponsibly !

  • James Meade, in “Efficiency, Equality and the Ownership of Property”, championed the idea of a systematic regime of predistributive policies, which he called a “property-owning democracy”.
    Meade’s property-owning democracy looks fundamentally to change individuals’ economic power within markets. It would do this by significant redistribution of control over both human and non-human capital. Meade’s approach promotes social justice not only by raising wages through substantial investment in education and training, but also by giving every citizen a capital stake, along the lines of a supercharged version of the baby bond that George Osborne threw onto the scrapheap.

    Meade’s idea was later taken up and further developed by John Rawls . Rawls argued that predistribution in a property-owning democracy was in fact far superior to traditional forms of welfare-state redistribution.

    Predistribution of human capital, through education and training, fosters self-respect and economic agency, while predistribution of capital stakes gives people the kind of independence that comes with being less in thrall to the vagaries of the labour market. Those with a more secure economic position are free to refuse demeaning or badly paid jobs, and this in turn bids-up wages and reduces inequality.

    Meade and Rawls, the two outstanding theorists of predistribution, conjure a vision of fundamentally changing the distribution of economic power in society. While both look to reduce the month-to-month taxation and redistribution of incomes, they nevertheless agree that real predistribution involves the aggressive taxation of wealth, through taxes on capital holdings and transfers, and especially on inheritance. Real, radical forms of predistribution do not so much allow governments to tax less in absolute terms; rather, they require a fundamental shift in the focus of taxation from income to wealth, as Vince Cable has argued.

  • Peter Martin 4th Nov '17 - 8:06am

    @ Simon,

    “taxation isnt about controlling inflation -its about rasing money for the Govt to spend” ??

    This is true for taxation by your local council, and also true for the Scottish, NI and Welsh Govts but it isn’t true for the Westminster Govt.

    You’ve got to ask yourself where money comes from in the first instance. Unless taxpayers are successful counterfeiters it can’t come from them. So Govt has to create the money first by spending it into the economy and then create a demand for that currency by levying taxes payable in it. So the Govt doesn’t want what it itself has created in the first instance, but it does want everyone else to want it.

    Incidentally, it is worth noting that the government can never get back more in taxes than it has created in the first place. It always ends up with negative numbers. But that doesn’t matter to the currency issuer.

  • Edward Morello,

    From your..” Earlier this year The Resolution Foundation estimated that the richest 1% of the UK population owns 14% of the nation’s assets (some £11 trillion worth)”….

    In 2018 it is expected that the UK income tax will total £243 billion…

    The 30% paid by the top 1% is therefore around £80 billion

    Unless my maths are skewed that equates to rather less than 1% of their worth….

    I’ll ask David Raw if his ‘food bank’ can start stocking champagne and caviar for these desperate people…

  • William Fowler 4th Nov '17 - 10:42am

    This has all been tried before by Labour, what happens if you try to tax the super rich you end up with less money but the govn has already spent the extra money it thought it was going to raise and therefore either bankrupts the country or increases taxes on the mildly well off to compensate. Only fair way to tax actual wealth rather than income is via inheritance tax, either get rid of the very high allowance or put an extra surcharge on estates (say 5 percent of the total with no allowances and 50 percent on trusts and companies that have been used to pass on assets).

    We also have one of the most generous welfare systems in the world, albeit let down by a lack of housing, and as an almost bankrupt country with an almost completely ruined currency there is little chance of expanding it further.

  • It is far too difficult to tax the rich and the dole is generous cry the Yellow Bookers. And they wonder why the electorate gave them the bums rush; neither statements are true and neither statements are popular with the majority of the electorate and those that would agree vote Tory.

  • Please don’t confuse Orange Bookers with the the Yellow Book of DLG and Keynes!
    Two different beasties.

  • Mea Culpa and I can’t even blame it on colour blindness.

  • Peter Martin 4th Nov '17 - 2:21pm

    @ William Fowler,

    ” ………and as an almost bankrupt country ”

    This is sheer nonsense. The UK National Debt is about 90% of GDP. So that’s the same as someone with an after tax income of £50k pa, or before tax income of something like £80k pa having a mortgage of £45k on a house he bought many years ago which is worth more than ten times that. So is he almost bankrupt too?

    In any case the Govt can never involuntarily default on any loan denominated in its own currency. It’s own IOUs. It’s just not technically possible.

  • William I’ll let you into a secret but you mustn’t tell anyone, it’s not really 90% it’s actually below 70%. How is that right you ask, well to understand that you need to be able to answer the question

    Who owns the Bank of England?

    Why is that relevant you rightly ask

    because William

    UK government debt is primarily held by …………. 23% is held by Bank of England – as part of Quantitative easing/asset purchase programme.

    https://www.economicshelp.org/blog/1407/economics/who-owns-government-debt/

    Nice trick if you can do it isn’t it William and they have.

  • Peter Martin,

    “So that’s the same as someone with an after tax income of £50k pa, or before tax income of something like £80k pa having a mortgage of £45k on a house he bought many years ago which is worth more than ten times that. So is he almost bankrupt too?”

    This is not really a like for like analogy. GDP is not state income it is both public and private sector income/spending..

    Another way to examine UK debt is to look at both government debt and private debt combined. Total UK debt includes household sector debt, business sector debt, financial sector debt and government debt. This is over 500% of GDP.

    The whole of government accounts https://www.nao.org.uk/highlights/whole-of-government-accounts/ give a snapshot of the UK finances that are closer to the analogy of net assets/liabilities. . The 2014-15 accounts shows net expenditure for the year of £152.0 billion (spending less taxes and other income) and a net liability position (assets less liabilities) of £2,103.2 billion i.e. the equivalent of approximately 3 years of tax receipts.

    It is of course important to place public borrowing i in context. In the aftermath of the financial crisis we saw a sharp rise in private sector saving (UK savings ratio). The private sector has been seeking to reduce their debt levels and increase savings (e.g. buying government bonds). This increase in savings led to a sharp fall in private sector spending and investment. The increase in government borrowing is making use of this steep increase in private sector savings and helping to offset the fall in aggegare demand, particularly from low levels of business investment.

    Public sector interest payments at 3.5% of GDP are manageable, but as interest rates increase, debt levels may become increasingly burdensome in the future.

  • Ed Shepherd 4th Nov '17 - 5:34pm

    Several times in debates about taxation, I have heard it said that the top 1% pay 30% of income tax (or a similar figure). But I find that statistic that sheds little light on the burden of tax that the population faces. A more pertinent question is: How much proportion of their income and wealth do high earners pay as tax of any knd? Compare with how much the poorer people in society pay as a proportion of their income and wealth? In addition to income tax, we need to look at other taxes: VAT, Council Tax, Insurance Premium Tax, tax on energy, tax on fuels, tax on vices (smoking or drinking or gambling). Start adding up those other taxes and look at them as a proportion of the income and wealth that a person pays as tax. VAT, Council Tax and IPT are particularly onerous on lower earners and those with few assets. The wealthy and the highly paid also have much more scope to shelter money from tax. I have never understood why more than a basic level of pension contributions should attract tax relief, for instance. Those low down in the scale have only the personal allowance (raising it was a commendable action by the Lib Dems but it should have been balanced out by more tax on the wealthy).

  • Peter Martin 4th Nov '17 - 5:56pm

    @ JoeB

    You’re right to make the point that private debt matters too. There’s far too much emphasis on Govt debt to the exclusion of all other types of debt. But not in the way you describe. You can’t just lump it all together as you’ve done.

    If I borrow an amount of money from you, the amount I’ve borrowed adds to the total debt in the way you’ve described it. But so what? You’ll either get your money back or you won’t! Either way the total assets of the UK remain unchanged.

    It does matter because if I want to borrow some money then I’m more likely to spend it. You as a lender presumably don’t have a pressing need to do that.

  • That’s an important that Ed Shephed makes about the incidence of taxes. The lowest income decile consistently the highest proportion of overall taxes to income. However, to judge the progressivity of the tax system you need to take into account the benefits received – both direct and indirect.

    The ONS compiles a report on this ‘Effects of taxes and benefits on UK household income’ https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2016

    Some highlights from the 2016 report :

    – the average income of the richest fifth of households before taxes and benefits was £84,700 per year, 12 times greater than that of the poorest fifth (£7,200 per year). An increase in the average income from employment for the poorest fifth of households has reduced this ratio from 14 to 1 in the financial year ending 2015.

    The ratio between the average income of the top and bottom fifth of households (£63,300 and £17,200 respectively) is reduced to less than 4 to 1 after accounting for benefits (both cash and in kind) and taxes (both direct and indirect).

    On average, households paid £7,800 per year in direct taxes (such as Income Tax, National Insurance contributions and Council Tax), equivalent to 18.7% of their gross income. Richer households pay higher proportions of their income in direct taxes than poorer households.

    The poorest households paid more of their disposable income in indirect taxes (such as Value Added Tax (VAT) and duties on alcohol and fuel) than the richest (27.0% and 14.4% respectively) and therefore indirect taxes cause an increase in income inequality.
    Overall, 50.5% of all households received more in benefits (including in kind benefits such as education) than they paid in taxes (direct and indirect). This is equivalent to 13.7 million households and continues the downward trend seen since the financial year ending 2011.

    Households where the main earner is aged between 25 and 64 paid more in taxes (direct and indirect) than they received in benefits (including in kind benefits), whilst the reverse was true for those aged 65 and over.

    Despite being less progressive (targeted towards reducing inequality) than many of the other benefits, the State Pension has consistently made the largest contribution to the overall progressivity of cash benefits over the past 22 years.

  • Sue Sutherland 4th Nov '17 - 10:19pm

    Please see the previous post by Jo Swinson. We are living in a country where some young women can’t go to school when they have their period because they can’t afford sanitary towels or tampons. This is medieval. We are living in a country where well off pensioners in London use their free bus and rail pass to visit expensive restaurants while others rely on food banks. This is outrageous. We are living in a country where quite a few people have several homes while others sleep and die on the streets.
    For goodness sake let’s stop talking about the Laffer minute curve and do something about this. Now.

  • Edward Morello writes, “Demanding more of the people at the top does little to resolve the underlying problems of income inequality”. He is wrong. Reducing the net incomes of the rich does reduce net income inequality. If the extra money was used to fund a Citizens Income then it could assist in reducing net income inequality even more. He is correct real wages need to increase, which is why I support increasing the National Living Wage above £9 an hour after 2020. He is wrong to think that those writing our manifesto really want to reduce unemployment much below 5% of the working age population. I would like to see unemployment below 3% of the working age population and think we should pay the price of inflation being above 2% to achieve it.

    @ William Fowler
    “Only fair way to tax actual wealth rather than income is via inheritance tax”

    You wrong and you even know it, because you go on to state that you would take 50% of companies when the owner dies and trusts in some undefined way. It would be much better to abolish the rules on not taxing gifts and tax all gifts over the income tax allowance level at the income tax levels. Maybe all trusts should be converted into companies with shareholders instead on beneficiaries so that the assets can be taxed as either a gift or with an inheritance tax when passed on.

    “We also have one of the most generous welfare systems in the world”

    This might have been true once, it isn’t now, especially if you are unemployed trying to live on £73.10 a week or £114.85 if a couple.

  • Ed Shepherd 5th Nov '17 - 11:20am

    Even more indirect taxes that from only a small proportion of the tax burden on the wealthy: road tax, prescription charges, eye care costs, dental costs (not easy to find an NHS dentist). A decreasing number of the population remember when prescriptions, eye tests and dental care were free at the point of delivery. Those were the good old days.

  • Those who demand swingeing tax rises for the super rich to fund more public generosity need to be prepared for serious disappointment and need to work up some new ideas. The indignation re food banks and the rest is fine but the super rich aren’t taxable. The term tax havens gets used. Until one world government sets up then they exist and are untouchable. Well, aren’t they? Putting your anger in the fridge and thinking before responding I repeat Well, aren’t they? The super rich are easily smarter than Corby and McDonnell and every LibDem. They have hordes of lawyers to sort this stuff and any number of nations keen for their assetts if the UK want to drive them away.
    You could confiscate the riches’ property after all that worked in 1917 (well temporarily) then they all starved (apart from the actual Bolsheviks, of course).
    So you are left with taxing each other until the last traces of ambition, enterprise and entrepreneurship have been extinguished.

  • The author concludes, correctly in my view, “Demanding more of the people at the top does little to resolve the underlying problems of income inequality, or to reduce the resentment many feel to those who are more fortunate. Rather as Liberal Democrats we should aim to raise up those currently trapped in the bottom percentages, while demanding less from those at the top, as a way to build a fairer and more equal society for all.

    Inequality has to be addressed both before and after redistribution though the tax and welfare systems. The approach of the nobel prize winning economist, James Meade, requires substantial investment in education and training at all levels including adult education, as well as giving citizen a capital stake e.g a serviced plot of land on which a house can be built.

    The political philosopher, John Rawls, followed the same approach arguing that this kind of redistribution engenders both a self-reliance and economic liberty that can greatly reduce the need for redistribution of incomes via the tax and benefit systyems.

    Taxation of accumulated wealth would remain an essential component of addressing egregiuos inequality. However, this would be focused on clawback of economic rents derived from the exploitation of land and national resouces, including broadband and the radio spectrum as well as money creation in the banking system and similiar monopolies i.e.a system of taxation based on levies that explicity do not deter, but rather promote, ambition, enterprise and entrepreneurship.

  • Joe,
    Can , my serviced plot for my house be on Park Lane please? Next to the Dorchester?
    I want one of those capital stake things.

  • Fundamentally disagree that we tax wealth rather than income. Labour markets create massive disparities with many on the minimum wage while others are massively overpaid for jobs that serve no real social purpose or for presenting Strictly Come Dancing (did I actually say that ?). Social justice demands that we adjust those rediculous differences in pay through taxation.
    On the other hand, if I decide I would like to pass my savings and property on to my children, rather than buying fast cars or going on endless foreign holidays, it is none of the governments business, not in a free and liberal society anyway.

  • Palehorse,

    as long as you don’t already have an ownership interest in 1/10th of an acre of more and can pay the imputed tax based on the market rental value of the plot- to finance plots for others in areas of less demand, why not? You will also have to reimburse the current value of the plot (or a part thereof) if you receive an inheritance of land at any time subsequently.

  • Little Jackie Paper 5th Nov '17 - 10:16pm

    Chris Cory – ‘On the other hand, if I decide I would like to pass my savings and property on to my children, rather than buying fast cars or going on endless foreign holidays, it is none of the governments business, not in a free and liberal society anyway.’

    Fine, as long as your children understand that those savings and that houseprice wealth might be required to pony up for any long-term social care costs you have for example. Just I’d rather go on endless foreign holidays and buy fast cars than prop up your kid’s unearned property inheritance. I assume you understand that’s free and liberal.

  • Chris Cory addresses an important point that families should be able to support their children by passing on property and savings.

    Taxation of wealth should not mean interference with families progressing and acquiring the security of property and savings. Wealth has to be distinguished from capital i.e. owner occupied housing, investments in businesses etc. Wealth is primarily held in real estate, government gilts and investments in rent seeking activities as opposed to productive capital.

    Inheritance tax is primarily paid by middle-income families not by very wealthy individuals and is resented for that reason.

    Pre-distribution is based on organising the economy such that all have the ability to look after themselves. One of the tasks required is ensuring that affordable housing is available to all. Until we achieve that, we cannot solve the problem of inequality.

  • “full employment in fulfilling and well paid work”

    Crikey, and they call ME an idealist for advocating basic income because I recognise that this utopian ideal is not possible.

  • Peter Martin 6th Nov '17 - 2:00pm

    @Chris Cory,

    “On the other hand, if I decide I would like to pass my savings and property on to my children, rather than buying fast cars or going on endless foreign holidays, it is none of the governments business, not in a free and liberal society anyway”

    It’s always “the Government’s business” until such time as the Government decides it isn’t going to levy any death duties or impose taxes on cars, holidays etc. It is the Govt’s business to ensure that elderly people are looked after too. Or are you saying it isn’t?

    We can’t have it both ways. We can’t demand all the goodies and, as a society refuse to pick up the tab. The resources have to be found from somewhere! Just how we do that is always a matter of political opinion. But if you’re asking me if I’d prefer a hefty tax bill while I’m still alive or after I’ve died, then I’d have to tell you it’s a no-brainer!

  • Lorenzo Cherin 6th Nov '17 - 2:22pm

    Chris makes a very good point which unfortunately , Joe does not meet with any more info , further confusing us with talk of one tenth of an acre, for goodness sake get with those of us trying to understand the motives and methodology behind land taxes, do you want to tax big gardens of suburban folk or not ?!

    I lost my house , and own nothing.

    I have no children.

    Parents and political wonks today who have both and do not pass on those assets invariably do not care about their children, are self indulgent and or selfish, or have well off children who have managed to succeed .

    We have no right , nor , should we want , to aquire the only home of dead people .

    We have the highest property taxes in the developed world.

    Tax the land and property of the super rich or don’t bother.

    As long as the Dukes can keep their home, do not expect the Englishman to cease to see his or her own home as their castle , especially if modest !!

  • Peter Martin 6th Nov '17 - 2:25pm

    @Jennie,

    Your reply to a previous comment of:

    “full employment in fulfilling and well paid work”

    was

    “Crikey, and they call ME an idealist for advocating basic income because I recognise that this utopian ideal is not possible.”

    Ok we can perhaps question the word “fulfilling”. Someone is always going to have to do the, literally, crappy jobs, like cleaning out the sewers, but they are necessary jobs so maybe someone finds them to be fulfilling.

    But in economic terms it’s quite possible to have full employment. We have that now in London and the SE of England. So it’s not at all Utopian. If we can have that there, we can have it in rest of the country too. The problem, in economic terms, is striking a sensible balance between creating inflation and having too much unemployment.

    Full employment, which was the norm in the post war years, doesn’t necessarily mean zero unemployment. It was about 2% in the 60s when there was no shortage of jobs for anyone who was prepared to do them. There’s always going to be people between jobs. Or looking for their first job. There are those who aren’t easily employable for a variety of reasons. Not that we shouldn’t try to do what we can to help find them jobs. In the last resort we can even create one for them.

    Full employment isn’t all there is to it though. We can still have high levels of inequality even when everyone who wants a job has a job.

  • Joe,

    “as long as you don’t already have an ownership interest in 1/10th of an acre of more and can pay the imputed tax based on the market rental value of the plot- to finance plots for others in areas of less demand, why not? You will also have to reimburse the current value of the plot (or a part thereof) if you receive an inheritance of land at any time subsequently.”

    SOLD! – it’s a deal. I’ll flog it for hundreds of millions and will never pay the imputed tax and stuff financing others. I don’t expect any inheritance so I am quids in. And I thought economists just spent their time dreaming up batty schemes.

  • Nonconformistradical 6th Nov '17 - 4:49pm

    ” Someone is always going to have to do the, literally, crappy jobs, like cleaning out the sewers, but they are necessary jobs so maybe someone finds them to be fulfilling.”

    Leaving out the ‘fulfilling’ aspect – how about someone like Fred the shred and his kind having to do them…?

  • Palehorse,

    it is public housing (there isn’t any in Park lane) but there are sites in every London Borough including Westminster and Kensington and Chelsea. The rental value of these sites (and hence the imputed tax) are significantly greater than similiar size plots in the North-east.

    The ongoing liability for Imputed tax based on rental values reduces the sale value of the land considerably and represents a charge on the site. The site cannot be sold without a building on it and no land title can be registetred until the tax debt is cleared as commonly occurs in the USA with property taxes). That’s the benefit of Land Value Tax, you cannot choose to never pay the imputed tax and still keep hold of the property or transfer the land title in a sale.
    As public housing, there are restrictions on what you can do with the site. There are basically two options build on it to gain security of tenure and a right of resale (with ongoing imputed tax obligations for the buyer) or release the site back to the local authority if you move out of the area within commencing building on the plot.

  • Joe,
    Kensington will do fine (although Park Lane has a nice park opposite).
    This 1/10 acre sounds even more lucrative giveaway than those wonderful council house sales.
    I just build a house, pay the tax and use the proceeds to buy a small place to retire (Belgium for example)?
    I’m in and you say this bloke won a Nobel Prize for it?

  • Palehorse,

    for public housing sites, Kensington means North Kensington around the Grenfell Tower area. The subsequent sale value is impacted by the reduction in value of the land as it comes with an ongoing obligation for the new owner to pay a Land Value Tax/Ground rent based on market rental values. What you would get in a sale is the value of the house you build and very little, if anything, for the land value i.e. you would get back roughly what you had spent on building the property.
    The Liberal party (the small number of old members that did not transfer to the Liberal Democrats) has had a policy for a UK Universal Inheritance, for all UK-born UK citizens at 25, of £10,000, roughly 10% of the average wealth of every adult and child as of 2013 http://www.liberal.org.uk/discdocs/inheritance_tax.html.
    Minimum monetary inheritances for all on reaching adulthood was a measure advocated by the Uk’s pre-eminent scholar of income disparities, the late Sir Anthony Atkinson http://www.independent.co.uk/news/business/analysis-and-features/sir-anthony-atkinson-and-the-curious-optimism-of-the-godfather-of-inequality-10286080.html

  • @ Peter Martin

    I define full employment as having less than 3% of the working age population unemployed and even with this definition and not your 2% there is not full employment in south-east England. The latest figures I could find were 3.4%. London was higher and even higher than the south-west (3.5%) and Scotland (3.8%) at 5.5% (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/regionallabourmarket/july2017).

  • Peter Martin 7th Nov '17 - 10:19am

    @ Michael BG,

    Yes I take your point. Just how we define “full employment” has to be contentious and somewhat arbitrary. I would say that trying to keep unemployment as low as 2% in the 60’s was probably too ambitious and created too much inflationary pressure which led to the replacement of Keynesian economics by neo-liberalism in the mid 70s under the Callaghan govt. And continued in earnest by Margaret Thatcher of course.

    It’s a difficult problem. We can’t keep even a few percent unemployed for any period of time. They end up being unemployable. If we try to run the economy to give everyone a job we can create too much inflation.

  • @ Peter Martin
    “If we try to run the economy to give everyone a job we can create too much inflation.”

    Indeed, but perhaps more than 2% is not too much inflation. Some wage inflation should reduce economic inequalities.

    If the aim was a 3% national unemployment rate then maybe resources should be allocated for jobs of last resort to those out of employment the longest in a ratio based on the percentage above 3%. So the South East would receive 4, London 25, Wales 16, Scotland 8, West Midlands 29 and Northern Ireland 23.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • User AvatarVenetia Caine 14th Aug - 11:49am
    I've asked before, but have not had a response. But I wish you would ensure that when your posts appear under your name on Facebook,...
  • User AvatarNeil Sandison 14th Aug - 11:48am
    Cllr Jonny Tepp Couldnt agree more it is technically feasible brown field sites and existing housing land where proerties are no longer fit for purpose...
  • User Avatarnvelope2003 14th Aug - 11:47am
    Peter Hirst: Like they did not expect us to abolish tuition fees
  • User AvatarMatthew Huntbach 14th Aug - 11:47am
    Innocent Bystander Now that Miliband then Corbyn have taken all those voters back and scared all the “right leaning LibDems” into voting Tory the LibDems...
  • User AvatarPeter Hirst 14th Aug - 11:44am
    We need a range of radical clear policies that sound interesting to the electorate such as land value taxation, abolition of SATS and that property...
  • User AvatarMike Drew 14th Aug - 11:39am
    The reason why we were able to build so many houses after WW2 wa because we had so many demopped soldiers and industry did not...