tag:blogger.com,1999:blog-6214838.post2620093096693291352..comments2024-03-04T17:54:32.559+00:00Comments on Iain Dale's Diary: LibDem Tax Proposals Make the Rich Pips SqueakIain Dalehttp://www.blogger.com/profile/03270146219458384372noreply@blogger.comBlogger43125tag:blogger.com,1999:blog-6214838.post-64989795649385636642007-07-15T21:02:00.000+01:002007-07-15T21:02:00.000+01:00Like it or not it is the relatively inequalities i...Like it or not it is the relatively inequalities in the tax burden that are the main problem and not the overall burden of tax. A substantial factor in the house price bubble is caused by the fact that the principal private residence exemption for cgt makes housing an on-shore tax shelter and this is a benefit that disproportionately accrues to those who are rich in assets. The people who work and earn and are the real engine of the economy and are taxed too highly on their income. <BR/><BR/>Inheritance tax is unfair not because it is set at too low a level (which it is - but only due to house price inflation) but because for the rich it is entirely optional.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-48512108209903417932007-07-13T21:41:00.000+01:002007-07-13T21:41:00.000+01:00thanks for correction john moss. complex stuff. ...thanks for correction john moss. complex stuff. So the current top rate of income tax is really 54% then -(40% income tax plus 14% Nat Ins) and Lib Dems would increase that to 64%.<BR/><BR/>A high earner with an income of £240,000 from a company would save £1600 a week by emigrating..still a big incentive to leave the country.Tapestryhttps://www.blogger.com/profile/17267094484651413428noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-66528108526450572442007-07-13T21:11:00.000+01:002007-07-13T21:11:00.000+01:00As yet I have been unable to find any detail on wh...<EM>As yet I have been unable to find any detail on what these tax breaks for high earners consist of.</EM><BR/><BR/>The main one is the removal of taper relief on capital gains. I think one of the reasons they may have chosen this moment to update their tax proposals may be to take advantage of the current criticism of private equity, who take particular advantage of this mechanism to minimise their tax bills (as <A HREF="http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/27/cctax127.xml" REL="nofollow">Jeff Randall explained recently</A>).<BR/><BR/>But there are two problems:<BR/><BR/>1. This is an indiscriminate way of tackling this exploitation of the tax system, that will have knock-on effects beyond private equity, on more general incentives to invest (not normally something to be discouraged), and<BR/><BR/>2. The private equity story may well be reaching its peak, and changes to global economic conditions may substantially undermine the model (see last week's Economist), which means the LibDems would be relying on revenue from a shrinking pie (which they were helping to shrink even faster) in order to balance their budget.<BR/><BR/>All the same, this isn't a bad effort (e.g. using revenue from environmental taxes to reduce tax on employment is a pretty good strategy) and better than anything the Tories have so far produced.bgpriorhttps://www.blogger.com/profile/00628170401069060830noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-43087465505139817642007-07-13T18:40:00.000+01:002007-07-13T18:40:00.000+01:00Tim Worstall: "Asinine. Non residents don't pay CG...Tim Worstall: "Asinine. Non residents don't pay CGT at all."<BR/><BR/>Not particularly asinine, I think they are simply saying they would amend the scope of CGT so that it would apply to non-residents with respect to interests in land, just as Schedule A Income Tax currently applies to any rental profits that a non-resident makes from that same interest in land.<BR/><BR/>This is long overdue and would bring the UK into line with other countries. Taking away the benefit is not likely to cause a great number of foreign property investors to cash out of the UK. Most of that money comes here for other reasons (diversification or a relatively safe haven). But there are an awful lot of UK "controlled" funds that invest in UK property through offshore vehicles in order to avoid the CGT charge. Believe me. I know who they are.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-55539474725788744672007-07-13T16:23:00.000+01:002007-07-13T16:23:00.000+01:00Tapestry is slightly wrong about the upper limit o...Tapestry is slightly wrong about the upper limit on National Insurance contributions. Brown removed the upper limit for employer contributions only (12.8% paid on all salary paid out), not on employee contributions. He did remove it on the 1% he added to both employee and employer contributions as part of his 2002 £8bn tax raid.<BR/><BR/>If the LDs were to remove the upper limit on employee NI contributions, then anybody earning more than around £38,000 would have a marginal rate of 51%. This would bring in about £5bn of the £13.5 they claim will come from closing loopholes.<BR/><BR/>If they did this, then to leave you with an extra £100 in your pocket, you would have to be paid £204 and your emplyer would need an extra £26 on top for the NI they pay. It is a spurious arguement to say that the business gets a tax benefit from paying this out as salary, it is still an increase in the businesses costs and reduced tax bill or not, if the business is owned by a pension fund, then the profits are reduced and the returns on yours an my pension investment is reduced.<BR/><BR/>So, as usual, pretty depressing, dismal and damaging stuff from the golden shower.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-43936349089813914802007-07-13T14:55:00.000+01:002007-07-13T14:55:00.000+01:00our household income is currently about £68,000 gr...<I>our household income is currently about £68,000 gross. We are planning to leave the country, because we've had enough at being told just how 'rich' and 'fortunate' we are.</I><BR/><BR/>Amusingly, this mean that if you were a tube driver, married to another tube driver, you would be, according the the Lib Dems "too rich" and eligible for top rate tax.<BR/><BR/>They really are a waste of [expletive deleted to satisfy Iain] spaceAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-31781887798771499212007-07-13T14:45:00.000+01:002007-07-13T14:45:00.000+01:00"Bringing money made on UK property by people who ..."Bringing money made on UK property by people who are not resident in the UK, within capital gains tax"<BR/><BR/>Asinine. Non residents don't pay CGT at all.Tim Worstallhttps://www.blogger.com/profile/13161727860817121071noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-35824446336730383422007-07-13T13:02:00.000+01:002007-07-13T13:02:00.000+01:00Although a single anecdote does not data make... o...Although a single anecdote does not data make... our household income is currently about £68,000 gross. We are planning to leave the country, because we've had enough at being told just how 'rich' and 'fortunate' we are.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-11515584743851182772007-07-13T12:41:00.000+01:002007-07-13T12:41:00.000+01:00"The system is creaking because the very rich and ..."The system is creaking because the very rich and particularly foreign domicilliaries are making an insufficient contribution"<BR/><BR/>The system is creaking because Gordon Brown is spunking away £600 billion a year and not getting anything like value for money. You could probably cut government expenditure by half and still get the same outcomes or better if you cut out the waste, but that will never happen. Government has no incentive to cut waste, because they can never go out of business.<BR/><BR/>We need tax cuts, not a redistribution of the current tax burden. We need to cut the size of the state. For a start, why not get rid of DEFRA, DTI, Departments of Health and Education, just get rid of them. Give people vouchers for health care and education if needs be, but get rid of the dead hand of the state. <BR/><BR/>Gordon Brown's solution: spend £20 billion on ID cards. God help us all!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-5540087637110080442007-07-13T11:59:00.000+01:002007-07-13T11:59:00.000+01:00There should be lower rates of income, capital gai...There should be lower rates of income, capital gains and inheritance taxes but everyone should pay them. The system is creaking because the very rich and particularly foreign domicilliaries are making an insufficient contribution. With the extraordinary levels of house price inflation at the top end of the market it might actually be beneficial to the economy if some of the very rich did clear off. It is the people in the middle who are the productive units in society and they are the ones who should be tempted not to leave. As always the Tories and New Labour ignore these people and obsess about what is in the interest of big business (and often foreign big business).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-62989142604275243822007-07-13T11:38:00.000+01:002007-07-13T11:38:00.000+01:00Anon, if 2 million househlds lose and 23 million g...Anon, if 2 million househlds lose and 23 million gain, the 2 million will not just sit there. The numbers leaving Britain each year are already around 250,000. A large proportion of these are high earners who own substantial assets. <BR/><BR/>Around 25% of Britons are considering moving overseas. Your 2 million households would soon be down to 1 million. Then you would have to find someone else to drive out of the country. Why not just cut taxes across the board, raise thresholds and get the economy growing? Or don't you like the diea of a successful economy?Tapestryhttps://www.blogger.com/profile/17267094484651413428noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-47592305892142270482007-07-13T11:13:00.000+01:002007-07-13T11:13:00.000+01:00Stealthy ....in the sense that everyone has notice...Stealthy ....in the sense that everyone has noticed Tappers ..<BR/><BR/>For true stealth what about using interest rates as a safety valve for printing money and getting government spending financed by Mortgage payers.Newmaniahttps://www.blogger.com/profile/11922161971821380803noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-88180369377824042402007-07-13T11:07:00.000+01:002007-07-13T11:07:00.000+01:00Iain,I generally disagree with your comments (bein...Iain,<BR/><BR/>I generally disagree with your comments (being a red and all) but i think your spot on on the Lib tax policy. There unfunded headline grabbers.<BR/><BR/>No-one seems to point out that income tax is pretty constant and easily predicted, if you cut it by £16bn you need to replace it, to prevent massive inflation. But tax on airlines is not constant and if we have another Sept 11th, or fuel protest and tax take drops, there will be a massive hole in the public finances!<BR/><BR/>Also, if you are "green", you tax to stop people doing things like flying etc. But if consumption drops so will the tax take and there will be a hole again. If consumption stays the same, it isn't doing the environment any good.<BR/><BR/>I think we will stick with economic stability and the predictability a 20p rate of income tax brings!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-6752639374194450702007-07-13T11:06:00.000+01:002007-07-13T11:06:00.000+01:00Funny how barely anyone contributing to this discu...Funny how barely anyone contributing to this discussion has actually bothered to see how they will raise the money to pay for the 4p cut. Press reports this morning are pretty clear that it is green taxes (aviation and VED), a single rate of pension contribution relief, and abolishing CGT taper relief (thereby going back to the system under Lawson). If 2 million households lose as the Telegraph reports that means 23m gain! I'd love it if Osborne produced something like this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-56140217234335055222007-07-13T11:03:00.000+01:002007-07-13T11:03:00.000+01:00Newmania, the way to generate more tax revenue sho...Newmania, the way to generate more tax revenue should be to get the economy to grow, not to raise rates of tax on any sector, or use fiscal drag to increase rates.<BR/><BR/>By raising taxes on the most productive sector - high earners - the economy's growth is blunted, and tax revenues will be lower. I know we like many Lib Dem policies on crime and localism, but on money they are really at the basket case stage.<BR/><BR/>Brown has made use of fiscal drag by intentionally underestimating inflation rates by moving to the CPI (2.5%) from the RPI(4.5%) and even the RPI ignores asset price inflation. <BR/><BR/>If asset prices are included in an inflation calculation, inflation is probably nearer to 10% these last few years - equal to the growth in the money supply, which has also been about 10% a year.<BR/><BR/>That's why IHT is now a feared tax by house owners for example, and so many people cannot afford a house. To have kept pace with real inflation since 1997, the tax free threshold should be nearer £10,000 a year, not £4000. Gordon's biggest stealth tax of all has been to continually lie about inflation.Tapestryhttps://www.blogger.com/profile/17267094484651413428noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-1685339194544261432007-07-13T10:39:00.000+01:002007-07-13T10:39:00.000+01:00IT is of course likely that the Liberal Party will...IT is of course likely that the Liberal Party will not be able to sustain a policy of tax cutting and certain that it will not be as it seems <BR/>On the other hand the fact that they are seeking to represent themselves as sensitive to tax payers at all is interesting. WE are approaching a time when the "Progressive Party’s" soi disant , are likely to combine against the natural Conservative Majority in England<BR/>I see it as vital that the Conservative Party has an open door for Liberal Liberals who will otherwise be voting for the labour Party. There are lots of good ideas coming out of the Liberal Party on housing and crime and , unlike the Labour Party , at least they have some notion that Public spending , is tax payers money , not a magic everlasting drinking horn.<BR/>Parts of the Liberal Party are not all bad and the headlines are at least most encouraging. Tapestry has pulled it to pieces I see, but I would like to see direct taxes moved to indirect ones and combined with simplicity as a principle.<BR/><BR/>Doesn`t anyone see anything good about this at all ? It shows that Conservatives are not alone in worrying about wealth creation and the right of the individual to be independent . When Ming has to admit that all his Party are doing no more than working for Gordon Brown those elements will not be pleased and I would like to se him nailed about what the Libs would do after an election before it happens.Newmaniahttps://www.blogger.com/profile/11922161971821380803noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-8183076735688557172007-07-13T09:48:00.000+01:002007-07-13T09:48:00.000+01:00Low earners might be young and their earnings coul...Low earners might be young and their earnings could rise. Or their children or grandchildren could become high earners. <BR/><BR/>High earners too can lose their jobs or businesses through unforeseen events. Money can be lost as easily as made. We are are all low earners and we are all high earners at one time or another.<BR/><BR/>It is not up to governments to level the playing field. Taxes have an efficient level at which they generate the most money. If they are set too high, taxpayers put effort into avoiding them, and they put less effort into earning. Taxes set too high net less and less.<BR/><BR/>Who gains when tax is raised inefficiently? Not the poorer members of society who depend on government spending.<BR/><BR/>Taxes should be set at rates which encourage people to get on and build their businesses, increase their earnings and pay taxes as they are reasonable. Confiscatory taxes such as income/national insurance tax at 75% are self defeating. Lib Dems and Labour don't understand that - or are they in fact trying to use taxes to stop people becoming wealthy and independent from the state? They don't believe in independence of mind, but in controlling everyone.<BR/><BR/>That's why the economy grows under Conservative governments. They understand that people have to be independent from government to build their own economic futures, from which all members of society benefit.Tapestryhttps://www.blogger.com/profile/17267094484651413428noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-57328502362501609132007-07-13T09:46:00.000+01:002007-07-13T09:46:00.000+01:00500 pages of the tax code? Woo hoo! Of course, gi...500 pages of the tax code? Woo hoo! Of course, given that it stands at something over 12,000 pages at present, this is perhaps a little cosmetic.<BR/><BR/>Anyway - which 500 pages? Isn't that a little like saying 'we're going to repeal six laws' but not saying which?Tim Jhttps://www.blogger.com/profile/03705980028580424584noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-32323959785884237842007-07-13T09:35:00.000+01:002007-07-13T09:35:00.000+01:00Capital gains tax on UK property for foreigners is...Capital gains tax on UK property for foreigners is a good idea. Under most tax treaties to which the UK is a party, the right to tax income and gains from property falls to the country in which the property sits, but we have decided that we only tax the gains of persons who are resident or ordinarily resident. We tax the income from UK property, so why not tax the gains like other countries? While we are about it, why not tax the income at the full corporation tax rate rather than tax it as income under the income tax rules at the basic rate (4% lower under the Lib Dem proposals)?<BR/><BR/>I think many people would be surprised by how many "offshore" investments in property are made by companies controlled less than a million miles from the West End of London, funded not by foreign capital so much as by highly geared loans from RBS and the Bank of Scotland.<BR/><BR/>If you think the 10% tax rate on capital gains in private equity is lower than justified, that is nothing compared to the effective tax rates of many UK property investors.<BR/><BR/>And if you think they pay 4% stamp duty on their purchases and sales ........Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-40444001861615461662007-07-13T09:03:00.000+01:002007-07-13T09:03:00.000+01:00Didn't the LD proposals state that they were reven...Didn't the LD proposals state that they were revenue neutral, meaning that they are adjusting how tax is taken rather than increasing it?<BR/><BR/>Given that the tax system currently is grossly complicated and unfair on low/ medium earners shouldn't these proposals be welcomed as a breath of fresh air? Much more so than '7p on a pint of beer' or flirtation with flat taxes.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-24874289153928027002007-07-13T08:50:00.000+01:002007-07-13T08:50:00.000+01:00I should have added that (if the 50% band is impos...I should have added that (if the 50% band is imposed, and it will require £240,000 gross to get £60,000 into the pocket), if the recipient can arrange to leave the UK for over 9 months a year and receive the £240,000 as a dividend, the tax payable is only £72,000, so instead of £60,000 in his pocket, the recipient would get £168,000.<BR/><BR/>For such a person the incentive to go and live overseas would be a tax saving of £2000 a week (45% of £240,000).<BR/><BR/>They already save £1600 a week in tax by going abroad. It is usually far cheaper to live abroad as well, so that the same money buys a lot more value, and more can be saved and invested. <BR/><BR/>And you wonder why high earners are going overseas in droves.Tapestryhttps://www.blogger.com/profile/17267094484651413428noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-86325669224857848552007-07-13T03:10:00.000+01:002007-07-13T03:10:00.000+01:00smacks of a panic measure by the LDs to try and st...smacks of a panic measure by the LDs to try and stop their support ebbing away.The media has quite rightly foccused on Briown/Cameron over the last few months andthe LDs have been pushed into their real position in British politics; a meaningless repository for tatical voters, idiots and people who like the colour yellow...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-21376988896242146492007-07-12T22:52:00.000+01:002007-07-12T22:52:00.000+01:00Everone is critisising the Lib/Dems, but where are...Everone is critisising the Lib/Dems, but where are there any conservative proposals to compare with. <BR/><BR/>Oh yes 7p on a pint of beer.Johnny Norfolkhttps://www.blogger.com/profile/16900659617233793880noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-48097125927439766122007-07-12T22:45:00.000+01:002007-07-12T22:45:00.000+01:00Bang on, Iain. I've assumed that the Lib Dems have...Bang on, Iain. I've assumed that the Lib Dems have calcluated the £68k figure based on the replacement of CT with an LIT; my back-of-a-fag-packet maths does seem to bear this out. Who decided £68k is 'rich' anyway?<BR/><BR/>Having said that, the lack of detail in the report means that I wouldn't be the slightest bit surprised that there's a further tax band of 50% on earnings over £60k hidden in there somewhere.<BR/><BR/>My blog (plug, plug) has its own inimitable take on proceedings...Advertising Sellouthttps://www.blogger.com/profile/12895091503749259321noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-13479106691482351932007-07-12T22:21:00.000+01:002007-07-12T22:21:00.000+01:00I'm not going to read it but anon 8.36 has spotted...I'm not going to read it but anon 8.36 has spotted 15 years IHT liability on gifts.<BR/><BR/>As someone who has just spent rather a long time winding up a relative's estate because of the 7 year provision, I would predict that a 15 year provision would make such an endeavour infeasible.Anonymousnoreply@blogger.com