What caught my eye this week.
Last month we discussed how many more people are being taxed at the highest rates of income tax than ever before.
And despite a spirited rearguard action from a few old-timers who say you wouldn’t believe the tax they paid back in their day (days when you could still buy the average home for four times even a slightly higher-taxed salary, incidentally…) the consensus was that enough will soon be enough, if it’s not already.
Unsurprising perhaps, given we also learned last week that a majority of Monevator readers are higher or additional-rate taxpayers.
Turkeys are not renowned for their love of the roasting tray.
Same old question
So here’s a more contentious challenge – especially for the higher-earners among you who feel overtaxed right now.
The Telegraph recently launched a tub-thumping campaign to abolish inheritance tax (IHT). Veteran Monevator readers know IHT is my favourite tax. But the UK population hates it.
For whatever reason, the typical person would rather we tax hard work over a lifetime than someone who just happens to pop out of a particularly auspicious uterus through no effort of their own – a scenario where if anyone deserves a big wealth windfall it is surely the gasping and pained owner of said uterus, not the newcomer riding the slip-and-slide into human civilization.
I would continue, but happily ex-Telegraph leader writer James Kirkup has done so less sloppily in The Spectator this morning.
I like IHT and so do a lot of people like me: professional policy wonks and economists, who proliferate at Westminster and often get a lot of prominence in political debate – especially on Twitter.
My technocratic tribe largely regards inherited wealth as harmful to social mobility and economic efficiency. We’d rather see large accumulations of wealth redistributed by the state than cascade down to children who may already have enjoyed significant economic and social advantages […]
We get particularly enraged by arguments like ‘it’s double taxation’, since ‘double taxation’ is commonplace and unremarked on elsewhere.
Every pound of taxed income that you spend on VAT-rated items, for example, is being taxed twice.
Hear hear. Alas, Kirkup continues:
We’re all scared of dying and one of the few sources of comfort is the idea that when we do, we can leave something behind for the people we love; the power of that feeling is so strong that it doesn’t matter if your estate isn’t in any danger of incurring IHT. You’re still very likely to hate the idea of that tax and support its reduction.
Kirkup’s whole article is worth a read. He makes further pertinent points about the state of British politics and especially the still-benighted Tory party. More than 50 Conservative MPs apparently support the idea of this unfunded £7bn tax cut that benefits a mere 4% of the population.
Political titan Liz Truss is one of them, which would be enough to get the policy squirreled away into an old biscuit tin in the attic in a saner reality.
But what about you guys?
We mostly agree income taxes are too high.
But do you also call for the equivalent of a 1p hike in the basic rate so that already-advantaged kids can get everything they’re due but nothing they’ve earned for themselves?
Or do you accept that – unpleasant as it is – somebody has to pay the state’s way? And that it’s better to incentivise hard work and, dare I say it, entrepreneurship, than the feudal notion that every old Telegraph reader’s three-bed in the South of England should be their castle to be passed on unmolested to their by-then already mostly-well-to-do 40-to-50 something year-old offspring?
I’ll don my flame suit (I’m off to a BBQ next, it’ll do double-duty) though I’m not looking for a fight. Rather one of our considered discussion about the facts.
Which are: we’re poorer as a nation than we were, not least due to a previous populist decision we made a few year ago. That economically self-destructive move is already costing us at least £40bn in lost tax receipts. Yet someone has to pay to keep the show on the road – and it can’t all be done by the GDP-boost from record immigration.
So it’s a serious question. If you won’t tax the dead than who?
Have a great weekend.
Commodities investing: why we’re missing a trick – Monevator
From the archive-ator: How to estimate care home costs – Monevator
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
UK mortgage lending hits record low in sign of market stress – Guardian
Larry Summers blasts Brexit, calls it a historic economic error… – Proactive Investors
…meanwhile Eurozone inflation falls more than expected to 6.1% – CNBC
The S&P 500’s gains this year are almost entirely from five companies – Axios
ESG-hostile activists in the US could break how Vanguard runs index funds – RIABiz
They came. They saw. They incinerated half their funds’ potential returns – Morningstar
Products and services
Building societies offering members regular saver rates up to 9% – Guardian
Annuity sales soar by 22% on much more attractive deals – This Is Money
Can you save money with a ‘green’ mortgage? – Which
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor
The tiny odds of winning nothing in a year with £25,000 in Premium Bonds – This Is Money
The best savings accounts in June – Be Clever With Your Cash
Return train tickets to be scrapped on LNER routes. A money-saver? – Which
Pastel-coloured homes for sale, in pictures – Guardian
Comment and opinion
Against index funds, part II – Fortunes & Frictions
Have index funds become growth funds? – Morningstar
Don’t bet on market timing – Humble Dollar
Inflation is widening the gap between private and public sector pensions – This Is Money
Other people’s money – Humble Dollar
A discretionary withdrawal strategy for early retirement – Mad Fientist
Introducing the weird portfolio [Few weeks old] – Portfolio Charts
Do you need a ‘Mary Jean’ list to help your other half or kids? – Humble Dollar
Regret-optimised portfolios and optimal retirement income [Podcast] – Rational Reminder
Naughty corner: Active antics
Weddings and divorce: the scourge of investment returns [Search result] – FT
Working hours in hedge funds vs. private equity – eFinancial Careers
How to build defensive equity portfolios – Advisor Perspectives
Why people continue to invest in active funds – Financial Samurai
How to avoid dividend stocks with excessive debts – UK Dividend Stocks
Why down-and-sideways markets are bullish – Of Dollars and Data
Sector expertise doesn’t typically generate alpha for fund managers – Finominal
Kindle book bargains
A Man for All Markets by Edward O. Thorp – £0.99 on Kindle
Liar’s Poker by Michael Lewis – £0.99 on Kindle
Love, Pain, and Money: The Making of a Billionaire by John Caudwell – £0.99 on Kindle
Crickonomics: The Anatomy of Modern Cricket by Stefan Szymanski and Tim Wigmore – £3.79 on Kindle
What ‘rewiring’ an economy means for investors – Schroders
Why cultivated meat is still so hard to find in restaurants – BBC
Black sea urchins have disappeared, threatening a coral reef – CNN
Huh, our fake beach is good for baby sharks – Hakai
Pesticide firms withheld brain toxicity studies from EU regulators – Guardian
In defense of flies – Vox
Robot overlord roundup
AI ‘godfather’ Yoshua Bengio feels ‘lost’ over life’s work – BBC
Is an AI stock market bubble inevitable? – A Wealth of Common Sense
AI-controlled military drone ‘kills’ its operator in simulated test – Guardian
Tech giants have been investing in AI for years – Crunchbase
Off our beat
Can humans ever understand how animals think? – Guardian
Paying attention – Morgan Housel
Multi-cancer blood test shows real promise in NHS study – BBC
One of the world’s most controversial philosophers explains himself – Vox
The power of staying put [Podcast] – Morgan Housel, again, via Spotify
It’s good that we now do vital government business on burner phones, like drug dealers – Marina Hyde
Why our allergies are getting worse – NPR
“The cowards never started and the weak died along the way. That leaves us, ladies and gentlemen. Us.”
– Phil Knight, Shoe Dog