What caught my eye this week.
Last month we discussed how many more people are being taxed at the highest rates [1] of income tax than ever before.
And despite a spirited rearguard action [2] 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 [3] 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.
He writes [4]:
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 [4] 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 [5] 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?
Heir-raising taxation
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 [6] 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 [7] from record immigration [8].
So it’s a serious question. If you won’t tax the dead than who?
Have a great weekend.
From Monevator
Commodities investing: why we’re missing a trick – Monevator [9]
Ego as a catalyst: why I see value being outed at this investment company [Mogul members [10]] – Monevator [11]
From the archive-ator: How to estimate care home costs – Monevator [12]
News
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 [13]
Larry Summers blasts Brexit, calls it a historic economic error… – Proactive Investors [14]
…meanwhile Eurozone inflation falls more than expected to 6.1% – CNBC [15]
The S&P 500’s gains this year are almost entirely from five companies – Axios [16]
Is your Barclays [17] or Lloyds Group [18] branch among hundreds closing in 2023? – Which
ESG-hostile activists in the US could break how Vanguard runs index funds – RIABiz [19]
[20]They came. They saw. They incinerated half their funds’ potential returns – Morningstar [21]
Products and services
Building societies offering members regular saver rates up to 9% – Guardian [22]
Annuity sales soar by 22% on much more attractive deals – This Is Money [23]
Can you save money with a ‘green’ mortgage? – Which [24]
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor [25]
The tiny odds of winning nothing in a year with £25,000 in Premium Bonds – This Is Money [26]
The best savings accounts in June – Be Clever With Your Cash [27]
Open an account with low-cost platform InvestEngine via our link [28] and get £25 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine [28]
Return train tickets to be scrapped on LNER routes. A money-saver? – Which [29]
Pastel-coloured homes for sale, in pictures – Guardian [30]
Comment and opinion
Against index funds, part II – Fortunes & Frictions [31]
Have index funds become growth funds? – Morningstar [32]
Don’t bet on market timing – Humble Dollar [33]
Inflation is widening the gap between private and public sector pensions – This Is Money [34]
Other people’s money – Humble Dollar [35]
A discretionary withdrawal strategy for early retirement – Mad Fientist [36]
Introducing the weird portfolio [Few weeks old] – Portfolio Charts [37]
Do you need a ‘Mary Jean’ list to help your other half or kids? – Humble Dollar [38]
Regret-optimised portfolios and optimal retirement income [Podcast] – Rational Reminder [39]
Naughty corner: Active antics
Weddings and divorce: the scourge of investment returns [Search result] – FT [40]
Working hours in hedge funds vs. private equity – eFinancial Careers [41]
How to build defensive equity portfolios – Advisor Perspectives [42]
Why people continue to invest in active funds – Financial Samurai [43]
How to avoid dividend stocks with excessive debts – UK Dividend Stocks [44]
Why down-and-sideways markets are bullish – Of Dollars and Data [45]
Sector expertise doesn’t typically generate alpha for fund managers – Finominal [46]
Kindle book bargains
A Man for All Markets by Edward O. Thorp – £0.99 on Kindle [47]
Liar’s Poker by Michael Lewis – £0.99 on Kindle [48]
Love, Pain, and Money: The Making of a Billionaire by John Caudwell – £0.99 on Kindle [49]
Crickonomics: The Anatomy of Modern Cricket by Stefan Szymanski and Tim Wigmore – £3.79 on Kindle [50]
Environmental factors
What ‘rewiring’ an economy means for investors – Schroders [51]
Why cultivated meat is still so hard to find in restaurants – BBC [52]
Black sea urchins have disappeared, threatening a coral reef – CNN [53]
Huh, our fake beach is good for baby sharks – Hakai [54]
Pesticide firms withheld brain toxicity studies from EU regulators – Guardian [55]
In defense of flies – Vox [56]
Robot overlord roundup
AI ‘godfather’ Yoshua Bengio feels ‘lost’ over life’s work – BBC [57]
Is an AI stock market bubble inevitable? – A Wealth of Common Sense [58]
AI-controlled military drone ‘kills’ its operator in simulated test – Guardian [59]
Tech giants have been investing in AI for years – Crunchbase [60]
Off our beat
Tarzan FIRE [Sort of on our beat!] – New York Post [61] [h/t Abnormal Returns [62]]
Can humans ever understand how animals think? – Guardian [63]
Paying attention – Morgan Housel [64]
Multi-cancer blood test shows real promise in NHS study – BBC [65]
One of the world’s most controversial philosophers explains himself – Vox [66]
The power of staying put [Podcast] – Morgan Housel, again, via Spotify [67]
It’s good that we now do vital government business on burner phones, like drug dealers – Marina Hyde [68]
Is Apple’s weird headset the future? – Vox [69] and FT [70] [Search result]
Why our allergies are getting worse – NPR [71]
And finally…
“The cowards never started and the weak died along the way. That leaves us, ladies and gentlemen. Us.”
– Phil Knight, Shoe Dog [72]
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