What caught my eye this week.
When I wrote a few weeks ago that pre-Budget speculation had reached a fever pitch, I was wrong.
Turned out that was mere pre-Budget babble. This week was the fever.
I have no more speculation to add. Not least because Whitehall-based readers seem to have picked up on my suggestion that freezing the income tax thresholds for a few more years might be the least worst way to raise (and broaden) the tax take, if taxes must indeed be raised.1
As well as hiking inheritance tax, of course.
Both got more airtime this week – see below – so I guess my work is done.
Budget game for a laugh
I’m being facetious of course.
While Monevator has surely snuck into the email boxes of those near those in power, it’s obvious that everything anyone can think of has already been put onto the table for consideration with this Budget.
“Shouldn’t we give the Window Tax a second look?”
“What was wrong with that Poll Tax malarkey again?”
Sub-optimal, but if you think you can do better, try the FT’s new Chancellor Game. Playing it reminded me of the 1980s movie WarGames, where a computer realises there’s no winning World War 3.
This was the best I managed:
I tilted my Budget towards growth and ramped up education and free school meals.
The latter gave me pause though. Neither the economy nor voters would benefit from my investments in the future before the next election – let alone before the weekend papers and talk shows.
And so are born the headline-grabbing gimmicks and rabbits out of hats of Budget Day that complicate financial planning for years…
More pre-Budget reading:
- 100 days of miserablism: can Labour get out of its Budget mess? – This Is Money
- Rachel Reeves looks to keep ‘stealth tax’ freeze on thresholds [Search result] – FT
- Inheritance tax increases expected – BBC
- Lump sum withdrawals ‘surge’ while contributions ‘plummet’ [allegedly] – Independent via MSN
- Chancellor to leave capital gains on property untouched, reports claim – Guardian
Have a great weekend.
From Monevator
Manage your index-linked gilts with our spreadsheet – Monevator [Members]
FIRE-side chat: Secret Squirrel – Monevator
From the archive-ator: How to run your portfolio like a hedge fund – Monevator
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.
Fall in UK inflation supports a November rate cut – Morningstar
House prices rise for the sixth month in a row… – Office for National Statistics
…and gross buy-to-let rental yields are at a record high, says agent… – This Is Money
…but landlord sales are at a record high pre-Budget, too – Rightmove
Canada Life has published a new report on living to 100 [PDF] – Canada Life
Six months left to top up your state pension – Which
Older workers with health conditions sidelined due to ageism – Centre for Aging Better
Jane Street interns make more than Keir Starmer and Jay Powell… – FT
…while Citadel staff’s fund stake triples to $9bn in four years – Yahoo Finance
Meta reportedly fires staffer on $400K a year for spending $25 meal credits on toothpaste – Fortune
Why aren’t people having babies? – Sherwood
Products and services
Atom Bank’s new best buy savings account pays 4.85%, with a catch – This Is Money
Why are mortgage rates rising and when could they fall again? – The Standard
Get £100-£2,000 cashback when you open a SIPP with Interactive Investor (T&Cs apply. Capital at risk) – Interactive Investor
Beware the pension recycling rules if you’re making re-Budget withdrawals – T.I.M.
Fidelity’s platform lifts restrictions on RIT Capital investment trust – Investment Week
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
New rules for Buy Now Pay Later schemes to protect shoppers from 2026 – Which
Uber One review: is it worth the money? – Be Clever With Your Cash
Questions to ask a financial advisor about their model portfolio – Morningstar
Victorian homes for sale, in pictures – Guardian
Comment and opinion
House of mirrors – Money with Katie
The low stability of a high income – Of Dollars and Data
Parenting is, basically, financially ruinous – Guardian
Active equity funds lagging on average, like every year – SPIVA
The S&P 500 won’t do 26% a year forever – A Wealth of Common Sense
Mob rule – Humble Dollar
Five investment lessons from the five best investment books – Darius Foroux
A few thoughts on diversification strategies – Fortune Financial
The laws of financial health – The Uncertainty Of It All
Why you might soon get paid like an Uber driver – Slate
The behavioural science behind your retirement [Podcast] – Standard Deviations
Naughty corner: Active antics
Faith – Albert Bridge Capital
Quarterly hedge fund letters – from Third Point [PDF] and Greenlight Capital
Playing President Trump: options or wagers? – Sherwood
Kindle book bargains
Failed State: Why Nothing Works and How to Fix It by Sam Freedman – £0.99 on Kindle
Technofeudalism: What Killed Capitalism by Yanis Varoufakis – £0.99 on Kindle
Bad Blood: Elizabeth Holmes and the Theranos Scandal by John Carreyrou – £0.99 on Kindle
Casino: The Rise and Fall of the Mob in Las Vegas by Nicholas Pileggi – £0.99 on Kindle
Environmental factors
Taxing Europe’s frequent flyers could raise €64bn a year, study finds – Guardian
Four ways to make solar panels more effective – Which
Robinhood co-founder wants to create the Starlink of solar power – Fast Company
De-extinction and the wooly mammoth – Garden of Forking Paths
How Europe said bye-bye to Russian gas – JSTOR
Atmospheric rivers are shifting amid global warming – Fast Company
“Hey dude, where’s my self-driving car?” mini-special
Human driving increases transport costs by 10x – Austin Vernon
Can Tesla’s autonomous driving achieve ‘impossible’ dreams like SpaceX? – Stratechery
Low-fi robotaxi parking lot radio [Livestream] – YouTube
Robot overlord roundup
Another AI manifesto just dropped – Sherwood
The future of AI and the US economy, according to Goldman – Faster, Please!
Science and mice mini-special
Has working with mice led autism research astray? – Vox
Eating less can lead to a longer life, according to mouse research – Nature
Off our beat
Thoughts on nostalgia – Morgan Housel
Is OnlyFans catfishing its users? – Hollywood Reporter
Jonathan Clements: Life is full of small pleasures [Podcast] – Morningstar
Marina Hyde: it’s Badenoch versus Jenrick on GB News – Guardian
Elon Musk’s perfect disinformation… – The Garden of Forking Paths
…vs Tim Urban taking a toddler to see the SpaceX spectacular – T.F.P.
The year is 2149 and… [A few weeks old] – MIT Tech Review
Quantifying the Kevin Bacon game – Stat Significant
Why New York is so great [See also London…] – Young Money
The middle of Lidl [Music video] – Goldie Lookin’ Chain via YouTube
And finally…
“There is nothing like losing all you have in the world for teaching you what not to do.”
– Edwin Lefevre, Reminiscences of a Stock Operator
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- Note: I said ‘least worst’. I think the tax take on income especially is already at the upper limit of tolerable. I see a case for wealth taxes but beyond hiking IHT it seems difficult to implement. I wouldn’t tax business any harder and I’d be wary of any changes to capital gains tax. Only economic growth can get us out of this, ultimately. Don’t blame me, I didn’t vote for make-believe sunlit uplands and fantasy dividends. [↩]
Oh wow this FT game is going to ruin my wife’s weekend…
Yes,I had a go at the FT quiz too and decided I could recognise a poisoned chalice when presented with one.
I do hope the current government has thoroughly considered and consulted on any proposed changes. The papers I read have been pretty rabid in their speculations so who knows.
Mind you, if they are thinking about stretching the IHT PET timescales I trust they will consider the record keeping requirements on tax payers and their executors. We went through an exercise to justify gifting from surplus income over the 7 year period and that was enough of an effort.
Personally I am wondering about financial stocks as any cut backs in tax free allowances won’t be good for them, ditto banks. Holding a bit more cash might stop me worrying and foregoing future gains is so much better than seeing a loss!
The Year is 2149… bloody hell, what a read!
I’m going to need to put down the phone, sit quietly and reflect for a while before coming back to check some of the other links.
Thanks @TI for the brain food
Edwin Lefevre, Reminiscences of a Stock Operator – such a great book
After tutting and shaking my head through the Guardian parenting piece and the HENRY to NENRY piece, I scrolled to the bottom and found Goldie Looking Chain lurking there! Thank you 🙂
Middle Of Lidl – brilliant – just what I needed to cheer me up whilst floating around in the sea of financial negativity as we wait for 30th of the month (or should we say 31st) TY for the link!
The follow up to ‘Why aren’t people having babies?’ perhaps:
What happens to the employer-employee relationship when they do stop having so many babies:
https://www.theguardian.com/world/2024/oct/19/japan-workers-resignation-agencies-quit-job-work-life
The Jonathan Clements interview was brilliant, and contains some very honest takes from a man whose cancer diagnosis robbed him of the long retirement he surely secured for others with Humble Dollar and his previous financial writing.
Also, I missed this week’s FIREside chat, but what an excellent interview from Squirrel!
You could probably put the ‘Why aren’t people having babies?’ link next to the ‘Parenting is, basically, financially ruinous’ link next to each other and save people a tiny bit of effort making the link.
That plus VAT on private school fees and the spectre of inheritance tax increases does make you wonder just how much labour dislikes the family unit?
I don’t have skin in the private school game as mine go to the local comp, but I do think those sending their kids to private schools are inadvertently doing the govt a massive favour. I know their motivation isn’t in any way altruistic, but they’re pumping in 25k per year (fees, trips and ipads) into the local economy for each kid, saving the govt about 7k per kid per year and still paying the same amount of income tax. That is a fantastic deal for Reeves – certainly one where you should definitely not be rocking the apple-cart.
I shouldn’t be scratching the scab of IHT because I am well aware those with and those without kids are completely unable to appreciate each others perspectives.
I think my push for acknowledgement of the heavy lifting being done by parents in support of the all the childless folks future selves will come to nought, in much the same way as the ‘housing is an asset’ debate rolls on ad infinitum.
I think you’ve either got to whisper a quiet thank-you to the parents, be very pro-immigration, or both – but you can’t rationally be neither..
Guns don’t kill people..wrappers do…
It’s all getting quite boomy in the markets? I know the mantra is just keep on buying but even now? My equities percentage is quite high now…rebalancing feels more important this year than previously.
Great fire update from secret squirrel. Resilience in the face of adversity. Seriously impressive stuff. Can’t relate too much myself to it if I am being honest although a fear of poverty is an irrational (now) driver for me.
So politics…both the conservatives and labour manifesto and pre-election huff and puff collides with reality. You cannot raise the sorts of sums of money being talked about / balance the books without impacting most of the population. The conservatives needed to leave office – they’d run out of steam but honestly the differences between the two parties from a budgetary perspective isn’t going to be that much.
Given the state pension is effectively means tested – think progressive rates of taxation, even pensioners may start feeling a bit more of the pinch eventually.
Public services are going to continue to be underfunded and taxation will continue to increase. Around 50% of my council tax is now spent on adult social care. It’s a direct reflection of an aging society.
The budget is going to be painful but presumably so are there next few years. Labour are going to face a lot of public sector pressure for pay rises (see tube strikes coming later this year), that will need paying for and given some of their paymasters are trade unions, it’s harder for them to push back.
Hard to see what happens five years out but I feel a conservative / reform coalition is not beyond the bounds of possibility. People’s lives aren’t going to change immeasurably for the better.
Mind you the biggest x against this is there no unifying Tory leader coming through. The Conservatives may need to plough through another election and a leader or two before getting another chance.
Population decline outside of Africa is fascinating. A) it’s good for the environment? B) the social economic make up of Europe must change significantly over the next forty years with immigration from the south C) I’m v interested to see what happens in Japan – very little immigration, English isn’t widely spoken, culturally on its own – their population is forecast to almost halve over the next few decades possibly. Will all the manual jobs be taken over by bots? It feels like that’s the country that will make the most advances here.
I think we can and should expect that tax burden to continue to rise and rise, bills are going to go up. It’s all going to be, relatively, quite sh*t unfortunately.
I think it’s time for the government to consider a wealth tax. Other countries (e.g. Switzerland) have managed it. The rates could be low (similar to fund management charges) with significant tax free allowances. The main thing is to just start them (which means putting the machinery in place to measure it). Later it can be extended to letting lower tier authorities also set their own rates (and abolishing the frankly regressive home-value-based system we currently have).
“I am well aware those with and those without kids are completely unable to appreciate each others’ perspectives.”
It’s always seemed to me that if the childless – who I assume dominate the lobby for raising the IHT tax take – wish to persuade me of their sincerity they need only explain that they have swerved every bequest coming their way and will continue to do so.
Not me: I admit that when I was left £25 by an aunt in the 70s I simply accepted it and spent the lot. On high living, presumably – you know, beer, the launderette, that sort of thing.
On IHT – the average age of inheritance is quite high (47 according to this hastily googled link, but I’ve seen similar elsewhere https://www.fraserandfraser.co.uk/news/research-finds-average-age-for-inheritance-is-47-years-old/). Your children should be well on their way to standing on their own feet by then I feel, maybe parents should be helping their children out earlier if they feel so strongly about their legacy. Or is it more for the grandkids instead, perhaps?
Either way, I feel there are potentially better ways to incentivise having a family than promising that you can pass on more than £325k tax-free (about 4% of estates, it’s probably worth noting – not sure why it gets so much press attention) when your children are eyeing up retirement themselves (presuming you’ve passed on the monevator secrets).
@Rhino #9 > those sending their kids to private schools are inadvertently doing the govt a massive favour
Seriously? Do you recall the corrupt entitled private school bastards that ran the joint for the last decade or so? Finest Etonian character-building in action.
Yeah, such schools build character, but what sort? I’m not so sure that children are entirely ready to make best use of the ‘you’re a lot more special than the 93% of State School oiks’ message without building a hefty sense of entitlement. Private schools in the UK are a legacy of Imperial Britain ruling far flung places with communications measured in days and weeks. The developmental trauma of boarding schools produces high-functioning sociopathic behavior in many survivors, This Be The Verse writ large. I knew a woman who had been so traumatised by the experience pretty much the first question she’d ask of anyone knew was ‘Did you board?’ Eh, WTF? And yes I do know not all private school pupils board.
Sure, I get the logic of these parents paying into the state school system and not loading it with the fruit of their loins. Presumably I paid for some of the State school system and similarly didn’t load it. C’est la vie.
I get all the reasons people send their kids to private schools. It’s the ‘doing the government a massive favour’ that I challenge. In an age of Peter Turchin’s elite overproduction they’re buying their kids seats at the top table. Fair enough, but it’s simple looking after yourself and your own.
@ermine – Yep, no problem with an ideological argument to ban private schools on those sort of grounds, equality of opportunity, level playing field, that sort of thing – but that’s not what we’ve got here. It’s just grubbing up an extra 20%. The ‘favour’ is just a financial one plus alleviating a little pressure on seats. I was thinking about how things could look in a generation’s time if you did ban private schools and was quite enjoying the gedanken experiment but then remembered all the potential Boris’ would just beggar of to Switzerland or some such, then come back and it would be same as it ever was .
I note it looks as though Eton is now going to make a massive windfall at the govts expense due to the changes. Plus ca change, plus c’est la meme chose
@Rhino it’s not really about the money, the amount raised will have almost no impact. Labour really do want to eliminate private schools and this is a pragmatic first step for them. Personally I hope they succeed.
@IHTBore said “Your children should be well on their way to standing on their own feet by then I feel”.
I’m thinking about the guy interviewed on this blog whose son was autistic and unable to manage without support. The real world does sometimes get in the way despite your best efforts.
@Rhino I wasn’t making a case for or against private schools, it was the ‘doing the gov a favour’ I couldn’t comprehend. I’ve done the gov the same favour along those lines 😉
Private schools are businesses, selling dreams, a feeling of exclusivity, perhaps lower pupil:teacher ratios and advantage to parents. Fair enough, it’s a service, and it’s not illegal. I would remove the BS ‘charitable’ status and yes have ’em charge VAT on the service they are selling, just like a builder, but otherwise leave ’em be. The ‘charitable’ status is again a historical legacy from the times when we didn’t have universal State education, but that’s getting on for eighty years ago. A commercial enterprise should pay its way but it should also pay its taxes like any other business.
Ermine – well said. This is an ideological issue, it’s about equality not making money. In the future get rid of private schools with normal school places selected at random not by how close you are to a school. All the ‘naice ’ teachers will have to teach in normal schools. All the middle class tiger mums will put pressure on government to raise standards etc.
It’s a continual (existential?) fight for “fairness “
(Interestingly “fairness” seems to be hard wired into humans from the get go -it was an argument /debate/fact I noticed that was always present in children,s decision making from a very early age )
As some of us are randomly blessed by life with better genes than others (looks,IQ,brains,bodies etc) inequality is forever and seems to be hard wired into natural systems
Probably therefore it has an evolutionary advantage for species survival ?
How to harness the benefits of the more blessed for the benefit of all as well as them is an ongoing dynamic process
(In animals and other forms of life -life and death do the buisness-survival of the fittest?)
Arguably the West at this point in time has achieved a better control of this dynamic than previous cultures in that the better off while remaining well off themselves agree pick up most of the bill for the rest of us
xxd09
I don’t think the government’s ideological basis has been understood. Increasing taxes on estates, public schools, wealth gained without labour(cgt)…share the basis that people shouldn’t be allowed to do just what they want with their money. Yes you can construct rationale around it, invent a narrative, but that’s the basis of it. So yep you can buy a big flash car, but no you can’t buy your child an education or a house.
Puzzled why any FIRE aspirants, with their focus on becoming what a socialist would call a rentier, unearned income and all that, won’t see it that way. What’s the phrase, Useful something or other :).
@ermine. I think you are extrapolating the issues we have with public schools over the whole range of private schools. Most private schools are not like Eton, Harrow, Winchester etc. The parents are not “buying their children a seat at the top table” since there is little networking advantage to being at an average private school. The real issue for the majority of parents who use private schools is that they feel the alternative is too risky – whether that is true or false. In my experience, very few want to pay £25k-50k/annum/child for the sake of it.
I would agree that it’s no different to choosing a plumber. Nonetheless, we don’t force people to use one plumber like those who would ban private schools want. Whether you add 20% VAT is the question is debatable. For most services you do but many educational products are not VAT rated.
I see this as another example of ideology over pragmatic solving of problems. The right likes to demonize immigrants and transgender. The left wants to demonize the rich. Private schools are a non-problem.
This will almost certainly rebound badly on Labour. It’s being implemented too quickly. Schools, parents and even the govt don’t have answers to specifics despite it being implemented in only a few weeks. More parents than expected are finding the cost too high.
I suspect that the SHTF next school year (too late to withdraw this year). We’re going to see many parents with SEN children (such as myself), who were happy in their private schools, having to transport their children vast distances to go to crappy comps that don’t have a clue about their specific requirement. It will be a disaster for those children. Home schooling will proliferate. The idea that these “tiger moms” are going to pressure the govt to raise standards is total fantasy.
Of course, it won’t make a jot of difference to the public schools like Eton. It won’t make a jot of difference to the “rich” (like myself) who see a few hundred grand to educate the child as a rounding error.
@ZXSpectrum48k I wasn’t claiming for or against fee-paying education, merely wanting the back-slapping for the favour these parents did by not calling on State education.
I have now researched the difference between public and private schools (for non Brits, it ain’t what you think, both are fee-paying, go figure) and take the point that the egregious examples of piss-poor character are the carefully honed output of public school character building. More particularly boarding schools, with their peculiar misanthropic take on attachment theory. That spawned the sort of character Bozza and his ilk showed. I’d raze the lot of that sort of joint etc, then salt the earth, but that’s just my opinion from seeing the fruit of the tree at the helm. We don’t need that sort of character anywhere near the controls of anything that matters to anybody else. Public schools and the entitled born to rule ethos performed an important role in for Imperial Britain, but that’s long past its sell-by date.
What you term private schools, pfft , they’re just another alternative service provider. Agreed they’re a non-problem. Like a builder or plumber, providing a useful service, but not charitable institutions improving the common weal. They’re companies. I don’t even feel strongly about VAT, the closest analogue is private health, if you pay VAT for a private hip operation then pay it for private schooling. If not, maybe Reeves is out of order.
Either way the putative favour private school parents did for the government is also done by the child-free. I accepted that as part of the social contract and never thought it required particular back-slapping, which is where I came in @15.
Can’t believe some of the comments on here, I guess there’s nothing like a Labour budget to bring out the politics of envy… For the moron advocating a “wealth tax” we already have them: reduced thresholds on every tax, CGT, dividend tax, property taxes, stamp duty etc… how about instead we tax 90% of all income & assets of anyone advocating wealth taxes? You want theft, so let’s start with you – seems fair. And as for eradicating private schools, I think the country actually needs the eradication of envious, class-obsessed left wingers. That would vastly improve this country – both in terms of economic prosperity and character.
@Peter P – Thanks for sharing your views but please don’t call other posters on our website ‘morons’, when all they’ve done is express a commonplace view about a widely-discussed (whether you like it or not) economic policy.
@Peter P
I don’t agree with wealth tax at all either, in part for the reasons you give, but I don’t think it’s helpful to call people advocating it “morons”. It’s a point of view, just like yours or mine.
And of all the arguments against a wealth tax, characterising it as “theft” is amongst the very worst, because if you accept that a democratically-imposed wealth tax is theft, then isn’t every other type of tax theft too?
@Valiant, one problem comes when you decide how to balance your tax sources and explicitly identify targets you are going to tax more heavily at the expensive of being more generous to others. Some might think that devisive and raise questions of fairness ( with some risk to democracy).
First step is you separate ‘earned’ from ‘unearned’ income, the former categorised as honest toilers with sweat on their brows, gawd bless ’em, the latter as free loading
rentiers. You then pin a moral dimension to this, it’s only fair that those with broad shoulders blah blah…
If the additional tax you put on unearned income aren’t enough then you go after their assets.
Taking assets is not the same as taxing income. After all, if you passed a body in the street would you take their wallet because you can think of better uses for the money and the dead guy doesn’t need it anymore :). That’s called IHT.
Peter P’s frustration is evident, but I do agree with him.
@Mr Optimistic – V well said.
@Valiant – You are wrong, so let me explain. First it’s NOT democratically imposed (Labour had less than 30% of the population’s vote & did not put this in their manifesto). Second, it’s one thing to have x% of income taxed – we earn EXTRA income and give up some of it as tax, fine. But asset taxes are different. Imagine I spend £50k of my ALREADY TAXED income on holidays, and you instead save your £50k of taxed income to provide care for your sick mother. I then declare you have “too much savings” and advocate a “wealth tax”. Thus you lose savings and your ill mother suffers. How is this fair? It’s not – it destroys all proper incentive. IHT is the same – envious people dislike you helping your children and thus tax your children because you are financially responsible. I’m sorry, Peter is correct, it IS theft.
Further, we need to understand that promoting unfair and malicious economic choices is extremely harmful to society. If people voice discriminatory and malicious views about race/gender/religion they face imprisonment. Perhaps we need the same for people voicing discriminatory and malicious views about wealth (such as wealth taxes)?
Re IHT, anyone who dislikes it has the option to give to their offspring (or mother) while alive – something that’s been mentioned quite a few times on this site, particularly in the comments – only needing to survive for seven years to avoid any tax. If the wealth is in the form of bricks-and-mortar then sell it or use equity drawdown. Anyhow, retaining £325k plus 60% of anything more doesn’t sound too harsh for what is free money for recipients. I can’t recall hearing any plans for 100% escheatment.
I don’t understand the issue with IHT, its paid by a tiny number of estates and you can help your children in your lifetime, which seems altogether more satisfactory to me.
Private schools negate equality of opportunity, I’d get rid of them all, but they should at least lose their charitable status. The concept of private schools (and private healthcare) just seems immoral.
As @Joe says we need to understand that promoting unfair and malicious economic choices such as private schools and unrestrained inheritance benefits is extremely harmful to society.
@Curlew, we’ve been through this many a time. It might look straightforward to you but it isn’t. The uncertainties of the future ( longevity, care costs, spouse to consider) make everything contingent.
@Mr Optimistic
“It might look straightforward to you…”
Yes, it does. Allowance of £325k, possibly up to £1m for a married couple passing on a house (plus 60% of anything in excess) gives plenty of scope for giving offspring, etc an advantage.
@Joe #28
With you all the way Joe!
@Mr Optimistic – Again, well said. Thank you sir.
@Curlew – please read and digest Mr Optimistic’s comment. NB: Labour are proposing to significantly reduce current IHT thresholds, and extend/remove the 7 year gifting rule. So you are wrong – it is NOT straightforward.
@Larsen – please also read Mr Optimistic’s comment on IHT. As for your hatred of good education, why the envy? Why should everything be “equal”. It isn’t. I’m better looking than you – nothing can “equalise” that. Some parents (many not rich) save and pay hefty private school fees, others don’t pay fees but instead pay for a big house. What’s wrong with either choice? What about private school bursaries for underprivileged kids – should they lose them because of your crazy ideas? My father received better cancer treatment because of private healthcare – maybe you wish he didn’t and suffered more?
To all the people hating on those who have saved and invested, and wish for better opportunities for them or their children, why? Why do you have the arrogance to believe your choices are how we should live? It’s that kind of thinking that paved the way for tyrants like Hitler & Stalin…
The arguments in favor of Wealth Tax are getting tedious, let’s look at some facts:
“A new wealth tax will make us poorer. We should reform existing taxes instead. Wealth taxes have a legacy of failure. In the last 25 years, 11 European countries repealed their wealth taxes because they raised trifling amounts, mainly hit the upper middle class and became hugely unpopular…”
“At first glance, a 2% pa wealth tax might not seem like enough, but the real financial impact is much bigger than it seems… it’s economically equivalent to paying a one-off tax of 30%, on top of existing income tax at 39.35%, a 68% effective tax on income…”
[Dan Neidle, Tax Expert, Prospect Magazine 7 Oct 2024]
Oy vey I invoke Godwin’s law and I claim my £5.
@Ermine thats a lol
@Joe, I have no ‘hatred’ or envy, I and my children received excellent education within the state system, I feel sorry for those who feel they have to go elsewhere, (it seems like a very un-FIRE thing to do). Equality of opportunity for every child is surely a goal that we can all agree on.
On healthcare I’m glad that your father was able to receive satisfactory treatment but that doesn’t mean that we shouldn’t strive towards equal provision of care for all, its a perfectly reasonable thing to aim for.
Godwin is a rarity round these parts fortunately. I don’t particularly want to see IHT changes or wealth taxes for self interested reasons. However there are many sensible democratic countries that do have them. Norway, Switzerland, Netherlands to name but a few – so they can’t really be that outrageous.
@Joe — I feel some part of what you’re presenting is a straw man, at least to the arguments as I might make them for a wealth tax (or would make them for higher IHT).
You are talking about the politics of envy and then refuting it. I agree it’s refutable.
But from an economic perspective I don’t want higher IHT or a wealth tax because I am a envious or resentful.
I’d want them (or at least higher IHT, I’m unconvinced about a wealth tax being feasible) because we have to tax something to fund the state (we can argue elsewhere about the appropriate level) and there’s a clear growing divide between the richest and everyone else on wealth, especially property.
With respect to IHT I’d far rather tax offspring who did nothing to earn the wealth of their dead parents except be born to them, versus people who are working for their money and paying income tax on the proceeds.
Obviously higher IHT isn’t going to replace income tax etc. But it’s a matter of where the next marginal £ of taxation comes from.
Re: education, I wouldn’t abolish private education, though perhaps I’d insist every privately educated child graduates with a two-hour seminar on the privilege they enjoyed with it.
(Yes, that is something like envious or resentful, but after spending my 20s tolerating mediocre public school alumni droning on about their hard work and equal opportunities, I had my fill and made a mental note in case I was ever PM).
Blimey what a lot of hot air from us little people.
Those with the broadest shoulders can’t be touched, those earning on PAYE or anything readily taxable will pay more.
Aspiration and new wealth building (not inherited) will become increasingly more difficult.
Private school VAT is unfair, it’s not paid on every service, education under 5 and over 19, new build property, books, financial services, private medicine, rentals etc. It’s therefore inconsistent. It’s also not charged in the EU, so another brexit upside….. lifes unfair.
Ultimately we can’t afford to keep spending as a nation as we are. Pouring increasing amounts of money into an NHS model that is fundamentally broken is a poor investment. No one though is willing to face into this.
I see this website as about sharing and building financial knowledge and helping us little people plot a way through to improve our lots and achieve our financial goals, whatever they may be. It does an excellent job of this. People raising Stalin and Hitler as they defend their right to grannies inheritance that they’ve had no hand in building, show how emotive clinging on to any gains can be for us little people. The real money that could make a difference to society is less likely to be reading Monevator, it’s the little peoples problem to solve for and pay for.
What I despise among the ‘wannabe socialists’ that seem so prevalent everywhere is their utter ignorance.
Apparently so-called wealth inequality, or helping one’s family, is wrong.
Meanwhile no one talks about what’s really wrong, i.e.:
– Crime costs the UK £200bn pa – enough to pay for the entire NHS! [src: Labour party] Why not offshore prisons to the 3rd world (like we do our jobs)?
– We have 50-60% of the UK paying no tax! A family living on benefits in London can be financially better off than a household earning £70K pa [src: Telegraph].
– The number of young people avoiding work & turning to benefits has tripled from 7% to 20% since 2008 (due to mental health) [src: FT]
– We have endless wastage & no accountability in the public sector (NHS, HS2 etc).
– We waste billions on climate change, when China’s emissions exceed all developed nations combined. China alone will tip us past the 2% goal. India is fast becoming as bad as China, and Africa will later become worse. Why is no-one discussing this?
– Most large corps pay no UK tax – but we still buy from them.
– CxOs, celebs & sports stars earn millions, politicians receive 6-figure sums for giving ‘speeches’ to investment banks etc. Why is there no wage cap on these people?
– Londoners have £multi-million houses that a property bubble has gifted them. Why don’t council tax bands increase proportionally?
Calls for wealth taxes on assets are another way to subjugate the working & middle class, who are all getting pulled into them by fiscal drag. Most people are too uneducated to realise they don’t work & too lazy to tackle the real issues I raise above.
@Sarah — Eh? Most of that stuff is talked about all the time, especially in right-wing papers, GB News, and certain corners of the Internet.
I agree crime is a frustrating nightmare, albeit coming down steadily over the years. I arrived back in London last night from the countryside to find some guy prowling around on a Boris bike outside the tube looking for phones to nick. (Haven’t time to explain why I knew this, suffice to say he’s familiar to locals). I thought to myself why am I putting up with this rubbish, why not move country/out of the City? Crime is a blight on all our lives — even the criminals (there’s the soft-hearted liberal bit for you).
But sadly locking people up has a bad record of stopping crime, especially among the young who commit most of it. It’s very expensive. I suspect shipping criminals abroad for incarceration would create other problems and costs, not least in the courts.
Someone like me would note that crime is correlated with poverty and would rather focus on the latter. Is it a coincidence that after 10+ years of (mostly dysfunctional) right-wing government we have homeless people all over the streets of London again? Or that sickness claims are back at a pre-Cameron high? It seems unlikely.
Fully aware there’s a flipside to this — I voted for Cameron because I felt the spending had gotten out of hand, which was obviously a massive mistake given the extremely costly Brexit that followed, as well as the fact that austerity probably was not helpful in retrospect — but there’s clearly two sides to the argument.
People on benefits / very low incomes don’t have much money. This is why they pay little to no tax. I’m sympathetic to the idea that everyone who earns should pay some tax on ‘citizen contract’ grounds but the numbers can’t be gotten around.
Agree about those ridiculous spending wastages, especially HS2.
Re: Climate change, remember China makes loads of our stuff so we’re effectively offshoring our carbon output to them. It’s also a leader in solar installation and it has really brought down the cost of EVs, which we’re currently trying to keep out via tariffs. (We being the developed world). I’m no fan of the CCP but this is another complex topic.
I think corporation tax should be zero (we should tax dividends, salaries and pensions — i.e. money coming out of productive assets) but only if zero everywhere. I’d agree we need some kind of international framework on this for a minimum tax level. Unfortunately global cooperation has been steadily going down since 2016 (Trump/Brexit/elsewhere).
I don’t think we need a wage cap on those high earners you mention. If someone wants to pay Beckham £100K for a 20 minute chat, good luck to all involved. I do think they should pay a higher tax rate though, which they do.
Council tax re-banding is fiendishly complex as I understand it. You also have the problem of fairly ordinary earners happening to live in two-bed terraces valued at £700K. But anyway this would to some extent be a wealth tax, which you seem to be against.
You’ve lost me here. Wealth taxes would certainly not hit the working class and ideally not the (lower?) middle class, they would hit the richest. Unfortunately they seem to be very difficult to implement.
In contrast fiscal drag is a tax on earned income. I agree income tax on ordinary people is high enough, which is why I personally would rather look to the likes of IHT, albeit accepting it’s not going to move the needle much even at sensible levels.
We’ve got a £40bn spending gap created by Brexit (the state’s share of lost would-be GDP if things had continued on-trend) and we’re paying for it.
People seem surprised we can’t balance the books without a lot of pain, which is itself surprising given we were warned this would happen.
“The concept of private schools (and private healthcare) just seems immoral.”
There was an Italian who promoted that view: “No individuals or groups outside the State”. It didn’t work out well for Italy.
@ermine — Re: the comment above, does Godwin’s Law have a corollary? 😉