Wealth Tax

Wealth Tax – Should You Be Concerned?

So if you are one of the brave souls who still dares to read the news regularly, it’s been noticeable how often the words ‘wealth tax’ have popped up lately.

Hardly surprising I guess. Clearly the immediate focus remains on managing through the covid pandemic. But  there’s also more than enough headlines about the economic impact of the numerous lock-downs and the massive amounts of money borrowed so far. 

Now to be clear – I am no financial whizz with a magic crystal ball. All what follows is my own musings, opinions and likely to be best ignored. However, it doesn’t take a genius to see that the UK, and many other countries, will at some point switch their attention as to how to best balance the books.

One thing I’ve always tried to do is see which way the financial wind is blowing.

I’m fine with handling risks I can do something about. The ones that have always concerned me the most are regulatory in nature – i.e. government sprung rule changes to the game.

In this case, I figure that the bulk of the can will still continue to get kicked down the road as much as possible. But I’d also say that as and when things start to stabilise, we’re likely to see changes of some sort. And I wouldn’t be too surprised to hear the calls for a wealth tax of sorts to continue to rise.

Why A Wealth Tax?

Ask me why I think the probability of a wealth tax has increased and I’ll give you a simple answer. The UK gov is running out of other easy options to raise funds. And at the same time there’s plenty of evidence on the ever-widening gap in wealth.

It’s like back when second-home owners and buy-to-lets started to get targeted. At some point a group becomes politically acceptable, even advantageous, to go after from a financial perspective. In the same way we started selling out of UK rentals back then, I’m just keeping a thoughtful eye on what might be next.

Why do I think a wealth tax is more likely now? Well, raising tax rates on traditional sources of income would be difficult to justify. Any change to income tax or VAT is going to target people who are already struggling.

Corporation tax raises would not exactly support a struggling economy to grow or help show the UK in the business friendly light I assume it still wants to show. Yes, I’d expect to continue a display of pushing large corps to pay up but that’s not going to be adequate for the hole our government is looking at.

So if you rule out major changes to most other taxes – you get left looking at the more palatable target of wealth

Covid is a clear (hopefully) one-off situation which gives a mandate for a “one-off” solution to tackle the economic pain caused. Combine that with plenty of reports on how the rich have got richer during the whole thing and you’ve got a plausible reason that a lot of people will support. 

Especially when they don’t think of themselves as ‘rich’…

What Is 'Fair' And Does It Matter?

This question has fascinated me for a long time. When you have so many different opinions, it’s practically impossible to arrive at something that everyone will think is a fair solution.

Entertainingly, it’s often joked that most people would consider a wealth tax as ‘fair’ – so long as it only applied to people richer than them. Personally I’m not sure I buy this one, I think it’s more nuanced. People tend to support those who have worked hard for their wealth. But not so much for those who haven’t.

And that’s why defining ‘fair’ is a bit of a nightmare. You can go down many rabbit holes on this one – and many people do. It’s pretty much the whole point of politics from what I see – to try and convince others that how you see things is ‘fair’ ( i.e. “right”).

I’ll be upfront here and declare I have zero party leanings. If I had my way I’d have a box on the ballot paper for ‘none of the above’ and force a revote until someone worthwhile finally stepped up. Yes, I may be waiting a while on that one….!

But that’s beside the point.

And to be honest, ultimately, I don’t think it matters what is and isn’t deemed fair in terms of assessing the risk here.

What will make a difference is what is possible and makes enough of an impact without losing voters. I.e. what matters here is what the politicians think they can get away with in the name of fairness.

What Would A Wealth Tax Target?

Again, I feel the need to remind you that this is all my own thinking. This blog is not a financial advice website by any stretch. If you are looking for something in that vein I would suggest trying Monevator or the like as a good starting pont.

What I’m about to dive into is my educated guess at where a wealth tax would focus, if one were to be brought in. I’m basing this on a combination of three things;

   1. Acceptableness: As above, is this likely to deemed as ‘fair’ or targeting only the ‘right’ people?

   2. Impact: Would this be likely to raise enough funds to make it worthwhile?

   3. Implementation: How complicated is this to actually implement – is it actually ‘do-able’?

So let’s get into it…

Private Homes

The UK is particularly strong at promoting home ownership as something desirable. Championing climbing the property ladder regardless of if you actually need the extra space. Most seeing it as their pension fund through later down-sizing.

Whether you think home ownership is the best thing since sliced bread or something out-dated in these days of global mobility (well, pre the dreaded C(ovid) and B (rexit) words anyway), it doesn’t matter for the purpose of this thought exercise.

What we’re interested in is how likely it is to be included in any kind of wealth tax.

In terms of (2) above, you can see it looks tempting. The UK’s own figures show that back in 2018, 35% of the public wealth was derived from property wealth. That’s a big chunk.  If you use a very rough finger in the air of 62% private home ownership (outright or mortgaged)  from the latest government view I could find that ends up as £3.15 trillion, or ~21.5% of UK wealth.

It would be a mixed bag on (3) though I reckon. Whilst easy enough to identify ownership, valuing individual houses each year would be a huge task. Though you’d see a lot of estate agents happily employed I guess.

On (1) is where this one really hits the wall though. Homeowners are probably one of the toughest groups to go after in terms of a political hit. The only way I can see it would be deemed palatable would be if it clearly targeted “them there rich folk”, so introducing some kind of threshold before private property contributed to your net wealth.

But to be honest, I think if anything happens here, it will be more in line with the kinds of council tax rises already floating around – perhaps a more targeted ( i.e. higher ) increase yet for those in the higher bands. 

If I lived in London or a giant house, I may be slightly more concerned, though probably not much. But I don’t. So I’m keeping this one in the minimal impact/likelihood bucket as of now.

Second (Third.. ) Homes & 'Evil' Landlords

So, I may have given myself away in the title here but it will not be a surprise to anyone who’s been involved at all in the Buy-To-Let market over the last 10-15 years in the UK. Landlords and second-home owners have been easy targets from a political perspective.

I’m not too interested in whether this is good or bad from yours or mine perspective – it’s just how it is. Anyone who can afford to own/operate a second home is going to be wealthier than the average man or woman in the street. So I don’t think anyone would argue too much that this category would tick the box for (1).

In terms answering (2) as in what it’s worth, using the two sources quoted above gives us an estimate of £1.02 – £1.93 trillion. The range being dependent on how much of social housing rentals are operated by private individuals. Not something easy to get a hold of and a little irrelevant to the main point here. Which is that second homes / BtL’s likely make up between 7-13% of the total privately owned UK wealth. So still a reasonable chunk and in an easily targeted group.

If a wealth tax were to be introduced, I wouldn’t be too surprised to see these groups included.

After all, from an implementation point of view, it’s easy to establish ownership and all landlords in particular will already be in the Self Assessment system.

But from our personal perspective, this is an area we’ve been exiting over the last few years now. For a number of reasons that deserve a whole post to go into at some point. But suffice to say we now only have one property left as a rental. So if this does become a target, we have minimal exposure at least.

Pensions

Next up, private pension wealth. Going back to Table 1 here, the UK government’s latest view shows a huge 42% of private wealth is invested in pensions. So about £6.1 trillion.

That must be a really tempting target, easily meeting our (2) criteria of having a meaningful impact. And as a bonus, it’s all captured on easily accessible systems. Meeting our pragmatic implementation  (3) criteria without too many issues either.

But can you imagine the outcry? Not to mention the lingering after effects on saver confidence. I think this would make for a particularly hard sell. As I said at the start, there’s a peculiar twist about targeting wealth that’s perceived to have been earned through hard work. Like saving your money whilst others are spending.

But it’s not impossible.

Strange times have already seen strange measures.

The introduction of new laws that would have been unthinkable less than a year ago. Borrowing of such huge amounts it’s difficult to visualise or really comprehend in any meaningful manner.

Personally, I think this will be a target of last resort. Perhaps only reached for if/when the UK cost of borrowing rises and it becomes impossible to service the debt anymore. A bit of a Greek situation but we’re not in that scenario, yet.

The only thing I could see happening here if the government did decide to pursue it, would be to go after a targeted subset of pensions.

Those deemed to be able to afford it. Not likely to get much public outcry or defence.

Pensions over a certain threshold wealth for example, similar to the approach you could take on private dwelling wealth. Defined Benefit pension holders another more obvious target. Though since a large proportion of those are now in the public sector, that would be an interesting mix of opinion.

But from my personal perspective? Well, I am one of those fortunate to hold a DB pension, all be it at the cost of working elsewhere for the higher salary.

But I struggle to see pensions as a target until things get even tougher. So not something I plan on doing anything about anytime soon yet.

Savings / Financial Investments

The financial wealth of the nation is where things start to get really interesting for me. With £2.12 trillion net wealth back in 2018 it was a decent (16%) slice of the cake then. And despite all the up/downs of markets this last year, there’s plenty of evidence showing that most people will have seen that wealth grow more since.

So any tax on financial investments/savings would defn be able to have a meaningful impact, making it a worthwhile one to think about.

It would be pretty simple to implement too, given everything is easily valued and all on systems. 

Again though, you have that issue of not wanting to discourage savers. I imagine a reasonably high threshold would be used so as only ‘rich’ people were targeted.

And I think that’s where FIRE folk in particular could run into trouble. We’re likely to have well above the average savings given they are intended to last us the rest of our lives.

FIRE folk don’t fit into an easy or typical bucket. We’ve usually combined hard work and lots of saving to buy ourselves time instead of stuff.

That’s not what governments want from its people for sure. It’s also not likely to get a lot of support from the vast majority out there. So yeah, this one I can see us being a target for if/when it happens.

In terms of mitigation, as far as I can see it would involve becoming a non-tax resident. Which is something we’re considering anyway, though for different reasons. Though from what I’ve read the plans would involve using the last seven years of data – so it’d only be from a long-term perspective anyway. One to watch though.

Physical Assets

As I understand it, this category is a bit of a catch all for everything else. Things like private number plates, art, wine etc. This area doesn’t seem to get a lot of attention – likely driven by it’s lower contribution (9%) to overall wealth. I also suspect that’s in large part because this is the most difficult to measure by far, since it’s driven by assets that don’t exactly have readily available liquid trading prices.

The latest resolution foundation report received a fair amount of attention earlier in the month. Highlighting a £800 billion gap between the government wealth estimations and it’s own methodology utilising the Top 100 Wealth List. My point being that it wouldn’t surprise me if a large part of that was down to missing those household valuations for their physical wealth.

Who knows. Either way, it’s still a fair chunk of value to go after.

But how would you go about valuing every single thing you owned fairly across the whole of the UK?

Simply asking people to put a value on their physical wealth for tax purpose and I suspect you’d get some pretty low valuations!

The only simple solution I can think of would be to tie it up with household insurance values. So if you want to insure £200k worth of contents, that’s how much wealth you are deemed to own. So if you undercut your valuation, you also undercut your cover/payout. Not perfect by a long stretch but perhaps do-able?

Though that wouldn’t get after a lot of that £880 billion, which I suspect is a lot more in the line of art, wine and other things fine. I imagine a lot of those types of wealth aren’t really captured anywhere until a capital gains tax is actually realised.

It would be entertaining indeed if it ended up being better to drink an investment in wine than to sell it – a whole new meaning to liquid assets!!

From our personal perspective, in true FIRE style, I don’t think we’d stack up high here. We’re not big on ‘stuff’ or ‘things’, spending our money on living life instead. Not high on my concern list.

How About An Overall Wealth Tax?

Having looked at each of the likely components individually, there are defn some areas it would be easier for a government to tackle than others.

However, most proposals are based on an individual or couples overall wealth. Similar to existing solutions in Norway, France and Spain for example.

For me, it’s implementing at that overall level  where a lot of issues come in.

It’s not clear to me how you easily come up with a standard figure for net wealth for everyone. How do you put a value on every single house at the same point in time? That’s a lot of broad brush assumptions beyond even the well-known council tax banding issues. Pensions and investment wealth, yep, those you can do. But as above, I think physical wealth would be another challenge.

And then you have the challenge of the vast majority of wealth being in non-liquid assets. Pretty much every statistic you can find will confirm that most of people’s wealth is tied up in houses and pensions. That’s why these two sections make up the largest blocks of UK wealth, after all. 

For example, the stereotypical granny living in a huge house in London by her own. Surviving on the state pension but all her wealth tied up in the house. How do you levy a wealth tax there? Does it just stack up as an unpaid bill until the inevitable happens and the government takes it’s cut before any inheritance gets paid out?

Or are you asking people to cash out somehow? Take on more mortgage to pay the tax bill? Would a government take a fee directly from pensions and other investments? Perhaps.

A tax on wealth seems fine when prices are going up. I think it would feel tough to be asked to lock in losses to pay your tax bill!

It’s clearly not simple. Wherever you set the threshold, there’s going to be cases that don’t feel ‘fair’. It’s just how things work. So yes, I think there’s a chance that successful FIRE people would be one of those groups, despite being in the hard work camp.

Which leaves me to finish with – do I support a wealth tax?

Do I Support A Wealth Tax?

Ask a hundred people if they support a wealth tax and you’ll get a hundred different answers I suspect. For me personally, it’s a bit of a mixed bag.

I totally accept I’m lucky enough to now be in a very privileged position. I would be deemed wealthy by most ordinary folk – though not by anybody in that Top 100 list by far! Maybe not even the Top 1m I’m pretty sure.

Anyone who knows us or who has read our story know how much work and sacrifice it took to get here. From that perspective if I’m totally honest it’s sometimes hard not to feel like we would have been better off spending instead. You can get fed up being a target for doing the responsible thing!

And I would most definitely mind less if I thought the money raised would be used wisely. However, as mentioned, I have zero faith that any government would do so. Governments are like big corporations – they just aren’t exactly effective or efficient with using money.

A wealth tax to me personally is a tax on hard work and spending less than average – without any assurance it will actually do any good.

My preference by far is to be able to use my money to help others in ways that I can actually see making a difference. Small charities not burdened by huge admin costs. That kind of thing.

But at the end of the day – I do recognise I am in a much better position than an awful lot of people who have also worked hard.

I have a lot to be grateful for and assuming it’s not a Cyprus 60% style savings raid, I can afford it. Sure, I’d like to know that any wealth tax would only go towards really helping equal things up. Really making a difference to the people on the ground. But that’s out of my control until I get that magic “vote for no-one” box..

At the end of the day, like my Twitter pal Liz of MindingMyThirties once said;

Taxes are essentially just a yearly subscription to the country you live in

The UK just needs to remain attractive enough to make the subscription worth it. Now where did I put that Portuguese visa application…… 😉

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18 thoughts on “Wealth Tax – Should You Be Concerned?”

  1. Very good article and comments too.
    If a wealth tax were introduced I think pensions are a tempting target.
    As I am still earning and I am self employed, I contribute to a SIPP as key way of building my retirement wealth due to the tax benefits.
    Recently I am reducing my SIPP contributions(though still making some) and I am trying to fill up my ISAs as a form of risk management.
    The view I am taking is that if the government wants to start focusing on pensions to deal with its own financial problems, my having my monies in some less accessible ways will serve me better. I think being nimble, aware and slightly sceptical of governments in this environment may serve us well.

    1. Hey Justin – thanks!

      Ha, yep – I think “nimble, aware & slightly sceptical” is pretty much the perfect summary of my attitude too. Being able to change and adapt has been a big part of making this lifestyle work – so anything which can help that is worth it in my book.

      You sound like you are doing well on your own path – cheers for taking the time to comment again, nice to hear from you.

      1. A pleasure.
        It would be really helpful if you could provide any posts on your views on the right geographical balance of a portfolio, how you select dividend shares and your more risky investments. It is great to have an accessible resource from someone who has a model of successful living and investing.

        1. Hmm – I have such a long back log of posts to catch up on but I’ll see. Always from a ‘not advice, just what I’ve done/do’ perspective though obviously. It’s so personal on your own beliefs and risk tolerance, situation…etc etc. I think it’s more helpful to go through the logic/process rather than the actual result for that reason.

          Plus there’s so many other people already covering that space far better than I. Monevator et al are great in-depth resources if you haven’t given them a go?

          1. Thank you for pointing that out. You are right to emphasise the process and I have been influenced by Monevator which is an excellent resource.
            The issue I have is that is that while I invest about 60% in world trackers/some blue chips and hold some gold and silver as a hedge, what to do with the balance and how to make better choices. I researched ISA millionaires (e.g those who have walked the talk) which ultimately led me to your website. Thank you for letting me know about peer to peer property lending which is one thing I am actively looking at.

          2. Hey Justin. I think you nailed it with “how to make better choices”. To me, it’s all about how you research, learn, understand – and then work out what’s best for you and your situation.

            Some people are in a great situation to take more risk, some less so. Some think they are – but really shouldn’t! And vice versa etc etc….!

            You sound like you are well on the right track. I’ve found Lemonheads forum is another excellent place to get input from people with years of experience of doing this successfully.

            At the end of the day, it’s not always about making the most – but making sure your money gives you what you want it to.

  2. Yes I would like to see all governments across the nation tax the wealth because they are hiding more money then the government can spend in a month and not pay taxes like the low and middle class we need government to tax to pay for things but while the rich get there own way and not pay a cent. I would love to see how a honest government works for all people.

    1. Hey there. Thanks for taking the time to read and comment. This is why the discussion on what is “fair” is interesting right – everyone has a different opinion and perspective.

      I think it’s quite a popular opinion about hiding wealth. Personally I think if you don’t want people to do that, you need to close the legal loopholes that exist to let them do so. Then you can go after anybody from a legal perspective, not just the vague moral hope that they will do “the right thing” – even though they are abiding by the law already!

      I also think it’s difficult to separate the whole “the rich should pay because they can afford it” type argument from the “what’s best in the long run for the country” type arguments. For example, the top 1% in the UK contribute ~27% of the tax take as of now. That’s a pretty hefty chunk. So it’s a delicate balance of how much more you can take before they decide to go somewhere more welcoming to the contribution they already make.
      Is there a lot of wealth inequality in the UK – absolutely. But I think the answer is a lot more complicated. You can have a fairer system but end up with everybody poorer – and I’m not sure that’s what people would want either?
      Cheers for taking the time – I love hearing all the perspectives.

  3. Interesting post and nice breakdown – definitely something worth discussion. My view (whatever it is worth!) is below.

    I’m not sure I agree with “fair” as a well defined or useful term (I”m not sure you are suggesting this – but feels it’s worth saying). Those will little (either money or skill) – will prefer the “from each according to their abilities, to each according to their needs” – those with money or skills will view this as making them slaves to the incapable. Neither view is objectively wrong necessarily – it is just a case of who you care about and what you want to promote – society isn’t about some objective moral truth (in my view) – it’s just a bunch of people trying to figure out how to live with each other without too much violence. I also think it makes the (false) assumption that good intentions produce good outcomes – to which history provides many horrific counterexamples. I agree with your focus on pragmatism – in my view the only realistic thing we can/should do is consider the consequences, as well as created structures and incentives and think hard about whether anyone really wants to live in that world.

    For that reason, I think the argument that a tax shouldn’t apply to the poorest (_at all_) is dangerous. This continued and increasing targetting of taxes and increasing numbers of the voting population paying little or no tax creates a society of government largess – everyone is happy to spend more because they know they won’t pay and they (falsely) believe that there is a limitless supply of (someone else’s) money to spend. I think ensuring that everyone feels at least some (proportionate and scaled) pain is important to ensure the right incentives and make sure everyone has skin in the game. I’d also personally like to force anyone making suggestions for additional spending on an area to actually look at the existing government budget first to put things in perspective – both in terms of understanding both their own (often small) contribution and the already huge costs – but that’s a separate nit.

    The question around poverty (to me) seems both from a pragmatic point and a “what would most people accept” point to come down more to – why do some have so much money and some have so little? I think if you ask the person on the street, they are happy with earned wealth and unhappy with “unearned” wealth, and are happy with the lazy and feckless starving but unhappy with the hardworking or deserving starving (with possibly broken view of work = time worked and no notion of human capital or risk). The question seems to be what wealth is unearned and why are the hardworking (or those willing to work) earning too little? It’s not clear to me a wealth tax addresses either of these – from this point of view it just makes the assumption that unearned wealth is uniform – and equally it treats the hardworking poor in the same way as the lazy – as well as thinking of wealth as this salaried linear thing (i.e., ignoring variable income, one-time payments for long time hard work or investment etc, accrual of human capital). The point is often raised about inequality in this context – but inequality seems to me desirable from the perspective of rewarding those who invest in themselves and produce – the issue is that the system may be broken and may not be doing that.

    The other suggested changes to normalize capital gains and income tax rates (assuming reintroduction of indexation), raising inheritance tax (along with fixing loopholes), attacking the triple lock (fantastic idea – although sadly this one is likely too politically hard) and numerous other tax “fixes” seem both to address some of the inequalities of opportunity (rather than outcome) and keep reasonable incentives in place. The other question (longer term) is how do we make sure we have the right jobs and the right skills so that the skilled hardworking can be paid (and taxed) well and the unskilled hardworking can become skilled (alongside productivity increases etc) – no idea on that one – but it seems a more important question to me. From a purely pragmatic perspective – there is the question of whether these other alternatives satisfy the impact criteria – but the suggestion from the FT articles I read seems to be that it would at least go some way – even if taking longer to pay debts back. It also avoids all of the issues of pricing illiquid assets (etc) that you mentioned – since there is clearly an agreed value at the point of transaction for capital gains etc and you have chosen to trade (so have some control over when to tax losses or gains) and we already charge capital gains and so have a system in place.

    Overall, I think a wealth tax is pragmatic only in the sense of bringing in an immediate large tax take – but the long term negative effects on incentives (both for people and government), long-term capital flight, and a whole bunch of other things are not worth the cost. I say this as someone would likely not pay much with a couples allowance and would likely lose more in the long term to rises in capital gains and inheritance tax.

    1. Wow! You defn take the prize for best comment yet. I love the thought that you’ve put into this – very much appreciated and a great read. Thank you.

      I tend to agree – a wealth tax to me is a blunt tool that would doubtlessly cause a number of unintended & unwished for behaviours as people responded to it.

      I think my concern is that politics & people today don’t often see to have the time, inclination or patience to delve through the nuances of what would drive the “right” behaviors. Defn the media don’t and they seem to get an ever bigger influence on these areas, which doesn’t help. It also takes time to see it actually working – something else in short supply for anybody in a place to actually be able to make a difference.

      I’d absolutely agree with you – rewarding hard work & effort is not in line with how wealth/income gets shared currently. But that’s been the case for so long – still, you always have to hope it will improve as things go forwards.

      Thanks again for such a thought-provoking response – meant a lot.

      1. Totally agree – I think sadly we are all (myself included) not as educated or informed as we should be on this – and so this limits the political ability to do anything sensible (and makes it easier to do silly things too).

        One thing I’d love to see to aid this is some games / simulators online to let you play with the budget yourself. It wouldn’t cover much around the incentives (although you could try to model and explain some) – but at least people would see both how much some things cost and how little some measures would pay. I’d especially like to see this with some kind of forecasts or agreed spending plans, demographic changes, etc. Maybe it exists – or maybe it’s just too much effort or too hard – but might be a fun exercise to dispell a lot of illusions and by giving people something to engage with themselves – it might force them to think and accept more responsibility for the decision. Who knows!

        Although saying that – the FT has a basic version of this already it seems – https://ig.ft.com/sites/2014/deficit-calculator/ (old but still insightful).

        1. Ha – I love it. Wouldn’t it be great to see millions of people playing an app version instead of Candymania (or whatever it was called?!). You could have a really interesting leaderboard based on all kinds of things!

          Seriously though, for sure. I can totally understand the calls for financial literacy to be taught in schools – a great life skill for sure.

          Thanks for the link – I shall have to go play!

  4. Interesting write up, thanks.

    I have to say that I’ve not really paid attention to wealth tax in the news because I can’t shake the feeling that it won’t apply to me (my wealth won’t be high enough even when I FIRE).

    However, @indeedably makes some interesting points, I hadn’t considered the changes which would affect everyone (rather than the targeted few) like removal of tax free employer contributions or tax free lump sums.

    Something I may need to factor into my plans.

    1. Hey Weenie – cheers for stopping by!

      I think that’s the point right? Everybody always assumes these things will be targeted at the super rich but so often they can escape the intended impact, whilst ‘normal’ people feel the impact.

      It’s a bit of the ‘death by a thousand paper cuts (or tax changes!) effect. Nothing huge or headline worthy but add up to an impact.

      Thanks for taking the time to comment – very appreciated!

  5. That was thoughtful and balanced. So much of current discourse in your country and mine, especially mine, is ballistic and hateful. As a guy with wealth I do have qualms about paying even more taxes on assets bought with already taxed money. Yet like you, I know I’m fortunate while many people as good or better than me suffer greatly. I appreciate the way you think and communicate, I’d like to develop more of that in myself.

    1. Thank you – this comment really made my morning.

      You are right, so much of what we read is intended to be divisive – inspiring negative emotions is a far easier way to get attention. So I truly appreciate someone enjoying my balanced style. I totally get the double tax feeling!

      Tbh, you sound like you are well on your way already – but I wish you well in continuing to develop – cheers 🙂

  6. Very interesting thought exercise here.

    Property is an easy target because it can’t be readily picked up and moved to a lower tax jurisdiction. An easier metric than valuing every existing property would be to estimate the land value of every property, then taxing based upon potential rather than whether it currently contains a mansion or a hovel. That model is successfully used in other markets I invest in today. If stamp duty was replaced with a recurring value based land tax, it removes much of the financial friction from property transactions, encouraging (or at least not discouraging) downsizing etc.

    Pensions are another easy target because they are locked away behind age restrictions. Even more so, because for many folks they are out of sight out of mind. Investors don’t feel the immediate pain in their wallets today unless they are already retired, so changes are quickly accepted and forgotten about by large portions of the electorate.

    For mine, I think the changes would likely be more subtle rather than bold. Things like aligning tax rates across all types of income (including pensions). Removing tax free employer pension contributions. Removing tax-free lump sum withdrawals from pensions. Eliminating tax advantaged accounts like ISAs. Using bracket creep to increase taxes (i.e. leave the tax band bounds unchanged even as inflation increases wages).

    1. Thanks Indeedably

      Appreciate the thoughtful response too. I think a lot of the more subtle changes you mention are probably pretty much a given. Changes that are hard to immediately notice or explain the impact to the wider masses.

      I’m likewise leaning towards the can largely being kicked down the road whilst borrowing remains low. If that changes I think we’ve all seen how quickly governments are getting used to doing the unthinkable. Asset mobility may become a distinct advantage!

      Thanks for stopping by & sharing your insightful comments.

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