Ah, the wealth tax. The Green party's magic money tree. A tax of 2% on assets above £10m would raise £24bn. Except, the equivilant Spanish tax (which includes a rate of 3.5% of wealth over E10.7m) raised... E632m in 2023. Any answers on why a UK one would apparently be so much more effective? - ThreadSky | a Reddit-style client for Bluesky

jamesdaustin.bsky.social • 40 days ago

Ah, the wealth tax. The Green party's magic money tree. A tax of 2% on assets above £10m would raise £24bn.

Except, the equivilant Spanish tax (which includes a rate of 3.5% of wealth over E10.7m) raised... E632m in 2023.

Any answers on why a UK one would apparently be so much more effective?

Reposted from Carla Denyer

I've written to Rachel Reeves about the financial struggles facing councils across the country & the impossible choices they're having to make. Public services have been cut to the bone & we're all feeling the impact. We need to see a wealth tax, not further cuts.

Comments

someoneontwitter.bsky.social•40 days ago

Is there any reason why luxury goods can't be taxed instead? If you want to buy, I don't know, a yacht, or a football club, or any other purchase that isn't essential (e.g. not cars or 1st houses) that costs over 50k ?

jamesdaustin.bsky.social•40 days ago

Yeah, a luxury VAT band would be something I don't object to on principle - but I'd need to see some more detail on it.

someoneontwitter.bsky.social•40 days ago

Someone would need to make a very long list of expensive, unnecessary items. I'd be happy to make it if someone buys me one of each.

someoneontwitter.bsky.social•40 days ago

Oh, also, is there any reason why a robin hood tax (on financial market trades) wouldn't work ?

jamesdaustin.bsky.social•40 days ago

IIRC - and its been a few years since I read anything on it - there we're a fair few challenges about competitiveness and how you'd impact hedging

someoneontwitter.bsky.social•40 days ago

I guess if you only taxed winning trades, I wonder if that would solve the hedging issue.

shevdon.bsky.social•40 days ago

Tax Land. It’s much more difficult to move that offshore.

beccoop.bsky.social•40 days ago

Also, when you propose an actual wealth tax (say on farms worth more than £1million) they don't mean THAT wealth tax.

jamesdaustin.bsky.social•40 days ago

Yes, that was very amusing.

See also the Greens views on housing, or green energy, or... Well... when anyone tries to do something in reality

beccoop.bsky.social•40 days ago

Green policies, but not green infrastructure in MY constituency!

ingyingram.bsky.social•40 days ago

Almost as though there is advice and methods of ways around it. Who would have thought?!

albrew.bsky.social•40 days ago

This is defeatism dressed up as sophistication.

jamesdaustin.bsky.social•40 days ago

No, it's just reality. Evidenced based policy making

albrew.bsky.social•40 days ago

Policy-free policy making, more like. The authors of that report specifically ring-fence inequality-reduction as a rationale for a wealth tax. Duh.

jamesdaustin.bsky.social•40 days ago

And? Doesn't mean it raises any money

albrew.bsky.social•39 days ago

Like I said first time, defeatism dressed as sophistication. The Greens may be naive and/or stretched, the Spanish may have made a hash of their tax. Doesn’t mean it can’t be done effectively, especially when those saying it can’t specifically discount redistribution policy in their analysis :)

jimob1.bsky.social•40 days ago

So you believe in taxing income rather than assets? Simple double entry arithmatic, if the economy isn't growing, then for someone to get richer another must get poorer. It isn't a magic bullet but for anyone who cares about inequality, wealth taxes (plural) should feature in the policy mix.

jamesdaustin.bsky.social•40 days ago

I believe in taxes that work: I think if you can tax wealth we should but there are more effective ways on doing it (tho likely less popular ones as a result)

jimob1.bsky.social•40 days ago

Such as? Financial repression, UBI, land tax, remove tax breaks..all for it. But to address inequality you have to say how and why. What's Labour's plan? As its tricky, cynically sidestep the issue by filing it in the too difficult box? Bravo to the Greens for trying at least.

davidboothroyd.bsky.social•40 days ago

I'd say a UK wealth tax would likely be less effective. Wealthy UK residents, and their tax advisers, are likely to know many more effective ways to place wealth out of the reach of any tax. Could easily end up costing more to administer than it brings in

jamesdaustin.bsky.social•40 days ago

I have heard rumours this is the case with the Spanish tax already...

But yes. I'm sure the UK, a place famous for its financial service industry, might have some people who know how to hide wealth

adamlbrown.bsky.social•40 days ago

Tbh regardless of the specific proposal, if your only argument is that a vaguely similar tax in a completely different country had different outcomes without explaining why that happened and why you believe those conditions also apply here, you dont really have much of an argument at all

jamesdaustin.bsky.social•40 days ago

It's entirely valid to point out that a similar proposal on Spain entirely failed to raise anything like the sum they're claiming a wealth tax in the UK would raise.

adamlbrown.bsky.social•40 days ago

It doesn't really add anything to the discussion unless you explain why it failed and how those lessons are applicable here. Otherwise it's just whataboutism. You could find badly implemented examples of every possible policy if you were so motivated.

jamesdaustin.bsky.social•40 days ago

A similar policy failing to raise anything like the predicted sums is anything but whataboutary: its a clear practical example. Particularly when other wealth taxes have also failed to raise anything like the predicted sum.

adamlbrown.bsky.social•40 days ago

Nah, sorry, this is all just vague handwaving. It tells us absolutely nothing about what kind of policies would have what kind of effect. It comes across as if you've just made a decision that you don't like a certain policy and are retrofitting rationales to your priors

jamesdaustin.bsky.social•40 days ago

No more than that you like a specific tax idea and are handwaving away how similar proposals elsewhere have failed to raise anything like the stated sum.

jamesdaustin.bsky.social•40 days ago

As for why: wealth taxes are notoriously hard to administer effectively. Wealth is mobile and difficult to tax.

I'm not aware of any wealth tax in a equivalent economy that has raised close to £26bn. What is different about this approach compared to others?

ivh.bsky.social•40 days ago

So Uk more like Spain than like Germany? Germany used to have a wealth tax of 0,5-1% until 1996. It raised €4,6bn at the time (1996 prices)

jamesdaustin.bsky.social•40 days ago

We're in a very different world to 1996.

ivh.bsky.social•40 days ago

Although Switzerland still has a wealth tax that even varies among regions from 1% to 5%. Might suggest that a lot depends on specific context.

robwilloe.bsky.social•40 days ago

More stinking rich people in the UK?

jamesdaustin.bsky.social•40 days ago

Not really - slightly more, but not enough to make up the differance

crusaderproject.bsky.social•40 days ago

The comparison would need to correct for the likely much more skewed wealth distribution in the UK. See eg here https://www.suerf.org/wp-content/uploads/2023/08/l_08c5433a60135c32e34f46a71175850c_44247_suerf.pdf and here: https://www.resolutionfoundation.org/app/uploads/2020/12/The-UKs-wealth-distribution.pdf - not saying that gets you to 24bn, but right now you’re likely comparing Apples and Aubergines.

jamesdaustin.bsky.social•40 days ago

Yeah, you'd get more than in Spain - were a larger and more unequal economy - but its worth noting their approach actually has lower bands.

And the higher up with go the more money there is to shield wealth

crusaderproject.bsky.social•40 days ago

No disagreement. Just noting that on the face of the numbers it doesn’t appear to be a trivial difference. Just from some random googling it appears the Top 20% hold about 1.5x the wealth in the UK, compared to Spain. I suspect if you dug into it the UK will have more households >10m than Spain.

arun-niranjan.bsky.social•40 days ago

So why are wealth taxes a magic money tree?

To my admittedly naive mind - wealth includes land and buildings which are:
- easy to know who they belong to
- hard to move out of the country

So surely taxes on these at least should be easily collectible?

testsubject9.bsky.social•40 days ago

This has always been my question. If the owners sell land and buildings to move their wealth into new investments, why couldn’t we tax the sale of those real assets and the new owners of those assets would then be subject to the adjusted taxes?

jamesdaustin.bsky.social•40 days ago

You could - but a lot depends on what mechanisms they use to do that

testsubject9.bsky.social•40 days ago

I feel like those mechanisms should be investigated and changed to avoid abuse, but it’d probably require global consensus. The problem, I imagine, would be getting any kind of agreement, and some governments would almost certainly try to attract wealth by refusing to implement the new rules.

jamesdaustin.bsky.social•40 days ago

There have been moves at G20 (led by Lula - tho the UK has supported) around a wealth tax but obviously very tricky to do.

But yeah, I think for it to be really effective in the way I'd like you'd need to have some global agreement.

chrismwheeler.bsky.social•40 days ago

We have built a financial industry and system out of making those things hard to know who they belong to.

We really should fix that!

arun-niranjan.bsky.social•40 days ago

With added advantage of making property less attractive as a money making asset, lowering prices so that people go back to buying a house primarily to live in it

nlitchfield.bsky.social•40 days ago

Have you seen the pushback that council tax rises get? :)

arun-niranjan.bsky.social•40 days ago

My take on the reason people get mad about council tax is that 80% of it goes on social care for a very small number of incredibly vulnerable people, which they are legally obliged to do.

But most of the people paying council tax just experience cuts to basic services that aren't legally protected

jamesdaustin.bsky.social•40 days ago

Wealth is notoriously difficult to tax: people divest to other things, put them into trusts, offshore, obscure valuations etc etc. And the more wealth you have, the more options you have to avoid tax on it.

arun-niranjan.bsky.social•40 days ago

Why is wealth moving any different to income? There's a source and a target, surely we can track it at one or the other?

Perhaps this just gets rolled into CGT 🤷🏾‍♂️

jamesdaustin.bsky.social•40 days ago

Income is pretty difficult to traxk at higher levels as well - lots of ways ro obscure it via Shell companies etc etc

testsubject9.bsky.social•40 days ago

It seems like we have to try something to tax wealth, despite the difficulty of doing so. The alternative is deepening inequality, social unrest and the rise of far-right populism. By that point, we might well wish that we’d attempted the difficult approach of taxing wealth to fund our societies.

thomscottphillips.bsky.social•40 days ago

I agree with Arun: in the specific case of property and land, obscuring wealth seems hard. Treasury knows its value and legal owner

jamesdaustin.bsky.social•40 days ago

Given how many properties are held by shell companies and other vehicles you may be a bit over optimistic here....

thomscottphillips.bsky.social•40 days ago

The tax can be levied on the shell company. True, it’s often hard to know who the ultimate owner is, but if you limit yourself to land and property, you don’t need to

If no payment there are already legal means to seize property to pay debts

megatrondheim.bsky.social•40 days ago

Because Spain's wealth tax includes exemptions, i.e., regional flexibility in the rates or thresholds, and from what is published so far, the UK's doesn't.

Discrepancy issues are great talking points, but they shouldn't lead to dismissal of a taxation system aimed at fairness.

jamesdaustin.bsky.social•40 days ago

Equally Spain's contains lower rates which, theoretically, should allow for it to raise more.

Its not a exact comparison of course, but it's noteworthy that it's raising nowhere near the claimed amount.

megatrondheim.bsky.social•40 days ago

It is important to also (although reporting may be limited) identify Spain's behavioral response to their country's 'wealth tax'. Along other countries who implemented a 'wealth tax' there is a reported reactionary response of "moving newly taxed assets to undervalued/undertaxed assets".

megatrondheim.bsky.social•40 days ago

So, thinking about new proposals for taxing wealth, unless there is something in place preventing the exploitation of 'loop holes' based on reported behavior, then it is really just all talk, no action. Something to dampen decades of rising sentiment toward income inequality.

tmfyorks.bsky.social•40 days ago

632 million is a good start...keep going.

jamesdaustin.bsky.social•40 days ago

Not if, say, the aim is to raise enough money to sort out council finances.

Labour gave councils a increase of 1.3bn this budget (plus a fair amount through other measures) and thay arguably isn't enough

joeps123.bsky.social•40 days ago

One of my pet peeves is the left’s general reluctance to call for broad based tax rises. You want better funded public services? Great, well they have to be paid for by reliable means

iamnicksimpson.bsky.social•40 days ago

Out of interest, what’s your proposal for increasing tax take? Because it seems we’re going to need more.

The desired economic growth and subsequent increased tax receipts aren’t coming anytime soon.

jamesdaustin.bsky.social•40 days ago

I'd start off with doing things that might actually work - rather than fantasy proposals.

But in my ideal world, with few political constraints, I'd be looking at full tax reform - in particular of Council tax - and merging NI/income. But I'm not the govt and don't have those constraints

iamnicksimpson.bsky.social•40 days ago

I think most sensible people agree with you on council tax. Frustrating that it won’t happen.

As for NI/income tax merging, that doesn’t raise any money by itself.

Both only increase income if you increase the rate of tax somewhere.

Presumably the top…

Like a sort of… tax on the wealthy..?

annaclarke.bsky.social•40 days ago

Merging NI and tax would raise quite a bit extra if you made the new rate equivalent to what employees are paying (so 28p basic rate), because pensioners and others with unearned income would be paying more.

richarddwyer.bsky.social•40 days ago

But it will make a lot of wealthy pensioners worse off. Which is presumably why the tories became in favour of this policy just *after* their 14th and final budget after a decade plus of power.

Oh yeah sure Hunt, you'll abolish NI in your next budget. That's something that will definitely happen.

iamnicksimpson.bsky.social•40 days ago

That’s a good point. I’d be in favour of that.

Again though, you’re largely going after wealth. Which I don’t think is a bad thing (essentially, I don’t see where else you can sustainably find more money).

annaclarke.bsky.social•40 days ago

Increasing tax on unearned income isn't directly a wealth tax, as it's the income from capital you're taxing not the capital itself. So more sustainable and pragmatic than trying to reach capital

neiljl.bsky.social•40 days ago

Agree, set the new rate to be always above the basic pension amount (they could call it the quadruple lock!) and it would bring in huge amounts, so much so they could reduce the new combined rate
Would also help reduce the inequality of tax on paid employment and other income streams

jamesdaustin.bsky.social•40 days ago

Depends a bit on how you manage thresholds + greater efficency helps. But I'd be interested in a range of measures: but I'm not seen any real evidence that a straight wealth tax as proposed would be effective

nlitchfield.bsky.social•40 days ago

Not going to speak for James, but there is a clear, effective, and proven way to do this raise tax on those who pay far less tax than their international peers. Basic Rate taxpayers. 38k a year in the UK means 28% income tax + NI, in comparable EU countries that's about 9% higher.

glostermeteor.bsky.social•40 days ago

Imo we need to widen the base. There are some ridiculous loopholes both in the VAT system and Inheritance Tax. Why tax biscuits but not cakes? Why tax individuals but not trusts? Labour made a move with APR on farms, but its not enough.

glostermeteor.bsky.social•40 days ago

By getting rid of exemptions and loopholes you raise more revenue without actually having to increase rates.

hereinmymind.bsky.social•40 days ago

Not just the Green Party. Also the Labour and non-Labour left.

ivh.bsky.social•40 days ago

Germany used to have a wealth tax of 0,5-1% until 1996. It raised €4,6bn at the time (1996 prices).

azery.bsky.social•40 days ago

I think the idea of a wealth tax is as much 'one simple trick' as farage's 'just get rid of all the immigrants'. obviously much less vile.

ultimately a better approach for this sort of thing would be something regarding land value or adjusting council tax. esp with how much property is unused.

jamesdaustin.bsky.social•40 days ago

I would love to know how many times the Greens have spent that (non-existent) £28bn by now.

But yes, it's very much that one weird trick and works just as well policy wise. But the point isn't to provide coherent policy, but to have something to hit the govt with (who are constrained by reality)

ccmack.bsky.social•40 days ago

Apparently several times in your head! Wealth tax isn't a trick, saying as much is the weird and uncivil response here.

shmmeee.bsky.social•40 days ago

What’s your strategy for addressing the issues raised in the article?

jamesdaustin.bsky.social•40 days ago

How dare someone be weird and uncivil by...

...pointing out a party's tax plans are hopelessly unrealistic

nlitchfield.bsky.social•40 days ago

It's not a 'trick'. It's a policy that has never worked anywhere.

woollcott.bsky.social•40 days ago

John McDonnell was on Today espousing the same. Found it bizarre hearing Nick Robinson actually ask ‘what advice would you give Rachel Reeves’

jamesdaustin.bsky.social•40 days ago

Numbers from @danneidle.bsky.social here: https://taxpolicy.org.uk/2024/06/13/our-take-on-the-green-manifesto/ in his fairly comprehensive frisking of the Greens tax plans.

Notably the Spanish example also contains rates at E3m and E5.4m as well. And still doesn't raise that much.

ajhtoffee.bsky.social•40 days ago

The UK is an international centre of finance, property and assets. There would surely be a LOT more wealth over 10m to tax.

jamesdaustin.bsky.social•40 days ago

I wouldn't underestimate Spain's wealth - but putting that aside, the thing with that sort of wealth is it very easy to move and shield.

It's why, if we're going to a wealth tax (and I'd back one if we can make it work) it needs to be on a global basis.

ajhtoffee.bsky.social•40 days ago

I don't doubt it's easy to avoid, and the Greens numbers are wild. But if it raises maybe a few billion, isn't it worth it anyway? If it came into force "midnight tonight" in a budget, could assets be re-assigned and mansions sold quickly enough to avoid it?

jamesdaustin.bsky.social•40 days ago

I suspect you run into some serious issues with business and investor confidence if you start pulling tricks like this

prasino.bsky.social•40 days ago

Comparison with Spain not really appropriate. Far, far more " super rich" in UK than in Spain.

jamesdaustin.bsky.social•40 days ago

Are there, erm, 30x more of them? Because that's what you'd need to raise the amount the Greens are claiming (and the Spanish tax has a number of lower bands)

prasino.bsky.social•40 days ago

Quite probably. Spain has for example nowhere near the numbers of millionaires from financial services. I know the Spanish tax system very well!

jamesdaustin.bsky.social•40 days ago

Hmmmmmmm

Comment image

innulazenovka.bsky.social•40 days ago

In France, their Impôt sur la Fortune Immobilière, levied on real estate worth over €1.3 million, apparently raised €2.35 billion in 2023.

innulazenovka.bsky.social•40 days ago

There are probably good reasons for believing that the sums raised by a British wealth tax would be more like those raised in Spain than in France, but could someone please explain to me what they are?
https://fr.statista.com/statistiques/477214/revenu-collecte-impot-sur-fortune-france/

jamesdaustin.bsky.social•40 days ago

I mean, the French wealth tax is quite different to what is being proposed in the UK, but putting that aside, it raises nowhere near the amount claimed for a UK wealth tax.

innulazenovka.bsky.social•40 days ago

Thanks. I don't know anything about it, and am certainly no fan of the Greens but, having had a French friend recommend their wealth tax, I wondered why the comparison was with Spanish rather than the French figures.

Presumably the Spanish wealth tax is similar to what's proposed for the UK?

jamesdaustin.bsky.social•40 days ago

Yeah - it has a (roughly) 1
£10m bracket and similar percentages whereas the French one starts lower, with a lower rate

jamesdaustin.bsky.social•40 days ago

And... the UK one, on far less estates, is apparently going to raise £26bn?

Right.

jamesdaustin.bsky.social•40 days ago

But I guess they work as one magic, rhetoric trick to pretend you can tax and spend without hitting any ordinary people.

bumpkina.bsky.social•40 days ago

It’s a policy for someone who will never have to implement it. If and when Reform actually produce policies the same will apply

alunephraim.bsky.social•40 days ago

Fact is, quite small increases on the three big taxes all raise a lot of money. I wish we could be a little less weird as a society about the most efficient of these as it would make a lot of things less byzantine.

nathanwylabour.bsky.social•40 days ago

The thing is, we're already in a position where we're doing (really quite substantial) income tax rises each year via the freezing of the thresholds. I think it's perfectly understandable that it would be politically difficult to increase the headline rates *on top of* that.

nathanwylabour.bsky.social•40 days ago

Of course, we would never have been in this position if the coalition hadn't massively increased the income tax thresholds, while pretending this was somehow compatible with trying to balance the budget.

But we are where we are.

jamesdaustin.bsky.social•40 days ago

Yep - we're trying to address 14 yesrs of vandalism

alunephraim.bsky.social•40 days ago

(By which I mean income tax. Others being VAT and the two NICs).

cooraysmith.bsky.social•40 days ago

What do you think to bringing back an upper band of VAT (abolished in 1979)? Say 30% on incredibly high value purchases. I don’t see “ordinary people” objecting to a higher band on luxuries costing say more than 75k?

tpgroberts.bsky.social•40 days ago

The easy one in terms of unexplored higher rate payers is scrapping the NI upper rate band and as a sop, doing away with the personal allowance taper at the same time, removes some of the weirdness in the tax system and still on net raises revenue.

folkparanoia.bsky.social•40 days ago

I'd actually favour the opposite approach - apply VAT to absolutely everything, without all the stupid "is it a cake?" court cases. Distributional issues can be sorted out through income tax and transfers.

richarddwyer.bsky.social•40 days ago

There are very rich people who will travel to London to buy a bag at harrows and I think we need to talk about exponential VAT rates for some things.

alunephraim.bsky.social•40 days ago

I was wondering about this sort of thing the other day, especially as purchases of that sort are often made to dodge tax aren't they? Hmm.

jamesdaustin.bsky.social•40 days ago

I'd need to think about it more - but broadly in favour on instinct?

rich-bryant.uk•40 days ago

I still maintain that a flat tax on almost everything is immoral. If I can be arrested and put in prison for walking around naked, you cannot tax the clothes I would otherwise need to buy.

preachypreach.bsky.social•40 days ago

Specifically basic rate income tax and the bottom end of the higher rate band

alunephraim.bsky.social•40 days ago

Wealth is a bugger to actually hit. One reason why VAT on private school fees is a nice one is that it's a rare static target.

preachypreach.bsky.social•40 days ago

It’s also a pain to measure which is a much underestimated problem

vijaychopra.uk•40 days ago

Wealth is hard to hit - but a good proxy is Land. And it's not like land can be moved off shore.
Unfortunately it's politically hard (see other attempts to tax immovable assets like the "dementia tax" - one of the few good ideas of that gvt but killed by headlines).

shmmeee.bsky.social•40 days ago

The real bugger is its all in housing and pensions so any raid is framed as a raid on ordinary people even if it’s not. See also IHT

azery.bsky.social•40 days ago

this is why any approach to taxing wealth would need global buy-in and support, which has been slow-moving

jamesdaustin.bsky.social•40 days ago

Yes, which is why the Spanish one has been so ineffective.

And if you're going to hit lower assets etc. which make it effective you're going to get a *lot* of resistence from older people, in particular.

mariosrichards.bsky.social•40 days ago

Property and pension taxes feels like the main practical ones.

Of course, there is a reason people keep focusing on less realistic alternatives ...

jamesdaustin.bsky.social•40 days ago

Yes, but then you can't pretend your tax plans won't hit your voters.

alunephraim.bsky.social•40 days ago

The way to finesse that difficulty is to make the argument that small and regrettable increases will be made up for through other means, so you will still have more money in your pocket etc. But that requires a culture shift and, actually, to a logic we've never had in GB.

alunephraim.bsky.social•40 days ago

This is what people in Nice Soft Left spaces often don't get: when we had broadly higher tax rates across the board and when the Labour Party was happy to defend them, most people of working age did not pay income tax. I think the shift to a new language is possible, but it would be a new language!

jamesdaustin.bsky.social•40 days ago

Worth noting the French version (which is very different) has also raised nothing like £26bn

nlitchfield.bsky.social•40 days ago

Quite. The "magic money tree" would be to tax *basic* rate taxpayers in much the same way as the leading EU nations do. Somewhere in the 25-30% range. https://en.wikipedia.org/wiki/Tax_rates_in_Europe Obviously no-one will do that so thresholds will likely continue to be frozen to achieve the same effect.