Economics for idiots

[Pidge]

I think the Billionaire argument is a bit of a red herring. As mentioned I think capital gains is probably the bigger lever in that area (and it's not the most watertight of tax arrangements anyway, with losses being used to offset gains), plus inheritance tax, obviously.

 

I think there's a group of people who are much closer to the threshold who resent the tax more.  The same arguments apply, but you can appreciate the disappointment someone who wins a big commission may feel when seeing their paycheck.  It's a sad fact of reality that they can't appreciate the money they've kept because their perspective is skewed to only look up the chain.  I'd argue these are often the cohorts that do a disproportionate amount of damage in some ways, the 'business class' class.

 

But, Boss is right about one thing, government mis-spending is a big issue.  But the future is demanding service modernisation and will definitely demand major education investments at some point (but can't see it any time soon unfortunately - the tories have tried their take on it, but I don't see the academy model really providing equity of access needed to really create a better society), which will not be cheap.

[Duff Man]

As you've already stated he opposes the proposed tax increases of the Democrats. He's also said numerous times that he thinks the current system is fine and doesn't need radically changing.

[Strontium]

2 minutes ago, Duff Man said:

As you've already stated he opposes the proposed tax increases of the Democrats. He's also said numerous times that he thinks the current system is fine and doesn't need radically changing.

 

Right, but opposing certain tax increases doesn't mean opposing all tax increases, especially when your opposition to those specific tax increases is because they don't raise enough revenue.

[Duff Man]

Again with the porkies. I didn't say he opposes all tax increases. As for your second point; that's highly subjective, on multiple levels.

[Strontium]

6 minutes ago, Duff Man said:

Again with the porkies. I didn't say he opposes all tax increases. As for your second point; that's highly subjective, on multiple levels.

 

When you say someone "opposes tax increases", then the "all" is implied. That's not porkies, it's how English works.

 

And if someone says he opposes specific tax proposals because they don't raise enough revenue, you can disagree with him on whether or not they do raise enough revenue, but it's not subjective to challenge him on his motives.

[AngryOfTuebrook]

53 minutes ago, Boss said:

 

As I say, go look around Liverpool. See the grade 1 listed buildings. They were built when income tax was low. The docks were built when income tax was low. The prosperity of the city happened during a time you claim was the worst of times. 

 

Er... you do know the origins of the wealth that built Liverpool, don't you?

 

What exactly are you advocating?

[Boss]

Just now, AngryofTuebrook said:

Er... you do know the origins of the wealth that built Liverpool, don't you?

 

What exactly are you advocating?

 

If you're talking about the slave trade, that was abolished before most of the grade 1 buildings were built. Nice try though.

[Jairzinho]

The origins of the wealth however...

[AngryOfTuebrook]

56 minutes ago, Boss said:

 

Long term investors that keep their money in the market are the reason behind the stock markets success. You'd be incentivising day trading, which is much more volatile, unless of course you want to increase income tax to 75% as well, in which case you'll make it virtually impossible for anyone to make money in stocks and the stock market will crash as everyone tries to pull their money out before your laws come into play.

 

As I say, go look around Liverpool. See the grade 1 listed buildings. They were built when income tax was low. The docks were built when income tax was low. The prosperity of the city happened during a time you claim was the worst of times. 

 

The era you're talking about was the era that destroyed the city. No industry, no infrastructure, no progress. The society of baby boomers created the cheap money, debt fuelled society we see today, and also the entitlement of that generation has left the millennial's in the state they are in now, unable to afford houses and walking out of universities jobless owing £50,000 in non-defaultable debt. 

 

Volatile day-trading is the source of much of the non-productive unearned income that I'm arguing should be more highly taxed.

 

Of course I want progressive income tax, with the top rates much higher than they are currently (and properly collected). You'll have to explain the mechanism whereby that would lead to a market crash, because I just can't see it; the idea sounds like nonsense. 

 

Liverpool wasn't destroyed by progressive taxation.  The decline in the importance of shipping and the rise of containerisation started the rot; Thatcher's low tax/low spending dogma and her attacks on manufacturing did the rest.

[Duff Man]

12 minutes ago, Sixtimes Dog said:

 

When you say someone "opposes tax increases", then the "all" is implied. That's not porkies, it's how English works.

 

And if someone says he opposes specific tax proposals because they don't raise enough revenue, you can disagree with him on whether or not they do raise enough revenue, but it's not subjective to challenge him on his motives.

Which I haven't actually said, anywhere in this thread. You're literally incapable of having an honest conversation.

[Boss]

Just now, AngryofTuebrook said:

Volatile day-trading is the source of much of the non-productive unearned income that I'm arguing should be more highly taxed.

 

Of course I want progressive income tax, with the top rates much higher than they are currently (and properly collected). You'll have to explain the mechanism whereby that would lead to a market crash, because I just can't see it; the idea sounds like nonsense. 

 

Liverpool wasn't destroyed by progressive taxation.  The decline in the importance of shipping and the rise of containerisation started the rot; Thatcher's low tax/low spending dogma and her attacks on manufacturing did the rest.

 

Sure. Let's say my income tax is 45% on short term capital gains. It's 28% on long term capital gains. You propose to increase income tax to 75% so that means short term capital gains becomes 75% because it's taxed based off your income. You increase long term capital gains also to 75%.

 

I have, let's say £100,000 in long term investments. I could pull my money out before your laws come into play and make £72,000. Otherwise, once your laws come into play, I'll only make £25,000. How many other people with long term investments will have the same thought as me? Chances are, all of them. 

 

Suddenly you preside over an economy where all the shares are being sold en masse at one time. The market tanks.  

[Bjornebye]

Tax rates should be consistent for everyone. 

[deiseach]

George's Hall was built in an era where there were frequent cholera epidemics in Liverpool that routinely killed thousands. And no, I'm not saying that the money spent on George's Hall could have been used to save lives, but that low tax regimes do a good job building grand monuments but are not so good at containing cholera. It took an act of parliament to rid Liverpool of the cholera scourge. If it were left to philanthropy, we'd still be waiting.

 

And in the course of a quick Google about this, I discovered that Dr Duncan grew up in what is now the Raz. Now you know.

[Pidge]

8 minutes ago, Boss said:

 

Sure. Let's say my income tax is 45% on short term capital gains. It's 28% on long term capital gains. You propose to increase income tax to 75% so that means short term capital gains becomes 75% because it's taxed based off your income. You increase long term capital gains also to 75%.

 

I have, let's say £100,000 in long term investments. I could pull my money out before your laws come into play and make £72,000. Otherwise, once your laws come into play, I'll only make £25,000. How many other people with long term investments will have the same thought as me? Chances are, all of them. 

 

Suddenly you preside over an economy where all the shares are being sold en masse at one time. The market tanks.   

Capital gains tax rate is not linked to income tax rate, unless it's invested through a company you take an income from.

 

The level of CGT depends on your tax band (and whether any gains push you into a higher bracket), but you do not pay income tax on capital gains.

 

CGT is 20% for higher rate taxpayers (28% on residential property). 

 

https://www.gov.uk/capital-gains-tax/rates

[Boss]

4 minutes ago, Pidge said:

Capital gains tax rate is not linked to income tax rate, unless it's invested through a company you take an income from.

 

Do you know the rates for short term capital gains if you don't take an income from the company?

[Pidge]

7 minutes ago, Boss said:

 

Do you know the rates for short term capital gains if you don't take an income from the company?

Fair enough, I read your post quite quickly and just took as referring to short-term investments, rather than the rate itself. 

 

Can you enlighten me?  Can't find it with a quick search on the Capital Gains manual.  Link would be appreciated.

 

However, if you take gains from a company at all, then yes that is charged at income tax rates.  Because you're taking an income.

[Boss]

11 minutes ago, Pidge said:

Fair enough, I read your post quite quickly and just took as referring to short-term investments, rather than the rate itself. 

 

Can you enlighten me?  Can't find it with a quick search on the Capital Gains manual.  Link would be appreciated.

 

However, if you take gains from a company at all, then yes that is charged at income tax rates.  Because you're taking an income.

 

Sure. In America they have long term and short term capital gains. The short term rates are taxed as though they are ordinary income. Long term is lower to incentivise long term investment. In the UK it appears to be 10%, 20% and 28% with a tax free allowance of £12,000. I just wanted to know if the rates are different based on the timeframe in which the shares are bought and sold and how drawing an income from the company affects things. I'm genuinely interested to know, if you wouldn't mind explaining to me.

[Pidge]

So it's nothing to do with UK tax, fair enough.  The pound signs in your example had me thinking otherwise.

 

I don't believe they are, but could be mistaken (did my RO1 a few years ago now). The amount of gain varies based on numerous elements, including inflation, so yes the length of time an asset is held will affect the amount due, but I don't believe the rate changes.  That's based on the gain and the year in which the gain is encashed IIRC.

 

Investments through companies are more complicated and depend on the type of company (mainly based on how direct those investments are made), really not an area I've worked in at all, but generally speaking the investment costs and returns would be borne in the company accounts and taxed accordingly.  An individual subsequently taking an income is taxed under PAYE and so not CGT.

[Strontium]

59 minutes ago, Duff Man said:

Which I haven't actually said, anywhere in this thread. You're literally incapable of having an honest conversation.

 

No, don't lie, thanks. 

 

This is what you originally wrote:

9 hours ago, Duff Man said:

It's really weird that the super rich are almost always against raising taxes, but can't wait to tell you about their new foundation. It's a real mystery.

 

Then I asked for some examples of the above:

5 hours ago, Sixtimes Dog said:

Do you have any specific examples, because I'm finding the insinuations a little too vague to meaningfully address.

 

You asked me to clarify:

5 hours ago, Duff Man said:

Of what?

 

I clarified that I was looking for examples of:

4 hours ago, Sixtimes Dog said:

Of these rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations.

 

Then you wrote:

3 hours ago, Duff Man said:

You've already mentioned one.

 

Now, since the only person I had mentioned was Bill Gates, this means you were citing him as an example of rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations.

 

I would suggest that if you didn't intend to say that Bill Gates was dead against tax rises, then you shouldn't have cited him as an example of a rich person who was dead against tax rises.

 

Honest conversations require people to remember what they've written. On that basis, I'd agree it's impossible to have an honest conversation about this with you.

[Bjornebye]

[Duff Man]

I mean that's just laughable. You've twice attributed quotes to me that were completely made up. That you would do that and then accuse me of dishonesty is astonishing, but also entirely unsurprising given it's you.

[Strontium]

1 minute ago, Duff Man said:

I mean that's just laughable. You've twice attributed quotes to me that were completely made up. That you would do that and then accuse me of dishonesty is astonishing, but also entirely unsurprising given it's you.

 

I've just cited exact quotes right there, so there's no weaselling out of it.

 

If Bill Gates isn't an example of "rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations", then I'm at a loss as to why you cited him as one.

 

So Bill Gates isn't one then. Do you have any actual examples of "rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations"?

[Bjornebye]

2 minutes ago, Sixtimes Dog said:

 

I've just cited exact quotes right there, so there's no weaselling out of it.

 

If Bill Gates isn't an example of "rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations", then I'm at a loss as to why you cited him as one.

 

So Bill Gates isn't one then. Do you have any actual examples of "rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations"?

Michael Caine 

[Boss]

18 minutes ago, Pidge said:

So it's nothing to do with UK tax, fair enough.  The pound signs in your example had me thinking otherwise.

 

I don't believe they are, but could be mistaken (did my RO1 a few years ago now). The amount of gain varies based on numerous elements, including inflation, so yes the length of time an asset is held will affect the amount due, but I don't believe the rate changes.  That's based on the gain and the year in which the gain is encashed IIRC.

 

Investments through companies are more complicated and depend on the type of company (mainly based on how direct those investments are made), really not an area I've worked in at all, but generally speaking the investment costs and returns would be borne in the company accounts and taxed accordingly.  An individual subsequently taking an income is taxed under PAYE and so not CGT.

 

I shouldn't have put the pound signs. I really appreciate you taking the time to explain that. Thanks Pidge.

[A Red]

3 hours ago, AngryofTuebrook said:

Yes.

 

It worked well throughout the Western world in the three decades after the war, when those sort of tax rates were common.

Why did it ever stop?