Britain proposes Emergency Wealth Tax

Quote by lafayettemister
Emergency Wealth Tax

Fair or unfair to tax wealth after it was already (presumably) taxed as income. Assuming there's an estate/death tax as well, the same money will be taxed three times? Necessary attempt to save the economy?

I can't say I know much/enough about the British economy, but from afar this seems a bit unfair.

Quote by CoopsRuthie


The UK exemption is £325,000 for estate taxes. In the USA, the amount taxed is anything over $5,120,000. The exemption in the UK is lower than the USA, and the UK rate of tax is 40% of any amount over the exempt amount. Still, the tax doesn't raise that much money for the government. In 2013, unless the law is changed, the US rate will become 55% with an exemption of one million dollars. If you want to leave your family more of your fortune in the United States the best bet is to die in 2012.

Estate taxes aren't necessarily a re-tax of already taxed money. In some cases the money has not ever been taxed, or at least part of the estate is made up of untaxed profits that have accumulated during a person's lifetime. Some capital gains would never be taxed if all money was transferable at death without an inheritance tax. The increase in the value of an asset is not taxed as income during the lifetime of the person who acquired it unless it is sold.

Of course, there are ways around the estate tax. The transfer tax that Mitt Romney used to transfer his father's money to his own children, for instance. Romney can claim that he didn't inherit anything from his parents, that it all went to his children and to charity, and the government still doesn't get to tax the capital gains that George Romney made in his lifetime.

Quote by lafayettemister
Emergency Wealth Tax

As part of the global push to tax the rich, Britain is now debating an "emergency" wealth tax. But the idea has hit fierce opposition from conservatives, who say the "politics of envy" hasn't made the country rich.

Deputy Prime Minster Nick Clegg, leader of the Liberal-Democrat Party, has proposed a one-time tax on the wealth (rather than the incomes) of high-net-worth Britons. The details aren't clear, but Clegg says the country is facing an economic war caused by a prolonged recession, and needs to tax the rich in order to avoid social unrest.

He told the Guardian that unless the country "hardwired fairness" into the budget, "I don't think the process will be either socially or politically sustainable or acceptable."

Chancellor George Osborne shot back, saying the plan would chase out the rich and make the odds of full recovery even worse. Bernard Jenkin, the chair of the House of Commons' public administration committee, told the BBC that the tax could strangle the golden geese of Britain. "If the politics of envy made a country rich, we'd be very rich ... Most rich people are contributing far more in tax than other people."

Britain has already hiked taxes on the rich to 50 percent but amid a weak economy and reports of wealth flight, the tax was ratcheted down in April to 45 percent.

Baroness Susan Kramer, a member of Clegg's party in the House of Lords, said that a wealth tax could be more effective than an income tax, and that the wealthy won't move away.

"You have to be part of the society in which you live," she told the Guardian. ""If we're going to be a coherent society, and that is absolutely fundamental to our success and our prosperity, everyone has to carry a share of it."

The debate in Britain mirrors the central debate in America's presidential election: how much to tax the rich. Obama has called for raising their taxes. Romney calls for cutting them.

Britain's tax distribution is less progressive than America's, with the top 1 percent paying about 24 percent of the total income taxes in the U.K. In the United States, the same group pays more than 35 percent. The top 10 percent in Britain pays 55 percent of income taxes, while in America the top 10 percent pays 59 percent.

But Britain's example can be used by both Republicans and Democrats as fuel for their arguments. Republicans can argue that Britain's tax hike on high incomes didn't help their recovery, since their economy is still weak. Democrats can argue that the austerity measures imposed in Britain have prolonged their recession and that the tax hike was abandoned too quickly.

Either way, the debate over taxing the rich is starting to sound familiar around the world.

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Is this big news over there? What do you think about it? Fair or unfair to tax wealth after it was already (presumably) taxed as income. Assuming there's an estate/death tax as well, the same money will be taxed three times? Necessary attempt to save the economy?

I can't say I know much/enough about the British economy, but from afar this seems a bit unfair.

The phrase "hardwired fairness into the budget" is an especially troubling concept to me. Who determines what is fair?

Quote by lafayettemister


Okay, the estate tax question was just an aside. What about the "emergency wealth tax" itself? To have a "one time" tax on individual wealth? If someone has capital gains or IRA or 401k that was invested in good faith as tax free, is it okay to then tax it as wealth? Or already taxed income that has been saved by a frugal person or couple into a nice retirement fund, is it okay to randomly decide to tax it again as wealth? Or just some person that makes a shitload of money, okay to re-tax him/her?