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Time for a wealth tax to pay for the costs of the pandemic?

Discussion in 'Personal' started by Morninglover, May 29, 2020.

  1. Morninglover

    Morninglover Star commenter

    Is this something we should emulate to pay for the huge economic costs of Covid 19?

    This is why we're proposing a wealth tax in Spain to help us out of this crisis
    My country’s recovery from coronavirus should be funded by those who can afford it. A new levy could generate €10bn


    "One of the most important points is the proposal to create a tax on wealth. At the moment in Spain, there is a tax on wealth of sorts – but it is ineffective because the regions (comunidades autónomas) can autonomously decrease it almost to zero and thus practise tax dumping. As a result, and thanks also to the rest of the tax system, inequality in Spain grew significantly during the last decade. Now the wealthiest 1% owns 25% of the country’s wealth, while the poorer 20% just owns 0.1% of the pie.

    We are proposing that Spain puts in place an effective tax on wealth to generate over €10bn every year, around 1% of GDP. This can be done without taxing the middle class at all; it would be a progressive scheme, starting at 2% for net wealth over €1m – and concentrating most on the revenue of the 1,000 richest people".
    Spoofer4114 and ajrowing like this.
  2. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Lots of people might agree but the devil will be in the detail. Lots of proposals for 'taxing the wealthy' are popular right up until someone decides what "wealth" means - your retirement savings? the sole house that you own and live in? - and who is going to count as "wealthy".
  3. LondonCanary

    LondonCanary Star commenter

    The article proposes
    " This can be done without taxing the middle class at all; it would be a progressive scheme, starting at 2% for net wealth over €1m "

    If we transposed that to the UK it might mean everyone living in a house with a net value of £1 million would have to pay at least an extra £20,000 a year in tax. Could be tough for many finding that from net income. It would tax the middle-class a lot.
  4. Oscillatingass

    Oscillatingass Star commenter

    I cant see it happening in that form though some sort of taxation rise to help pay for the effects of Covid is surely on the cards.
  5. dumpty

    dumpty Star commenter

    It seems grossly unfair to me that tax rises not only force those who did not get help to pay again but as we know, they tend to be left in place even when they served their purpose.Tax rises will also hurt the young (again) as they try to get on in life. They already had 10 years of austerity thrown upon them.

    Could a system be devised where only those who got government money pay it back? For example every year and based on what you received, you pay a bill - and when the amount is is paid back it stops. That's it - done.

    At the very least a compromise along those lines - those who got pay most back and then OK perhaps a sole1% VAT rise so this time, unlike under lockdown, we are a tad more 'in it together'.
    Laphroig and needabreak like this.
  6. florian gassmann

    florian gassmann Star commenter

    And in some parts of London, one million would not buy much more than a tiny two-bedroomed terrace house. The sort of thing many teachers and nurses might live in.

    needabreak, nomad and Jolly_Roger15 like this.
  7. Jolly_Roger15

    Jolly_Roger15 Star commenter

    As others have said, 'wealth taxes' never fall on the truly wealthy but the middle classes, especially people living on a pensioner, who are relatively asset-rich but income-poor.
    Ellakits, artboyusa and needabreak like this.
  8. Ivartheboneless

    Ivartheboneless Star commenter

    VAT is divisive and punishes the low paid more than the better off. Of course now that we have dumped Europe (and they are probably still laughing and glad to see us go) the whole VAT structure could be revised so that it is a fair tax. But of course it won't be! There has been talk on and off since at least 2008 about closing all the offshore tax havens, but nothing was done because it is where the likes of Cameron, Osborne, and all the other rich types have their money. And all the "loopholes" about not trading from the UK like Amazon in Luxemberg (yet your packages are in warehouse in the UK), Google, and of course Branson who moved himself abroad to that island "because it was such a beautiful island" no, nothing to do with tax evasion, how dare you, and by the way can I have a bale out? I suppose Sir Philip Greed is still languishing on his yacht doing an impersonation of a beached whale and laughing at all the pensioners he has stolen money from.
  9. Morninglover

    Morninglover Star commenter

    So hit the young and also many of the less well off who were furloughed? Even though they were at far less risk of becoming ill with Covid 19 or requiring hospital treatment?
    Laphroig, LiamD and monicabilongame like this.
  10. Bedlam3

    Bedlam3 Star commenter

    It's worth investigating how / if this could work as in general it is the lower paid workers at the moment who seem to be taking the hit. Due to the nature of their jobs many are not able to work from home so are having to use sick pay (around £95 PW) or holiday pay to cover periods of self isolation when someone in their household is showing symptoms. In a large household they could have to self isolate several times. I don't know how a fair system could be worked out and I did think at first it should be through income tax which could still work if we had a threshold to protect workers who were unable to WFH.
    Mangleworzle likes this.
  11. Mangleworzle

    Mangleworzle Star commenter

    That sounds fair in principle but would probably hit the youngest the hardest through no fault of their own.

    My youngest son for instance in his 20's is already paying back his student loan and has been furloughed receiving 80% of the basic part of his pay (itself 70-80% of his total pay). So he's had to tighten his belt through this time and then potentially will get hit afterwards to pay back what he's received.

    Perhaps there should be a distinction between those who have lost out on earned income due to being unable to work and those who have still had a functional income stream without working, or from the extra income they have received from the boost the lockdown gave their business.

    Something like a levy on large businesses profits instead of them paying share dividends maybe?

    £1000 extra to pay back for a low-paid worker is a much greater burden than an extra £10,000 for those who get the profits generated by those workers
  12. dumpty

    dumpty Star commenter

    The principle of those who got most pennies pay most back pennies seems fair to me, yes. My main concern is taxes hurt all and hurt for much longer than an agreed bill to pay back.

    But sure, paying back will hurt some more than others - just as furlough helped some more than others.
  13. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Stopping paying dividends gets proposed on here so often I've lost count but no-one proposing it ever explains why they consider it OK to deprive shareholders of their income. It's almost as if there's a stereotype of shareholders as being Victorian-style top-hatted filthy-rich capitalists tossing money in the air while they grind the faces of their workers who deserve to have their share dividends confiscated through taxation.

    But most shares in "large businesses" - quoted companies - are owned by pension funds, investment trusts, and the like that are investing our money. The money working people are saving for their retirement, to buy a house, etc.

    So if the government confiscates all share dividends through taxation what happens to all those pensions and savings?

    Share dividends aren't 'free money'.
    needabreak likes this.
  14. Mangleworzle

    Mangleworzle Star commenter

    Everything you say seems like a reason to stop paying dividends in that case. Most people pay for the costs of CV, but not out of earned income which is where it hits and hurts most immediately. It will also hit those who can afford it more than those who can't.

    I don't see why people who get their income from sitting around being rich should avoid any kind of a hit, do you?

    Perhaps these are even the reasons it gets proposed so often, it seems fair and obvious.
    monicabilongame likes this.
  15. LondonCanary

    LondonCanary Star commenter

    So those who worked throughout make no additional payment. My kids will sign up for that.
    needabreak likes this.
  16. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Did you read anything I wrote? Dividends aren't going to people who are "sitting around being rich". They are funding pensions. Pensions of people on all incomes, not the pensions of rich people. Mine, yours. (Actually if you are in TPS not yours. Maybe that's why teachers are so keen on confiscating dividends, their pension won't suffer?)
    Ellakits and needabreak like this.
  17. Mangleworzle

    Mangleworzle Star commenter

    You have misread, try again.
  18. Morninglover

    Morninglover Star commenter

    You are happy for those with less to pay more (as a proportion of their income/wealth) than the rich. Don't be surprised if, one day, they decide to hit back.
    Laphroig, LiamD and monicabilongame like this.
  19. Mangleworzle

    Mangleworzle Star commenter

    Yes I did and I took it a step further than you did.

    The bigger your pension (i.e. the more you can afford it) the more you contribute.

    The important thing is not to hit the incomes of those who have suffered by giving them a bill for what may turn out to effectively be a retrospective loan.
    phlogiston likes this.
  20. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Pensions are earned income! If you want to make the argument that it's more important to help younger people get money by taking it from old people it would be better to make that argument directly so that it can be debated for what it is. Not by some round about route through confiscating share dividends.
    lexus300 and needabreak like this.

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