Starmer's vision quest

[BoldonLad]

Because only the little people get salaries.

More to the point, the little people don't get cgt or dividends.

Anyone in receipt of a Pension (other than State Pension) is indirectly in receipt of dividends, I would hazard a guess that includes quite a few "little people".

Similarly, anyone "growing" a "Private" Pension, is indirectly in receipt of Dividends, and Capital Gains (unless their Pension scheme is a dog.

 

[Shortfall]

You're a Laffer minute!

On the subject of Laffer, I claim no expertise on this but from what I can gather, recent hikes in CGT have failed to bring in extra revenue. In fact the opposite has happened. What are people's views on this?

 

[Pblakeney]

Which means they don't benefit from the low taxation on such income.

In case it escaped your attention, I was agreeing with your point but phrasing it more accurately.
Multi-billionaires quite possibly take salaries too, just not proportionate to total income compared to what the little people get.

 

[Pblakeney]

Anyone in receipt of a Pension (other than State Pension) is indirectly in receipt of dividends, I would hazard a guess that includes quite a few "little people".

Similarly, anyone "growing" a "Private" Pension, is indirectly in receipt of Dividends, and Capital Gains (unless their Pension scheme is a dog.

Of course they are. You'd have to be stupid to be in a position to do so, and not do so.
I took "little people" to be those working and who's only potential income is salary, and more specifically those who don't have sufficient disposable income to change this.

 

[BoldonLad]

Of course they are. You'd have to be stupid to be in a position to do so, and not do so.
I took "little people" to be those working and who's only potential income is salary, and more specifically those who don't have sufficient disposable income to change this.

Not unreasonable, but, even people as small as that will be enrolled in a workplace pension scheme now, unless, in addition to being little people, they are also employed by a "little" company.

 

[First Aspect]

Anyone in receipt of a Pension (other than State Pension) is indirectly in receipt of dividends, I would hazard a guess that includes quite a few "little people".

Similarly, anyone "growing" a "Private" Pension, is indirectly in receipt of Dividends, and Capital Gains (unless their Pension scheme is a dog.

It's taxed as income.

 

[Pblakeney]

It's taxed as income.

True after a point. There is a tax free proportion.

 

[First Aspect]

True after a point. There is a tax free proportion.

It's not taxed as a dividend either way though. And, again, for a fairly good reason. There just seem to be too many fairly good reasons each of which has a unintended consequence or two.

 

[Pblakeney]

It's not taxed as a dividend either way though. And, again, for a fairly good reason. There just seem to be too many fairly good reasons each of which has a unintended consequence or two.

Agreed. I'm just pointing out that it is not 100% taxable income.
For example, and this will annoy a few considerably, I pay zero income tax.

 

[Stevo 666]

On the subject of Laffer, I claim no expertise on this but from what I can gather, recent hikes in CGT have failed to bring in extra revenue. In fact the opposite has happened. What are people's views on this?

Quick answer is you're right, the CGT hikes/allowance cuts have had a counterproductive effect:
https://ifamagazine.com/capital-gai... in Capital Gains,reaching around £20 billion.

Quote:
"The government’s decision to slash Capital Gains Tax (CGT) allowances and hike rates has backfired. CGT receipts have fallen sharply – from nearly £17 billion in 2022-23 to £14.5 billion in 2023-24, and now to just £13.1 billion in 2024-25. What’s more, in the first six months of the year, CGT has raked in £11.8 billion, compared to £13.5 billion during the same period last year. The policy may have been designed to raise revenue, but it’s instead prompted behavioural shifts that have dented the tax take.

This is particularly relevant amid renewed speculation about a ‘wealth tax’. While taxing the wealthiest may sound politically appealing, the CGT experience shows that people will change behaviour or adjust their financial plans to mitigate the tax bills."

Who's Laffering now, eh? 🙂

 

[Ian H]

There was a leap in receipts as people tried to beat the new rates, then the expected drop afterwards. It'll most likely return to normal levels.

 

[Stevo 666]

There was a leap in receipts as people tried to beat the new rates, then the expected drop afterwards. It'll most likely return to normal levels.

May do, although CGT is to a degree controllable to the extent that people don't need to sell a chargeable asset. The Labour income tax hike in 2010 similarly failed to raise any significant amounts of money as many people paying the top rate (in particular the self employed and company owners)could control how much they received in any given year by way of dividends, bonuses etc. Some banks also put deferral schemes in place. As ever, the human reaction to high taxes puts a spoke in the leftie tax gathering wheels.

 

[Stevo 666]

For me it's not about a "Wealth Tax", more that the wealthy (those with the broadest shoulders" need to be taxed more in relation to their disposable income. Recent years we've seen the rich get richer and the poor get poorer (relative to each other).

Those on ludicrosus salaries have massive disposable incomes. Does anybody thing that the CEO of Southern Water needs an anula income of £1.4m to cover his mortgage, holiday, food, heating, Council Tax, etc. And extra will be "invested" wherever the sought returns are and that is as easily overseas as in the UK - makes no difference where you live eg unfortunately a significant portion of my own savings are invested overseas).

So present system is some struggling using food banks to survive whilst others getting paid more than they (and their next generation and the next generation's next generation) could ever spend on any sensible lifestyle.

Not suggesting take all their extra cash,just they can be taxed higher and still enjoy fabulous lifestyles beyond the wildest dreams of 99% of the population.

Whether that is best achieved through wealth tax, income tax, capital gains tax or whatever is more a consideration of tax experts not the likes of me.

Also whilst it's sensible for politicians to establish broad policy eg those with broadest shoulders should pay more tax, best if tax experts come-up with best way to achieve than.

Ian

Problem here is that you are assuming that people aren't already taxed enough - or more importantly that you're assuming that they don't think that they are. In some cases people may well just suck up tax hikes but when they are already high then quite often people will decide enough is enough for them and alter their behaviour or tax planning to compensate.

The other issue is that some types of higher tax in some also reduces investment and business activity, hitting tax receipts.

This is what is happening now and Labour are starting to discover this to their cost.

 

[First Aspect]

Problem here is that you are assuming that people aren't already taxed enough - or more importantly that you're assuming that they don't think that they are. In some cases people may well just suck up tax hikes but when they are already high then quite often people will decide enough is enough for them and alter their behaviour or tax planning to compensate.

The other issue is that some types of higher tax in some also reduces investment and business activity, hitting tax receipts.

This is what is happening now and Labour are starting to discover this to their cost.

As often said, they should have shared the NI burden between employers (via the thresholds) and employees (by removing the uncosted cut made just before the election), but they didn't have the cahunas to campaign on it.

 

[BoldonLad]

It's taxed as income.

Pension being paid out, is, as you say, taxed as income, are you suggestion the dividends and/or Capital Gains which are funding that payout should also add to the individuals tax liability?

Pension being paid into a scheme is not (generally speaking) taxed.